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LEASES

9 Months Ended

Sep. 30, 2024

NOTE 7 – LEASES

In September 2024, the Company executed a contract to lease a metals concentration facility located in Phillipsburg, Montana, which was accounted for as an operating lease. The lease has a term of 18 months with fixed cash payments in advance in the first six months of the lease of $10,000 per month, or $60,000 in total, and fixed cash payments in advance in the last twelve months of the lease of $95,000 per month, or $1.14 million in total, which includes a fixed monthly fee of $45,000 and a minimum milling fee of $50,000 per month. An additional payment of $50 per ton is due each month in the last twelve months of the lease for all milling in excess of 1,000 tons per month. The Company has not included any milling fee payments above the minimum in its lease liability as it is not deemed probable at this time. $10,000 was paid upon signing the lease, which is being accounted for as an initial direct cost ("IDC"). The Company is amortizing the undiscounted fixed lease cost and the IDC on a straight-line basis over the term of the lease. The Company recorded the present value of the fixed lease cost over the lease term as a lease liability and Right of Use ("ROU") asset. The Company used its incremental borrowing rate of 3.49% as of the date of initial possession of the leased asset when determining the present value of future payments of this operating lease as the rate implicit in the lease was not readily determinable. The lease includes provisions for the Company to use the existing mill building and all contents related to its use and to process owned and non-owned ore containing antimony and other critical minerals. The lease does not include any transfer of ownership of the facility at the end of the lease, nor any option to extend the lease or purchase the facility, nor any residual value guarantees. The Company can terminate the lease without cause with thirty days’ notice and must provide the facility to the lessor at the end of the lease in the same condition as it was received.

The lease liability related to this operating lease, which represents the present value of the lease payments, was $787,477 at inception and $782,646 and $nil at September 30, 2024 and December 31, 2023, respectively. The ROU asset, which includes the unamortized portions of the IDC and is adjusted for any accrued or prepaid lease, was $764,035 and $nil at September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024 and 2023, the Company recorded $33,611 and $nil, respectively, of lease expense related to this lease and IDC in "Cost of Revenues" in the Condensed Consolidated Statements of Operations. IDC paid upon signing this lease was $10,000 and $nil and lease payments were $15,000 and $nil during the three and nine months ended September 30, 2024 and 2023, respectively, which were included in operating cash flows.

The following table summarizes expense and cash payments for operating leases during the periods noted:

	For the three and nine months ended
	September 30, 2024		September 30, 2023
Operating lease expense	$	33,611	$	-
Cash paid for operating lease liability	$	15,000	$	-
Cash paid for initial direct cost	$	10,000	$	-

The following table contains the remaining lease term and discount rate as of the end of the period:

	September 30, 2024
Remaining lease term - operating lease	17.5 months
Discount rate - operating lease		3.49	%

The table below is a maturity analysis of the future minimum lease payments as of September 30, 2024.

Twelve months ending September 30,
2025	$	757,500
2026		427,500
Total undiscounted future minimum lease payments		1,185,000
Less: discount on lease liability		(402,354	)
Total discounted operating lease liability at September 30, 2024		782,646
Less: current portion of operating lease liability		(483,211	)
Noncurrent operating lease liability	$	299,435