NOTE 13 - COMMITMENTS AND CONTINGENCIES

Concession Taxes

The Company is required to pay mining concession taxes in Mexico to maintain concessions owned by DynaMéxico. In addition, the Company must incur a minimum level of annual expenditures for all concessions held. The minimum expenditures are calculated based on the land area and the age of the concessions. Amounts spent in excess of the minimum may be carried forward indefinitely over the life of the concessions and are adjusted annually for inflation. Based on management’s recent business activities, current operations, and forward-looking plans – and considering expenditures incurred on mining concessions from 2002 through 2017, as well as continuing expenditures – the Company does not anticipate any difficulty for DynaMéxico in meeting the minimum annual expenditure requirements. The current minimum expenditure rate ranges from approximately $388 – $2,400 Mexican Pesos per hectare). DynaMéxico retains sufficient carry-forward amounts to cover more than ten years of the minimum annual requirements (calculated based on the 2017 minimum, adjusted annually for inflation at an assumed rate of 4%).

Leases

In addition to the surface rights held by DynaMéxico pursuant to the Mining Act of México and its Regulations (Ley Minera y su Reglamento), DynaMineras maintains access and surface rights to the SJG Project pursuant to a 20-year Land Lease Agreement. The 20 Year Land Lease Agreement with the Santa Maria Ejido Community surrounding San Jose de Gracia was dated January 6, 2014 and continues through January 2033. It covers an area of 4,399 hectares surrounding the main mineral resource areas of SJG and provides for annual lease payments on January 1st each year by DynaMineras, in the amount of $1,359,443 Pesos (approximately $67,000 USD) adjusted for inflation based on the Mexico minimum wage increase. Rent was $5,429,373 Pesos (approximately $266,000 USD) for the year ended December 31, 2025. The Land Lease Agreement provides DynaMineras with surface access to the core resource areas of SJG (4,399 hectares) and allows for all permitted mining and exploration activities.

The Company also leases office space for its corporate headquarters located in Irving, Texas. In February 2023, the Company entered into a 52-month lease extension that included additional office space. As part of the amended lease, the Company received four months of free rent upon completion of the office expansion. The expansion was completed and the Company moved into the new space effective August 1, 2023. The Company makes tiered monthly lease payments on the first day of each month.

The Company determines whether a contract is or contains a lease at inception. As of June 30, 2026, the Company has two operating leases: (i) a 52 month lease for office space with a remaining term of 17 months; and (ii) a 20-year ground lease associated with its Mexico mining operations, with a remaining term of approximately 7.5 years. Variable lease costs consist primarily of common area maintenance, storage, parking, and utilities. The Company’s leases do not have any residual value guarantees or restrictive covenants.

As the implicit discount rate is not readily determinable for most of the Company’s lease agreements, the Company uses an estimated incremental borrowing rate to determine the initial present value of lease payments. The incremental borrowing rate is based on the Company’s interest rates on its outstanding promissory notes.

Mercuria Matters

As described in Part II, Item 1 (Legal Proceedings) of this Quarterly Report on Form 10Q, Mercuria holds LCIA arbitration awards against DynaMineras and is pursuing enforcement proceedings in Mexico. Mercuria has also commenced proceedings in Texas against the Company and DynaMéxico seeking to hold them liable for DynaMineras' obligations under theories including fraudulent transfer, conspiracy, and alter ego. The Company and DynaMéxico dispute these claims and believe they have meritorious defenses. The Company is currently unable to predict the ultimate outcome of these proceedings.

The Company has recorded an accrual of $1,000,000 in respect of the arbitration awards and related costs. Management continues to evaluate the matter based on information currently available and will update its assessment as additional information becomes available. The accrual does not represent management's estimate of the ultimate amount that may be payable, but rather the amount determined to be appropriate under applicable accounting standards based on the information currently available.

DynaMineras Tax Assessment

On August 10, 2026, the Mexican tax authority (Servicio de Administración Tributaria, or "SAT") issued a tax assessment following its review of the 2021 tax year of DynaMineras. The tax assessment includes proposed adjustments relating principally to the treatment of certain tax loss carryforwards, deductions and income recognition matters. The tax assessment resulted in an aggregate proposed assessment of approximately MXN $173.7 million (approximately US$10 million), consisting of tax, inflation adjustments, interest and penalties.

Management, together with its legal and tax advisors, disagrees with significant portions of the tax assessment and believes substantial factual and legal defenses remain available. The Company intends to pursue available administrative and judicial remedies with respect to those matters for which it disagrees with SAT's tax assessment.

While the tax assessment includes a quantified amount, the matter remains subject to available review and appeal processes. Based on the information currently available, management does not believe that a loss is probable and estimable under applicable accounting standards and, accordingly, the Company has not recorded a liability in the accompanying condensed consolidated financial statements related to SAT's review of DynaMineras' 2021 tax year.