Texas Mineral Resources CorpTEXAS MINERAL RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

The accompanying notes are an integral part of these interim consolidated financial statements.

TEXAS MINERAL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine and Three Months Ended May 31, 2023 and 2022

(Unaudited)

The accompanying notes are an integral part of these interim consolidated financial statements.

TEXAS MINERAL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Nine Months Ended May 31, 2023 and 2022

(Unaudited)

The accompanying notes are an integral part of these interim consolidated financial statements.

TEXAS MINERAL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CASHFLOWS

For the Nine Months Ended May 31, 2023 and 2022

(Unaudited)

The accompanying notes are an integral part of these interim consolidated financial statements.

Texas Mineral Resources Corp.

Notes to Interim Consolidated Financial Statements

November 30, 2017May 31, 2023

(Unaudited)

NOTE 1 – BASIS OF PRESENTATIONGENERAL

Exploration-Stage Company

Since January 1, 2009, Texas Mineral Resources Corp. (the “Company”) has been classified as an “exploration stage” company for purposes of Regulation S-K Item 1300 of the U.S. Securities and Exchange Commission (“SEC”). Under SEC Regulation S-K Item 1300, companies engaged in significant mining operations are classified into three categories, referred to as “stages” - exploration, development, and production. Exploration stage includes all companies that do not have established reserves in accordance with Item 1300. Such companies are deemed to be “in the search for mineral deposits.” Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Item 1300.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of Texas Mineral Resources Corp. (“we”, “us”, “our”, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”),SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K, for the year ended August 31, 2017,2022, dated December 14, 2017November 29, 2022 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 20172022 as reported in our annual report on Form 10-K, have been omitted.

Principles of Consolidation

The consolidated financial statements include the accounts of Texas Mineral Resources Corp and its proportionate interest in the assets, liabilities, and operations of Round Top Mountain Development Company, LLC (“RTMD”). All significant intercompany balances and transactions have been eliminated.

Going Concern

These financial statements have been prepared on a going concern basis which assumesassuming that the Company will not be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.continue as a going concern. The Company has incurred losses since inception resulting in an accumulated deficit from inception through May 31, 2023, of approximately $34,748,000 as of November 30, 2017$41,945,000 and has yet to achieve profitable operations, and projects further losses are anticipated in the development of its business raising substantial doubt aboutbusiness.

On May 31, 2023, the Company’s ability to continue asCompany had a going concern. Theworking capital surplus of approximately $1,352,000; however the Company’s ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/orits ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intendsThe Company doesn’t expect to financegenerate revenue from operations in the near future.

In accordance with our current projected budget, the Company does not have sufficient capital to fund its share of total cash calls required under the RTMD operating costs overagreement (“Operating Agreement”) as well as expected general and administrative expenses during the next twelve months. Failure by the Company to fund required cash calls to RTMD would result in dilution to its then current RTMD ownership interest (20% as of May 31, 2023). Accordingly, the Company will be required to either raise additional capital to fund its obligations during the next twelve months with existing cash on hand and or private placement of common stock.

On March 14, 2016,elect to dilute its ownership interest in RTMD. There can be no assurance that the Company filed a Certificate of Amendment withwill be able to raise the Secretary of State ofnecessary capital to fund its cash calls and expected general and administrative expenses. No cash calls were requested during the State of Delaware to amend its Certificate of Incorporation to change the name of the Company from “Texas Rare Earth Resources Corp” to “Texas Mineral Resources Corp”. The amendment was effective at 9:00 am ESTthird fiscal quarter ended May 31, 2023. Based on March 21, 2016. The Certificate of Amendment did not make any other amendmentsthese factors, there is substantial doubt as to the Company’s Certificateability to continue as a going concern for a period of Incorporation.

Reclassificationtwelve months from the issuance date of prior year balances

Ourthese financial statements. These financial statements duringdo not include any adjustments to the period ended November 30, 2017 contain amounts that have been reclassified for presentation and comparability purposes. The amounts and contentclassifications of these related account balances wereassets and liabilities that may be necessary should we be unable to continue as a going concern.

Texas Mineral Resources Corp.

Notes to Interim Consolidated Financial Statements

May 31, 2023

(Unaudited)

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt – Debit with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (“EPS”) calculation in certain areas. This ASU is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. Management does not altered duringexpect the reclassification.adoption of this standard to have a significant impact on the Company’s financial position, results of operations or cash flows.

NOTE 3 – JOINT VENTURE ARRANGEMENTS

The Company accounts for its interest in RTMD using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rata share of the assets, liabilities, and operations of RTMD in the appropriate classifications in the financial statements.

NOTE 24 – MINERAL PROPERTIES

September 2011The following discussion under “RTMD Mineral Properties” provides a history of the ownership and obligations of the Round Top Project, of which we, as of May 31, 2023, held a 20% proportionate interest and USA Rare Earth LLC (“USARE”) held an 80% proportionate interest.

RTMD Mineral Properties

August 2010 Lease

On September 2, 2011, we entered intoAugust 17, 2010, the Company executed a new mining lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering approximately 860 acres at Round Top Mountain in Hudspeth County, Texas. The mining lease issued by the Texas General Land Office gives usthe Company the right to explore, produce, develop, mine, extract, mill, remove, and market beryllium, uranium, rare earth elements, all other base and precious metals, industrial minerals and construction materials and all other minerals excluding oil, gas, coal, lignite, sulfur, salt, and potash. The term of the lease is nineteen years so long as minerals are produced in paying quantities.

Under the terms of the lease, we willthe Company is obligated to pay the State of Texas a total lease bonus of $142,518; $44,718 of which was$142,518. The Company paid $44,718 upon the execution of the lease, and $97,800 whichRound Top will be due when we submitpay the remaining $97,800 upon submission of a supplemental plan of operations to conduct mining. Upon the sale of any minerals removed from the Round Top weProject, Round Top will pay the State of Texas a $500,000$500,000 minimum advance royalty.

Thereafter, weif paying quantities of minerals are obtained, Round Top will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from the Round Top Project and six and one quarter percent (61/4%) of the market value of all other minerals removed and sold from Round Top.

Assuming production ofsold. If paying quantities hashave not been obtained, weRound Top may pay additional delay rental fees to extend the term of the lease for successive one (1)(1) year periods pursuant to the following schedule:

NOTE 2 – MINERAL PROPERTIES (Continued)

Schedule of August 2010 Lease

In August 2017, we2022, our joint venture partner paid the State of Texas a delay rental to extend the Stateterm of Texasthe lease in thean amount of $67,077.equal to $134,155.

Texas Mineral Resources Corp.

