NOTE 9 - Stockholders' Equity

Common Stock

The holders of the Company's 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 March 31, 2022, the Company’s Board of Directors adopted the “2022 Stock Incentive Plan”. The 2022 Stock Incentive Plan had a total of 6,250,000 units available to award to the Company’s directors, executive officers and consultants. A unit can be a common stock purchase option, a restricted stock unit (“RSU”) or a performance stock unit (“PSU”). As of December 31, 2024, a total of 1,676,181 units relating to the 2022 Stock Incentive Plan remained available for future grants.

On May 18, 2023, pursuant to the authorization and approval provided by the stockholders at the Company's 2023 annual meeting of stockholders, the Company increased its authorized shares of common stock from 114,302,330 to 300,000,000 shares.

On October 21, 2022, the Company entered into an Equity Distribution Agreement with BMO Capital Markets Corp. and Canaccord Genuity LLC (collectively, the "Sales Agents"), to establish the ATM Program. On December 10, 2024, Dakota Gold entered into an Amended and Restated Equity Distribution Agreement with the Sales Agents. Under the terms of the Amended and Restated Equity Distribution Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50 million from time to time through any of the Sales Agents, acting as agent.

On October 11, 2023, the Company entered into a binding agreement with OMF Fund IV SPV C LLC, an entity managed by Orion Mine Finance ("Orion"), for an investment of $17 million in the Company and a commitment from Orion for future financing support. On October 20, 2023, Orion purchased 6,666,667 shares of common stock of the Company at a price of $2.55 per share for aggregate gross proceeds of $17 million in a registered direct offering (the "2023 Orion Equity Investment"). Following the closing of the 2023 Orion Equity Investment, Orion owned approximately 7.8% of the Company's issued and outstanding shares of common stock. Concurrent with the consummation of the 2023 Orion Equity Investment, the Company sold to Orion a 1% net smelter return royalty interest ("2023 NSR") on certain properties held by the Company for total consideration of up to $1 million, with approximately $0.08 million paid at closing and the remaining $0.92 million payable by Orion upon the achievement of certain development milestones. The Company paid a total of approximately $0.18 million in stock issuance costs related to the 2023 Orion Equity Investment. The net smelter return was considered a sale of future revenue and accounted for as a debt instrument, which is classified as royalty liability on the consolidated balance sheet.

In connection with the 2023 Orion Equity Investment, Orion has been granted a right to match the terms of future financings of the Company (the "Matching Right"). Orion's Matching Right does not include any equity or convertible debt offering conducted by the Company on a non-brokered basis or conducted by banks or brokers with aggregate proceeds of up to $200 million (of which no more than $50 million may be in the form of unsecured convertible debt), including equity issuances from the Company's ATM offering program. Both the 2023 Orion Equity Investment and the Matching Right will expire on the earlier of (i) October 11, 2033, (ii) the date that is 24 months after the date the Company obtains all permits and planning approvals necessary for construction on one of its material properties, and (iii) the closing of a financing by the Company in the aggregate amount of at least $300 million, so long as the Company complied with its obligation to permit Orion to exercise its Matching Right.

On June 26, 2024, the Company entered into another binding agreement with Orion, for an investment of approximately $5.86 million in the Company. On July 2, 2024, Orion purchased 2,344,836 shares of common stock of the Company at a price of $2.50 per share for aggregate net proceeds of approximately $5.71 million in a registered direct offering (the "2024 Orion Equity Investment"). Following the closing of the 2024 Orion Equity Investment, Orion owned approximately 9.9% of the Company's issued and outstanding shares of common stock. Concurrent with the consummation of the 2024 Orion Equity Investment, the Company sold to Orion a 1% net smelter return royalty interest ("2024 NSR") on certain properties held by the Company for total consideration of approximately $0.18 million paid at closing. The Company paid a total of approximately $0.15 million in stock issuance costs related to the 2024 Orion Equity Investment.

Subsequent to December 31, 2024, the Company utilized its ATM to raise gross proceeds of approximately $7.45 million by issuing 2,548,713 shares of common stock. Additionally, approximately $1.62 million was raised through the exercise of 780,048 warrants and approximately $0.02 million was raised through the exercise of 10,000 options.

