Dakota Gold Corp

Condensed Consolidated Interim Balance Sheets

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss

Condensed Consolidated Interim Statements of Cash Flows

Condensed Consolidated Interim Statements of Changes In Equity

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 1 - Organization and Nature of Business

Organization

Dakota Gold Corp., ("we," "us", "our," "the Company," "Dakota Gold" or "DGC") was incorporated as JR Resources Corp. ("JR") on November 15, 2017 under the Business Corporations Act (British Columbia, Canada). The Company focuses its business efforts on the acquisition, exploration, and development of mineral properties in the United States of America ("U.S."). On May 22, 2020, the Company completed the domestication process and changed its registration from the Province of British Columbia, Canada to the State of Nevada. On March 31, 2022, the Company completed a merger with Dakota Territory Resource Corp., a Nevada corporation ("Dakota Territory" or "DTRC"), pursuant to which Dakota Territory stockholders, other than Dakota Gold, were entitled to receive one share of Dakota Gold common stock for each share of Dakota Territory common stock (the "DTRC Merger"). As a result of the DTRC Merger, Dakota Gold delivered 35,209,316 shares of the Company's common stock to former holders of Dakota Territory common stock. The Company currently operates in one segment, mineral exploration, in the United States.

Liquidity

The Company's mineral properties are at the exploration stage and are without declared mineral reserves or mineral resources, except for the mineral resource estimate contained in the Company's inaugural technical report summary for the Richmond Hill property, which was prepared in accordance with Subpart 1300 of Regulation S-K, promulgated by the Securities and Exchange Commission ("S-K 1300"), and which was completed in April 2024. Therefore, our mineral properties have not generated revenues. The business of exploring for minerals involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines (see Risk Factors in the Company's 10-K for the year ended December 31, 2023). Major expenditures are required to establish ore reserves, to develop metallurgical processes, to acquire construction and operating permits, and to construct mining and processing facilities. The amounts shown as mineral rights and properties represent acquisition and holding costs and do not necessarily represent present or future recoverable values. The recoverability of the amounts shown for mineral rights and properties is dependent upon the Company obtaining the necessary financing to complete the necessary exploration of the properties, the discovery of economically recoverable reserves, development of the properties and future profitable operations or through sale of the assets.

These condensed consolidated interim financial statements for the three months ended March 31, 2024 and 2023 ("financial statements") have been prepared on the assumption that the Company and its subsidiaries will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. As of March 31, 2024, the Company had not advanced its properties to commercial production and is not able to finance day-to-day activities through operations.

The Company's management believes its cash balance of approximately $15.11 million as of March 31, 2024, the Company's working capital of approximately $12.22 million, the anticipated ability to utilize the ATM program during the year and the ability to scale down the exploration program alleviate the doubt as to the Company's ability to continue as a going concern for 12 months beyond the date of these financial statements.

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 2 - Summary of Accounting Policies

Basis of Presentation

The interim Condensed Consolidated Financial Statements ("interim statements") of Dakota Gold Corp. have been prepared, without audit, in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and the rules of the U.S. Securities and Exchange Commission ("SEC") for interim statements, and should be read in conjunction with the Company's audited financial statements and the notes thereto for the year ended December 31, 2023 included in its Annual Report on Form 10-K, as filed with the SEC on March 28, 2024.

In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent year ended December 31, 2023, as reported in the Company's Annual Report on Form 10-K, have been omitted. The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited financial statements of the Company and in accordance with the instructions to Form 10-Q, certain information and footnote disclosures required by GAAP have been condensed or omitted.

Basis of Consolidation

The interim financial statements for the three months ended March 31, 2024 and 2023 include the accounts of the Company and the following 100%-owned subsidiaries: DTRC, LLC (incorporated in the U.S.), JR Resources (Canada) Services Corp. (incorporated in Canada), Dakota Gold Holdings LLC (incorporated in the U.S.) and Dakota Gold (Canada) Services Corp. (incorporated in Canada).

All intercompany accounts and transactions between the Company and its subsidiaries have been eliminated upon consolidation.