Notes to Interim Consolidated Financial Statements

May 31, 2023

(Unaudited)

November 2011 Lease

On November 1, 2011, we entered intothe Company executed a mining lease with the State of Texas covering approximately 90 acres more or less, of land that we purchased in September 2011 near our Round Top site. The deed was recorded with Hudspeth County on September 16, 2011.is adjacent to the August 2010 Lease. Under the lease, wethe Company paid the State of Texas a lease bonus of $20,700 which was paid$20,700 upon the execution of the lease. Upon the sale of minerals removed from the Round Top weProject, Round Top will pay the State of Texas a $50,000$50,000 minimum advance royalty. Thereafter, weif paying quantities of minerals are obtained, Round Top will pay the State of Texas a production royalty equal to eight percent (8%) of the market value of uranium and other fissionable materials removed and sold from the Round Top Project and six and one quarter percent (6 1/4%) of the market value of all other minerals sold from Round Top.

Assuming production ofminerals. If paying quantities hashave not been obtained, weRound Top may pay additional delay rental fees to extend the term of the lease for successive one (1)(1) year periods pursuant to the following schedule:

Schedule of November 2011 Lease

In October 2017, weAugust 2022, our joint venture partner paid the State of Texas a delay rental to extend the Stateterm of Texas of $6,750.the lease in an amount equal to $13,500.

March 2013 Lease

On March 6, 2013, wethe Company purchased the surface lease at the Round Top Project, known as the West Lease, from the Southwest Wildlife and Range Foundation (the “Foundation”)(since renamed the Rio Grande Foundation) for $500,000$500,000 cash and 1,063,830 shares of our common stock. Westock valued at $500,000. The Company also agreed to support the Foundation through an annual payment of $45,000$45,000 for ten years to support conservation efforts within the Rio Grande Basin, and in particular engaging in stewardship ofparticularly Lake Amistad, a large and well-known fishing lake near Del Rio, Texas. The West Lease comprises approximately 54,990 acres. Most importantly, the purchase of the surface lease gave usprovides the Company unrestricted surface access for the potential development and mining of ourthe Round Top Project. As of the date of this filing the $45,000 payments due in June 2016 and 2017 have not been paid; consequently, we have expensed the value of the West Lease during fiscal 2017. We fully intend to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring the lease current when funds are available. Expensing the value of the West Lease does not restrict our access to the mineral leases.

October 2014 Surface Option and Water Lease

InOn October 29, 2014, we executed an agreementthe Company announced the execution of agreements with the Texas General Land Office securing the option to purchase the surface rights covering the potential Round Top project mine and plant areas and, separately, a lease to develop the water necessary for the potential Round Top projectProject mine operations.

The option to purchase the surface rights covers approximately 5,670 acres over the mining lease and the additional acreage adequate to site all potential heap leaching and processing operations as currently anticipated by the Company. WeRound Top may exercise the option for all or part of the option acreage at any time during the sixteen yearsixteen-year primary term of the mineral lease. The option can be kept current by anmaintained through annual paymentpayments of $10,000, which has not been paid as of the date of this filing.$10,000. The purchase price will be the appraised value of the surface at the time of exercisingoption exercise. All annual payments have been made as of the option.date of this filing.

The ground water lease secures ourthe right to develop the ground water within a 13,120 acre-acre lease area located approximately 4 miles from the Round Top deposit. The lease area contains five existing water wells. It is anticipated that all potential water needs for the Round Top project mine operations would be satisfied by the existing wells covered by this water lease. This lease hasterms include an annual minimum production payment of $5,000$5,000 prior to production of water for the operation, which has not been paid as of the date of this filing.operation. After initiation of production weRound Top will pay $0.95$0.95 per thousand gallons or $20,000$20,000 annually, whichever is greater. This lease remains effective asin effect so long as the mineral lease is in effect.

The Pagnotti Enterprises Inc. MemorandumSanta Fe Gold Corporation

In November 2021, the Company entered into a mineral exploration and option agreement with Santa Fe Gold Corporation (“Santa Fe”). Under the option agreement, the Company and Santa Fe plan to pursue, negotiate and subsequently enter into a joint venture agreement to jointly explore and develop a target silver property to be selected by the Company among patented and unpatented mining claims held by Santa Fe within the Black Hawk Mining District in Grant County, New Mexico. Completion of Understanding

On June 28, 2016 TMRC executed a Memorandumjoint venture agreement, if any, is subject to the successful outcome of understanding with Pagnotti Enterprises Inc. (“PEI”) of Wilkes Barre, Pennsylvania, ownersa multi-phase exploration plan leading to a bankable feasibility study to be undertaken in the near future by the Company. Under the contemplated terms of the Jeddo Coal Co., whereby under specifiedproposed joint venture agreement, the Company would be project operator and initially own 50.5% of the joint venture while Santa Fe would initially own 49.5%. Additional terms TMRC could lease one or more of Jeddo’s deposits locatedthe joint venture are expected to be negotiated between the Company and Santa Fe in the anthracite region of northeast Pennsylvania. Research by the Department of Energy (DOE) has shown that these coal deposits and the sandstones and siltstones immediately associated with them contain anomalously high values of rare earth and on particular interest, Scandium. The DOE researchfuture. 

Texas Mineral Resources Corp.

Notes to date has indicated that the rare earth can be efficiently extracted from pulverized rock using ammonium sulfate as the lixiviant. TMRC is in the process of preparing an application for a federal grant to design and construct a continuous ion exchange/continuous ion chromatography (CIX/CIC) pilot plant to be delivered to a designated project area in the Appalachian coal province. TMRC and its co-applicants, K-Tech, Inventure Renewables, of Tuscaloosa, Alabama and Penn State University are proposing to plan, develop, design and install the CIX/CIC pilot plant at one of the Jeddo Coal properties. The grant was awarded in March 2017 to the consortium consisting of Inventure Renewables, Penn State, K-Tech and TMRC with Inventure being the principal investigator in the consortium. Funding began in September 2017.Interim Consolidated Financial Statements

May 31, 2023

(Unaudited)

Under the terms of the Memorandumoption agreement, the Company plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, consisting of Understanding (MOU) signed 28 June 2016, TMRC had a six-month term to performgeologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based on the necessary due diligencedistrict-wide evaluation, the Company will designate one 80-acre tract as the “project area” and to technicallycommence detailed exploration work. The property covered in the option agreement is approximately 1,300 acres and economically evaluate the properties. Upon executioncovers approximately 75% of the MOU TMRC and PEI had six monthsknown mining district. The area to draft and executebe studied also includes a formal leasetwo-mile radius “area of interest.” The option agreement containing allprovides the standard terms of mining lease agreements. Upon execution of a lease, TMRC will be obligated to pay a $5,000 per month rental or a 12% royalty whichever is greater. As of the date of this filing, no lease has been executed.

NOTE 3 – NOTES PAYABLE

As part of our surface leaseCompany with the Rio Grande Foundation (formerly referredright to designate any properties within the “area of interest” as the Southwest Wildlife Foundation), the Company recorded a note payable for an amount for the initial $45,000 due upon signing of lease and the nine (9) future payments due of $45,000 which has been recorded at its present value discounted with an imputed interest rate of 5% for a total note payable of $364,852. As of the date of this filing, we have not paid the June 2016 or 2017 installment of our surface lease, in the amount of $45,000 each, to the Southwest Wildlife Foundation. As a result, the full amount of the note payable has been classified as currently due.“project area” properties. The note payable balance as of November 30, 2017 $260,000. The Company has also accrued interest expense as of November 30, 2017 of $37,500. This unpaid interest is included in accrued liabilities.

