Contango Silver & Gold (NYSE: CTGO) completes Dolly Varden merger and 50/50 ownership split
Rhea-AI Filing Summary
Contango Silver & Gold Inc. completed its merger with Dolly Varden Silver Corporation via a share-for-share plan of arrangement. Each Dolly Varden share was exchanged for 0.1652 Contango common share or an exchangeable share, and Contango issued 13,686,278 Contango Shares, 417,048 replacement options and the Acquiror issued 1,597,301 Exchangeable Shares.
Immediately after closing, there were 32,104,900 outstanding Contango Shares including Exchangeable Shares, with former Dolly Varden and legacy Contango holders each owning roughly 50% of the economic and voting interest. The company changed its name from Contango ORE, Inc. to Contango Silver & Gold Inc., kept the CTGO ticker, and put voting and exchange mechanisms in place so Exchangeable Shares mirror Contango Shares economically and in voting power.
The board and management were reshaped, adding Dolly Varden executives, appointing Shawn Khunkhun as President and Clynton Nauman as Chairman, while Rick Van Nieuwenhuyse remains CEO. Dolly Varden’s audited 2025 IFRS financials show C$143.4 million in assets, C$61.1 million in cash and cash equivalents, and a C$31.7 million annual loss driven mainly by C$25.2 million of exploration and evaluation spending.
Positive
- Transformative merger on a share-for-share basis combines Contango’s producing and advanced Alaskan assets with Dolly Varden’s high-grade Kitsault Valley portfolio, creating a larger North American precious metals company with roughly 50/50 ownership between legacy Contango and former Dolly Varden shareholders.
- Strong cash and asset base added from Dolly Varden, including C$143.4 million in total assets and C$61.1 million in cash and cash equivalents as of December 31, 2025, supporting continued exploration and development across the enlarged property portfolio.
Negative
- None.
Insights
Contango’s all-share merger with Dolly Varden creates a better-capitalized, exploration-heavy precious metals platform with shared control between legacy owners.
The completed merger folds Dolly Varden’s high-grade Kitsault Valley and related British Columbia properties into Contango Silver & Gold, alongside Contango’s producing and advanced projects. Consideration was entirely in equity via Contango Shares and Exchangeable Shares at a fixed 0.1652 exchange ratio, so no transaction debt is disclosed in this content.
Governance and alignment are central: former Dolly Varden and Contango shareholders each hold about 50% of combined economic and voting interest, and Exchangeable Shares are supported by an Exchangeable Share Support Agreement and a Voting and Exchange Trust Agreement to preserve economic and voting equivalence. Leadership now blends prior Contango and Dolly Varden executives and directors.
Dolly Varden’s 2025 IFRS statements illustrate the profile Contango is absorbing: C$143.4 million in assets and C$61.1 million cash and equivalents, but a C$31.7 million annual loss, mainly from C$25.2 million in exploration and evaluation expenses. The combined company therefore pairs cash flow and a sizeable treasury with a large, ongoing exploration spend. Pro forma financials attached as Exhibit 99.3 detail how this combination would have looked for the year ended December 31, 2025.
8-K Event Classification
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| |
(Zip Code) | |||
| (Address of principal executive offices) |
Registrant’s Telephone Number, including area code:
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
As previously announced, on December 7, 2025, Contango Silver & Gold Inc., formerly known as Contango ORE, Inc. (the “Company”), and its newly formed subsidiary, 1566004 B.C. Ltd. (the “Acquiror”), entered into an Arrangement Agreement (the “Agreement”) with Dolly Varden Silver Corporation, a British Columbia corporation (“Dolly Varden”). Under the Agreement, the Company, indirectly through the Acquiror, will acquire all of the issued and outstanding common shares of Dolly Varden (the “Dolly Varden Shares”) at an exchange ratio of 0.1652 of a share of voting common stock of the Company (the “Contango Shares”) for each Dolly Varden Share (the “Exchange Ratio”) by way of a statutory plan of arrangement (the “Arrangement”) under the Business Corporations Act (British Columbia), on and subject to the terms and conditions of the Agreement.
Eligible Canadian resident Dolly Varden Shareholders may elect to receive exchangeable shares (the “Exchangeable Shares”) instead of Contango Shares, which provide, as nearly as possible, equivalent economic and voting rights to Contango Shares but allow for deferral of Canadian income tax that might otherwise be payable upon the immediate exchange of their Dolly Varden Shares for Contango Shares. The Exchangeable Shares are exchangeable for Contango Shares on a one-for-one basis.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On March 26, 2026, the Company completed the Arrangement pursuant to the terms of the Arrangement Agreement. Under the terms of the Arrangement Agreement, at the effective time of the Arrangement (the “Effective Time”), each Dolly Varden Share that was issued and outstanding immediately prior to the Effective Time was exchanged for 0.1652 of a Contango Share, or, for Eligible Holders (as such term is defined in the Arrangement Agreement) who validly elected, 0.1652 of an exchangeable share in the capital of the Acquiror (each whole share being, an “Exchangeable Share”), in each case subject to the terms and conditions of the Arrangement Agreement.
Immediately prior to the Effective Time, all Dolly Varden restricted share units awarded pursuant to the Dolly Varden Restricted Share Unit Plan dated May 20, 2022 (“Dolly Varden RSUs”) were surrendered and cancelled or redeemed by Dolly Varden for Dolly Varden Shares, so that holders of the Dolly Varden RSUs prior to the Effective Time participated in the Arrangement as Dolly Varden Shareholders.
At the Effective Time, but not as part of the Arrangement, each outstanding option to purchase Dolly Varden Shares (“Dolly Varden Option”) granted pursuant to the Dolly Varden Share Option Plan, as amended and restated on May 18, 2017, and the Dolly Varden Stock Option Plan dated May 20, 2022 (collectively, the “Dolly Varden Option Plans”), whether vested or unvested, was deemed to be vested to the fullest extent and automatically exchanged for an option to purchase Contango Shares (each, a “Replacement Option”). Each Replacement Option allows the holder to purchase Contango Shares equal to the product of (i) the Exchange Ratio (rounded down to the nearest whole number of Contango Shares), multiplied by (ii) the number of Dolly Varden Shares subject to the original Dolly Varden Option. The exercise price per share is equal to the quotient of (x) the U.S. Dollar equivalent of the exercise price per share of the Dolly Varden Option divided by (y) the Exchange Ratio. The terms of each Replacement Option, including the conditions to and manner of exercising, are the same as the Dolly Varden Option so exchanged, and are be governed by the terms of the Dolly Varden Option Plans, which were assumed by the Company.
In connection with the Arrangement, the Company, 1566002 B.C. Unlimited Liability Company, an unlimited liability company existing under the laws of the Province of British Columbia, Canada and wholly-owned subsidiary of Contango formed for the purpose of effecting the Arrangement (“CallCo”), and Acquiror executed an Exchangeable Share Support Agreement (the “Exchangeable Share Support Agreement”). Such agreement, among other things, provides Contango and CallCo, in addition to the rights, privileges, restrictions and conditions attaching to the Exchangeable Shares, the right to purchase Exchangeable Shares from the holders thereof (other than Contango and its affiliates) upon the occurrence of certain events, as specified in the Exchangeable Share Support Agreement. Further, the Exchangeable Share Support Agreement provides for the protection of the “economic equivalence” with respect to the Contango Shares and the Exchangeable Shares and for Contango to use its commercially reasonable efforts to effect the registration of the Contango Shares issued upon the exchange of Exchangeable Shares. The foregoing description of the material terms of the Exchangeable Share Support Agreement does not purport to be complete and is qualified in its entirety by reference to the Exchangeable Share
2
Support Agreement, which is attached to this Current Report on Form 8-K as Exhibit 4.1 and incorporated by reference herein.
In connection with the Arrangement, the Company, CallCo, Acquiror and Computershare Trust Company of Canada, a trust company incorporated under the laws of Canada (the “Trustee”), executed a Voting and Exchange Trust Agreement (the “Voting and Exchange Trust Agreement”). The purpose of the Voting and Exchange Trust Agreement is to create a trust for the holders of Exchangeable Shares, other than the Company and certain related persons (the “Beneficiaries”). The Trustee will hold the Special Voting Share in order to enable the Trustee to exercise the voting rights attached to the Exchangeable Shares. Holders of Exchangeable Shares can direct the Trustee as to how to vote their Exchangeable Shares on an as-converted-to-Contango-Shares basis. The Trustee will hold the Exchange Right and the Automatic Exchange Right (as defined in the Voting and Exchange Trust Agreement) in order to enable the Trustee to exercise or enforce such rights, in each case as trustee for and on behalf of the Beneficiaries. The foregoing description of the material terms of the Voting and Exchange Trust Agreement does not purport to be complete and is qualified in its entirety by reference to the Voting and Exchange Trust Agreement, which is attached to this Current Report on Form 8-K as Exhibit 4.2 and incorporated by reference herein.
At the Effective Time, Contango issued 13,686,278 Contango Shares and replacement options to purchase 417,048 Contango Shares, and the Acquiror issued 1,597,301 Exchangeable Shares, to the former Dolly Varden Shareholders. Immediately following the Effective Time, there are 32,104,900 outstanding Contango Shares, including the 1,597,301 Exchangeable Shares, with the former Dolly Varden Shareholders and the Contango Shareholders each owning approximately 50% of the economic and voting interest of the Company. The Exchangeable Shares, which can be converted into Contango Shares at the option of the holder and have the same voting rights as Contango Shares, are similar in substance to shares of Contango Shares and, therefore, have been included in the determination of outstanding Contango Shares immediately following the Effective Time.
In connection with the Arrangement, effective as of March 26, 2026, the Company changed its name from “Contango ORE, Inc.” to “Contango Silver & Gold Inc.” by filing a certificate of amendment to the Company’s certificate of incorporation (the “Certificate of Amendment”) on March 25, 2026. On March 26, 2026, the Contango Shares began trading on the NYSE American under the new name; the ticker symbol and CUSIP number remained the same. The foregoing description of the material terms of the Certificate of Amendment does not purport to be complete and is qualified in its entirety by reference to the Certificate of Amendment, which is attached to this Current Report on Form 8-K as Exhibit 3.1 and incorporated by reference herein.
In connection with the Arrangement, on March 25, 2026, the Company filed a Certificate of Designation of Series A Special Voting Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the “Special Voting Share”) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to have their voting rights exercised. After the Effective Time, each Exchangeable Share has become exchangeable for one Contango Share and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which Contango Shareholders are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, to receive dividends that are economically equivalent to any dividends declared with respect to the Contango Shares. The foregoing is only a brief description of the material terms of the Certificate of Designation and does not purport to be a complete description of the rights and obligations thereunder. Such description is qualified in its entirety by reference to the Certificate of Designation, which is attached to this Current Report on Form 8-K as Exhibit 3.2 and incorporated by reference herein.
The issuance of (i) the Contango Shares to those Dolly Varden Shareholders that elected to receive or otherwise will receive Contango Shares in connection with the Arrangement, and (ii) the Exchangeable Shares to those Dolly Varden Shareholders that elected to receive Exchangeable Shares in connection with the Arrangement, and (iii) the Replacement Options to the holders of the Dolly Varden Options were issued in reliance upon the exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended, pursuant to the approval of the terms and conditions of the issuance and exchange of such securities by the Supreme Court of British Columbia by the final order issued and entered on March 23, 2026. The subsequent issuance of Contango Shares to the former Dolly Varden Shareholders who elected to receive Exchangeable Shares in exchange for such shareholders’ Exchangeable Shares and to holders of Replacement Options who exercise Replacement Options are expected to will be registered with the Securities and Exchange Commission (“SEC”) on a Registration Statements on Forms S-3 and S-8, respectively.
3
| Item 3.02. | Unregistered Sales of Equity Securities. |
To the extent required by Item 3.02 of Form 8-K, the information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.
| Item 3.03 | Material Modification to Rights of Security Holders. |
To the extent required by Item 3.03 of Form 8-K, the information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
To the extent required by Item 5.02 of Form 8-K, the information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.
(b) Resignation of Directors.
Pursuant to the Arrangement Agreement, as of the Effective Time, Richard A. Shortz and Darwin Green, resigned from the Board and any respective committees of the Board to which they belonged. Additionally, Brad Juneau stepped down as Chairman of the Board, although he will remain a director of the Company.
(c) Appointment of Officers.
Shawn Khunkhun
As of the Effective Time, the Board appointed Shawn Khunkhun, as President of the Company.
Mr. Khunkhun, age 44, has served as Chief Executive Officer and a director of Dolly Varden since February 18, 2020. Mr. Khunkhun has over 20 years of experience in the capital markets, mineral exploration, and development sector with a focus on enhancing shareholder value. He has served in a variety of strategic roles including CEO, Director and Executive Chairman. Mr. Khunkhun has been instrumental in creating awareness for undervalued companies including explorers, developers, and producers. Mr. Khunkhun is a Director of GoldX2 and also an advisor to West Red Lake, Nations Royalty & NexGold and founder of Argenta Silver. He is the former CEO and a current director of StrikePoint Gold Inc., as well as director of Gladiator Metals Corp. The Board believes Mr. Khunkhun is qualified to serve as a director because of his experience in incubating and growing companies through capital raises, acquisitions, and spinouts, as well as his long-standing relationships with the mining investment community.
The Company and Mr. Khunkhun have not completed their negotiations in connection with Mr. Khunkhun’s employment agreement as of the date of this Current Report on Form 8-K.
Rick Van Nieuwenhuyse, who previously served as President, Chief Executive Officer and a director of the Company, will remain the Chief Executive Officer and a director of the Company.
(d) Election of New Directors.
As of the Effective Time, the Board appointed Mr. Khunkhun, Forrester (Tim) Clark and Darren Devine as directors of the Company and named Clynton Nauman as Chairman of the Board.
Forrester (Tim) Clark
Mr. Clark, age 57, has served as a director of Dolly Varden since February 25, 2022. He currently serves as Chief Executive Officer and a director of Fury Gold Mines Ltd., a mineral resource exploration and development company. He brings 23 years of global capital markets experience with numerous US, European and Canadian investment banks, including BMO Capital Markets, where he held the role of Managing Director, Institutional Equity Sales. The Board believes Mr. Clark is qualified to serve as a director because he provides corporate strategy, peer and financial analysis and insights for corporations within the materials, commodities and mining sectors.
Mr. Clark will stand for re-election at the next annual meeting of stockholders. At this time, the Company has not determined the Board committees on which Mr. Clark will serve. Mr. Clark will be eligible for
4
compensation in accordance with the Company’s standard compensation policies for non-employee directors as described in the section entitled “Corporate Governance” in the Company’s proxy statement on Schedule 14A filed with the SEC on April 29, 2025.
