Executive Summary / Key Takeaways

• Thunder Mountain Gold ($THMG) is an exploration-stage company primarily focused on advancing its South Mountain gold, silver, and base metals project in Idaho, representing the core of its investment thesis.
• The company reported a significantly increased net loss in Q1 2025, driven by higher exploration expenditures related to South Mountain and substantial stock-based compensation expenses.
• THMG faces a critical liquidity challenge, with insufficient cash to cover operating commitments for the next 12 months, raising substantial doubt about its ability to continue as a going concern without further financing.
• Recent strategic moves, including a partnership with MFD Investment Holdings and approved private placement financings totaling $1.82 million (including the recently closed $1.2M), are aimed at funding the South Mountain Project's advancement towards a Preliminary Economic Assessment (PEA).
• The investment outlook is highly speculative, dependent on successful exploration, favorable study results, and the company's ability to secure consistent, sufficient funding in a competitive and volatile market environment.

Setting the Scene: An Explorer's Journey and the South Mountain Focus

Thunder Mountain Gold, Inc. ($THMG) traces its roots back to 1935, evolving from its initial focus in the Thunder Mountain Mining District to its current identity as a junior mineral exploration company centered on the South Mountain Project in southwest Idaho. This strategic shift, marked by the divestiture of its original holdings in 2005 and the acquisition of South Mountain in 2007, defines the company's present-day mission: to explore and potentially develop this polymetallic (gold, silver, zinc, lead, copper) deposit.

Operating within the highly competitive junior mining sector, THMG vies for capital and promising mineral properties against numerous peers, many of whom possess significantly greater financial and technical resources. Companies like Hecla Mining (HL) and Coeur Mining (CDE) represent larger, producing entities with diversified portfolios and established operational scale, while Timberline Resources (TLRS) operates as a more direct peer in the exploration space within the Western U.S. THMG's strategic positioning emphasizes a focus on properties in politically stable regions like Idaho and Nevada, coupled with an operational approach that seeks cost efficiencies, particularly through its holdings on private land at South Mountain. This focus on private land, encompassing leased acreage adjacent to its patented and unpatented claims, offers a potential advantage by potentially streamlining permitting processes compared to projects solely on public lands.

However, THMG operates at a significant disadvantage in terms of scale and financial robustness when compared to larger competitors. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, THMG's current exploration-stage status means it generates no revenue, contrasting sharply with producing companies like Hecla and Coeur. Even against exploration peers like Timberline, THMG has historically shown lower revenue growth (flat in recent years) and poorer margins, reflecting its earlier stage of development and limited operational footprint.

The South Mountain Project: Ambition Meets Reality

The South Mountain Project stands as the cornerstone of THMG's value proposition. The company's wholly owned subsidiary, South Mountain Mines, Inc. (SMMI), manages the project through a lease and option agreement with Owyhee Gold Trust, LLC (OGT), in which THMG holds a 75% interest. The current strategic objective is clear: advance the project through critical technical and economic studies, specifically targeting the completion of a Preliminary Economic Assessment (PEA).

Advancing a project to PEA involves significant technical work, including updating mineral resource estimates, baseline environmental studies, and initial engineering. THMG's operational approach relies on standard exploration methods, including drilling and sampling, supported by a Quality Assurance/Quality Control (QA/QC) program involving duplicates, standards, and blanks to verify assay results. Independent consultants conduct site visits and audit databases to ensure compliance with regulatory standards like Subpart 1300 of Regulation S-K, which governs mineral property disclosures. While information does not detail proprietary technological breakthroughs in extraction or processing, their technical rigor in resource estimation and compliance is crucial for building investor confidence in the project's potential. This contrasts with larger peers like Hecla or Coeur, who may employ more advanced processing technologies that offer quantifiable benefits like higher recovery rates or faster throughput, areas where THMG currently lags.

A key recent development bolstering the South Mountain effort is the strategic partnership announced in January 2025 with Swiss-based MFD Investment Holdings SA. MFD has committed $1 million towards project-related expenditures and is providing technical support, in exchange for an option to earn a 10% interest. This partnership is vital, adding both financial strength and technical expertise to accelerate the project's technical studies.

Financial Performance: A Snapshot of Exploration Costs

As an exploration company, THMG's financial statements primarily reflect expenditures rather than revenue. The first quarter of 2025 highlighted the costs associated with advancing the South Mountain Project and managing corporate overhead.

For the three months ended March 31, 2025, THMG reported a net loss of $540,300, a significant increase compared to a net loss of $205,560 in the same period of 2024. This widening loss was primarily driven by two factors:

• Increased Exploration Expenses: Exploration costs rose substantially by 234%, from $20,075 in Q1 2024 to $67,073 in Q1 2025. This increase is directly attributable to project-related expenses aimed at advancing the South Mountain Mine project, aligning with the company's stated strategy.
• Higher Management and Administrative Expenses: These expenses saw a dramatic 351% increase, climbing from $95,040 in Q1 2024 to $428,463 in Q1 2025. The principal driver for this surge was $325,815 in stock-based compensation expense recognized from stock options issued to officers and directors in February 2025.
  \

The company's balance sheet at March 31, 2025, reflected cash and cash equivalents of $363,709, down from $481,322 at December 31, 2024. Net cash used in operating activities for Q1 2025 was $247,613, an increase from $200,171 in Q1 2024, indicating a higher cash burn rate. While the company received $130,000 in financing activities during Q1 2025 from a prior subscription agreement, this inflow was insufficient to offset the operating cash burn.