The Foundation has not given notice of default or made any demand for payment as of the date of this filing. However, based upon the Company being in default on the Note Payable there is no guarantee that the Foundation will allow the Company to bring the lease payments current without requiring the Company to provided additional consideration to the Foundation. Consequently, since the Company cannot be guaranteed the ability to utilize the lease due to its current default status, the Company has written off the value of this lease ($1,394,852) as of August 31, 2017. The Company intends to continue with the evaluation of the mineral potential of the property, to ultimately mine the property, and to bring this note payable and its accrued interest current when the funds are available.

Related Party Notes Payable and Advances

On July 1, 2016 the Company received two loans for $2,500 each from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued 5,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $1,185 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.00% (ii) estimated volatility of 185% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 and August 31, 2016 was a total of $5,000. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advances.

On September 1, 2016, the Company entered into five loans totaling $71,500 from five directors of the Company. The loans were due March 1, 2017, are non-interest bearing, and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration for the loans, we issued in total 147,000 common stock purchase warrants. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $57,414 and the warrants have a relative fair value of $14,086 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.180% (ii) estimated volatility of 245% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 and August 31, 2016 was $71,500. The value of the warrant was amortized to interest expense over the term of the note payable.

On November 1, 2016option is for so long as the Company entered into two loans for $4,000continues to conduct exploration activities in the Project Area and $1,000 from two directors of the Company. The loans are non-interest bearing, unsecured and due upon demand. As additional consideration for the loans, we issued 8,000 and 2,000 common stock purchase warrantscan be exercised on 60 days’ notice to each individual. The warrants have an exercise price of $0.10 and term of five years. The warrants had a fair value of $1,057 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.30% (ii) estimated volatility of 181% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $5,000. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.Santa Fe.

On December 12, 2016, the Company entered into a loan for $15,000 a director of the Company. The loan is due June 12, 2017, is non-interest accruing, and unsecured. As of this filing the loan is in default and due upon demand. As additional consideration for the loan, we issued 60,000 common stock purchase warrants to the individual. The warrants have an exercise price of $0.10 and term of five years. The loan has a relative fair value of $10,437 and the warrants have a relative fair value of $4,563 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.90% (ii) estimated volatility of 241% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $15,000. The value of the warrant was amortized to interest expense over the term of the note payable.

On January 12, 2017 the Company entered into two loans totaling $20,000 from a director and an officer of the Company. The loans are due July 12, 2017, are non-interest accruing, and unsecured. As of this filing the loans are in default and due upon demand. As additional consideration for the loans, we issued 40,000 common stock purchase warrants to each individual. The warrants have an exercise price of $0.10 and term of five years. The loans have a relative fair value of $13,542 and the warrants have a relative fair value of $6,458 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.87% (ii) estimated volatility of 240% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $20,000. The value of the warrant was amortized to interest expense over the term of the note payable.

During the three months ended May 31, 2017 the Company entered into eight loans totaling $47,500 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 190,000 common stock purchase warrants. The warrants have an exercise price of $0.17 - $0.21 and a term of five years. The warrants had a fair value of $39,557 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.75% (ii) estimated volatility of 234% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $47,500. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

During the three months ended August 31, 2017 the Company entered into seven loans totaling $82,165 from two directors of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued in total 328,660 common stock purchase warrants. The warrants have an exercise price of $0.20 - $0.23 and a term of five years. The warrants have a fair value of $65,137 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.75% (ii) estimated volatility of 169% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The notes payable balance as of August 31, 2017 was $82,165. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

During the three months ended November 30, 2017 the Company received two advances totaling $16,750 from a director and an officer of the Company. The loans are non-interest accruing, unsecured and due upon demand. As additional consideration for the loans, we issued a total of 67,000 common stock purchase warrants. The warrants have an exercise price of $0.21 - 0.22 and a term of five years. The warrants have a fair value of $12,518 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.88% (ii) estimated volatility of 122% (iii) dividend yield of 0.00% and (iv) expected life of the warrants of five years. The note payable balance as of November 30, 2017 was $16,750. The value of the warrants was expensed as interest expense at the time of issuance due to no stated term on the advance.

NOTE 45 – SHAREHOLDERS’ EQUITY

Capital Stock

OurThe Company’s authorized capital stock consists of 100,000,000 shares of common stock, with a par value of $0.01$0.01 per share, and 10,000,000 preferred shares with a par value of $0.001$0.001 per share.

All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. The sharesShares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by ourthe Company’s Board of Directors (our(the “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Corporation,Company, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.

In October 2022, we issued 26,833 shares of common stock related to director fees earned and expensed during the year ended August 31, 2022.

During the quarter ended November 30, 2022, the Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $49,165 for director’s fees earned during the quarter. The Company issued the related 22,859 shares of common stock in December 2022.

During the quarter ended November 30, 2022, the Company granted a total of 30,000 stock options, with an exercise price of $0.30 per share and a fair value of $55,310 on the date of grant to a consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 4.00% (ii) estimated volatility of 201.75% (iii) dividend yield of 0.00% and (iv) expected life of all options of 5 years. The Company recognized the full $55,310 as compensation expense during the three months ended November 30, 2017, we2022.

During the quarter ended February 28, 2023, the Company recognized $3,474 in stock compensation expense for and a corresponding charge to additional paid-in capital in the amount of $39,502. The Company issued the related 37,313 shares of common stock in March 2023.

During the quarter ended February 28, 2023, the Company granted a total of 30,000 stock options, issued to outside consultants for serviceswith an exercise price of $1.97 per share and $12,518 in interest expense for warrants issueda fair value of $37,905 on the date of grant to a directorconsultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 4.00% (ii) estimated volatility of 201.75% (iii) dividend yield of 0.00% and an officer for advances(iv) expected life of all options of 5 years. The Company recognized the full $37,905 as compensation expense during the three months ended February 28, 2023.

On March 3, 2023, the Company granted options to us.

We had 44,941,533purchase up to 500,000 shares of our common stock outstandingto our Board Chairman for efforts related to negotiating the amended and restated option agreement and other consulting services, with an exercise price of $1.31 per share and a fair value of $637,548 on the grant date. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of November 30, 2017.

NOTE 5.00% (ii) estimated volatility of 193.88% (iii) dividend yield of 0.00% and (iv) expected life of all options of 5 – RELATED PARTY TRANSACTIONS

years. The Company has received advances from certain Directorsrecognized the full $637,548 as compensation expense during the three months ended May 31, 2023.

During the quarter ended May 31, 2023, the Company recognized stock compensation and Officers. The advances totaled approximately $263,000 asa corresponding charge to additional paid-in capital in the amount of November 30, 2017.