Darren Devine
Mr. Devine, age 58, has served as a director of Dolly Varden since August 25, 2016. He currently serves as Principal of CDM Capital Partners, a firm that provides corporate finance advisory services to private and public companies, and acts as a director to private and junior public companies primarily in the natural resource sector. Mr. Devine is a former member of the TSX Venture Exchange’s Local Advisory Committee. Prior to founding CDM Capital, Mr. Devine qualified as a barrister and solicitor in British Columbia and in England & Wales and practiced exclusively in the areas of corporate finance and securities law. The Board believes Mr. Clark is qualified to serve as a director because he provides corporate finance and securities law experience, as well as and insights for public companies within the materials, commodities and mining sectors.
Mr. Devine will stand for re-election at the next annual meeting of stockholders. At this time, the Company has not determined the Board committees on which Mr. Devine will serve. Mr. Devine will be eligible for compensation in accordance with the Company’s standard compensation policies for non-employee directors as described in the section entitled “Corporate Governance” in the Company’s proxy statement on Schedule 14A filed with the SEC on April 29, 2025.
There are no familial relationships among any of the Company’s directors or executive officers.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
To the extent required by Item 5.03 of Form 8-K, the information contained in Item 2.01 of this Current Report on Form 8-K is incorporated by reference herein.
| Item 7.01. | Regulation FD Disclosure. |
The Company issued a press release on March 26, 2026 relating to the closing of the Arrangement. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information included herein and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 8.01. | Other Events. |
On February 11, 2026, the Company, the Acquiror and Dolly Varden entered into an amending agreement (the “Amending Agreement”). The Amending Agreement amended the Arrangement Agreement and the Plan of Arrangement to include reference to Dolly Varden’s Share Option Plan, as amended and restated on May 18, 2017, which was inadvertently omitted from each of these documents. The Amending Agreement is attached to this Current Report on Form 8-K as Exhibit 2.1 and incorporated by reference herein.
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial statements of businesses acquired.
The audited consolidated financial statements of Dolly Varden as of December 31, 2025 and 2024, and the related ,consolidated statements of loss and comprehensive loss, changes in shareholders’ equity and cash flows for the years ended December 31. 2025 and 2024, and the related notes thereto, are attached to this Current Report on Form 8-K as Exhibit 99.2 and incorporated by reference herein.
(b) Pro forma financial information.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025 and unaudited pro forma condensed combined balance sheet as of December 31, 2025, and the related notes thereto, are attached to this Current Report on Form 8-K as Exhibit 99.3 and incorporated by reference herein.
5
(d) Exhibits.
| Exhibit No. |
Description of Exhibit | |||
| 2.1 | Amending Agreement, effective February 11, 2026, by and among Contango ORE, Inc., 1566004 B.C. Ltd. and Dolly Varden Silver Corporation. | |||
| 3.1 | Certificate of Amendment to Certificate of Incorporation of Contango ORE, Inc. | |||
| 3.2 | Certificate of Designation of Series A Special Voting Preferred Stock. | |||
| 4.1 | Exchangeable Share Support Agreement. | |||
| 4.2 | Voting And Exchange Trust Agreement. | |||
| 99.1 | Press Release of the Company, dated March 26, 2026. | |||
| 99.2 | Financial Statements of Dolly Varden Silver Corporation as of December 31, 2025 and December 31, 2024. | |||
| 99.3 | Unaudited pro forma condensed combined financial information. | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONTANGO SILVER & GOLD INC. | ||||||
| Date: March 27, 2026 |
By: |
/s/ Mike Clark | ||||
| Chief Financial Officer and Secretary | ||||||
Exhibit 99.1
NEWS RELEASE
CONTANGO SILVER & GOLD INC.
Contango Completes Merger with Dolly Varden
FAIRBANKS, AK / VANCOUVER, BC — (March 26, 2026) — Contango Silver & Gold Inc. (“Contango” or the “Company”) (NYSE American: CTGO) and Dolly Varden Silver Corporation (“Dolly Varden”) are pleased to announce they have completed their previously announced merger (the “Arrangement”), following receipt of all required shareholder and court approvals. An application has been submitted to the Toronto Stock Exchange to list the Contango Shares (as defined below) and it is expected that the Contango Shares will be listed shortly, subject to satisfaction of applicable listing requirements and approval of the Toronto Stock Exchange.
With the completion of the transaction, all issued and outstanding Dolly Varden common shares have been acquired by 1566004 B.C. Ltd. (“Acquireco”), an indirect wholly owned subsidiary of Contango, under a statutory plan of arrangement. Each Dolly Varden common share has been exchanged for 0.1652 of a share of voting common stock in Contango (each whole share being, a “Contango Share”), or, for Eligible Holders (as such term is defined in the Arrangement Agreement, as defined below) who validly elected, 0.1652 of an exchangeable share in the capital of Acquireco (each whole share being, an “Exchangeable Share”), in each case subject to the terms and conditions of the arrangement agreement dated December 7, 2025, as amended February 11, 2026, between the Company, Dolly Varden and Acquireco (the “Arrangement Agreement”). The Exchangeable Shares are exchangeable for Contango Shares on a one-for-one basis subject to adjustment. All Dolly Varden stock options outstanding at closing were deemed to be exchanged for equivalent securities to acquire Contango Shares, adjusted in accordance with the exchange ratio noted above. Pursuant to the Arrangement, Contango issued 13,686,278 Contango Shares and replacement options to purchase 417,048 Contango Shares, and Acquireco issued 1,597,301 Exchangeable Shares. After completion of the transaction, there are 30,507,599 outstanding Contango Shares, excluding the Exchangeable Shares. For further information on the Arrangement, please refer to the Company’s definitive proxy statement dated February 13, 2026, which can be accessed online on Contango’s website at www.contangoore.com/investors/special-meeting and under the Company’s EDGAR profile, and Dolly Varden’s management information circular prepared in respect of the arrangement, which can be accessed online under Dolly Varden’s SEDAR+ profile.
The combined entity, renamed Contango Silver & Gold Inc., brings together Contango’s cash-flowing Manh Choh Gold Mine and advanced high-grade exploration projects in Alaska with Dolly Varden’s high-grade Kitsault Valley silver-gold project in British Columbia’s Golden Triangle – one of the most prolific mineral belts in the world.
The merger creates a powerful North American mid-tier precious metals producer with:
| • | A portfolio of high-grade precious metals assets spanning advanced exploration to production stage projects in Alaska and British Columbia. |
| • | More than US$100 million in combined cash and minimal debt, providing a robust platform for growth. |
| • | A balanced 50/50 ownership split between Contango and former Dolly Varden shareholders. |
Contango is being led by Rick Van Nieuwenhuyse, Chief Executive Officer, Shawn Khunkhun, President and Mike Clark, Executive Vice President & Chief Financial Officer. The Board of Directors includes Clynt Nauman (Chairman), Brad Juneau, Darren Devine, Mike Cinnamond, Tim Clark, Rick Van Nieuwenhuyse, and Shawn Khunkhun, reflecting balanced representation and deep industry expertise.
“This merger marks the start of an exciting new chapter,” said Rick Van Nieuwenhuyse, CEO of Contango Silver & Gold. “By combining Contango’s cash-flowing Manh Choh mine, the advanced stage exploration Lucky Shot and Johnson Tract projects, and the district scale exploration of high-grade silver in the Kitsault Valley, we are building a uniquely positioned gold and silver focused company with a strong balance sheet and production base, significant growth potential, and exceptional exploration upside.”
Shawn Khunkhun, President of Contango Silver & Gold remarked, “Contango Silver & Gold offers investors exposure to an emerging North American mid-tier producer focused on high-grade silver and gold assets. Our current value proposition is compelling on a cash flow basis, supported by strong production potential and disciplined capital management. Beyond near-term cash flow, the most significant upside may lie in the optionality embedded within our portfolio. Our unique pipeline of high-grade primary silver and gold projects provides meaningful leverage to rising metal prices, as well as long-term growth potential through exploration and development success.”
With completion of the acquisition, the Dolly Varden common shares are expected to be delisted from the TSX Venture Exchange at the close of trading on March 27, 2026 and from the NYSE American on April 6, 2026. Dolly Varden will make an application to cease to be a reporting issuer in Canada shortly thereafter. Contango has applied to list Contango Shares on the Toronto Stock Exchange, subject to satisfaction of applicable listing requirements and approval of the Toronto Stock Exchange.
CONFERENCE CALL AND WEBCAST
Contango will host a conference call and webcast to discuss the new company on Thursday, March 26, 2026, at 1:00pm EST / 10:00am PST. Participants may join the webcast using the following call-in details: https://6ix.com/event/introducing-contango-silver-and-gold.
ABOUT CONTANGO
Contango is a NYSE American listed company that engages in the exploration for and development and production of gold and associated minerals in Alaska and in the Golden Triangle in British Columbia. Contango holds a 30% interest in the Peak Gold JV, which leases approximately 675,000 acres of land for exploration and development on the Manh Choh project, with the remaining 70% owned by KG Mining (Alaska), Inc., an indirect subsidiary of Kinross Gold Corporation, operator of the Peak Gold JV. The Company and its subsidiaries also have (i) a lease on the Johnson Tract project, which consists of mineral rights to approximately 21,000 acres located near tidewater, 125 miles southwest of Anchorage, Alaska, from the underlying owner, CIRI, (ii) a lease on the Lucky Shot project, which consists of mineral rights to approximately 8,600 acres of State of Alaska and patented mining claims located in the Willow Mining District about 75 miles north of Anchorage, Alaska, from the underlying owner, Alaska Hardrock Inc., (iii) mineral rights to approximately 145,000 acres of State of Alaska mining claims, (iv) mineral rights to approximately 11,700 acres of State of Alaska mining claims and upland mining leases, all of which give Contango the exclusive right to explore and develop minerals on these lands, and (v) mineral tenures of approximately 247,000 acres (100,000 ha) located in and around the Kitsault Valley in the Golden Triangle of northwest British Colombia.
Additional information can be found on our web page at www.contangoore.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities (“Forward-looking Statements”). These include statements regarding any anticipated benefits of the transaction, Contango’s plans and expectations for its properties and operations, operations in respect of Contango mineral properties, terms and conditions relating to the Exchangeable Shares, the anticipated timing of the delisting of the Dolly Varden shares from the TSX-V and NYSE American and the listing of the Contango Shares on the Toronto Stock Exchange. The Forward-looking Statements regarding Contango are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995, based on Contango’s current expectations and includes statements regarding future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as “expects”, “projects”, “anticipates”, “plans”, “estimates”, “intends”, “believes”, “ensures”, “forecasts”, “predicts”, “proposes”, “contemplates”, “aims”, “seeks”, “continues”, “potential”, “positioned”, “strategy”, “outlook”, “future”, “going forward”, “designed to”, and similar expressions or other words of similar meaning, and the negatives thereof, or stating that certain actions, events or results “may”, “might”, “will”, “should”, “would”, or “could” be taken, or that they are “possible”, “probable”, or “likely” to occur or be achieved). However, the absence of these words does not mean that the statements are not forward-looking. Forward-looking Statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to: the risks of the exploration and the mining industry (for example, operational risks in exploring for and developing mineral reserves; risks and uncertainties involving geology; the speculative nature of the mining industry; the uncertainty of estimates and projections relating to future production, costs and expenses; the volatility of natural resources prices, including prices of gold and associated minerals; the existence and extent of commercially exploitable minerals in properties acquired by Contango or the Peak Gold JV; ability to realize the anticipated benefits of the Peak Gold JV; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the interpretation of exploration results and the estimation of mineral resources; the loss of key employees or consultants; health, safety and environmental risks and risks related to weather and other natural disasters); uncertainties as to the availability and cost of financing; Contango’s inability to retain or maintain its relative ownership interest in the Peak Gold JV; inability to realize expected value from acquisitions; inability of our management team to execute its plans to meet its goals; the extent of disruptions caused by an outbreak of disease, such as the COVID-19 pandemic; and the possibility that government policies may change, political developments may occur or governmental approvals may be delayed or withheld, including as a result of presidential and congressional elections in the U.S. or the inability to obtain mining permits. Additional information on these and other factors which could affect Contango’s operations or financial results are included in Contango’s other reports on file with the U.S. Securities and Exchange Commission. Investors are cautioned that any Forward-looking Statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the Forward-looking Statements. Forward-looking Statements are based on the estimates and opinions of management at the time the statements are made. Contango does not assume any obligation to update Forward-looking Statements should circumstances or management’s estimates or opinions change.
CONTACTS:
Contango Silver & Gold Inc.