Stock-Based Compensation

Stock-based compensation expense is included in exploration as well as general and administrative expenses, based upon the primary activities of the grantees. The Company recognized stock-based compensation expense as follows in the accompanying consolidated statement of operations:

	Years Ended December 31,
	2024	2023
	$	$
RSUs	1,616,421	1,561,070
PSUs	825,633	712,114
Stock options	571,004	1,323,652
Other	131,639	-
Allocated to general and administrative expense	3,144,697	3,596,836

RSUs	305,557	265,798
PSUs	211,982	194,436
Stock options	114,043	265,925
Allocated to exploration expense	631,582	726,159
Total stock-based compensation expense	3,776,279	4,322,995

During the year ended December 31, 2024, 56,741 shares of common stock with a fair value of approximately $0.13 million were issued to a former employee as compensation.

As of December 31, 2024, unrecognized compensation expense and weighted-average vesting period for each of the Company's stock-based compensation awards were as follows:

	Unrecognized Compensation Expense	Weighted- average Vesting Period
	$	Years
RSUs	1,285,525	1.37
PSUs	608,895	1.43
Stock options	372,101	1.26

Stock Options

Outstanding stock options under the 2022 Stock Incentive Plan have a term of five years.

During the years ended December 31, 2024 and 2023, the Company issued stock options, exercisable for up to five years, to certain executive officers, where vesting occurs over a one -to- three -year period based on a time-of-service vesting condition. To determine stock-based compensation expense for stock options, the fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model for the periods presented, which requires certain assumptions to determine fair value. The key assumptions for the stock option grants in the years ended December 31, 2024 and 2023 are as follows:

	Years Ended December 31,
	2024	2023

Weighted-average expected volatility	65.6%	65.0%
Weighted-average expected life in years	3.5	3.5
Weighted-average dividend yield	0.0%	0.0%
Weighted-average risk-free interest rate	4.26%	3.99%

The average grant date fair value of the options was $1.05 and $1.39 per share for those issued during the year ended December 31, 2024 and 2023, respectively.

For 2024 options, estimated volatility is based on historical volatility of the Company's stock. Prior to 2024, this estimate was based on the average volatility of the Company’s peer group as there was no sufficient historical data to make this estimate.

The stock-based compensation expense related to the options has been recognized in the Company's consolidated financial statements since the grant date and the fair value, estimated at the initial grant date using the Black-Scholes option pricing model, will continue to be amortized over the vesting period.

A summary of the Company's stock option activity and related information for the years ended December 31, 2024 and 2023 is as follows:

	Number		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	#		$	Years	$
Outstanding as of December 31, 2022	3,999,572		3.89
Options granted	333,588		2.81
Options forfeited/cancelled	(62,500	)	3.34
Options exercised	(68,750	)	1.05
Outstanding as of December 31, 2023	4,201,910		3.86
Options granted	445,966		2.12
Options forfeited/cancelled	(387,500	)	4.76
Options exercised	(82,500	)	1.92
Outstanding as of December 31, 2024	4,177,876		3.63	2.13	196,327
Options exercisable as of December 31, 2024	3,252,364		3.92	1.73	160,650

The total intrinsic value of options exercised in the years ended December 31, 2024 and 2023 was approximately $0.04 million and $0.16 million, respectively.

A summary of the Company's options outstanding at December 31, 2024 follows:

Expiry Date	Number of Options	Exercise Price	Remaining Life
	#	$	Years
March 15, 2026	573,750	1.92	1.21
May 17, 2026	1,453,125	4.76	1.38
September 13, 2026	200,000	5.09	1.70
October 18, 2026	300,000	4.64	1.80
September 2, 2027	571,447	3.01	2.67
November 18, 2027	300,000	3.74	2.88
March 1, 2028	333,588	2.81	3.17
March 1, 2029	445,966	2.12	4.17
	4,177,876

RSUs

The Company's 2022 Stock Incentive Plan provides for the issuance of RSUs in amounts as approved by the Company's board of directors.

