11. Leases

Operating Leases

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases as incurred over the lease term. The Company accounts for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs).

On June 1, 2024, the Company entered into the 2024 Contract Mining agreement for a term of three-months.  On September 1, 2025, the 2024 Contract Mining agreement auto-renewed for a period of one-month. On October 1, 2025, the 2024 Contract Mining agreement was terminated, and Company personnel are now conducting mining operations at the Isabella Pearl mine.

Finance Leases

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The Company has finance lease agreements for certain equipment. The leases bear annual imputed interest of 4.50% to 6.55% and require monthly principal, interest, and sales tax payments of $0.5 million. The weighted average discount rate for the Company’s finance leases is 6.5%. Scheduled minimum annual payments as of March 31, 2026 are as follows (in thousands):

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The weighted average remaining lease term for the Company’s finance leases as of March 31, 2026 is 2.4 years.

Supplemental cash flow information related to the Company’s operating and finance leases is as follows for the three months ended March 31, 2026 and 2025:

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