Rick Van Nieuwenhuyse
(907) 388-7770
www.contangoore.com
Exhibit 99.2
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in Canadian Dollars)
Report of Independent Registered Public Accounting Firm To the Shareholders and Directors of Dolly Varden Silver Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial position of Dolly Varden Silver Corporation (the “Company”), as of December 31, 2025 and 2024, and the related consolidated statements of loss and comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards). Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. We have served as the Company’s auditor since 2011. /s/ DAVIDSON & COMPANY LLP Vancouver, Canada Chartered Professional Accountants March 12, 2026
DOLLY VARDEN SILVER CORPORATION
Consolidated Statements of Financial Position
(Expressed in Canadian Dollars)
| As at | Notes | December 31, 2025 |
December 31, 2024 | |||||||
| ASSETS |
||||||||||
| Current |
||||||||||
| Cash and cash equivalent |
4 | $ | 61,082,045 | $ | 32,057,647 | |||||
| Short term investments |
- | 2,119,952 | ||||||||
| Prepaid expenses |
5 | 499,955 | 328,093 | |||||||
| Goods and Services Tax and other receivable |
6 | 1,136,156 | 67,552 | |||||||
| 62,718,156 | 34,573,244 | |||||||||
| Non-current |
||||||||||
| Property and equipment |
7 | 156,041 | 191,715 | |||||||
| Reclamation deposits |
8 | 208,000 | 159,000 | |||||||
| Exploration and evaluation assets |
8 | 80,356,492 | 71,329,535 | |||||||
| $ | 143,438,689 | $ | 106,253,494 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||
| Current |
||||||||||
| Accounts payable |
11 | $ | 1,633,612 | $ | 118,521 | |||||
| Accrued liabilities |
11 | 2,372,171 | 802,656 | |||||||
| Liability on flow-through share issuances |
9 | 7,004,953 | 3,478,712 | |||||||
| 11,010,736 | 4,399,889 | |||||||||
| Shareholders’ Equity |
||||||||||
| Share capital |
9 | 285,981,680 | 224,362,471 | |||||||
| Reserves |
9 | 13,207,452 | 12,513,816 | |||||||
| Deficit |
(166,761,179 | ) | (135,022,682 | ) | ||||||
| 132,427,953 | 101,853,605 | |||||||||
| $ | 143,438,689 | $ | 106,253,494 | |||||||
Nature of Operations (Note 1)
Subsequent Event (Note 15)
These consolidated financial statements were approved for issue by the Board of Directors on March 12, 2026 and signed on its behalf by:
| “Shawn Khunkhun” | “James Sabala” | |||
| Director |
Director |
The accompanying notes are an integral part of these consolidated financial statements
3
DOLLY VARDEN SILVER CORPORATION
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in Canadian Dollars)
| Notes | Year Ended December 31, 2025 |
Year Ended December 31, 2024 |
||||||||||
| EXPENSES |
||||||||||||
| Consulting fees |
11 | $ | 2,585,354 | $ | 1,275,026 | |||||||
| Directors’ fees |
11 | 263,000 | 228,400 | |||||||||
| Exploration and evaluation |
8, 11 | 25,198,442 | 17,875,317 | |||||||||
| Management fees |
11 | 1,108,100 | 1,536,737 | |||||||||
| Marketing and communications |
2,166,118 | 1,477,450 | ||||||||||
| Office and administration |
1,026,328 | 250,708 | ||||||||||
| Professional fees |
1,893,341 | 236,947 | ||||||||||
| Rent and maintenance |
11 | 156,135 | 129,262 | |||||||||
| Share-based payments |
9, 11 | 2,181,824 | 2,600,955 | |||||||||
| Transfer agent and filing fees |
362,978 | 137,690 | ||||||||||
| Travel and accommodation |
229,507 | 207,161 | ||||||||||
| Operating loss |
(37,171,127 | ) | (25,955,653 | ) | ||||||||
| Recovery on flow through share premium |
9 | 4,561,159 | 4,301,284 | |||||||||
| Part XII.6 tax recovery (expense) |
(306,457 | ) | 2,933 | |||||||||
| Interest and other income |
1,177,928 | 1,002,289 | ||||||||||
| Loss and comprehensive loss for the year |
$ | (31,738,497 | ) | $ | (20,649,147 | ) | ||||||
| Basic and diluted loss per common share |
$ | (0.38 | ) | $ | (0.28 | ) | ||||||
| Weighted average number of common shares outstanding– basic and diluted |
84,499,539 | 72,938,587 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements
4
DOLLY VARDEN SILVER CORPORATION
Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
| As at | Common Shares |
Share Capital | Reserves | Deficit | Total Shareholders’ |
|||||||||||||||
| Balance, December 31, 2023 |
67,516,696 | $ | 184,751,037 | $ | 11,568,202 | $ | (114,373,535 | ) | $ | 81,945,704 | ||||||||||
| Exercise of stock options |
908,584 | 2,310,602 | (990,995 | ) | - | 1,319,607 | ||||||||||||||
| Issuance of common shares for |
68,750 | 222,750 | - | - | 222,750 | |||||||||||||||
| Issuance of flow-through shares |
7,711,425 | 35,699,985 | - | - | 35,699,985 | |||||||||||||||
| Issuance of common shares |
2,875,000 | 11,500,000 | - | - | 11,500,000 | |||||||||||||||
| Share issuance costs – cash |
- | (3,006,253 | ) | - | - | (3,006,253 | ) | |||||||||||||
| Flow-through share premium liability |
- | (7,779,996 | ) | - | - | (7,779,996 | ) | |||||||||||||
| Share-based payments |
- | - | 1,461,500 | - | 1,461,500 | |||||||||||||||
| Restricted share compensation |
- | - | 1,139,455 | - | 1,139,455 | |||||||||||||||
| Restricted share units converted to |
171,223 | 664,346 | (664,346 | ) | - | - | ||||||||||||||
| Loss and comprehensive loss for the year |
- | - | - | (20,649,147 | ) | (20,649,147 | ) | |||||||||||||
| Balance, December 31, 2024 |
79,251,678 | 224,362,471 | 12,513,816 | (135,022,682 | ) | 101,853,605 | ||||||||||||||
| Exercise of stock options |
252,062 | 1,153,747 | (468,942 | ) | - | 684,805 | ||||||||||||||
| Issuance of common shares for |
2,172,675 | 8,794,384 | - | - | 8,794,384 | |||||||||||||||
| Issuance of flow-through shares |
4,608,000 | 32,590,200 | - | - | 32,590,200 | |||||||||||||||
| Issuance of common shares |
5,351,500 | 30,138,300 | - | - | 30,138,300 | |||||||||||||||
| Share issuance costs – cash |
- | (3,989,268 | ) | - | - | (3,989,268 | ) | |||||||||||||
| Flow-through share premium liability |
- | (8,087,400 | ) | - | - | (8,087,400 | ) | |||||||||||||
| Share-based payments |
- | - | 1,085,228 | - | 1,085,228 | |||||||||||||||
| Restricted share unit compensation |
- | - | 1,096,596 | - | 1,096,596 | |||||||||||||||
| Restricted share units converted to |
269,806 | 1,019,246 | (1,019,246 | ) | - | - | ||||||||||||||
| Loss and comprehensive loss for the year |
- | - | - | (31,738,497 | ) | (31,738,497 | ) | |||||||||||||
| Balance, December 31, 2025 |
91,905,721 | $ | 285,981,680 | $ | 13,207,452 | $ | (166,761,179 | ) | $ | 132,427,953 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements
5
DOLLY VARDEN SILVER CORPORATION
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
| Year
ended 2025 |
Year
ended 2024 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Loss for the year |
$ | (31,738,497 | ) | $ | (20,649,147 | ) | ||
| Items not affecting cash: |
||||||||
| Share-based payments |
1,085,228 | 1,461,500 | ||||||
| Restricted share unit compensation |
1,096,596 | 1,139,455 | ||||||
| Recovery on flow-through share premium |
(4,561,159 | ) | (4,301,284 | ) | ||||
| Depreciation of property and equipment |
36,564 | 48,057 | ||||||
| Accrued Part XII.6 tax |
306,457 | - | ||||||
| Loss on disposal of property and equipment |
5,091 | - | ||||||
| Changes in non-cash working capital items: |
||||||||
| Prepaid expenses |
(171,862 | ) | 140,169 | |||||
| Goods and Services Tax receivable |
(1,068,604 | ) | 899,712 | |||||
| Reclamation deposits |
(49,000 | ) | ||||||
| Accounts payable and accrued liabilities |
2,778,149 | 117,125 | ||||||
| Cash used in operating activities |
(32,281,037 | ) | (21,144,413 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||
| Acquisition of equipment |
(5,981 | ) | (23,716 | ) | ||||
| Acquisition of exploration and evaluation assets |
(232,573 | ) | (150,000 | ) | ||||
| Short term investment |
2,119,952 | (2,119,952 | ) | |||||
| Cash provided by (used in) investing activities |
1,881,398 | (2,293,668 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Private placement, net of share issuance costs |
58,739,232 | 44,193,732 | ||||||
| Exercise of stock options |
684,805 | 1,319,607 | ||||||
| Cash provided by financing activities |
59,424,037 | 45,513,339 | ||||||
| Change in cash and cash equivalent during the year |
29,024,398 | 22,075,258 | ||||||
| Cash and cash equivalent, beginning of year |
32,057,647 | 9,982,389 | ||||||
| Cash and cash equivalent, end of year |
$ | 61,082,045 | $ | 32,057,647 | ||||
| Supplemental disclosure with respect to cash flows: |
||||||||
| Interest income received in cash |
$ | 1,177,928 | $ | 1,002,270 | ||||
| Non-cash transactions: |
||||||||
| Fair value of options exercised |
$ | 468,942 | $ | 990,995 | ||||
| Fair value of shares issued for acquisition of exploration and evaluation assets |
$ | 8,794,384 | $ | 222,750 | ||||
| Reclassification of acquisition costs from prepaid expenses to exploration and evaluation assets |
$ | - | $ | 50,000 | ||||
| Restricted share units converted to common shares |
$ | 1,019,246 | $ | 664,346 | ||||
| Premium liability on flow-through shares |
$ | 8,087,400 | $ | 7,779,996 | ||||
The accompanying notes are an integral part of these consolidated financial statements
6
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 1 | NATURE OF OPERATIONS |
Dolly Varden Silver Corporation (the “Company” or “Dolly Varden”) was incorporated under the Business Corporations Act (British Columbia) on March 4, 2011 and is a public company listed on the TSX Venture Exchange (the “Exchange”) under the symbol “DV”. In addition, the Company trades on the NYSE American, LLC under the symbol “DVS” and on the Frankfurt Exchange under the trading symbol “DVQ “. The Company’s primary business is the acquisition and exploration of mineral properties in Canada. The Company’s head office is Suite 3123, 595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1J1. The registered address and records office of the Company is located at Suite 1700 Park Place, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8.
The Company owns interests in multiple mineral titles and claims in British Columbia, Canada. On February 25, 2022, the Company acquired 100% of the outstanding common stock of Homestake Resource Corporation and its wholly owned subsidiary Homestake Royalty Corporation (collectively, “Homestake”) in exchange for common shares of the Company. The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements and to complete the development of properties, as well as upon future profitable production or proceeds from the disposition thereof. Management believes that the Company has sufficient working capital to maintain its operations and activities for the next fiscal year.
On April 7, 2025, the Company completed a consolidation of the issued and outstanding shares of the Company at a ratio of four pre-consolidation common shares for one post-consolidation common share. All share figures and per share figures in these consolidated financial statements have been retroactively adjusted to reflect the share consolidation.
On December 7, 2025, Dolly Varden and Contango ORE, Inc (“Contango”) entered into an arrangement agreement (the “Arrangement Agreement”) to combine Contango and Dolly Varden on a merger-of-equals basis pursuant to a statutory plan of arrangement under the Business Corporations Act (British Columbia) (“BCBCA”). Pursuant to the terms and conditions of the Arrangement Agreement, Contango will acquire all of the issued and outstanding common shares of Dolly Varden at an exchange ratio of 0.1652 of a share of voting common stock of Contango for each Dolly Varden share held.
| 2 | BASIS OF PRESENTATION |
| (a) | Statement of Compliance |
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board (“IASB”) effective for the year ended December 31, 2025.
| (b) | Basis of Presentation |
The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
7
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLICY INFORMATION |
| (a) | Basis of Consolidation |
These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All intercompany transactions, balances, revenue and expenses are eliminated in full upon consolidation.
The legal subsidiaries of the Company are as follows:
| Name of Subsidiary | Place of |
Beneficial Ownership Interest | ||||||
| Incorporation |
December 31, 2025 |
December 31, 2024 | ||||||
| Homestake Resource Corporation |
British Columbia, Canada | 100% | 100% | |||||
| Homestake Royalty Corporation |
British Columbia, Canada | 100% | 100% | |||||
| (b) | Functional and Foreign Currency |
The consolidated financial statements are presented in Canadian dollars, which is the Company’s and its subsidiaries’ functional currency. Foreign currency transactions are translated into Canadian dollars using the exchange rates at the date of the transactions. Foreign exchange gains or losses resulting from the settlement of transactions and from the translation at year-end rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss.
| (c) | Cash and cash equivalents |
Cash and cash equivalents includes cash on hand, demand deposits with financial institutions and other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of change in value.
| (d) | Related Party Transactions |
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
| (e) | Equipment |
The Company records equipment using the cost method, whereby equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recorded over the useful lives of the assets on a declining balance basis at the following annual rates.
| Dock |
5 | % | ||
| Gas tank |
10 | % | ||
| Boat |
15 | % | ||
| Tents and trailers |
30 | % | ||
| General equipment |
20 | % | ||
| Vehicles |
30 | % |
8
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLIICY INFORMATION (cont’d) |
| (e) | Equipment (cont’d) |
An item of equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.
Where an item of equipment is composed of major components with different useful lives, the components are accounted for as separate items of equipment. Expenditures incurred to replace a component of an item of equipment that is accounted for separately including major inspection and overhaul expenditures, are capitalized.
| (f) | Exploration and Evaluation Assets |
Upon acquiring the legal right to explore a mineral property (exploration and evaluation assets), all direct costs related to the acquisition of a mineral property are capitalized. Exploration and evaluation expenditures incurred prior to the determination of the feasibility of mining operations and the decision to proceed with development are recognized in profit or loss as incurred, net of recoveries. Costs incurred before the Company has obtained the legal rights to explore an area are charged to profit or loss. Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within equipment. Recoverability of the carrying amount of any exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.
| (g) | Impairment of Non-Financial Assets |
Non-financial assets are evaluated at least annually by management for indicators that the carrying value is impaired and may not be recoverable. The Company’s non-financial assets are equipment and exploration and evaluation assets. When indicators of impairment are present, the recoverable amount of an asset is evaluated at the level of a cash generating unit (CGU), the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of a CGU is the greater of the CGU’s fair value less costs to sell and its value in use. An impairment loss is recognized in profit or loss to the extent that the carrying amount exceeds the recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable reserves, estimated future commodity prices and the expected future operating and capital costs. The pre-tax discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
Additionally, the reviews consider factors such as political, social and legal and environmental regulations. These factors may change due to changing economic conditions or the accuracy of certain assumptions and, hence, affect the recoverable amount. The Company uses its best efforts to fully understand all of the aforementioned to make an informed decision based upon historical and current facts surrounding the projects. Discounted cash flow techniques often require management to make estimates and assumptions concerning reserves and resources and expected future production revenues and expenses.
9
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLIICY INFORMATION (cont’d) |
| (g) | Impairment of Non-Financial Assets (cont’d) |
Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit (“CGU”) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of an impairment loss is recognized immediately in profit or loss.
| (h) | Decommissioning Liabilities |
The Company recognizes a provision for statutory, contractual, constructive or legal obligations associated with decommissioning of mining operations and reclamation and rehabilitation costs arising when environmental disturbance is caused by the exploration or evaluation of exploration and evaluation assets, and equipment. Provisions for site closure and decommissioning are recognized in the period in which the obligation is incurred or acquired and are measured based on expected future cash flows to settle the obligation, discounted to their present value. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability including risks specific to the countries in which the related operation is located.
When an obligation is initially recognized, the corresponding cost is capitalized to the carrying amount of the related asset in exploration and evaluation assets and equipment. These costs are depreciated using either the unit of production or straight-line method depending on the asset to which the obligation relates.