Comparing THMG's financial position to peers underscores its early stage and financial fragility. Its TTM Current Ratio of 0.31 indicates limited ability to cover short-term obligations, significantly lower than Hecla (1.08) or Coeur (0.83), and even slightly below Timberline (0.50). While THMG's TTM Debt/Equity ratio is 0.00, reflecting minimal debt, this is largely due to its reliance on equity financing, which leads to dilution. The company's negative profitability metrics (Gross, Operating, Net, EBITDA margins all 0.00% TTM, as expected for an explorer) highlight the distance to potential production and profitability, a stark contrast to producing peers like Hecla (Gross Margin 0.21% TTM, Net Margin 0.04% TTM) or even exploration peers with some revenue history.

Outlook and the Path Forward

THMG's outlook is entirely tied to the successful execution of its plan to advance the South Mountain Project. The stated plan for the next twelve months is to continue baseline environmental and engineering work necessary to complete a PEA. This is a critical milestone that, if successful, could provide a preliminary economic blueprint for the project and potentially attract further investment or partnership opportunities.

Recognizing its precarious liquidity position, management is actively pursuing additional funding. Subsequent to the March 31, 2025, quarter-end, the company approved a private placement financing of $1.2 million in April 2025, which was anticipated to close around mid-May 2025. This financing, alongside the MFD partnership funding, is intended to provide the necessary capital to execute the planned technical work at South Mountain. Management has explicitly stated that without additional financing, they do not have sufficient cash for normal operations over the next 12 months and will need to curtail expenditures or seek alternative funding arrangements.

The company also continues to explore broader strategic alternatives, including mergers, lease options, asset sales, or farm-outs of other properties, to ensure long-term viability. Recent executive appointments in February 2025 (COO, VP Operations) are intended to strengthen the leadership team specifically to advance the South Mountain Project.

Risks and Challenges

Investing in THMG carries significant risks, inherent to the junior exploration stage and compounded by the company's financial condition:

• Going Concern Uncertainty: The accumulated deficit and insufficient cash for 12 months of operations raise substantial doubt about the company's ability to continue as a going concern. Future operations are entirely dependent on securing additional financing.
• Exploration Stage Risk: There is no assurance that commercially exploitable mineral reserves exist at South Mountain or any other property. Exploration is speculative, and most prospects do not become producing mines. Even if reserves are found, development requires substantial capital, which THMG may not be able to raise.
• Reliance on Financing: The company has no revenue and relies solely on external financing (equity, debt, partnerships) to fund operations and exploration. The ability to raise funds is subject to market conditions, which are currently challenging. Failure to secure financing would severely impact operations and potentially lead to the loss of property interests.
• Competition: THMG competes with better-funded companies for properties and capital, potentially limiting its opportunities and ability to execute its strategy.
• Mineral Resource Estimates: Estimates are subject to uncertainties. Changes in metal prices, technical assumptions, or geological interpretations could negatively impact the perceived value and economic viability of the South Mountain resource.
• Dilution Risk: Future equity financings, necessary for survival and project advancement, will dilute the ownership interests of existing shareholders.
• Internal Controls: Minimal staffing levels present a risk to internal controls over financial reporting, potentially increasing the likelihood of misstatements. While steps are being taken (e.g., outsourced financial consulting), this remains a noted weakness.
• Regulatory and Environmental Risks: Mining and exploration are subject to extensive regulations, including evolving disclosure requirements (S-K 1300) and environmental standards. Compliance adds costs and complexity. Land reclamation obligations, while accrued for South Mountain, could be burdensome.
• Market Volatility: The price of THMG's stock is volatile, influenced by metal prices, financing news, exploration results, and general market conditions.

Conclusion

Thunder Mountain Gold represents a high-risk, high-reward investment proposition centered on the potential of its South Mountain Project. The company has a clear strategic objective: to advance South Mountain towards a Preliminary Economic Assessment, a crucial step in de-risking the project and demonstrating its potential economic viability. Recent steps, including securing a strategic partner in MFD and lining up necessary financing, indicate active pursuit of this goal.

However, the path forward is fraught with challenges. The company's financial position is precarious, underscored by the going concern warning and a heavy reliance on external capital. The success of the investment thesis hinges entirely on the ability to not only raise sufficient funds but also to achieve positive exploration and study results at South Mountain in a timely and cost-effective manner. While the focus on a promising polymetallic project in a favorable jurisdiction provides the upside potential, investors must weigh this against the significant financial constraints, execution risks inherent in exploration, and intense competition within the mining sector. The coming quarters, particularly the progress towards the PEA and the ability to secure follow-on funding, will be critical determinants of THMG's future.