$39,500 for director’s fees earned during the quarter. The Company rents office spaceissued 37,313 of the related 49,540 shares of common stock in April 2023 and the remaining 12,227 shares in June 2023.

Texas Mineral Resources Corp.

Notes to Interim Consolidated Financial Statements

May 31, 2023

(Unaudited)

During the quarter ended May 31, 2023, the Company granted options to purchase up to 30,000 shares of common stock, with an exercise price of $1.97 per share and a fair value of $28,652 on a month to month basisthe date of $1,600 from a former director. This space is currently subleasedgrant to a tenant.consultant. The fair value of the options was determined using the Black-Scholes option-pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 4.00% (ii) estimated volatility of 201.75% (iii) dividend yield of 0.00% and (iv) expected life of all options of 5 years. The Company recognized the full $28,652 as compensation expense during the three months ended May 31, 2023.

During the quarter ended May 31, 2023, the holders of 110,000 common stock options were exercised for total cash consideration of $38,000. The exercise price of the common stock options ranged from $0.22 to $0.45.

In January 2020, the Company entered into three separate consulting agreements for total consideration of 699,999 shares of common stock (233,333 per agreement). The common stock underlying the agreements had a total value of $448,000, based on the $0.64 quoted market price of the common stock on the agreement date. The right to receive the common stock is subject to ratable vesting over a 24-month period and at August 31, 2022, all 699,999 shares had vested and 87,501 had been issued. The consultants had requested that the Company hold the remaining shares issuable under the agreements in trust to allow the consultants to request their shares as they vest. During the three months ended May 31, 2023, the Company issued the remaining 612,498 shares under the agreement.

NOTE 6 – SUBSEQUENT EVENTS

In December 2017 certainOn June 26, 2023, the Company, USARE and the manager amended and restated the Operating Agreement and the following material amendments to the Operating Agreement were adopted:

Material Amendments

Cash Calls

On the basis of the adopted program and budget then in effect, the manager will submit to each member monthly cash calls at least 10 days before the last day of each month, and within 10 days of receipt, (a) USARE will pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest and (b) the Company will either (i) pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest, or (ii) deliver to RTMD a written notice indicating what amount, if any, of the applicable estimated cash requirements that the Company will contribute (the “Notice of Non-Contribution”). Failure by the Company to deliver payment of its proportionate share of the estimated cash requirements, as an additional capital contribution, or to deliver a Notice of Non-Contribution within the 10 day period shall automatically be considered a “Deemed Non-Contribution” and shall have the same effect as if the Company provided a timely Notice of Non-Contribution with respect to non-contribution of its entire proportionate share of the applicable cash call.

Remedies for Failure to Meet Cash Calls

Non-Contribution. Capital contributions only will be made to fund programs and budgets. If the Company does not contribute all or any portion of any additional capital contribution that it is required to contribute pursuant to a Notice of Non-Contribution or a Deemed Non-Contribution (such unfunded amount shall be deemed the “Shortfall Amount”), then USARE shall fund the entire Shortfall Amount within 5 business days after the Notice of Non-Contribution or Deemed Non-Contribution.

Dilution. Upon the contribution of the Shortfall Amount by USARE, the interests of the members of our Board lent the company $14,000 with no stated termwill be recalculated based on the advances and no interest.adjustment provision set forth below in the sub-heading “– Adjustment of Interests”.

Maximum Dilution. The Boarddilution of the Company shall not fall below a 3% interest in RTMD (the “Minimum Percentage Interest”). Upon the contribution by USARE of a Shortfall Amount which otherwise would result in a dilution of the Company below the Minimum Percentage Interest, USARE will receive a priority distribution of available cash, in addition to a distribution of available cash to which USARE otherwise is entitled to receive as a result of its proportionate additional capital contribution pursuant to the applicable cash call request, up to the Shortfall Amount that would have resulted in the Company’s interest being further diluted but for the Minimum Percentage Interest (the “Priority Distribution”). The Priority Distribution will continue until USARE has been reimbursed for its contribution of the Shortfall Amount that would have resulted in the Company having an interest below the Minimum Percentage Interest, after which time the members were also issued 56,000 warrants that will be valued during our second fiscal quarter ending February 28, 2018 using the Black-Scholes model.shall receive distributions of available cash pro rata in proportion to their respective interests.

Texas Mineral Resources Corp.

Notes to Interim Consolidated Financial Statements

May 31, 2023

(Unaudited)

Adjustment of Interests.

If USARE contributes the Shortfall Amount, then the then current interest of the Company will be reduced (subject to the Minimum Percentage Interest), effective as of each cash call under an additional capital contribution for the applicable program and budget, by a fraction, expressed as a percentage:

●            the numerator of which equals the Shortfall Amount actually funded by USARE; and

●            the denominator of which equals the market capitalization of the Company.

Distributions

Cash in excess of authorized reserves will be distributed to the members pro-rata in proportion to their respective interests on a periodic basis as determined by the management committee. RTMD will be required to make tax distributions to each member. Once USARE has been paid the Priority Distribution, if applicable, all distributions made in connection with the sale or exchange of all or substantially all of RTMD’s assets and all distributions made in connection with the liquidation of RTMD will be made to the members pro-rata in accordance with their respective interests.

July Cash Call

On June 28, 2023, we notified USARE that we had elected not to contribute our proportionate interest of $166,800 in cash to satisfy our portion of the July 2023 aggregate cash call of $834,000, but had elected to reduce our RTMD ownership interest from 20% to 19.951% pursuant to the dilution mechanism in the June 2023 amended Operating Agreement.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Texas Mineral Resources Corp,” “the Company” “we,” “our” or “us” refer to Texas Mineral Resources Corp.You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report.report as well as our Annual Report on Form 10-K for the fiscal year ended August 31, 2022. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

This list is not exhaustive of the factors that may affect ourthe Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading “Item 2. Management’sheadings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report, and “Item 1A. Risk Factors”as well as in ourthe Annual Report filed on Form 10-K for the fiscal year ended August 31, 2017, filed with2022. Although the SEC on December 14, 2017. Although we haveCompany has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We cautionThe Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, we disclaimthe Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statementsstatements..

Overview

In light of these risks and uncertainties, many of which are described in greater detail elsewhere in this Quarterly Report, as well as in the Annual Report filed on Form 10-K for the fiscal year ended August 31, 2022, there can be no assurance that the events predicted in forward-looking statements contained in the Quarterly Report will in fact transpire.

An investment in our common stock involves significant risks, including the risk of a loss of your entire investment. You should carefully consider the risks and uncertainties described herein before purchasing our common stock. The risks set forth herein are not the only ones facing our Company. Additional risks and uncertainties may exist and others could arise that could also adversely affect our business, financial condition, operations and prospects. If any of the risks set forth herein actually materialize, our business, financial condition, prospects and operations would suffer. In such event, the value of our common stock would decline, and you could lose all or a substantial portion of your investment.