The obligation is increased for the accretion and the corresponding amount is recognized as a finance expense. The obligation is also adjusted for changes in the estimated timing, amount of expected future cash flows, and changes in the discount rate. Such changes in estimates are added to or deducted from the related asset except where deductions are greater than the carrying value of the related asset in which case, the amount of the excess is recognized in profit or loss.
Due to uncertainties concerning environmental remediation, the ultimate cost to the Company of future site restoration could differ from the amounts provided. The estimate of the total provision for future site closure and decommissioning costs is subject to change based on amendments to laws and regulations, changes in technology, price increases and changes in interest rates, and as new information concerning the Company’s closure and decommissioning liabilities becomes available.
| (i) | Use of Estimates and Judgments |
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. These and other estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in these estimates could be material. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized during the year in which the estimates are revised and in any future periods affected.
10
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) |
| (i) | Use of Estimates and Judgments (cont’d) |
Significant Accounting Judgments
Significant accounting judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements include, but are not limited to, the following:
| i) | Recoverability of the carrying value of the Company’s exploration and evaluation assets |
Recorded costs of exploration and evaluation assets are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty and it is reasonably possible, based on existing knowledge, that a change in future conditions could require a material change in the recognized amount.
| ii) | Going concern |
These consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. If the going concern assumptions were not appropriate for these consolidated financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the consolidated statements of financial position.
| iii) | Stage of development |
Once the technical feasibility and commercial viability of an exploration property has been determined, it is then considered to be a mine under development and is reclassified to mineral property. The carrying value of capitalized exploration and evaluation costs are tested for impairment before they are transferred to mineral property. All costs relating to the construction, installation, or completion of a mine that are incurred subsequent to the exploration and evaluation stage are capitalized to mineral property. The Company assesses the stage of each mine under development to determine when a property reaches the stage when it is in the condition for it to be capable of operating in a manner intended by management (“commercial production”). Determining when a mine has achieved commercial production is a matter of judgement.
Critical Accounting Estimates
Key assumptions concerning the future and other key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities include, but are not limited to, the following:
| i) | Share-based payments |
The fair value of share-based payments is determined using the Black-Scholes option pricing model. Such option pricing models require the input of subjective assumptions, including the expected price volatility, option life, dividend yield, risk-free rate and estimated forfeitures at the initial grant date.
| ii) | Estimating useful life of property and equipment |
Depreciation of property and equipment is charged to write-down the value of those assets to their residual value over their respective estimated useful lives. Management is required to assess the useful economic lives and residual values of the assets such that depreciation is charged on a systematic basis to the current carrying amount. The useful lives are estimated having regard to such factors as asset maintenance, rate of technical and commercial obsolescence, and asset usage. The useful lives of key assets are reviewed annually.
11
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLIICY INFORMATION (cont’d) |
| (i) | Use of Estimates and Judgments (cont’d) |
| (iii) | Deferred income taxes |
Judgment is required in determining whether deferred tax assets are recognized in the consolidated statement of financial position. Deferred tax assets, including those arising from unutilized tax losses require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the date of the consolidated statements of financial position could be impacted.
| (iv) | Accrual of British Columbia Mineral Exploration Tax Credit (“BC METC”) |
The provincial government of British Columbia provides for a refundable tax on net qualified mining exploration expenditures incurred in British Columbia. The credit is calculated as 20% of qualified mining exploration expenses less the amount of any assistance received or receivable. The determination of the expenditures that would qualify as mining exploration expenses was based on the previous years’ tax filings and subsequent reviews by government auditors. BC METC will be recorded in profit or loss upon cash receipt or when reasonable assurance exists that the tax filings are assessed and the expenditures are qualified as mining exploration expenses.
| (v) | Decommissioning liabilities |
The Company estimates future site closure and decommissioning costs when environmental disturbances are caused by the exploration and evaluation of exploration and evaluation assets, and equipment. The estimate of the total provision for future site closure and decommissioning costs is subject to change based on laws and regulations, changes in technology, price increases and changes in interest rates, and expected plans for remediation. As at December 31, 2025, management has determined that the Company did not incur any such obligations. The Company will recognize a provision in the period in which a present obligation arises.
| (j) | Financial Instruments |
| (i) | Classification and measurement of financial assets and liabilities |
Under IFRS 9, Financial assets, on initial recognition, are recognized at fair value and subsequently classified and measured at: amortized cost; fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). The classification of financial assets depends on the purpose for which the financial assets were acquired. The Company’s financial assets which consist of cash and cash equivalents, short term investment, deposits and amounts receivable, are classified as amortized cost.
Under IFRS 9, financial liabilities, on initial recognition, are measured at fair value and subsequently measured at FVTPL or amortized cost. The Company’s financial liabilities which consist of accounts payable and accrued liabilities are classified as amortized cost.
12
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) |
| (j) | Financial Instruments (cont’d) |
| (ii) | Impairment of financial assets |
An ‘expected credit loss’ (ECL) model applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in equity instruments. The ECL model requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period. In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through the statement of loss and comprehensive loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. The Company’s financial assets measured at amortized cost are subject to the ECL model.
| (k) | Share capital |
Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects.
Flow-through common shares are a type of common share and are securities permitted by Canadian Income Tax Legislation whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures. The Company accounts for flow-through shares whereby any premium paid for the flow-through shares in excess of the market value of the common shares without flow-through features at the time of issue is credited to flow-through premium liability. The flow-through premium liability is included in profit or loss as the qualifying expenditures are incurred on a pro-rata basis.
The Company may issue units consisting of common shares and common share purchase warrants. The Company estimates the fair value of the common shares based on their market price on the share issuance date. The residual difference, if any, between the unit price and the fair value of each common share represents the fair value attributable to each warrant.
13
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) |
| (l) | Income taxes |
Current income taxes
Income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred income tax
Deferred income tax is recognized as the temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and recognized only to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
| (m) | Foreign currency translation |
Transactions denominated in foreign currencies are translated using the exchange rate in effect on the transaction date or at an average rate. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange in effect at the statement of financial position date. Non-monetary items are translated using the historical rate on the date of the transaction. Revenue and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Foreign exchange gains and losses are included in profit or loss.
| (n) | Loss per share |
Basic loss per share is calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share amounts are calculated assuming that the proceeds received from the exercise of stock options and warrants would be used to repurchase shares at the prevailing market rate. When a loss is incurred during the period, this calculation is considered to be anti-dilutive.
| (o) | Comprehensive income (loss) |
Comprehensive income (loss) is the change in the Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that are not included in profit or loss. The Company currently has incurred no comprehensive income or loss.
14
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 3 | MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) |
| (p) | Share-based payments |
The Company grants share-based awards to employees, directors and consultants as an element of compensation. The fair value of the awards is recognized over the vesting period as share-based compensation expense offset by reserves. The fair value of share-based compensation is determined using the Black-Scholes option pricing model. At each reporting date prior to vesting, the cumulative expense representing the extent to which the vesting period has expired and management’s best estimate of the awards that are ultimately expected to vest is computed. No expense is recognized for awards that do not ultimately vest. When stock options are exercised, the proceeds received, together with any related amount in the reserves, are credited to share capital.
In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the equity instruments. Otherwise, share based compensation are measured at the fair value of the goods or the services received.
| (q) | Application of New and Revised Accounting Standards |
Future standards not yet adopted
IFRS 18 Presentation and Disclosure in Financial Statements
In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements (“IFRS 18”) which replaces IAS 1 Presentation of Financial Statements. This standard aims to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss, in particular additional defined subtotals, disclosures about management-defined performance measures and new principles for aggregation and disaggregation of information. IFRS 18 is accompanied by limited amendments to the requirements in IAS 7 Statement of Cash Flows. IFRS 18 is effective from January 1, 2027. Companies are permitted to apply IFRS 18 before that date. The Company is currently assessing the impact the new standard will have on its consolidated financial statements.
| 4 | CASH AND CASH EQUIVALENTS |
Cash and cash equivalents consist of:
| December 31, 2025 | December 31, 2024 | |||||||
| Cash |
$ | 26,496,922 | $ | 32,057,647 | ||||
| Cash equivalent (Guaranteed investment certificates) |
34,585,123 | - | ||||||
| $ | 61,082,045 | $ | 32,057,647 | |||||
As at December 31, 2025, the Company’s cash includes Guaranteed Investment Certificates bearing interest at rates ranging from 2.5% – 3.3% (December 31, 2024 – 4.00%).
| 5 | PREPAID EXPENSES |
Prepaid expenses consist of:
| December 31, 2025 | December 31, 2024 | |||||||
| Advances for exploration expenditures |
$ | 100,135 | $ | 59,942 | ||||
| Insurance and other administrative expenses |
399,820 | 268,151 | ||||||
| $ | 499,955 | $ | 328,093 | |||||
15
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 6 | GOODS AND SERVICES TAX AND OTHER RECEIVABLE |
Goods and services tax and other receivable consist of:
| December 31, 2025 | December 31, 2024 | |||||||
| Goods and Services Tax receivable |
$ | 644,046 | $ | 67,332 | ||||
| BCMETC receivables |
481,500 | - | ||||||
| Other |
10,610 | 220 | ||||||
| $ | 1,136,156 | $ | 67,552 | |||||
| 7 | PROPERTY AND EQUIPMENT |
Property and equipment consists of:
| Dock | Tents and Trailers |
Equipment | Vehicles | Gas Tank | Boat | Office Furniture |
Total | |||||||||||||||||||||||||
| Cost: |
||||||||||||||||||||||||||||||||
| At December 31, 2023 |
$ | 15,571 | $ | 203,315 | $ | 189,301 | $ | 39,936 | $ | 40,000 | $ | 91,755 | $ | - | $ | 579,878 | ||||||||||||||||
| Additions |
- | - | 18,778 | - | - | - | 4,938 | 23,716 | ||||||||||||||||||||||||
| At December 31, 2024 |
15,571 | 203,315 | 208,079 | 39,936 | 40,000 | 91,755 | 4,938 | 603,594 | ||||||||||||||||||||||||
| Additions |
- | - | 3,764 | - | - | - | 2,217 | 5,981 | ||||||||||||||||||||||||
| Disposals |
- | - | (8,862 | ) | - | - | - | - | (8,862 | ) | ||||||||||||||||||||||
| At December 31, 2025 |
$ | 15,571 | $ | 203,315 | $ | 202,981 | $ | 39,936 | $ | 40,000 | $ | 91,755 | $ | 7,155 | $ | 600,713 | ||||||||||||||||
| Accumulated Depreciation: |
||||||||||||||||||||||||||||||||
| At December 31, 2023 |
$ | 8,627 | $ | 169,528 | $ | 89,364 | 28,837 | $ | 29,199 | $ | 38,267 | $ | - | $ | 363,822 | |||||||||||||||||
| Depreciation |
347 | 10,135 | 23,759 | 3,330 | 1,080 | 8,023 | 1,383 | 48,057 | ||||||||||||||||||||||||
| At December 31, 2024 |
8,974 | 179,663 | 113,123 | 32,167 | 30,279 | 46,290 | 1,383 | 411,879 | ||||||||||||||||||||||||
| Depreciation |
330 | 7,095 | 17,972 | 2,332 | 972 | 6,819 | 1,044 | 36,564 | ||||||||||||||||||||||||
| Disposal |
- | - | (3,771 | ) | (3,771 | ) | ||||||||||||||||||||||||||
| At December 31, 2025 |
$ | 9,304 | $ | 186,758 | $ | 127,324 | $ | 34,499 | $ | 31,251 | $ | 53,109 | $ | 2,427 | $ | 444,672 | ||||||||||||||||
| Net Book Value: |
||||||||||||||||||||||||||||||||
| At December 31, 2024 |
$ | 6,597 | $ | 23,652 | $ | 94,956 | $ | 7,769 | $ | 9,721 | $ | 45,465 | $ | 3,555 | $ | 191,715 | ||||||||||||||||
| At December 31, 2025 |
$ | 6,267 | $ | 16,557 | $ | 75,657 | $ | 5,437 | $ | 8,749 | $ | 38,646 | $ | 4,728 | $ | 156,041 | ||||||||||||||||
16
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 8 | EXPLORATION AND EVALUATION ASSETS |
Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims, as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many exploration and evaluation assets. The Company has investigated title to all of its exploration and evaluation assets and, to the best of its knowledge, title to all of its properties is in good standing.
Exploration and evaluation asset acquisition costs are set out below:
| Property | Balance, December 31, 2023 $ |
Acquisition $ |
Balance, December 31, 2024 $ |
Acquisition $ |
Balance, December 31 2025 $ |
|||||||||||||||
| KV Project |
70,906,785 | - | 70,906,785 | - | 70,906,785 | |||||||||||||||
| Big Bulk |
- | 422,750 | 422,750 | 264,798 | 687,548 | |||||||||||||||
| Kinskuch |
- | - | - | 5,213,815 | 5,213,815 | |||||||||||||||
| Porter |
- | - | - | 1,159,404 | 1,159,404 | |||||||||||||||
| American Creek |
- | - | - | 368,315 | 368,315 | |||||||||||||||
| Theia |
- | - | - | 897,116 | 897,116 | |||||||||||||||
| BA property |
- | - | - | 1,114,225 | 1,114,225 | |||||||||||||||
| Red Cliff |
- | - | - | 9,284 | 9,284 | |||||||||||||||
| 70,906,785 | 422,750 | 71,329,535 | 9,026,957 | 80,356,492 | ||||||||||||||||
Kitsault Valley (“KV”) Project
During the years ended December 31, 2011 to 2018, the Company purchased the Dolly Varden (or “DV”) property, consisting of fee simple titles, mineral claims and mineral tenures in respect of certain lands located in the Kitsault area of British Columbia. The property is subject to a 2% net smelter return royalty (“NSR”) of which one-half (or 1%) of the NSR can be repurchased by the Company for $2,750,000 at any time.
On February 25, 2022, the Company completed the acquisition of a 100% interest in the Homestake Ridge property pursuant to a purchase agreement with Fury Gold Mines Ltd. (“Fury”). The Homestake Ridge property is located adjacent to the Company’s DV property. The Homestake Ridge property is subject to a 2% NSR applicable to certain claims (the “Crown Grants”). The 2% NSR on the Crown Grants includes an annual advanced minimum royalty of $50,000 payment obligations. Ten business days after commencement of commercial production, approximately 17,300 shares of the Company are to be issued to the NSR holders. Additionally, a small area of the Homestake Ridge property is subject to a 3% royalty. The Company refers to the combination of its Homestake Ridge and DV properties as the KV Project. As of December 31, 2025, the Company has deposits totalling $208,000 (December 31, 2024 - $159,000) as reclamation bonds related to permits for the KV Project.
