Idaho Strategic Resources CEO John Swallow on Funding Growth Without Dilution

0:00Thank you.

0:302025. Growth tracks are twofold. The first is a rare earth and thorium exploration in Idaho rare earth elements thorium belt in central Idaho. The second is a Murray Gold Belt in northern Idaho, where the company is targeting 20 ,000 ounces of annual gold production by 2028. With me is John Swallow. He is president and CEO of Idaho Strategic Resources. John, welcome to Mining Stock Daily. Yeah, yeah. Thanks for having us on. John, you called Golden Chest Idaho's only hard rock gold mine with a decade of continuous modern production. Can you describe current operations now and what changes to get to that 20 ,000 ounces?

1:13Yeah, so currently the Golden Chest mine sits in the panhandle area of North Idaho. Basically, we control what I call the northern half of the Coeur d 'Alene mining district. The southern half contains Bunker Hill, Sunshine, Heckler's Lucky Friday, America's Gold and Silver's Galena mine. but the golden chest is on about 220 acres and kind of over in the far corner of a 20 ,000 acre land package that we've consolidated over the last five years so one of the things that we did when we set out to start is we started out with basically a production-backed exploration business model so what that did is that basically started with the hard part so you got to put a mine into production to build cash flow and revenues and then grow off of there and what that also does is it helps you greatly reduce dilution.

2:03And as the largest single shareholder, that's one of the things that I'm obviously most concerned about. But the Golden Chest, like you said, did about 12 ,500 ounces last year. We've steadily grown production since 2016. We're going to be advancing into another area of the mine called the Paymaster area this next year. And that's where most of our production will come from. we're currently operating in an area called the H vein and then also a higher grade area called the jumbo vein that will be kind of advancing as we go here over the next year or two. I think during your July presentation, you were talking about some long haul stoping, and I assume that some of the zones that you're targeting right now, but that was pending geotechnical tests.

2:48Is it everything is fine right now in terms of accessing new parts of the mine? Yeah, what we're doing is we're actually developing over to that Paymaster area, and the long-hole-stopping method of mining will be something that we incorporate over in that area. That'll be due to us. Right now, we incorporate an underhand cut-and-fill mining method in the HVNN and in the Jumbo. Now, gold prices have been rising nicely, but in the recent quarters, you also noted an increase in oil-insustaining costs, It's 16 % increase in a comparable on the Q2, and I believe a 30 % in a comparable on the Q1. That's 2026 versus 2025.

3:31What's driving prices higher? You know, one of the things that you'll see with us is we're going to be spending money on exploration. So part of our business model, basically production back to exploration is, you know, we can add and subtract exploration kind of as we want. But what we've done is we actually incorporate a heck of a lot of exploration out of cash flow. This year, we're going to do somewhere around$8 million worth of exploration that is largely comprised of drilling. So most of what that is, you'll see on there is either drilling at or near the Golden Chest, within the Murray Gold Belt, and even down towards our rarest element of properties to the south.

4:14Understood regarding production. I'm just interested, though, because you're an operator and we don't, you know, at Mining Stock Daily, we don't talk to operators nearly enough. But can you just detour and just talk a little bit about cost right now? I mean, it's a red hot sector. Obviously, there's been problems with diesel and also it's hard to get a hold of labor right now. What is a cost that you're kind of focused on right now? You know, one of the things we get asked the diesel question quite often. And to me, it's not a very large part of our cost, to be quite honest with you. One of the benefits you have when you have a mine located in the Silver Valley area of North Idaho is Interstate 90 runs right through the region.

4:57You've got five generations of workforce nearby. We actually are on an interstate and then a state highway. And the only time you're on a gravel road is when you drive to the portal off of the state highway. so as far as you know having high costs or like trucking diesel and that kind of stuff we don't really have any of that it's one of sort of one of the competitive advantages you have to our area my concern if i'm being honest was it wasn't really if diesel prices doubled that it's going to create a you know a hardship for the company i was actually more concerned that if we to make sure we could even get it you know those are the kinds of things that we look at so you some of things you do is you just store more diesel on site and that kind of thing.