Going Concern

These financial statements have been prepared assuming that the Company will continue as a going concern. The Company has an accumulated deficit from inception through May 31, 2023, of approximately $41,945,000 and has yet to achieve profitable operations, and projects further losses in the development of its business.

On May 31, 2023, the Company had a working capital surplus of approximately $1,352,000, however the Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. See “Liquidity and Capital Resources” below for a discussion of our liquidity and capital needs for the next twelve months.

Overview

We are a mining company engaged in the business of the acquisition, exploration and if warranted, development of mineral properties. We currently holdown a 19.951% membership interest in RTMD (as of May 31, 2023 we held a 20% membership interest in RTMD), which entity holds two nineteen yearmineral property leases executed in September 2011 and November 2011,with the Texas General Land Office to explore and develop a 950 acre950-acre rare earths project located in Hudspeth County, Texas, known(referred to as the “Round Top Project” or the “Project”). The leases, originally signed with primary terms of approximately 19 and 18 years, each currently have remaining terms of approximately eight years and provisions for automatic renewal if Round Top is in production. RTMD also holds prospecting permits covering 9,345 acres adjacent to the Round Top Project and prospecting permits covering an adjacent 9,345 acres. Our principal focus will be on developingProject. The strategy of RTMD is to develop a metallurgical process to concentrate or otherwise extract the metals from the Round Top Project’s rhyolite, although we will continueconduct additional engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study and then to examine other opportunities inextract mineral resources from the region as they develop. We currently have limited operations and haveRound Top Project. The Round Top Project has not established as of the date hereof that any of our projects orthe properties contain any Provenprobable mineral reserves or Probable Reservesproven mineral reserves under SEC Industry Guide 7.Item 1300 of Regulation S-K.

Rare earth elements (“REE”) are a group of chemically similar elements that usually are found together in nature – they are referred to as the “lanthanide series.” These individual elements have a variety of characteristics that are critical in a wide range of technologies, products, and applications and are critical inputs in existing and emerging applications. Without these elements, multiple high-tech technologies would not be possible. These technologies include:

Because of these applications, global demand for REE is projected to steadily increase due to continuing growth in existing applications and increased innovation and development of new end uses. Interest in developing resources domestically has become a strategic necessity as there is limited production of these elements outside of China. Our operations are exploratoryability to raise additional funds to continue to fund our participation interest in nature.the Round Top Project may be impacted by future prices for REEs.

The Company accounts for its interest in RTMD using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rate share of the assets, liabilities, and operations of RTMD in the appropriate classifications in the financial statements.

USARE has been working diligently to complete the preliminary feasibility study (“PFS”) that was originally anticipated to have been completed in 2022; however, various technical improvements have caused USARE to rework portions of the study with the goal to improve capex, opex, and throughput in certain sections of the PFS. We currentlybelieve USARE is making progress towards completion of the PFS with the goal to maximize its economic impact. There can be no assurance that any results of the PFS will be positive or lead to commercialization of the project.

USA Rare Earth Agreement

In August 2018, the Company and Morzev Pty. Ltd. (“Morzev”) entered into an agreement (the “2018 Option Agreement”) whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the Round Top Project by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. In August 2019, the Company and USA Rare Earth, LLC (“USARE”) entered into an amended and restated option agreement as further amended in June 2020 (the “2019 Option Agreement” and collectively with the 2018 Option Agreement, the “Option Agreement”), whereby the Company restated its agreement to grant USARE the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in Round Top. In May 2021, and in accordance with the terms of the Option Agreement, the Company and USARE entered into a contribution agreement (“Contribution Agreement”) whereby each of the Company and USARE contributed assets to Round Top Mountain Development, LLC (“RTMD”), a wholly-owned subsidiary of the Company, in exchange for their ownership interests in RTMD, a membership interest equating to 20% of RTMD issued to the Company and a membership interest equating to 80% of RTMD issued to USARE. Concurrently therewith, the Company and USARE, as the two members, entered into a limited liability company agreement (“Operating Agreement”) governing the operations of RTMD which contains customary and industry standard terms as contemplated by the Option Agreement. USARE is the manager of RTMD.

Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to RTMD in exchange for its 20% membership interest in RTMD:

and USARE assigned the following assets to RTMD (or the Company, as applicable) for its 80% membership interest in RTMD:

On June 26, 2023, the Company, USARE and the manager amended and restated the Operating Agreement and the following material amendments to the Operating Agreement were adopted:

Cash Calls

On the basis of the adopted program and budget then in effect, the manager will submit to each member monthly cash calls at least 10 days before the last day of each month, and within 10 days of receipt, (a) USARE will pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest and (b) the Company will either (i) pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest, or (ii) deliver to RTMD a written notice indicating what amount, if any, of the applicable estimated cash requirements that the Company will contribute (the “Notice of Non-Contribution”). Failure by the Company to deliver payment of its proportionate share of the estimated cash requirements, as an additional capital contribution, or to deliver a Notice of Non-Contribution within the 10 day period shall automatically be considered a “Deemed Non-Contribution” and shall have the same effect as if the Company provided a timely Notice of Non-Contribution with respect to non-contribution of its entire proportionate share of the applicable cash call.

Remedies for Failure to Meet Cash Calls

Non-Contribution. Capital contributions only will be made to fund programs and budgets. If the Company does not contribute all or any portion of any additional capital contribution that it is required to contribute pursuant to a Notice of Non-Contribution or a Deemed Non-Contribution (such unfunded amount shall be deemed the “Shortfall Amount”), then USARE shall fund the entire Shortfall Amount within 5 business days after the Notice of Non-Contribution or Deemed Non-Contribution.

Dilution. Upon the contribution of the Shortfall Amount by USARE, the interests of the members will be recalculated based on the adjustment provision set forth below in the sub-heading “– Adjustment of Interests”.

Maximum Dilution. The dilution of the Company shall not fall below a 3% interest in RTMD (the “Minimum Percentage Interest”). Upon the contribution by USARE of a Shortfall Amount which otherwise would result in a dilution of the Company below the Minimum Percentage Interest, USARE will receive a priority distribution of available cash, in addition to a distribution of available cash to which USARE otherwise is entitled to receive as a result of its proportionate additional capital contribution pursuant to the applicable cash call request, up to the Shortfall Amount that would have resulted in the Company’s interest being further diluted but for the Minimum Percentage Interest (the “Priority Distribution”). The Priority Distribution will continue until USARE has been reimbursed for its contribution of the Shortfall Amount that would have resulted in the Company having an interest below the Minimum Percentage Interest, after which time the members shall receive distributions of available cash pro rata in proportion to their respective interests.

Adjustment of Interests.

If USARE contributes the Shortfall Amount, then the then current interest of the Company will be reduced (subject to the Minimum Percentage Interest), effective as of each cash call under an additional capital contribution for the applicable program and budget, by a fraction, expressed as a percentage:

●           the numerator of which equals the Shortfall Amount actually funded by USARE; and

●           the denominator of which equals the market capitalization of the Company.