Big Bulk Property
On December 19, 2023, the Company entered into an assignment and assumption agreement (the “Assignment Agreement”) with Libero Copper & Gold Corporation (“Libero”) pursuant to which the Company was assigned the rights to an option agreement (the “Option Agreement”) to earn a 100% interest in certain claims known as the Big Bulk property. As consideration for the Assignment Agreement the Company issued Libero 68,750 common shares of the Company valued at $222,750, on January 9, 2024 (Note 9).
17
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 8 | EXPLORATION AND EVALUATION ASSETS (cont’d) |
In connection with this acquisition, the Company also entered into an amended agreement with LCT Holdings Inc., the owner of the Big Bulk property and optionor under the Option Agreement. The amended Option Agreement provides that the Company may earn-in a 100% undivided interest in the Big Bulk property by completing the following payments:
a) $50,000 in cash on or before December 31, 2023 (cash paid);
b) $150,000 in cash on or before December 31, 2024 (cash paid);
c) $250,000 in cash or common shares on or before December 31, 2025 (shares issued);
d) $500,000 in cash or common shares on or before December 31, 2026; and
e) $500,000 in cash or common shares on or before December 31, 2027.
The Company has the right to elect to issue common shares instead of a cash payment only when the market price of the common shares at the time is equal or greater than to the ten day volume weighted average price of the common shares of the Company, subject to such exchange’s minimum pricing rules and further provided that the common shares may only be issued by the Company if the deemed price is equal to or greater than $0.64 per common share, otherwise the Company may only satisfy such payment in cash.
Kinskuch Property
On May 23, 2025, the Company acquired 100% interest in the Kinskuch Property, in British Columbia, from Hecla Mining Company (“Hecla”) with the issuance of 1,351,963 common shares having a fair value of $5,178,018 (Note 9). The Company incurred $35,000 in legal fees related to the acquisition. Hecla will also retain a 2% NSR on the Kinskuch Property. The NSR will include a 50% buyback right, for $5,000,000, that will allow Dolly Varden to reduce the royalty to 1% at any time.
Porter Project
On May 23, 2025, the Company acquired 100% interest in the Porter Project, in British Columbia, from Strikepoint Gold Inc. (“Strikepoint”) with the issuance of 295,699 common shares of the Company having a fair value of $1,105,914 (Note 9). The Company incurred $53,000 in legal fees related to the acquisition.
American Creek Property, Theia Property, BA Property, and Red Cliff Property
On June 26, 2025, the Company acquired an interest in four properties in British Columbia totaling over 20,000 hectares (collectively, the “Properties”) from MTB Metals Corp. by issuance of 486,072 common shares of the Company valued at $2,245,653 (Note 9) plus the assumption of an outstanding property payment obligations of $50,000. The Company incurred $93,280 in legal fees related to the acquisition. The Properties include the American Creek Property (consisting of Mountain Boy Property, Silver Crown Property, and Dorothy Property), the Theia Property, the BA Property, and the Red Cliff Property. MTB Metals Corp. retained a 1% NSR on each of the Properties, pursuant to the terms of separate royalty agreements for each property.
In connection with the acquisition, the Company also entered into an amended joint venture (“JV”) agreement with Decade Resources Ltd. (“Decade”). As of June 26, 2025 the parties have been deemed to have entered into a joint operation agreement, whereby Decade owns 65% interest and Dolly Varden owns 35% interest in the Red Cliff Property. In addition, the Company entered into an amended option agreement (the “Option Agreement”) with Kenneth Gin and Kirpaul Siddoo (the “Optionors”) to acquire 100% interest in the American Creek Property, the Theia Property, and the BA Property. To maintain good standing of the Option Agreement, and to earn a 100% ownership interest in the three properties, the Company paid the Optionors $50,000 in cash. Upon exercise of the Option Agreement, the Dorothy Property is subject to a 2.5% NSR payable to the Optionors, commencing upon the achievement of commercial production. Commercial production is defined as either (i) achieving 70% of rated capacity for 30 consecutive days, or (ii) direct shipping of ore for profit. The Company retains the right to purchase 0.5% of the NSR for $1,000,000 within 90 days following the commencement of commercial production.
18
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 8 | EXPLORATION AND EVALUATION ASSETS (cont’d) |
Exploration And Evaluation Expenses
The following table summarizes the exploration and evaluation expenses incurred during the years ended December 31, 2025 and 2024.
| December 31, 2025 | December 31, 2024 | |||||||
| Analytical and sample related |
$ | 1,448,473 | $ | 1,127,904 | ||||
| Camp, food, supplies and related |
2,303,348 | 1,988,143 | ||||||
| Claim maintenance |
19,875 | 80,012 | ||||||
| Community relations and related |
231,871 | 82,385 | ||||||
| Depreciation |
36,564 | 48,057 | ||||||
| Drilling and related |
15,582,423 | 9,800,110 | ||||||
| Equipment and warehouse rental |
874,274 | 822,228 | ||||||
| Fuel |
789,482 | 738,856 | ||||||
| Geological and geoscience |
2,735,879 | 1,619,939 | ||||||
| Mapping and modelling |
180,640 | 165,618 | ||||||
| Project supervision |
467,340 | 602,500 | ||||||
| Resource and metallurgy |
22,133 | - | ||||||
| Road and drill pad preparation |
904,888 | 830,720 | ||||||
| Transport, travel and related |
82,752 | 87,057 | ||||||
| Cost recovery: BC METC |
(481,500 | ) | (118,212 | ) | ||||
| Total |
$ | 25,198,442 | $ | 17,875,317 | ||||
19
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 9 | SHARE CAPITAL |
Authorized: Unlimited number of common shares without par value.
Issued:
During the year ended December 31, 2025, the Company issued 269,806 common shares (2024-171,223) pursuant to conversion of restricted share units (“RSUs”). The value of the settled units adjusted the share capital reserve account by $1,019,246 (2024 -$664,346).
During the year ended December 31, 2025, the Company issued 252,062 common shares (2024-908,584) pursuant to the exercise of stock options for proceeds of $684,805 (2024-$1,319,607).
On December 22, 2025, the Company issued to Libero 38,941 common shares of the Company valued at $264,799 in relation to the Assignment Agreement (Note 8).
On October 23, 2025, the Company closed a bought deal financing for total gross proceeds of $33,973,000 by issuing 4,646,000 shares. The financing comprised 2,906,000 common shares at $6.50 per share for $18,889,000 under the LIFE exemption, 750,000 charity flow-through shares at $9.42 per share for $7,065,000, and 990,000 flow-through shares at $8.10 per share for $8,019,000. In connection with the closing of the financing, a finders’ fee of $1,698,650 was paid representing 5% of the gross proceeds.
On June 26, 2025, the Company closed a bought deal financing for aggregate gross proceeds to the Company of $28,755,500 through two offerings. Under the listed issuer financing exemption (“LIFE Offering”), the Company sold 2,445,500 common shares of the Company at a price of $4.60 per common share for gross proceeds of $11,249,300 and also sold 1,128,000 flow-through common shares at a price of $6.65 per FT common share for gross proceeds of $7,501,200. Under the Private Placement Offering, the Company sold 1,740,000 FT common shares of the Company at a price of $5.75 per flow through common share for gross proceeds of $10,005,000. In connection with the closing of the two financings, a finders’ fee of $1,437,775 was paid representing 5% of the gross proceeds.
On June 26, 2025, the Company completed the acquisition of interests in four mineral properties from MTB Metals Corp., which included the assumption of existing option and joint venture agreements. As consideration, the Company issued 486,072 common shares having a fair value of $2,245,653 (Note 8).
On May 23, 2025, the Company completed the acquisition of the Porter Project from Strikepoint. As consideration for the acquisition, the Company issued 295,699 common having a fair value of $1,105,914 (Note 8).
On May 23, 2025, the Company completed the acquisition of the Kinskuch Property from Hecla. As consideration for the acquisition, the Company issued 1,351,963 common shares to Hecla at a fair value of $5,178,018. (Note 8).
On September 27, 2024, the Company closed the second and final tranche of a bought deal financing for additional gross proceeds of $4,500,000 from the issuance of 900,000 flow through common shares at price of $5.00 per flow through common share. In connection with the closing of the first tranche of the offering, a finders’ fee of $225,000 was paid representing 5.0% of the gross proceeds.
20
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 9 | SHARE CAPITAL (cont’d) |
On September 4, 2024, the Company closed the first tranche of a bought deal financing for aggregate gross proceeds to the Company of $27,700,000. Pursuant to the close of the first tranche of this financing, the Company sold 2,875,000 common shares of the Company at a price of $4.00 per common share for gross proceeds of $11,500,000 and also sold 3,240,000 FT common shares at a price of $5.00 per FT common share for gross proceeds of $16,200,000. In connection with the closing of the first tranche of this financing, a finders’ fee of $1,385,000 was paid representing 5.0% of the gross proceeds.
On March 26, 2024, the Company closed a bought deal financing for gross proceeds to the Company of $14,999,985. Pursuant to this financing, the Company sold 3,571,425 FT common shares on a charitable basis at a price of $4.20 per FT common share. Underwriter fees of $749,999 were paid in relation to this financing.
On January 9, 2024, the Company issued to Libero 68,750 common shares of the Company valued at $222,750 in relation to the Assignment Agreement (Note 8).
Restricted Share Units
Under the Company’s Omnibus Plan, the maximum number of common shares issuable upon the vesting of RSUs granted pursuant to the Omnibus Plan combined with other share-based compensation arrangements is set at 10% of the total issued common shares. The Omnibus Plan is an evergreen plan meaning any vesting of an RSU will, subject to the overall limit described above, allow new grants available under the Omnibus Plan resulting in a reloading of the number of RSUs available for grant.
On February 28, 2025, the Company granted 237,244 RSUs to various directors with vesting equally spread over three years with the first vesting occurring on March 15, 2026. On April 2, 2024, the Company granted 295,750 RSUs to various directors with vesting equally spread over three years with the first vesting occurring after one year. The Company expensed $1,096,596 included in share-based compensation expense during the year ended December 31, 2025 (2024 - $1,139,455).
| Number of RSUs | ||||
| Balance, December 31, 2023 |
513,671 | |||
| Granted |
295,750 | |||
| Settlement upon vesting |
(171,223 | ) | ||
| Balance, December 31, 2024 |
638,198 | |||
| Granted |
237,244 | |||
| Settlement upon vesting |
(269,806 | ) | ||
| Balance, December 31, 2025 |
605,636 | |||
21
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 9 | SHARE CAPITAL (cont’d) |
Stock Options
The Company has an Omnibus Plan under which it is authorized to grant share purchase options to executive officers, directors, employees and consultants enabling the holder to acquire up to 10% of the issued and outstanding common shares of the Company. Under the plan, the exercise price of each option shall be no less than the discounted market price of the Company’s shares prior to the grant in accordance with Exchange policies. Options are granted for a maximum term of 10 years.
Vesting is at the discretion of the Board of Directors. In the absence of a vesting schedule, such options shall vest immediately.
| Number of Options |
Weighted Average Exercise Price $ |
|||||||
| Balance, December 31, 2023 |
2,717,689 | 2.48 | ||||||
| Granted |
706,000 | 3.40 | ||||||
| Exercised |
(908,584 | ) | 1.44 | |||||
| Forfeited/expired |
(116,667 | ) | 2.56 | |||||
| Balance, December 31, 2024 |
2,398,438 | 3.14 | ||||||
| Granted |
548,500 | 4.00 | ||||||
| Exercised |
(252,062 | ) | 2.72 | |||||
| Balance, December 31, 2025 |
2,694,876 | 3.36 | ||||||
As at December 31, 2025, the Company had outstanding stock options enabling the holders to acquire common shares as follows:
| Date of Expiry |
|
Exercise Price $ |
|
|
Number of Stock Options Outstanding as at December 31, 2025 |
| ||
| March 25, 2026 |
2.84 | 431,250 | ||||||
| February 25, 2027 |
3.16 | 877,500 | ||||||
| August 19, 2027 |
2.84 | 81,250 | ||||||
| February 24, 2028 |
3.88 | 100,000 | ||||||
| March 28, 2029 |
3.36 | 620,751 | ||||||
| May 22, 2029 |
4.24 | 25,000 | ||||||
| June 24, 2029 |
4.00 | 10,625 | ||||||
| February 28, 2030 |
4.00 | 548,500 | ||||||
| Total Outstanding |
3.36 | 2,694,876 | ||||||
| Total Exercisable |
3.17 | 1,925,626 |
During the year ended December 31, 2025, the Company recognized a total of $1,085,228 (2024 - $1,461,500) in share-based payments expense for the options granted and vested during the year. The fair value of options granted during the year ended December 31, 2025 was $2.38 (2024 - $2.48) per option. The weighted average remaining life of the stock options as of December 31, 2025 is 1.49 years (December 31, 2024 – 2.60 years).
22
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 9 | SHARE CAPITAL (cont’d) |
The following weighted average assumptions were used for the Black-Scholes valuation of stock options granted:
| For the year ended |
December 31, 2025 | December 31, 2024 | ||||||
| Risk-free interest rate |
2.60% | 3.68% | ||||||
| Expected dividend yield |
0% | 0% | ||||||
| Annualized stock price volatility |
77% | 83% | ||||||
| Expected life of options |
5 years | 5 years | ||||||
| Expected forfeiture rate |
0 | % | 0 | % |
Flow-through Premium Liability
The following is a continuity of the liability portion of the flow-through share issuances:
| Balance, December 31, 2023 |
$ | - | ||
| Flow-through premium liability additions |
7,779,996 | |||
| Settlement of flow-through share premium liability pursuant to qualifying expenditures |
(4,301,284) | |||
| Balance, December 31, 2024 |
3,478,712 | |||
| Flow-through premium liability additions |
8,087,400 | |||
| Settlement of flow-through share premium liability pursuant to qualifying expenditures |
(4,561,159) | |||
| Balance, December 31, 2025 |
$ | 7,004,953 |
Anti-dilution rights agreements
In September 2012, the Company entered into an ancillary rights agreement with Hecla, whereby as long as Hecla holds a pro-rata interest of 10%, it reserves the right to maintain its ownership interest in the event the Company issues any equity securities. In February 2022, the Company entered into an investor rights agreement in relation to the acquisition of Homestake with Fury whereby as long as Fury holds a pro-rata interest of 10%, it reserves the right to maintain its ownership interest in the event the Company issues any equity securities for cash. At December 31, 2025 each of Hecla and Fury owned greater than 10% of the Company.
| 10 | CAPITAL MANAGEMENT |
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern to pursue other business opportunities and to maintain a flexible capital structure that optimizes the cost of capital within a framework of acceptable risk. The capital of the Company consists of items within shareholders’ equity.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue new debt, or acquire or dispose of assets.