5:38But the diesel costs haven't really hit us that much. You know, on the, you know, we do, we do, we look at things a little bit different on the labor side. We, you know, we, we have a production bonus. We have safety bonuses. We have tonnage bonuses. We actually cover a hundred percent of our employees' healthcare. So our employee and their spouse, kids, you know, we cover, it's one of the things that we've wanted to do from day one that kind of sets us apart to gives us a competitive advantage when it comes to actually retaining labor. And we've got about 75 employees and we've had one person quit in the last four years.

6:15So really retention of employees hasn't been that difficult for us. I believe we pay well and we treat them very, very well. Now, one of the pieces that you have going is the building of the new Murray Mill. You note one of the key aspects is that's going to be removed haulage and save about$1.3 million annually. Can you talk strategically about how that fits within the company? Yeah, sure. So right now we ship our ore to the New Jersey Mill and it's about a 45-minute haul basically down a highway to where the New Jersey Mill is just outside of Kellogg. And so one of the things we looked at as we were going to expand into the Murray Gold Belt, you You know, when you start with 220 acres, you know, it's one thing.

6:59But when you've got 20 ,000 acres and you're looking to build sort of a satellite mill that can feed other operations within the area, you need to take a look at it. Our tailings facility at the New Jersey mill is filling up. And so we made the decision to go ahead and build the new mill at the mine. So, again, one of the interesting things with our business model is that we've been able to construct a new mill. We built a really nice warehouse and drive facilities for the guys. And we've purchased a number of large ticket, like college trucks and equipment. And we've done a lot of this out of cash flow.

7:37So we haven't really had to touch our bank account at all. And again, that's one of the beauties of sort of our very, very simple business model. But the Murray Mill is going to cost about$20 million, you know, give or take when it's done. We should be done and commissioning in the first quarter of 27. And then that's part of like our estimates to increase production and stuff. We're going to tie in directly with the sort of the commissioning and getting our legs on earth with the new mill. Yeah. Well, explain that new mill. How critical is that in terms of kind of getting to that 20 ,000 ounces piece?

8:09You know, it's it it's a it's a major part of it. Obviously, you know, a brand new mill, you're increasing capacity, but you're also going to be running four crews a day, you know, four crews, seven days a week. So it's about a 20 % increase in capacity. Plus we're going to be running full time, you know, 24 seven at the mill. The thing I look at too, is it allows us a lot of flexibility, um, for other discoveries within the larger area. So, and then keep in mind, we're going to still have our, our ownership in the New Jersey mill. And so it needs, it's going to need a new tailings facility permitted.

8:46And so we can turn around and start permitting that new tailings facility after we're already up and running in the Murray Mill. And so that gives, we just have a ton of flexibility on this startup, kind of the way you set it up. And then possibly you have two mills over time up and running. And so you've kind of got the starter kits for say additional operations and discoveries in the overall area. Your most recent news release was October 1st. You were talking about exploration highlights you had two drills that are running you add a third what were the key takeaways so right now the two drills running they've been running all year at the mine and one drill is doing resource definition work and one is doing a little bit of step out work one was running largely from underground most of the year and then the third one is doing a little bit more of the same a little bit further step out so really it's just it's just it's investing back in the business, investing back in the resources.

9:51And you want to, you know, you want to be right near where you are looking and supporting production. And then you also want to kind of keep that drill out there, turn into add ounces. You did announce some highlight drill holes, but I believe that some of the widths were narrow. Yeah. So some of those widths were narrower. That's kind of the golden chest mine. If you look at some of those intercepts, you know, we, The Golden Chest mine is a narrow, higher grade underground mine. So that's what we mine. That's what we can expect. You know, we typically like about a one meter wide width when we're mining.

10:30You know, so it's just basically you, it's an organic gold system. So you kind of take what it gives you. But so far, we've been pretty fortunate with a really, really good mixture of some very, very high grades along with sort of a base. um you know so we average about seven to ten grams per ton uh let's uh talk about uh rare earths uh and in that july presentation of microcrap uh your ir uh travis swallow uh he said there was a two rare earth drill programs uh that's a cardinal at mineral hill uh lucky horse lucky horseshoe at uh landing pass uh what's the status so we just couldn't we just finished up literally a week ago at Lemhi Pass.