Distributions

Cash in excess of authorized reserves will be distributed to the members pro-rata in proportion to their respective interests on a periodic basis as determined by the management committee. RTMD will be required to make tax distributions to each member. Once USARE has been paid the Priority Distribution, if applicable, all distributions made in connection with the sale or exchange of all or substantially all of RTMD’s assets and all distributions made in connection with the liquidation of RTMD will be made to the members pro-rata in accordance with their respective interests.

Other material terms of the Operating Agreement that remain unchanged are as follows:

Management.

A management committee will make the major decisions of RTMD, such as approval of the respective program and budget, and the manager will implement such decisions. The management committee consists of three representatives of the members, with two being appointed by USARE and one by the Company (initially being Dan Gorski). The representatives vote the ownership percentage interests of their appointing member.

Management Committee Meetings.

Meetings will be held every three months unless otherwise agreed. For matters before the management committee that require a vote, voting is by simple majority except for certain “major decisions” that require a unanimous vote. So long as the Company maintains a 15% or greater ownership interest, the nine decisions identified in the bullet points below require unanimous approval. If the Company’s ownership interest falls below 15%, the number of unanimous decisions is reduced to five (being the first five bullet points below). If the Company is acquired by a REE mining company or sells its ownership interest to a REE mining company, in each case who elects a majority of the Company’s board, this unanimous approval requirement can be suspended by USARE, at its option. The major decisions requiring unanimous approval, as set forth above, are:

Manager.

The manager will manage, direct and control operations in accordance with program and budget, will prepare and present to the management committee a proposed program and budget, and will generally oversee and implement all of the day to day activities of RTMD. The manager will conduct necessary equipment and materials procurement and property and equipment maintenance activities, with all operations to be conducted in accordance with adopted program and budget.

Permitted Transfers.

Certain transfers are permitted under the Operating Agreement, including transfers to affiliates or through certain mergers or other forms of business reorganization. A member may also encumber its ownership interest provided that if the ownership interest is foreclosed upon, the other member has a pre-emptive right to acquire such ownership interest at the foreclosure sale. If the transfer is a “permitted transfer,” the transferee is automatically admitted as a member; otherwise unless the other member agrees, the transferee is only an economic interest holder with no voting or other rights held by a member.

Right of First Offer.

If a member desires to transfer all or a portion of its ownership interest to a third party (other than a permitted transfer), it may do that without the consent of the other member so long as it gives the other member the first right to purchase its ownership interest on the same terms. If the other member does not elect to purchase the ownership interest on such terms, the member may sell its ownership interest on such terms and the transfer will be a permitted transfer.

Drag-Along Right.

If USARE accepts a bona fide offer to purchase its entire ownership interest and all other rights under the Operating Agreement from an unrelated third party, the Company will then be obligated to sell its entire ownership interest and all other rights under the Operating Agreement to the unrelated third party on the same terms and conditions as are accepted by USARE.

Santa Fe Project

In November 2021, the Company entered into a mineral exploration and option agreement with Santa Fe Gold Corporation (“Santa Fe”). Under the option agreement, the Company and Santa Fe plan to pursue, negotiate and subsequently enter into a joint venture agreement to jointly explore and develop a target silver property to be selected by the Company among patented and unpatented mining claims held by Santa Fe within the Black Hawk Mining District in Grant County, New Mexico. Completion of a joint venture agreement, if any, is subject to the successful outcome of a multi-phase exploration plan leading to a bankable feasibility study to be undertaken in the near future by the Company. Under the contemplated terms of the proposed joint venture agreement, the Company would be project operator and initially own 50.5% of the joint venture while Santa Fe would initially own 49.5%. Additional terms of the joint venture are expected to be negotiated between the Company and Santa Fe in the future. 

Under the terms of the option agreement, the Company plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, consisting of geologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based on the district-wide evaluation, the Company will designate one 80-acre tract as the “project area” and commence detailed exploration work. The property covered in the option agreement is approximately 1,300 acres and covers approximately 75% of the known mining district. The area to be studied also includes a two-mile radius “area of interest.” The option agreement provides the Company with the right to designate any properties within the “area of interest” as “project area” properties. The term of the option is for so long as the Company continues to conduct exploration activities in the Project Area and can be exercised on 60 days’ notice to Santa Fe. There can be no assurance any joint venture agreement or financing agreement will be consummated, that this project will materialize, or if it materializes that it will be commercially viable. 

The Black Hawk district is one of a famous, but rare, geologic type of mineral deposit typically characterized by small but high-grade ore bodies often containing silver, cobalt, nickel, uranium and arsenic. Silver principally occurs in “native” form. The district was discovered in the early 1880’s and mining was active until the collapse of the silver price after it was de-monetized in 1892. Because of their small size and random distribution, the small lens like “ore shoots” are practically impossible to locate by conventional exploration methods. If a method of finding these ore bodies can be developed, of which there is no assurance, we believe economic potential may exist.

Geologically, this class of mineral deposit is called the “Five Element Veins.” The silver occurs in native form and its grades are typically measured in percent. Nickel and cobalt occur as arsenides while the uranium as the oxide uraninite. Other metals such as zinc and bismuth can occur but seldom in economically important quantities. Approximately thirteen of these types of deposits have been identified, all but one in either Europe or North America. In spite of their rarity, these districts have traditionally been economically important. The European deposits were mined for silver in the 15^th, 16^th and 17^th centuries and later for uranium during the Soviet era. The Cobalt district in Ontario was discovered during railroad construction in 1903 and by the 1930’s had produced a reported 460 million ounces. The other principal Canadian producer, referred to as the Port Radium or the Echo Bay district, began in the 1930’s as a radium mine, later became a uranium producer after World War II and finally an important silver district after 1968 when the United States demonetized silver, for the second time. Districts of this type are aerially small. The carbonate veins are typically 6 to 18 inches wide. Individual ore bodies, “ore shoots”, are small and randomly distributed; an ore lens measuring 100x50 feet would be considered exceptionally large.

Based on comparison with the mining districts in Europe and Canada, and the history and geology of the Black Hawk district, we are intrigued by this district. Because of their small size and random distribution these “lenses” cannot be cost effectively located and developed by surface drill holes from the surface. However, because of the high silver, nickel and cobalt grades historically present in these types of veins, we believe that there is a possibility that they potentially contain enough metal to be electrically conductive, thus could be detectable by geophysical methods. The geophysical method holding the highest potential for detecting these “ore shoots” is believed to be the time domain electromagnetic (TDEM) system. TDEM has proven effective in locating large and deeply buried massive sulfide ore deposits. A system marketed by Zonge International, as NANOTEM, is used to detect small metal objects such as pipe, tanks and unexploded ordinance. We believe that the targets sought at Black Hawk fall between the capabilities of these two applications. It was decided to modify the small scale TDEM method, NANOTEM, to this survey.