The Company is dependent on the capital markets as its main source of operating capital. The Company’s capital resources are largely determined by the strength of the junior public markets, by the status of the Company’s projects in relation to these markets and its ability to compete for investor support of its projects. There have been no changes to the Company’s approach to capital management During the year ended December 31, 2025. The Company has no capital restrictions other than an anti-dilution right in favour of Hecla and Fury whereby both parties have the right to maintain their equity holdings in the Company.
23
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 11 | RELATED PARTY TRANSACTIONS |
During the years ended December 31, 2025 and 2024, the Company incurred the following amounts charged by officers and directors (being key management personnel) and companies controlled and/or owned by officers and directors of the Company in addition to the related party transactions disclosed elsewhere in these consolidated financial statements:
| Year ended | ||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||
| Directors’ fees |
$ | 233,000 | $ | 228,400 | ||||
| Consulting fees |
25,000 | - | ||||||
| Exploration and evaluation (3,4) |
498,750 | 722,500 | ||||||
| Management fees (1)(2) |
1,107,500 | 1,442,200 | ||||||
| Share-based payments (1)(2) |
1,842,089 | 2,026,036 | ||||||
| Total |
$ | 3,706,339 | $ | 4,419,136 | ||||
| (1) | The Company entered into a consulting service agreement with S2K Capital Corp. and Shawn Khunkhun, Chief Executive Officer and director of the Company. Pursuant to this consulting agreement, Mr. Khunkhun is compensated at a rate of $34,167 (2024 - $30,000) per month, where the increase was effective April 1, 2025. The Company is required to pay an equivalent to 24 months’ pay plus an average of any cash performance bonus paid in the previous two completed financial years if the consulting agreement is terminated by either party absent an event of default during the twelve-month period following the date of a change in control of the Company. During the year ended December 31, 2025, the Company paid a $360,000 bonus related to the year ended December 31, 2024 and made an allowance of $400,000 for amounts expected to be paid in 2026 that relate to the year ended December 31 2025. If the agreement is terminated for reasons other than event of default, the Company is required to pay a sum equal to 12 months’ pay. |
| (2) | The Company entered into a consulting service agreement with Fehr & Associates and Ann Fehr, Chief Financial Officer (“CFO”) for full outsourced accounting and corporate secretary services. During the year ended December 31, 2025, the Company paid $16,667 (2024 - $16,667) per month for CFO services. During the year ended December 31, 2025, the Company paid a $100,000 bonus related to the year ended December 31, 2024, and made a bonus allowance of $110,000 for amounts estimated to be payable in 2026 that relate to the year to end December 31, 2025. The Company is required to pay an equivalent to 12 months’ pay if the consulting agreement is terminated by either party absent an event of default during the twelve-month period following the date of a change in control of the Company. |
| (3) | The Company entered into a consulting service agreement with Robert van Egmond, VP Exploration of the Company. Pursuant to this consulting agreement, Mr. van Egmond is compensated at a rate of $23,333 (2024 - $22,500) per month effective April 1, 2025. During the year ended December 31, 2025, the Company paid a $135,000 bonus related to the year ended December 31, 2024, and made a bonus allowance of $135,000 for amounts expected to be paid in 2026 that relate to the year to end December 31, 2025. The Company is required to pay the equivalent to 12 months’ pay if the consulting agreement is terminated by either party, absent an event of default, during the twelve-month period following the date of a change in control of the Company. |
| (4) | The Company paid $120,000 (2024- $120,000) in exploration and evaluation expenses to a company controlled by a director. |
| (5) | The Company recognized consulting expenses of $25,000 (2024-$nil) to a company controlled by a director. |
Other related party transactions are as follows:
At December 31, 2025, included in accounts payable is $20,533 (December 31, 2024 - $10,640) owed to officers of the Company.
At December 31, 2025 included in accrued liabilities is $675,000 (December 31, 2024 – $686,750) accrued to officers and directors of the Company.
During the year ended December 31, 2025, $151,025 (2024 - $94,537) of accounting and administration fees were paid to Fehr & Associates, a corporation controlled by the CFO, that were attributable to costs directly associated with office space, accounting services and administration staff used by the Company.
24
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 11 | RELATED PARTY TRANSACTIONS (cont’d) |
The Porter Property acquisition (Note 8) was a related party transaction on account that Shawn Khunkhun, Chief Executive Officer, President and a director of Dolly Varden is also the Executive Chairman and a director of Strikepoint.
The Kinskuch Property acquisition (Note 8) is a related party transaction as Hecla is considered an insider on account of Hecla being a significant shareholder with over 10% interest ownership.
| 12 | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT |
The Company’s financial instruments recorded at fair value require disclosure as to how the fair value was determined based on significant levels of input described in the following hierarchy:
| • | Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| • | Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
| • | Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
The Company’s financial instruments include cash and cash equivalents, short term investment, amounts receivable, deposits, accounts payable and accrued liabilities, all of which are measured at amortized cost.
Financial Instruments
The carrying values of cash and cash equivalents, amounts receivable, deposits, accounts payable and accrued liabilities approximate fair values due to the short-term nature of these instruments or market rates of interest. The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below.
Credit Risk
The Company’s credit risk is primarily attributable to cash and cash equivalents, deposits and Goods and Services Tax (“GST”) receivable. The Company has no significant concentration of credit risk arising from operations. Cash consists of bank balances and demand guaranteed investment certificates at reputable financial institutions, from which management believes the risk of loss to be remote. GST receivable and deposits are due from government agencies. The Company limits its exposure to credit risk for cash by placing it with high quality financial institutions.
Liquidity Risk
The Company’s ability to remain liquid over the long term depends on its ability to obtain additional financing through the issuance of additional securities, entering into credit facilities, or entering into joint ventures, partnerships or other similar arrangements. The Company’s ability to continue as a going concern is dependent upon its ability to continue to raise adequate financing in the future to meet its obligations and repay its liabilities arising from normal business operations when they come due. As at December 31, 2025, the Company had cash and cash equivalents of $61,082,045 to settle current liabilities of $4,005,783 (excluding liability on flow-through share issuances).
25
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 12 | FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d) |
Interest Rate Risk
The Company has cash and cash equivalent balances subject to fluctuations in the prime rate. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. Management believes that interest rate risk is remote, as investments are redeemable at any time and interest can be earned up to the date of redemption.
Price Risk
The Company is exposed to price risk with respect to commodity prices. The Company’s future mining operations will be significantly affected by changes in the market price for silver. Precious metal prices fluctuate daily and are affected by numerous factors beyond the Company’s control. The supply and demand for commodities, level of interest rates, rate of inflation, investment decisions by large holders of commodities and stability of exchange rates can all cause significant fluctuations in commodity prices.
| 13 | SEGMENTED INFORMATION |
The Company operates in one reportable segment, the exploration and development of unproven exploration and evaluation assets. The Company’s primary exploration and evaluation assets are located in British Columbia, and its corporate assets, comprising mainly of cash, are located in Canada. The Company is in the exploration stage and has no reportable segment revenues or operating results. All corporate expenses are incurred in Canada.
| 14 | INCOME TAX |
A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
| Year ended | Year ended | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Loss for the year |
$ | (31,738,497) | $ | (20,649,147) | ||||
| Expected income tax recovery |
(8,569,000) | (5,575,000) | ||||||
| Change in statutory rates and other |
28,000 | - | ||||||
| Permanent difference |
(633,000) | (407,000) | ||||||
| Impact of flow through share issuance |
6,470,000 | 4,355,000 | ||||||
| Share issuance costs |
(1,077,000) | (812,000) | ||||||
| Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses |
95,000 | 196,000 | ||||||
| Change in unrecognized deductible temporary differences |
3,686,000 | 2,243,000 | ||||||
| Total income tax expense (recovery) |
$ | - | $ | - | ||||
26
DOLLY VARDEN SILVER CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Expressed in Canadian Dollars)
| 14 | INCOME TAX (cont’d) |
The significant components of the Company’s unrecorded deferred tax assets and liabilities are as follows:
| Year ended | Year ended | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Deferred tax assets: |
||||||||
| Exploration and evaluation assets |
$ | 8,709,000 | $ | 8,451,000 | ||||
| Property and equipment |
296,000 | 245,000 | ||||||
| Share issuance costs |
1,493,000 | 933,000 | ||||||
| Non-capital losses available for future periods |
16,329,000 | 13,622,000 | ||||||
| $ | 26,937,000 | $ | 23,251,000 | |||||
| Unrecognized deferred tax assets |
(26,937,000) | (23,251,000) | ||||||
| Net deferred tax assets |
$ | - | $ | - | ||||
The Company’s unrecognized deductible temporary differences, tax credits and tax losses are as follows:
| As at | As at | |||||||||||
| December 31, 2025 |
December 31, 2024 |
|||||||||||
| Temporary Differences: |
||||||||||||
| Investment tax credit |
$ | 711,000 | 2031 -2033 | $ | 711,000 | |||||||
| Property and equipment |
$ | 1,096,000 | No expiry date | $ | 905,000 | |||||||
| Exploration and evaluation assets |
$ | 30,330,000 | No expiry date | $ | 29,378,000 | |||||||
| Share issuance costs |
$ | 5,529,000 | 2046 to 2049 | $ | 3,454,000 | |||||||
| Non-capital losses available for future periods |
$ | 60,886,000 | 2027 to 2045 | $ | 50,453,000 | |||||||
| 15 | SUBSEQUENT EVENT |
Subsequent to December 31, 2025, the Company issued 93,750 common shares pursuant to the exercise of stock options for proceeds of $300,250.
27
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information (“Unaudited Pro Forma Financial Information”) has been prepared based on the historical audited consolidated financial statements of Contango Ore, Inc. (“Contango”) and Dolly Varden Silver Corporation (“Dolly Varden”), as indicated below, and is intended to provide information about how the Arrangement might have affected Contango’s historical financial statements.
The unaudited pro forma condensed combined statements of operations (“Unaudited Pro Forma Statement of Operations”) for the year ended December 31, 2025, combines the historical audited consolidated statement of operations of Contango for the year, with the respective historical audited consolidated statement of operations of Dolly Varden, as if the Arrangement had occurred on January 1, 2025. The unaudited pro forma condensed combined balance sheet (“Unaudited Pro Forma Balance Sheet”) as of December 31, 2025, combines the historical audited consolidated balance sheet of Contango and the historical audited consolidated statement of financial position of Dolly Varden each as of December 31, 2025, as if the Arrangement had occurred on December 31, 2025.
The Unaudited Pro Forma Financial Information has been developed from and should be read in conjunction with:
| ● | the accompanying notes to the unaudited Pro Forma Financial Information; |
| ● | the historical audited consolidated financial statements of Contango for the year ended December 31, 2025, included in Contango’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 16, 2026; |
| ● | the historical audited consolidated financial statements of Dolly Varden for the years ended December 31, 2025 and 2024, filed as Exhibit 99.2 to this Current Report on Form 8-K; and |
| ● | other information relating to Contango and Dolly Varden contained in or incorporated by reference into Contango’s definitive proxy statement on Form DEFM14A, filed with the SEC on February 13, 2026 (the “Merger Proxy Statement”). |
The Unaudited Pro Forma Financial Information is presented applying guidance for an asset acquisition as Contango concluded that the acquired set of assets did not meet the U.S. GAAP definition of a business. An acquisition accounted as an asset acquisition requires an acquiring entity to allocate the cost of an asset acquisition to the net assets acquired generally based on their relative fair values. Goodwill is not recognized in an asset acquisition.
The Unaudited Pro Forma Financial Information is presented for informational purposes only. The information has been prepared in accordance with Article 11 of Regulation S-X of the SEC as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using the assumptions set forth in the notes to the Unaudited Pro Forma Financial Information. The information has been adjusted to include estimated transaction accounting adjustments, which reflect the application of the accounting required by U.S. GAAP.
The information is not necessarily indicative of the financial position and results of operations that actually would have been achieved had the Arrangement occurred as of the dates indicated herein, nor do they purport to project the future financial position and operating results of the combined company. The Unaudited Pro Forma Financial Information also does not reflect the costs of any integration activities or cost savings or synergies expected to be achieved as a result of the Arrangement, which are described in the section of the Merger Proxy Statement entitled “The Arrangement-Contango’s Reasons for the Arrangement,” and, accordingly, do not attempt to predict or suggest future results.
Contango ORE, Inc. (to be named “Contango Silver & Gold Inc.”)