NOTE 3 - Mineral Rights and Properties

Dakota Gold has 100% ownership of the interests in the Blind Gold, City Creek, Cambrian Unconformity, Tinton, West Corridor, Ragged Top, Poorman Anticline, Maitland, and South Lead / Whistler Gulch Properties. In addition, we have 100% ownership in the Barrick Option, and the Richmond Hill Properties upon exercise of their underlying option payments. All are located in the heart of the Homestake District. The individual claims, properties, options, and leases are aggregated into a single unit mining property, hereinafter referred to as the "Black Hills Property."

On April 30, 2024, the Company published a mineral resource estimate under S-K 1300 at its Richmond Hill property. The full text of the technical report summary containing the mineral resource estimate is included in the Form 8-K filed by the Company on April 30, 2024.

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 3 - Mineral Rights and Properties (continued)

On January 12, 2024 (the "closing date"), the Company closed an agreement to purchase various databases, mining permits and real properties in Lawrence County, South Dakota from VMC, LLC ("VMC") for total consideration of $3.3 million, as well as a contingent payment of $2.1 million upon the first of either of the following “triggering events: (i) the first commercial gold production or (ii) on a change of control, if the Company still owns the real property. The Company's consideration to be paid to VMC consisted of a cash deposit of $1,000 and the remainder of the initial payment of $3,299,000 (the "balance payment") to be paid in two tranches:

1. On the closing date, one-half of the balance payment in shares of the Company's common stock based upon the volume-weighted average price ("VWAP") of the Company's shares for the 20-day period immediately prior to the closing date; and

2. On or before the date that is nine months following the closing date, a payment of one-half of the balance payment in the Company's shares of common stock, cash or a combination of the Company's stock and cash, at the election of the Company. The value of any of the Company's stock will be based upon the VWAP of the stock for the 20-day period immediately prior to the date of issuance of the stock on or before nine months following the closing date.

The VWAP of the Company's shares of common stock for the 20-day period immediately prior to the closing date was $2.57 per share.

On the closing date, the Company issued a total of 640,638 shares of its common stock, valued at $2.11 per share, the closing price of the Company's stock on the day before the closing date of the agreement, and paid closing costs of $9,778. The capitalized value of the first tranche of the balance payment totaled $1,361,524.

The Company has capitalized the present value of the second tranche to mineral properties, and included this amount in accounts payable at March 31, 2024. The amount initially recorded on the closing date related to the second payment due was $1,512,017, representing the present value of the balance payment of $1,649,500, discounted for the nine-month payment term at an interest rate of 11.66%. The second payment amount initially recorded on January 12, 2024 will accrete through the recognition of interest expense until it reaches $1,649,500 on October 12, 2024. If the Company elects to issue stock as any or all of its second tranche consideration, the difference between the liability at that time of settlement and the fair value of the shares issued to settle the liability will be recorded as a gain or loss in the statement of operations.

As of March 31, 2024 and December 31, 2023, the carrying value of Company's mineral properties totaled $82,238,845 and $79,344,304, respectively. As of March 31, 2024, the Company is in the exploration stage and has not commenced amortization of its properties.

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 4 - Property and Equipment

As of March 31, 2024 and December 31, 2023, the Company's property and equipment consists of the following:

Depreciation expense for the three months ended March 31, 2024 and 2023 was $67,606 and $60,740, respectively, and is included in general and administrative expenses. ROU assets are amortized on a straight-line basis for the remaining lives of their respective lease terms.

At March 31, 2024, the Company has three operating lease agreements for office and building space in Vancouver, British Columbia, Canada and Rapid City, South Dakota. The lease agreements do not contain extension options. For measurement of the original lease liability and ROU asset, the Company assumed a discount rate of 11.66% based on the Company's estimated incremental borrowing rate. During the three months ended March 31, 2024, the Company recognized approximately $33,000 in rent expense which is included in general and administrative and exploration expense on the condensed consolidated interim statements of operations. The weighted average remaining lease term for operating leases as of March 31, 2024 was 1.5 years. At March 31, 2024, the remaining undiscounted lease payments under these lease agreements totaled approximately $247,000.