A trial scoping survey was conducted in June 2021. Based on preliminary assessment, it was decided to modify and expand this survey. Lines were carefully laid out, surveyed and brush cut to facilitate accurate station placement. The initial “scoping” survey had indicated anomalous conductivity along the southeast margin of Alhambra current loops, and the Phase 2 arrays were extended 250 feet to the east-south-east to cover this area. This follow up survey was completed in February 2022. Potential electrical conductors were identified of sufficient size and depth extension to be regarded as drill “targets.” Further processing and analysis of these data is in progress. A third phase of geophysical investigation was planned and carried out in February 2023. There is no assurance that this project is economically feasible or that any producing properties and consequently, we have no current operating income or cash flow and have not generated any revenues. Furtherfurther exploration will be required beforeconducted.

Liquidity and Capital Resources

On May 31, 2023, our accumulated deficit was approximately $41,945,000 and our cash position was approximately $1,375,000. We had a final evaluation as to the economic and practical feasibilityworking capital surplus of any of our properties is determined.

On December 23, 2013, we published a revised version of the June 2012 Preliminary Economic Assessment (the “Revised PEA”)approximately $1,352,000. Round Top has not commenced commercial production on the Round Top Project basedProject. We have no revenues from operations and anticipate we will have no operating revenues until we place one or more of our properties into production. All properties are in the exploration stage.

During the fiscal year ending August 31, 2022 and the nine months ended May 31, 2023, we funded approximately $1,937,000 and $386,000, respectively, to RTMD pursuant to our funding obligations set forth in the Operating Agreement. USARE funded approximately $8,402,000 and $1,545,600, respectively, to RTMD in connection with advancing the Round Top Project.

During the fourth quarter of this fiscal year, RTMD notified the Company and USARE of a July 2023 capital call in the aggregate amount of $834,000 and, on a 20,000 tonne per day heap leach operation using a conventional element separation plant. The mineralized material estimate was recalculated to include uranium, niobium, tantalum and tin. The revised PEA assesses the potential economic viability of the simplified and “scaled down” operation whichJune 28, 2023, we believe is a much better fit with the present rare earth market.

On September 8, 2014, we announcednotified USARE that we had completed an internal analysis suggestingelected not to contribute our proportionate interest of $166,800 in cash to satisfy our portion of the July 2023 aggregate cash call of $834,000, but had elected to have USARE fund our portion and to reduce our RTMD ownership interest from 20% to 19.951% pursuant to the dilution mechanism in the June 2023 amended Operating Agreement. We expect that there iswill likely be additional capital calls during the next 12 months, as RTMD plans to continue its efforts towards completing a reasonable possibilitybankable feasibility study which includes work to adapt a lower volume staged growth approach to development of our Round Top project. The analysis indicated that an operation designed to produce a selected group of separated REE products inoptimize the range of 350-450 tonnes per year range, could potentially yield favorable mine economics. The goalleaching and developing of the proposed staged approach would be to increase mining rates if and when our products gained acceptability. The analysis suggested that capital needs in the Revised PEA could be proportionally reduced in relation to the lower volume initial stage. We are currently conducting a more detailed analysis of the relative capital expenses and operating expenses requirements of a scaled downCIX/CIC processing plant with both solvent extraction and ion exchange processes under evaluation. We believe the lower capital requirements of a staged startup could offset any marginal increase in unit operating costs.

Our current management and Board are stockholder-centric, and receive either no cash compensation or compensation that has been accrued. We will require definitive scientific documentation, rigorous economic studies, consideration of a wide range of alternatives and meticulous oversight of any cash outlays of stockholder funds.

Current Plan of Operations

Continued Work Program on Round Top Project

See “Properties – Current and Planned Metallurgical Activities” for a description of our current work activities and budget for the Round Top Project.

Exploration Potential of the Round Top Property

Although we have no plans in the next 24 months to conduct more physical exploration, we do believe, as stated in our 2010 presentations, that there are untested exploration targets present. They are:

We believe that using the existing data we can improve our understanding of the exploration potential of the area without resorting to such expensive techniques such as drilling.

Actively Seeking Project Partners

In addition to pursuing the exploration of our Round Top Project, we are actively seeking industry partners to assist the Company in financing the exploration and, if warranted, development of the Round Top Project. While we do not currently have any agreements and do not anticipate any agreementsInitial process design work will be carried out at USARE’s facility in Wheat Ridge, Colorado. Pending completion of the near future, we are actively engaged in pursuing partners forinitial process development, this facility may either be relocated to or replicated at the Round Top Project forwhere a rangepilot plant is expected to be established. This work may consist of participation, including but not limitedsetting up and equipping a facility to joint-venture arrangements, project sale, significant investment in the Company, back-end processing and product sales arrangements and other financing arrangements to assist inconduct pilot plant scale heap leaching. It is estimated that the Round Top Project.

OperationProject will require additional time and supportfurther expenditure to complete a bankable feasibility study. Each of the DoE Grant.

Approximately 25% of TMRC’ effortsCompany and USARE will be allocatedresponsible to completing itsfund their pro-rata share of these expenses, and unless we have sufficient cash to fund our pro rata share, we will likely request that USARE fund our pro-rata share of the Phase 1obligation and reduce our RTMD ownership interest pursuant to the dilution mechanism established in the June 23 amendment to the Operating Agreement. As of the DoE grant. Our role in this grant isdate hereof, we don’t know the amount of expenditures for the RTMD budget for the next 12 months.

We do not have sufficient cash on hand to acquirefund our portion of the samples, evaluate the primary and alternate sites, conduct the economic evaluation and co-ordinate the project.

Operation of American Minerals Reclamation

Absent the securing of feasibility financing for Round Top budget for the remainder of TMRC plans to actively pursue the development of American Minerals Reclamation (AMR). We have set no geographical limitations onnext 12 months, assuming that capital calls are requested during this project butperiod. Therefore, we are currently basing our efforts in the Pennsylvania coal producing region because of the excellent opportunities present there and existence of the network of people and institutions that have been developed during the grant application process.

Liquidity and Capital Resources

As of November 30, 2017, we had a working capital deficit of approximately $1,601,000. We currently have no working capital and will either (i) need to raise additional funding to implementfund our business strategy.