Pro Forma Condensed Combined Balance Sheet
As of December 31, 2025
(Expressed in United States dollars, except number of shares)
| Contango Historical |
Dolly Varden Historical |
|||||||||||||||||
| As at December 31, 2025 |
As at December 31, 2025 |
Note | Transaction accounting adjustments |
Pro forma December 31, 2025 |
||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| ASSETS |
||||||||||||||||||
| Current |
||||||||||||||||||
| Cash |
64,837,617 | 44,565,916 | - | 109,403,533 | ||||||||||||||
| Restricted cash |
106,365 | - | - | 106,365 | ||||||||||||||
| Prepaid expenses and other |
3,290,962 | 364,771 | 5(c) | (2,200,000 | ) | 1,455,733 | ||||||||||||
| Income tax and GST receivable
|
106,244 | 828,948 | - | 935,192 | ||||||||||||||
| 68,341,188 | 45,759,635 | (2,200,000 | ) | 111,900,823 | ||||||||||||||
| Investment in Peak Gold, LLC |
47,108,733 | - | - | 47,108,733 | ||||||||||||||
| Property & equipment, net |
52,065,293 | 113,849 | 5(c) | 391,717,265 | 443,896,407 | |||||||||||||
| Marketable securities |
4,436,013 | - | - | 4,436,013 | ||||||||||||||
| Reclamation deposits |
- | 151,758 | - | 151,758 | ||||||||||||||
| Exploration and evaluation assets |
- | 58,628,697 | 5(c) | (58,628,697 | ) | - | ||||||||||||
| Total assets |
171,951,227 | 104,653,939 | 330,888,568 | 607,493,734 | ||||||||||||||
| LIABILITIES |
||||||||||||||||||
| Current |
||||||||||||||||||
| Accounts payable |
1,014,233 | 1,191,895 | 5(c) | 7,834,129 | 10,040,257 | |||||||||||||
| Accrued liabilities |
4,336,813 | 1,730,754 | 5(c) | 1,000,000 | 7,067,567 | |||||||||||||
| Liability on flow-through share issuance |
- | 5,110,866 | - | 5,110,866 | ||||||||||||||
| Royalty reimbursement advance |
488,045 | - | - | 488,045 | ||||||||||||||
| Derivative contract liability |
66,465,622 | - | - | 66,465,622 | ||||||||||||||
| Debt, current portion |
4,000,000 | - | - | 4,000,000 | ||||||||||||||
| 76,304,713 | 8,033,515 | 8,834,129 | 93,172,357 | |||||||||||||||
| Asset retirement obligation |
123,444 | - | - | 123,444 | ||||||||||||||
| Contingent consideration liability |
2,757,952 | - | - | 2,757,952 | ||||||||||||||
| Derivative contract liability |
37,191,718 | - | - | 37,191,718 | ||||||||||||||
| Debt, non-current portion |
29,857,758 | - | - | 29,857,758 | ||||||||||||||
| Deferred tax liability |
617,353 | - | 5(c) | 89,933,913 | 90,551,266 | |||||||||||||
| Total liabilities |
146,852,938 | 8,033,515 | 98,768,042 | 253,654,495 | ||||||||||||||
| STOCKHOLDERS’ EQUITY |
||||||||||||||||||
| Preferred stock |
- | - | - | - | ||||||||||||||
| Common stock |
149,687 | 208,654,370 | 5(c), 5(d), 6 | (208,501,541 | ) | 302,516 | ||||||||||||
| Additional paid-in capital |
238,155,692 | - | 5(c), 5(f) 6 | 328,588,121 | 566,743,813 | |||||||||||||
| Treasury stock at cost |
(48,308 | ) | - | 6 | - | (48,308 | ) | |||||||||||
| Reserves |
- | 9,636,256 | 5(c), 5(d) 5(f), 6 |
(9,636,256 | ) | - | ||||||||||||
| Accumulated deficit |
(213,158,782 | ) | (121,670,202 | ) | 5(c), 5(d), 6 | 121,670,202 | (213,158,782 | ) | ||||||||||
| Total stockholders’ equity |
25,098,289 | 96,620,424 | 232,120,526 | 353,839,239 | ||||||||||||||
| Total liabilities and stockholders’ equity |
171,951,227 | 104,653,939 | 330,888,568 | 607,493,734 | ||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
2
Contango ORE, Inc. (to be named “Contango Silver & Gold Inc.”)
Pro Forma Condensed Combined Statement of Operations
For the year Ended December 31, 2025
(Expressed in United States dollars, except number of shares)
| Contango Historical |
Dolly Varden Historical |
|||||||||||||||||||
| Year ended December 31, 2025 |
Year ended December 31, 2025 |
Note | Transaction accounting adjustments |
Pro forma December 31, 2025 |
||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| Claim rental expense |
463,949 | - | - | 463,949 | ||||||||||||||||
| Exploration expense |
5,820,896 | 18,027,703 | - | 23,848,599 | ||||||||||||||||
| Depreciation expense |
140,729 | - | - | 140,729 | ||||||||||||||||
| General and administrative |
13,082,874 | 8,565,610 | 5 | (g) | 649,720 | 22,298,204 | ||||||||||||||
| Income from equity investment in Peak Gold, LLC |
(88,585,112 | ) | - | - | (88,585,112 | ) | ||||||||||||||
| (Income)/loss from operations |
(69,076,664 | ) | 26,593,313 | 649,720 | (41,833,631 | ) | ||||||||||||||
| Interest and other income |
(1,772,675 | ) | (4,105,911 | ) | - | (5,878,586 | ) | |||||||||||||
| Interest and finance expense |
7,598,562 | - | - | 7,598,562 | ||||||||||||||||
| Loss on derivative contracts |
109,108,194 | - | - | 109,108,194 | ||||||||||||||||
| Gain on metal sales |
(5,324,700 | ) | - | - | (5,324,700 | ) | ||||||||||||||
| Unrealized gain on marketable securities |
(4,749,312 | ) | - | - | (4,749,312 | ) | ||||||||||||||
| Loss before income tax |
35,783,405 | 22,487,402 | 649,720 | 58,920,527 | ||||||||||||||||
| Income tax expense |
303,240 | 219,248 | 5 | (g) | - | 522,488 | ||||||||||||||
| Net loss |
36,086,645 | 22,706,650 | 649,720 | 59,443,015 | ||||||||||||||||
| Basic and diluted loss per share |
2.80 | 0.27 | 2.11 | |||||||||||||||||
| Weighted average number of shares outstanding – basic and diluted |
12,902,668 | 84,499,539 | 5 | (h) | (69,216,661 | ) | 28,185,546 | |||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. NATURE OF OPERATIONS
These unaudited pro forma condensed combined financial statements as at December 31, 2025 and for the year ended December 31, 2025 (the “financial statements”) of Contango ORE, Inc. (to be named “Contango Silver & Gold Inc.”) have been prepared for purposes of inclusion in the Merger Proxy Statement.
Contango was formed on September 1, 2010 as a Delaware corporation for the purpose of engaging in the exploration for and development of gold ore and associated minerals in the State of Alaska.
CORE Alaska, a wholly-owned subsidiary of Contango has a 30.0% membership interest in the Peak Gold JV. Kinross Gold Corporation (“Kinross”) holds the remaining 70.0% membership interest in the Peak Gold JV and Kinross serves as the manager of the Peak Gold JV and operator of the Manh Choh (as defined below) mines.
Contango conducts its business through the below primary means:
| ● | its 30.0% membership interest in the Peak Gold JV, which leases approximately 675,000 acres from the Tetlin Tribal Council and holds approximately 13,000 acres of State of Alaska mining claims (collectively, the “Peak Gold JV Property”), including the Main and North Manh Choh deposits (“Manh Choh” or the “Manh Choh Project”); |
| ● | its wholly-owned subsidiary Contango Mining Canada Inc. (British Columbia), which holds 100% equity in HighGold Mining Inc., which in turn owns J T Mining, Inc., leasing approximately 21,000 acres (“Johnson Tract” or the “Johnson Tract Project”) from Cook Inlet Region, Inc. (“CIRI”), 125 miles southwest of Anchorage, Alaska; |
| ● | its wholly-owned subsidiary Contango Lucky Shot Alaska, LLC (“LSA”), leasing approximately 8,600 acres of State and patented mining claims (“Lucky Shot” or the “Lucky Shot Property”) in the Willow Mining District, approximately 75 miles north of Anchorage, Alaska; |
| ● | its wholly-owned subsidiary Contango Minerals Alaska, LLC, controlling approximately 145,330 acres of State mining claims, including: (i) approximately 69,780 acres northwest of Peak Gold JV (“Eagle/Hona Property”), (ii) approximately 14,850 acres northeast of Peak Gold JV (“Triple Z Property”), (iii) approximately 52,700 acres in the Richardson district (“Shamrock Property”), and (iv) approximately 8,000 acres near Lucky Shot (“Willow Property”) (collectively, the “Minerals Property”); and |
| ● | its wholly-owned subsidiary Avidian Gold Alaska Inc., controlling approximately 15,260 acres of State mining claims and leases, including: (i) approximately 1,030 acres near Fort Knox Gold Mine (“Amanita NE Property”), (ii) approximately 10,850 acres in Valdez Creek Mining District (“Golden Zone Property”), and (iii) leasing approximately 3,380 acres near Fort Knox (“Amanita Property”) (collectively, the “Avidian Properties”). |
Contango’s Manh Choh Project is in the production stage, while all other projects are in the exploration stage.
Dolly Varden Silver Corporation (“Dolly Varden”) was amalgamated under the Business Corporations Act (British Columbia) on January 30, 2012. Dolly Varden’s primary activity is the acquisition and exploration of mineral properties in Canada.
Dolly Varden is a mineral exploration company focused on exploration and advancing its 100% owned Kitsault Valley project (the “Kitsault Valley Project”), which includes the Dolly Varden property and the Homestake Ridge property located in the Golden Triangle of British Columbia, Canada, 25 kilometers (“km”) by road to tide water. The 163-square km Kitsault Valley Project hosts the high-grade silver and gold resources of Dolly Varden and Homestake Ridge along with the past-producing Dolly Varden and Torbrit silver mines.
In addition to the Kitsault Valley Project, Dolly Varden has consolidated a land package of six other properties in the same region as the Kitsault Valley Project. These six properties have historically been explored for gold, copper, silver, lead and zinc. Including the Kitsault Valley Project and the recent acquisitions, Dolly Varden now holds a combined area of 100,000 hectares within the region. For additional information regarding Dolly Varden’s business description, management’s discussion and analysis, results of operations, and historical financial statements (including
4
Dolly Varden’s audited consolidated financial statements for the year ended December 31, 2025), see Annex E to the Merger Proxy Statement and Exhibit 99.2 to this Current Report on Form 8-K.
The Arrangement
On December 7, 2025, Contango and Dolly Varden entered into the Arrangement Agreement (the “Arrangement”). Further details regarding the Arrangement are provided in Note 4.
2. BASIS OF PREPARATION
| (a) | Basis of presentation |
These pro forma financial statements give effect to the Arrangement. These pro forma financial statements are provided for illustrative purposes only, and do not represent the financial position that would have resulted had the Arrangement actually occurred on the dates indicated below. In addition, these financial statements are not necessarily indicative of the future financial position of Contango as a result of the Arrangement and do not reflect additional potential savings or costs arising from the Arrangement.
The unaudited pro forma condensed combined balance sheet as of December 31, 2025 reflects assumptions and adjustments to give effect to the Arrangement as if it had occurred on December 31, 2025. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 reflects assumptions and adjustments to give effect to the Arrangement as if it had occurred on January 1, 2025.
The unaudited pro forma information and adjustments, including the preliminary allocation of purchase price, are based upon preliminary estimates of fair values of assets acquired and liabilities assumed, current available information and certain assumptions that management believes are reasonable in the circumstances. The actual fair values of the assets acquired and liabilities assumed of Dolly Varden will be determined as of the Closing and may differ materially from the amounts disclosed in the assumed pro forma consideration allocation in Note 5(c) because of changes in fair value of the assets and liabilities up to the Closing, and as further analysis is completed.
Consequently, the actual allocation of the consideration may result in different adjustments than those in the unaudited pro forma condensed combined balance sheet. Similarly, the calculation and allocation of the consideration has been prepared on a preliminary basis and is subject to change between the time such preliminary estimations were made and the Closing of the Arrangement as a result of a number of factors.
These financial statements have been prepared by management using the following:
| ● | The audited consolidated financial statements of Contango for the year ended December 31, 2025 (“Contango Annual Financial Statements”), contained on Form 10-K filed with the SEC on March 16, 2026; |
| ● | The audited consolidated financial statements of Dolly Varden for the year ended December 31, 2025 and 2024 (“Dolly Varden Annual Financial Statements”), included in Exhibit 99.2 to this Current Report on Form 8-K; and |
The accompanying unaudited pro forma combined financial statements should be read in conjunction with the Contango Annual Financial Statements, all of which are filed with the SEC. Since Dolly Varden’s historical consolidated financial statements are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”), the historical financial information of Dolly Varden used in the pro forma statements has been converted to U.S. GAAP (Note 5(c)).
| (b) | Functional and presentation currency |
These unaudited pro forma combined financial statements are presented in United States dollars (“USD”), which is also the functional currency of Contango.
Since Dolly Varden’s historical consolidated financial statements are presented in Canadian dollars (“CAD”), the historical financial information of Dolly Varden used in the pro forma statements has been translated into USD, which is the functional currency of Contango (Note 5(a)).
5
3. MATERIAL ACCOUNTING POLICIES
The accounting policies used in the preparation of these financial statements are those set out in Contango Annual Financial Statements, with exception of the following:
Flow-through shares are a type of shares of common stock and are securities permitted by the Income Tax Act (Canada) (the “ITA”) whereby the investor can claim the tax deductions arising from the renunciation of the related qualifying resource expenditures. Contango accounts for flow-through shares whereby any premium paid for the flow-through shares in excess of the market value of the common shares without flow-through features at the time of issue as a credit to liability on flow-through share issuance. The liability on flow-through share issuance is amortized into income as the qualifying expenditures are incurred on a pro-rata basis.
4. DESCRIPTION OF THE TRANSACTION
On December 7, 2025, Contango and Dolly Varden entered into the Arrangement Agreement in respect of the Arrangement. Under the terms of the Arrangement Agreement, Contango will acquire all of the issued and outstanding Dolly Varden Shares at the Exchange Ratio of 0.1652.
Immediately prior to Closing, all Dolly Varden Restricted Stock Units (“RSU”) will vest and be settled for Dolly Varden Shares. Pursuant to the Arrangement, all outstanding Dolly Varden Options will be exchanged for stock options to acquire Contango Shares, adjusted to reflect the Exchange Ratio. Eligible Canadian stockholders of Dolly Varden will be able to elect to receive exchangeable shares in a Canadian subsidiary of Contango, which will be exchangeable into Contango Shares, instead of the Contango Shares to which they would otherwise be entitled.
Upon completion of the Arrangement, existing Contango Stockholders and former Dolly Varden Shareholders will own approximately 50.297% and 49.703% each of the combined company (see Note 6), respectively, using the fully diluted in-the-money treasury-stock-method (based on the number of Dolly Varden and Contango securities outstanding as of December 31, 2025). The ownership percentages will be determined once the Arrangement closes on March 26, 2026, considering outstanding common stock, options, RSUs and other instruments.
The Arrangement will be effected pursuant to a court-approved plan of arrangement under the BCBCA and was approved by (i) the Supreme Court of British Columbia (the “Court”) on March 23, 2026, (ii) 66 2/3% of the votes cast by Dolly Varden Shareholders at a special meeting of Dolly Varden Shareholders on March 17, 2026, and (iii) the affirmative vote of a majority of the Contango Shares present in person or by proxy at the special meeting of Contango Stockholders on March 17, 2026.
In addition to the approval of the Court and the Dolly Varden and Contango stockholders, the Arrangement is subject to the receipt of applicable regulatory and exchange approvals (including approval of the NYSE American and TSXV), and the satisfaction of certain other closing conditions customary for a transaction of this nature. Subject to the satisfaction of such conditions, the Arrangement is expected to close on March 26, 2026. The Arrangement Agreement includes customary deal protections, including reciprocal fiduciary-out provisions, non-solicitation covenants and the right to match any superior proposals. A reciprocal Termination Fee in the amount of $15 million is payable by either party in certain circumstances as set out in the Arrangement Agreement.
5. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
The fair value of Contango Shares issued as consideration in the Arrangement was estimated using the market price of Contango Shares as at March 17, 2026.