11:16So we don't have any results back or anything from that. So we were chasing a couple of carbonotype areas around and really just kind of expanding one of the... So that's another area that it's around 13 ,000, 15 ,000 acres in size. And there's a lot of prospects on it. And so there's a tremendous amount of high-grade rare earth, total rare earth numbers in the Lemhi Pass area. And Lucky Horse Area was one of the areas that we wanted to do our first round of testing on. And so we just finished that. And then the Mineral Hill area was another one of those areas to the north that we've been looking at for a while that we wanted.

11:56We kind of had an opportunity to get in there. Access was good. And so we jumped on it to jump in there and drill a few holes to kind of see what we had there. Really to see if we want to, you know, keep going with a phase two or not. And we're awaiting results on all of it. Rare earth processing can be tricky. And I know it's early days because you're drilling into that right now. But can you talk a little bit about what type of rock you're drilling into? And have you thought further in terms of what would make in terms of processing? Yeah, the mineralogy is obviously important on the rare earth side.

12:37So it's what I tell people when they ask about it to me. And I'm definitely not the expert here. But, you know, if you can look for, you know, monazite or xenotime better than, you know, you want to see that a little more than you want to see some of the more silicate type materials that are harder to process. But that's some of the work you do. So you don't just go drill holes and, you know, hit a vein and look for gold. You got to basically send it out, do quite a bit of testing. We did a lot of mineral electrical testing, soil sampling and everything ahead of these programs. And we're continuing to do that throughout the district.

13:15So it's, you know, like I said, it's involved and there's a lot of work that goes on here. I think one of the things we, you know, we're looking at right now, we just completed a really large, deeper soil sampling program at Diamond Creek. And that was interesting in that it has, we've outlined an initial kind of a geologic model deposit of about 20 ,000 tons, contained about 1 ,600 parts per million yttrium. And that one's interesting. I'll bring it up because we had a visit or a call from a large chip manufacturing company earlier this year. and they basically were talking to us about their need for supplies of yttrium, that basically they're going to be running low in a couple years, and the sources are cut off, and they've realized that they need to find domestic sources for yttrium and other heavy rare earths.

14:09And so we shifted our focus over to start focusing on the Diamond Creek area because we've got an area there that's pretty high in yttrium, And the occurrences there run along about a 3.2 kilometer long strike. So we feel pretty good about that area right now on the rare earth side. John, help us out. What do you expect in terms of news flow, major milestones over the next 12 months? So what we're looking at, we're going to start drilling the Niagara Copper Silver project that we have. It's within the Murray Gold Belt area. It's just a little ways from the mine. It's a strata bound Copper Silver.

14:49there's a historic resource of 154 million pounds of copper and 8.9 million ounces of silver so we should see some news flow coming from that project we should see news flow coming more news flow coming from in and around the mine and obviously we should have some news flow coming on the rare earth front so in addition to all of the exploration we're doing you'll also see our normal quarterly earnings report. And yeah, that should be a pretty full fall and winter. Now, congratulations back into September. You were included in the Global Junior Gold Miners Index. But I just talk about stories and the stories you're telling to investors and kind of the challenge there, John.

15:34So you have the gold story, of course, that you're talking about and what you're going to be growing there and also in Idaho. but then you also have the rare earth story as well too. Is it a hard story to kind of take to investors? Well, I, you know, I don't think so because what really what we do and our approach is a little different. Like we will tell the story and we will leave it up to investors to decide if they want to invest or not. We don't really, we don't really push anything. You know, we basically built the company that we would want to invest in and we did it the way companies used to be built where you start small and you grow.

16:09And, um, you know, you, to reduce dilution, we have about 15.8 million shares outstanding 70 million in cash in the bank. We've got, um, we're funding, you know,$8 million worth of exploration. We're building a$20 million mill. We're going to soon have two mills going, uh, in one area of North Idaho and the Silver Valley, which is one of the best areas in the world to actually build a business. And, um, we've got the upside leverage to both discovery on the gold side as well as on the rare earth side, not to mention on the thorium side a little bit if thorium becomes something to look at in the nuclear space.

16:47John, thanks to speak with Mining Stock Daily. Well, I appreciate it.

16:52John Swallow: The information presented should not be considered investment advice. Mining Stock Daily and its affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein. Please do your own research or speak with a licensed financial representative before making any investment decisions.