During the years ended December 31, 2024 and 2023, the Company granted RSUs to executive officers, directors and employees. Each RSU represents the right to receive one share of the Company's common stock. The fair value of RSUs granted were measured at the grant-date price of the Company's shares and vest over a three -year period. The stock-based compensation expense related to RSUs will continue to be amortized over the vesting period.

The Company recognized stock-based compensation expense, which was allocated to exploration expenses and general and administrative expenses, based upon the primary activities of the grantees.

During the year ended December 31, 2024, 371,453 RSUs were settled through the issuance of 371,453 shares of common stock. During the year ended December 31, 2023, 226,050 RSUs were settled through the issuance of 165,663 shares of common stock and payment of approximately $225,000 for related withholding taxes.

PSUs

The Company's 2022 Stock Incentive Plan provides for the issuance of PSUs in amounts as approved by the Company's Board of Directors.

During the years ended December 31, 2024 and 2023, the Company granted PSUs to executive officers.

The PSUs granted in the year ended December 31, 2024 and 2023 vest over a three -year period. Each PSU award entitles the participant to receive a variable number of shares of the Company's common stock based on the Company's performance against the MVIS Global Junior Gold Miners Index for the relevant performance periods. The total number of shares that may be earned for PSUs is based on performance over the performance period and ranges from 0% to 200% of the target number of shares, based on the table below:

Company Stock Price Performance Relative to Index Performance by:	Index Multiplier
>=50%	200%
Equals	100%
negative 50%	50%
<negative 50%	0%

The fair value of the PSUs was determined using a Monte Carlo simulation, and the weighted average assumptions of the PSUs are as follows:

	Years Ended December 31,
	2024	2023

Weighted-average expected volatility	65.6%	73.3%
Discount period in years	1.83	1.83
Weighted-average dividend yield	0.0%	0.0%
Risk-free rate	4.37%	4.65%

The stock-based compensation expense related to PSUs will be attributed separately for each vesting tranche of the award. The stock-based compensation for each vesting tranche will be recognized ratably from the service inception date to the vesting date for each tranche. The Company recognized stock-based compensation expense, which was allocated to exploration expenses and general and administrative expenses, based upon the primary activities of the grantees.

During the year ended December 31, 2024, 147,337 PSUs settled at 78% of performance target through the issuance of 115,517 shares of common stock. During the year ended December 31, 2023, 37,615 PSUs settled at 86% of performance target through the issuance of 18,609 shares of common stock and payment of approximately $38,000 for related withholding taxes.

A summary of the status and activity of the Company's non-vested RSUs and PSUs for the years ended December 31, 2024 and 2023 is as follows:

	Number of RSU Awards		Weighted- average Grant Date Fair Value per Award	Number of PSU Awards		Weighted- average Grant Date Fair Value per Award
	#		$	#		$
Non-vested, January 1, 2023	545,259		3.17	112,842		2.99
Granted	635,567		2.83	329,182		3.72
Vested	(226,048	)	3.14	(37,615	)	2.95
Non-vested, December 31, 2023	954,778		2.95	404,409		3.59
Granted	919,944		2.12	442,217		2.45
Vested	(371,453	)	2.99	(147,337	)	3.48
Forfeited/cancelled	(38,006	)	2.82	-		-
Non-vested, December 31, 2024	1,465,263		2.42	699,289		2.89

The total intrinsic value of RSUs that settled in the years ended December 31, 2024 and 2023 was approximately $0.87 million and $0.62 million, respectively. The total intrinsic value of PSUs that settled in the years ended December 31, 2024 and 2023 was approximately $0.24 million and $0.05 million, respectively.

Warrants

During the years ended December 31, 2024 and 2023, the Company issued no warrants. A summary of the Company's warrant activity is as follows:

	Warrants		Weighted Average Exercise Price
	#		$
Balance, December 31, 2022	7,612,111		2.08
Exercised	(9,018	)	2.08
Balance, December 31, 2023	7,603,093		2.08
Exercised	(100	)	2.08
Balance, December 31, 2024	7,602,993		2.08

As of December 31, 2024, all 7,602,993 warrants had a remaining life of 1.20 years, and will expire on March 15, 2026.