Contango evaluated the Arrangement under ASC 805, Business Combinations. ASC 805 requires that an acquirer determine whether it has acquired a business. If Contango obtained control over a business, the transaction would be accounted pursuant to the acquisition method of accounting and, as such, identifiable assets acquired and liabilities assumed would generally be recorded at fair value on the acquisition date and could result in recognition of goodwill or a bargain purchase gain. In evaluating the criteria outlined by this standard, Contango concluded that the acquired set of assets did not meet the U.S. GAAP definition of a business. Therefore, Contango accounted for the Arrangement as an asset acquisition. An acquisition accounted as an asset acquisition requires an acquiring entity to allocate the cost of an asset acquisition to the assets acquired and liabilities assumed generally based on their relative fair values.
6
Goodwill is not recognized in an asset acquisition. Transaction costs and fees incurred by Contango are capitalized as part of the cost of the acquisition.
An assessment was performed to determine whether Dolly Varden, in its current state, meets the definition of a business under U.S. GAAP. The analysis considered whether Dolly Varden has inputs, processes, and outputs. Based on this assessment, Dolly Varden has inputs, represented by the mineral interests to which it holds claims; however, it does not have outputs, as it remains in the exploration stage. Further consideration was given to whether Dolly Varden has an assembled workforce that performs a substantive process. It was concluded that no such workforce exists, as Dolly Varden would require additional technical personnel to advance its operations from exploration to development.
The definition of a business for SEC reporting purposes differs from that under ASC 805. SEC registrants must evaluate whether an acquisition constitutes a business under both definitions. The SEC definition focuses on whether the nature of the acquired entity’s revenue-producing activities or other attributes will remain the same after the acquisition. If there is sufficient continuity of the acquired entity’s operations before and after the acquisition such that disclosure of prior financial information is material to understanding future operations, the acquired entity qualifies as a business for SEC reporting—even if it does not meet the definition under ASC 805. Given that Dolly Varden is currently a separate entity and will maintain continuity of its operations upon closing of the transaction, we conclude that Dolly Varden qualifies as a business for SEC reporting purposes. However, this does not imply that Dolly Varden meets the definition of a business under U.S. GAAP, as noted above.
The following describe transaction accounting and other adjustments:
| (a) | Dolly Varden – CAD to USD translation |
The historical financial information was translated from CAD to USD, the functional and presentation currency of Contango, using the following historical CAD to USD exchange rates:
| Period end exchange rate as at December 31, 2025 |
0.73 | |||
| Average exchange rate for the year ended December 31, 2025 |
0.72 |
The effects of the translation of Dolly Varden’s historical financial information from CAD to USD are shown below:
Balance sheet as of December 31, 2025
| |
CAD (see Ex. 99.2) |
USD | ||||||
| $ | $ | |||||||
| ASSETS |
||||||||
| Current |
||||||||
| Cash |
61,082,045 | 44,565,916 | ||||||
| Prepaid expenses and other |
499,955 | 364,771 | ||||||
| Income tax and GST receivable |
1,136,156 | 828,948 | ||||||
| 62,718,156 | 45,759,635 | |||||||
| Property & equipment, net |
156,041 | 113,849 | ||||||
| Reclamation deposits |
208,000 | 151,758 | ||||||
| Exploration and evaluation assets |
80,356,492 | 58,628,697 | ||||||
| Total assets |
143,438,689 | 104,653,939 | ||||||
| LIABILITIES |
||||||||
| Current |
||||||||
| Accounts payable |
1,633,612 | 1,191,895 | ||||||
| Accrued liabilities |
2,372,171 | 1,730,754 | ||||||
7
| Liability on flow-through share issuance |
7,004,953 | 5,110,866 | ||||||
| Total liabilities |
11,010,736 | 8,033,515 | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Common stock |
285,981,680 | 208,654,370 | ||||||
| Reserves |
13,207,452 | 9,636,256 | ||||||
| Accumulated deficit |
(166,761,179 | ) | (121,670,202 | ) | ||||
| Total stockholders’ equity |
132,427,953 | 96,620,424 | ||||||
| Total liabilities and stockholders’ equity |
143,438,689 | 104,653,939 |
Condensed statement of operations for the year ended December 31, 2025
| |
CAD (see Ex. 99.2) |
USD | ||||||
| $ | $ | |||||||
| Exploration expense |
25,198,442 | 18,027,703 | ||||||
| General and administrative (1) |
11,972,685 | 8,565,610 | ||||||
| Loss from operations |
37,171,127 | 26,593,313 | ||||||
| Interest and other income (1) |
(5,739,087 | ) | (4,105,911 | ) | ||||
| Loss before income tax |
31,432,040 | 22,487,402 | ||||||
| Income tax expense |
306,457 | 219,248 | ||||||
| Net loss |
31,738,497 | 22,706,650 | ||||||
| (1) | Dolly Varden’s statement of operations presentation has been aligned with Contango’s naming conventions. Certain line items have been consolidated into general and administrative and interest and other income categories for presentation purposes. These reclassifications do not affect loss from operations or loss before income tax. |
| (b) | Dolly Varden - IFRS Accounting Standards to U.S. GAAP conversion |
The effects of converting Dolly Varden’s historical financial information from IFRS Accounting Standards to U.S. GAAP are considered immaterial; therefore, no adjustments have been made to the pro forma financial statements. A known difference between IFRS Accounting Standards and U.S. GAAP relates to the treatment of exploration and evaluation assets, as IFRS permits an entity to elect either expensing or capitalizing such costs. However, Dolly Varden’s accounting policy - expensing exploration costs as incurred - is consistent with Contango’s policy. Accordingly, there is no GAAP difference in this regard.
| (c) | Fair value adjustments and consideration |
Contango has performed a preliminary allocation of the estimated purchase price to the assets acquired and liabilities assumed based on their relative fair values and reflects assumptions and adjustments to give effect to the Arrangement as if it had occurred on December 31, 2025. There may be adjustments to the estimated fair values as the purchase price allocation is finalized. The final purchase price allocation may be materially different than the preliminary allocation reflected in the pro forma allocation.
8
A summary of the preliminary fair value of the consideration and the preliminary allocation to the net assets acquired is as follows:
| $ | ||||
| Consideration: |
||||
| Fair value of shares of common stock issued, calculated as 15,282,878 shares of common stock issued at a fair value of $21.25/share, (using share price as of March 17, 2026) (1) |
324,761,158 | |||
| Fair value of replacement options granted allocated to consideration (Note 5(f)) |
3,979,792 | |||
| Arrangement costs |
4,149,129 | |||
| Professional fees |
2,200,000 | |||
| 335,090,079 | ||||
| Net assets acquired: |
||||
| Cash |
44,565,916 | |||
| Prepaid expenses |
364,771 | |||
| Goods and services tax receivable |
828,948 | |||
| Property and equipment |
113,849 | |||
| Reclamation deposits |
151,758 | |||
| Exploration and evaluation assets (2) |
391,717,265 | |||
| Accounts payable |
4,876,895 | |||
| Accrued liabilities |
2,730,754 | |||
| Liability on flow-through share issuances |
5,110,866 | |||
| Deferred tax liability |
89,933,913 | |||
| Total |
335,090,079 | |||
| (1) | Contango maintains greater-than-50% ownership with a decrease or increase of 10% in stock price of Contango or Dolly Varden. Resulting change in ownership is less than 1%. |
| (2) | Exploration and evaluation assets have been reclassified to Property and Equipment, net to align with Contango’s presentation. |
Contango estimates transaction costs of $4,149,129, calculated as 1% of the five-day volume weighted average price (“VWAP”) of the fully diluted in-the-money shares, plus $2,200,000 related to professional fees incurred in connection with the transaction. Since the transaction is accounted for as an asset acquisition, the transaction costs are included in the cost of the assets acquired and liabilities assumed.
Consideration transferred less the carrying value of financial assets and liabilities and other current assets (carrying value approximates fair value) was allocated to Property and equipment and Exploration and evaluation assets based on their relative fair values.
As part of the acquisition, Contango measured and recorded an estimated net deferred tax liability related to taxable temporary differences between U.S. GAAP book basis and tax basis of the acquired net assets at a statutory rate of 27%.
Dolly Varden expects to incur acquisition-related transaction costs of approximately $3,685,000, comprised of professional and legal fees, and an additional $1,000,000 in professional fees related to the Arrangement. As these costs pertain solely to Dolly Varden, they are not included in the capitalized transaction costs. The assumption of Dolly Varden’s liabilities related to these transaction costs and fees is reflected in the purchase price allocation.
| (d) | Consolidation |
Dolly Varden’s Shareholders’ equity, which consists of Dolly Varden Shares, reserves and accumulated deficit will be eliminated upon consolidation.
9
| (e) | Dolly Varden RSUs converted into Dolly Varden Shares |
As at December 31, 2025, a total of 605,636 Dolly Varden RSUs were issued and outstanding. The Dolly Varden RSUs will vest immediately prior to the effective time of the arrangement, and will be surrendered and redeemed for 605,636 Dolly Varden Shares. The unvested value of the Dolly Varden RSUs was $502,941 which is included as part of Dolly Varden’s reserves prior to Closing.
| (f) | Dolly Varden options converted into Replacement Options |
As at December 31, 2025, a total of 2,694,876 Dolly Varden Options were issued and outstanding. The Dolly Varden Options are deemed to be vested on the date of Closing, and exchanged for Replacement Options. As a result, Contango will issue a total of 445,194 Replacement Options to the Dolly Varden Option holders.
The fair value of the options has been determined to be $4,629,512 using the Black-Scholes option pricing model and relevant guidance in ASC 805 to allocate between acquisition costs and post-combination expenses. Of this amount, $3,979,792 represents the fair-value-measure of the vested portion of Dolly Varden replaced options and is considered part of the acquisition cost. The remaining $649,720 is treated as post-combination expense and is reflected in the pro forma combined statement of operations for the year ended December 31, 2025.
| (g) | Assumptions and adjustments to the pro forma combined statement of operations for the year ended December 31, 2025 |
Contango is recognizing an estimated $649,720 in incremental stock-based compensation related to the portion of Replacement Options deemed to be a post-combination expense (Note 5(f)).
Income tax effects are considered immaterial; therefore, no adjustments have been reflected in the pro forma financial statements
| (h) | Pro forma basic and diluted loss per share |
The following table presents the reconciliation of the pro forma fully diluted number of shares, determined using the treasury stock method:
| # | ||||
| Common shares of Contango as at December 31, 2025 (1) |
14,966,449 | |||
| Warrants of Contango at December 31, 2025 |
524,753 | |||
| 15,491,202 | ||||
| Issuance of common shares as consideration to acquire Dolly Varden |
15,282,878 | |||
| Outstanding replacement options issued to former Dolly Varden option holders (2) |
25,340 | |||
| 15,308,218 | ||||
| Fully diluted issued shares Contango |
30,799,420 | |||
| Combined |
||||
| Total number of shares (1) |
30,249,327 | |||
| Warrants |
524,753 | |||
| Options (2) |
25,340 | |||
| Total fully diluted in-the-money shares |
30,799,420 | |||
| (1) | Includes 2,480 shares of treasury stock held by Contango as of December 31, 2025 and excludes 2,401 shares of common stock issued by Contango on December 31, 2025 which were not considered in the treasury stock method calculation. |
| (2) | Corresponds to the 445,194 Replacement Options after applying the treasury stock method. |
A summary of the pro forma basic and diluted weighted average shares outstanding is as follows:
10
| December 31, 2025 |
||||
| # | ||||
| Historical Contango basic weighted average shares |
12,902,668 | |||
| Issuance of common shares as consideration to acquire Dolly Varden |
15,282,878 | |||
| Pro forma combined basic weighted average shares |
28,185,546 | |||
| Impact of dilutive instruments |
- | |||
| Pro forma combined diluted weighted average shares |
28,185,546 | |||
Basic and diluted loss per share were calculated assuming all common shares outstanding following the Arrangement had been outstanding throughout all the year ended December 31, 2025. Potentially dilutive securities have an anti-dilutive impact due to net loss reported for the year ended December 31, 2025.
| 6. | PRO FORMA EQUITY |
A summary of the ownership allocation, reflecting the pro forma adjustments and assumptions, is presented below:
| Ownership allocation | Contango Stockholders |
Dolly Varden Shareholders |
Total | |||||||||
| # | # | # | ||||||||||
| Total shares outstanding (1) |
14,966,449 | 15,282,878 | 30,249,327 | |||||||||
| Warrants - in-the-money |
524,753 | - | 524,753 | |||||||||
| Options - in-the-money (2) |
- | 25,340 | 25,340 | |||||||||
| Total fully diluted in-the-money shares |
15,491,202 | 15,308,218 | 30,799,420 | |||||||||
| Ownership percentage |
50.297% | 49.703% | ||||||||||
| (1) | Includes 2,480 shares of treasury stock held by Contango as of December 31, 2025. |
| (2) | Corresponds to the 445,194 Replacement Options after applying the treasury stock method. |
11
A summary of Contango’s pro forma equity is as follows:
| Common stock | ||||||||||||||||||||||||||||||||
| Note | Shares | Amount |
Additional capital |
Treasury stock |
Reserves | Accumulated deficit |
Total | |||||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Contango’s equity (historical) |
14,968,929 | 149,687 | 238,155,692 | (48,308 | ) | - | (213,158,782 | ) | 25,098,289 | |||||||||||||||||||||||
| Shares of common stock issued as consideration and replacement options |
5(c), 5(f) | 15,282,878 | 152,829 | 328,588,121 | - | - | - | 328,740,950 | ||||||||||||||||||||||||
| Dolly Varden’s equity (historical) |
91,905,721 | 208,654,370 | - | - | 9,636,256 | (121,670,202 | ) | 96,620,424 | ||||||||||||||||||||||||
| Shares issued on vesting of Dolly Varden’s RSU |
5(e) | 605,636 | 502,941 | - | - | (502,941 | ) | - | - | |||||||||||||||||||||||
| Elimination of Dolly Varden’s equity upon consolidation |
5(d) | (92,511,357 | ) | (209,157,311 | ) | - | - | (9,133,315 | ) | 121,670,202 | (96,620,424 | ) | ||||||||||||||||||||
| Balance, December 31, 2025 |
30,251,807 | 302,516 | 566,743,813 | (48,308 | ) | - | (213,158,782 | ) | 353,839,239 | |||||||||||||||||||||||
12
FAQ
What did Contango Silver & Gold (CTGO) announce about its merger with Dolly Varden?
Did Contango ORE change its name as part of the Dolly Varden combination?
What management and board changes followed the Contango and Dolly Varden merger?
What do Dolly Varden’s 2025 financial statements show before merging into Contango Silver & Gold?
Filing Exhibits & Attachments
11 documents