NOTE 5 - Accounts Payable and Accrued Liabilities

As of March 31, 2024 and December 31, 2023, the Company's accounts payable and accrued liabilities consists of the following:

Included in "Other" at March 31, 2024 is $1,512,017 due to be paid later in 2024 for the purchase of a mineral property.

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 6 - Stockholders' Equity

Common Stock

The holders of common stock are entitled to one vote per share with respect to all matters required by law to be submitted to stockholders. The holders of common stock have the sole right to vote. The common stock does not have any cumulative voting, pre-emptive, subscription or conversion rights. Election of directors requires the affirmative vote of a plurality of shares represented at a meeting, and other general stockholder action (other than an amendment to our articles of incorporation) requires the affirmative vote of a majority of shares represented at a meeting in which a quorum is represented. The outstanding shares of common stock are validly issued, fully paid and non-assessable.

On May 18, 2023, pursuant to the authorization and approval provided by the stockholders at the Company's Annual General Meeting, the Company increased its authorized shares of common stock to 300,000,000 shares.

Share Issuances During the Three Months Ended March 31, 2024

The Company issued:

• 640,638 shares of common stock to VMC in connection with the first tranche of a payment for the purchase of a mineral property (Note 3);

• 115,517 shares of common stock to employees of the Company for the settlement of PSUs; and

• 207,515 shares of common stock to employees and directors of the Company for the settlement of RSUs.

There was no ATM stock issued in the three months ended March 31, 2024.

Share Issuances During the Three Months Ended March 31, 2023

During the three months ended March 31, 2023, the Company utilized its ATM program to raise net proceeds of approximately $5 million by issuing 1,886,800 shares of common stock.

In addition, the Company issued:

• 37,500 shares of common stock pursuant to an exercise of stock options for proceeds of $12,000;

• 9,018 shares of common stock pursuant to an exercise of warrants for proceeds of $18,757; and

• 18,609 shares of common stock to employees of the Company for the settlement of PSUs which vested on March 1, 2023.

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 6 - Stockholders' Equity (Continued)

Stock-based Compensation

The Company recognized stock-based compensation expense as follows:

The Company recognized stock-based compensation related to the issuance of stock options totaling $807,523 and $1,292,734 during the three months ended March 31, 2024 and 2023, respectively, of which $134,675 and $201,946 was allocated to exploration expenses, respectively, and $672,848 and $1,090,788 was allocated to administrative expenses, respectively.

We granted the following stock-based compensation awards as follows:

As of March 31, 2024, unrecognized compensation expense and weighted-average vesting period for each of our stock-based compensation awards were as follows:

For the Three Months Ended March 31, 2024 and 2023 (Unaudited)

NOTE 7 - Commitments and Contingencies

The Company may become party to various legal actions that arise in the ordinary course of its business. The Company is subject to audit by tax and other authorities for varying periods in various federal, state and local jurisdictions, and disputes may arise during the course of these audits. It is impossible to determine the ultimate liabilities that the Company may incur resulting from any of these potential lawsuits, claims, proceedings, audits, commitments, contingencies and related matters or the timing of these liabilities, if any. If these matters were to ultimately be resolved unfavorably, it is possible that such an outcome could have a material adverse effect upon the Company's consolidated financial position, results of operations, or liquidity. The Company does not, however, anticipate such an outcome and it believes the ultimate resolution of these matters will not have a material adverse effect on the Company's consolidated financial position, results of operations, or liquidity.

NOTE 8 - Income Taxes

A summary of the reconciliation of the income tax benefit based on the statutory federal income tax rate of 21% to the income tax benefit reported in these interim financial statements for the three months ended March 31, 2024 and 2023 is as follows:

The effective tax rate for the three months ended March 31, 2024 was 0.19%. The effective tax rate for the three months ended March 31, 2024 was less than the expected statutory rate as the Company does not expect to realize a benefit from a portion of the losses incurred.