Duringportion of the fiscal year ended August 31, 2017, we completed Stage 1ofRound Top budget or (ii) elect to have USARE fund our metallurgical activities as discussedportion and then reduce our interest in RTMD pursuant to the dilution mechanism set forth in the section heading “ITEM 2. PROPERTIES” of this Annual Report. Our budget for this stage of activity was approximately $134,502. To dateJune 2023 amendment to the Operating Agreement. Additionally, we have expended approximately that amount on Stage 1 which is now complete. Estimated cost of Stage 2 is $2,015,454, $336,454will likely need to raise additional capital during the next 12 months to fund our corporate business strategy and general and administrative expenses, the failure of which has been spent; this phase, called milestone 1,could cause us to curtail or cease our operations or otherwise adversely affect us. If we determine to reduce our ownership interest in RTMD, we would conserve cash and not dilute the common stock holders of Stage 2 has been modifiedthe Company through equity financings at the Company level. If we elect to raise equity capital at the Company level, the most likely source of future financing presently available to us is through the sale of our securities. Any sale of our shares of common stock will result in dilution of equity ownership to existing stockholders. This means that if we sell shares of common stock, more shares will be outstanding and augmented byeach existing stockholder will own a smaller percentage of the Defense Logistical Agency. Thereshares then outstanding. We may rely on debt financing (which could be in the form of convertible debt) and we may issue or grant warrants or options in the future pursuant to which additional shares of common stock may be issued. Exercise of such warrants or options (or conversion of debt) will result in dilution of equity ownership to our existing stockholders. We have no firm commitment with respect to obtaining debt or equity financing and, accordingly, we will be reliant upon a best efforts financing strategy. Accordingly, there is no guaranteeassurance that we will be able to raise the working capital necessary for balance of Stage 2 activities. After completion of Stage 1, we will use any remaining available capital to begin work on Stage 2fund either (i) our portion of the Round Top budget (in which event we would elect to have USARE fund our metallurgical activities.

The audit opinionportion of the cash contributions and notes that accompanyagree to allow our financial statements forinterest in RTMD to be reduced per the year ended August 31, 2017, disclose a ‘going concern’ qualification toJune 2023 amended Operating Agreement) or (ii) our ability to continue in business. The accompanying financial statements have been prepared under the assumption that we will continue as a going concern. We are an exploration stage company and we have incurred losses since our inception. We do not have sufficient cash to fund normal operations and meet debt obligations forgeneral administrative expenses during the next 12 months without deferring payment on certain current liabilities and raising additional funds. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured.months.

We currently do not have funds to pursue exploration or development work on any of our properties, which means that we will be required to raise additional capital, enter into joint venture relationships, or find alternative means to finance our properties in order to place them into commercial production, if warranted, or evaluate the possibility of selling one or more of our projects or the Company in its entirety. Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration and, if warranted, development or production on one or more of our properties and any properties we may acquire in the future or even a loss of property interests. This includes our leases over claims covering the principal deposits on our properties, which may expire unless we expend minimum levels of expenditures over the terms of such leases. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Our ability to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as our business performance.

Results of Operations

ThreeNine months ended November 30, 2017May 31, 2023 and November 30, 2016May 31, 2022

General &and Revenue

We had no operating revenues during the threenine months ended November 30, 2017May 31, 2023 and November 30, 2016.May 31, 2022. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $34.7$41.9 million as of November 30, 2017.May 31, 2023.

Operating expenses, other income (expenses) and resulting losses from Operations.

We incurred exploration costs for the threenine months ended November 30, 2017May 31, 2023 and November 30, 2016,May 31, 2022, in the amount of approximately $6,750$721,000 and $3,250,$1,102,000, respectively. The expenditures for the nine months ended May 31, 2023 and the nine months ended May 31, 2022 were primarily for leaching at the Round Top lab and to a limited extent, exploration costs for the Black Hawk project in New Mexico. For the nine months ended May 31, 2022, significant costs were incurred for Round Top as a result of mining and transporting approximately 30,000 metric tonnes of rhyolite from the deposit site to the planned demonstration plant site. There was also considerable earth work done at the site of the production plant to divert storm runoff water. In addition, we began contracting various consulting groups to commence the designing of the Round Top mine, heap leaching plant and processing plant. During the nine months ended May 31, 2023 and 2022, exploration expenditures for mining activities at Round Top were funded by RTMD. We account for our interest in RTMD under the proportional consolidation method. Under the proportional consolidation method, we record our share of expenses of RTMD within the income statement in the same line items that we would if we were to consolidate our financial statements with RTMD. During the nine months ended May 31, 2023, we spent approximately $256,000 on project related costs for the Santa Fe Project that commenced during the current fiscal year.

Our general and administrative expenses for the threenine months ended November 30, 2017May 31, 2023 and November 30, 2016,May 31, 2022, respectively, were approximately $91,000$1,497,000 and $120,000.$987,000. For the threenine months ended November 30, 2017,May 31, 2023 and 2022, this amount included approximately $3,400$888,000 and $404,000, respectively, in stock-based compensation to andirectors and common stock and stock options to outside consultant.consultants. The remaining expenditures totaling approximately $87,700 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the nine months ended May 31, 2023 and May 31, 2022, we earned approximately $24,600 and $4,600 in interest income from depository accounts. We recorded a loss on the transfer of one of our vehicles to RTMD in the amount of approximately $22,700.

We had losses from operations for the nine months ended May 31, 2023 and May 31, 2022 totaling approximately $2,218,000 and $2,088,000, respectively.

We had a net losses for the nine months ended May 31, 2023 and May 31, 2022 totaling approximately $2,193,000 and $2,084,000, respectively.

Three months ended May 31, 2023 and May 31, 2022

Revenue

We had no operating revenues during the three months ended May 31, 2023 and May 31, 2022. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $41.9 million as of May 31, 2023.

Operating expenses and resulting losses from Operations.

We incurred exploration costs for the three months ended May 31, 2023 and May 31, 2022, in the amount of approximately $91,000 and $519,900, respectively. Expenditures during the three months ended May 31, 2022 were primarily for our Round Top project. During the three months ended May 31, 2023, we spent approximately $91,000 on a survey and other project related costs for the Santa Fe Project that commenced during the current fiscal year.

Our general and administrative expenses for the three months ended November 30, 2016May 31, 2023 and May 31, 2022, respectively, were approximately $870,000 and $295,000. For the three months ended May 31, 2023 and May 31, 2022, this amount included approximately $12,000$706,000 and $112,000, respectively, in stock-based compensation to andirectors and outside consultant.consultants. The remaining expenditures totaling approximately $107,000 were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the three months ended November 30, 2017May 31, 2023 and November 30, 2016May 31, 2022, we recorded interest expense ofearned approximately $18,500$9,700 and $5,200, respectively. For the three months ended November 30, 2017, this amount included approximately $12,500$1,200, respectively, in interest expense related to warrants issued with advancesincome from certain officers and directors.depository accounts.

We had losses from operations for the three months ended November 30, 2017May 31, 2023 and November 30, 2016May 31, 2022 totaling approximately $98,000$962,000 and $123,000, respectively.$815,000.

We had net losses for the three months ended November 30, 2017May 31, 2023 and November 30, 2016May 31, 2022 totaling approximately $116,000$952,000 and $128,000,$814,000, respectively.

Investment Company Act Exclusion

Section 3(c)(9) of the Investment Company Act of 1940, as amended (“1940 Act”), provides that a company “substantially all of whose business consists of owning or holding oil, gas, or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts relative to such royalties, leases, or fractional interests” is not an investment company within the meaning of the 1940 Act. The Company has determined that this exemption applies to it giving consideration to the following four factors: