Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations of Chilean Cobalt Corp. ("Chilean Cobalt" and including its subsidiaries, collectively, the "Company") should be read in conjunction with our condensed consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. References in this Management's Discussion and Analysis of Financial Condition and Results of Operations to "us," "we," "our," and similar terms refer to the Company. This Quarterly Report on Form 10-Q includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as "anticipate," "estimate," "plan," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions are used to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Reference is made to "Risk Factors", which are included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("Commission") on April 2, 2025, as the same may be amended from time to time.

Overview

Chilean Cobalt Corp. is a US-based and US-traded (OTCQB: COBA) critical materials exploration and development company focused on the La Cobaltera cobalt-copper project in northern Chile, one of the world's few primary cobalt districts. As of the acquisition date on September 12, 2025, the Company is also focused on the El Cofre copper-cobalt-gold project in northern Chile. Chilean Cobalt strives to responsibly supply cobalt, copper and other critical minerals for a sustainable future.

Cobalt demand has been driven by the growth of its use in high performance metal alloy products for industrial and defense applications, as well as in lithium-ion batteries for portable electronic devices (tablets, phones) and electric vehicles (EVs). Copper demand continues to be driven by the growth in all manner of electrification as copper is a staple in nearly all things electric. The Company's wholly-owned subsidiary Baltum Mineria SpA ("Baltum") has acquired 6,377 hectares of fully exploitable mining concessions in northern Chile's Atacama region in the San Juan mining district. The Company continues to seek opportunities to further consolidate mining rights in the district, it has finalized a primary offtake arrangement and is working to finalize a downstream processing partner arrangement. The San Juan mining district, which includes the La Cobaltera and El Cofre areas, has been identified by CORFO, the Chilean governmental agency responsible for the country's economic development, as likely containing the highest quality cobalt assets in Chile. Chile already being the leading copper-producing country in the world with the La Cobaltera and El Cofre areas historically supporting the existence of established and high-quality copper assets. Being strategically located near roads, electricity, water, and ports, the site is in close proximity to robust mining infrastructure. The Company's principal business activities since incorporation have been the assessment, acquisition and consolidation of mining concessions; the exploration of the potential cobalt and copper resources within the concessions; and developing an accelerated phased implementation plan to generate revenue as quickly as possible. On November 11, 2025, we signed a definitive offtake arrangement with a wholly-owned subsidiary of Glencore plc (LSE: GLEN, "Glencore"), whereby Glencore will have a first and last right of refusal to purchase all of the Company's production of cobalt and copper minerals from the La Cobaltera and El Cofre projects, which it expects to ship to the United States or U.S. Free Trade Agreement countries. In addition, on September 6, 2024, we signed a non-binding LOI with US Strategic Metals ("USSM") to process and refine cobalt and copper concentrate we expect to produce at our La Cobaltera project. This processing is intended to lead to the creation of cobalt metal, battery chemical intermediate products, and/or other products critical for the production of advanced materials and energy technologies. USSM plans to carry out the processing at its production facility in Missouri. We are advancing due diligence and strategic discussions pursuant to that LOI and the terms and conditions of the agreement to be entered into between the Company and USSM are subject to negotiation. The objective of the three-way strategic partnership between the Company, Glencore and USSM is to establish an Americas-centric cobalt and copper supply chain, connecting Chilean Cobalt's La Cobaltera cobalt-copper project in Chile with USSM's integrated critical minerals processing site in Missouri, USA - which may include development of a dedicated processing line for La Cobaltera concentrate at USSM's site. Our relationship with USSM and Glencore is expected to strengthen US critical minerals supply chains while providing a sustainable and traceable source of raw materials for the growing domestic lithium-ion battery manufacturing capacity and high-performance metal alloy markets.

On November 7, 2025, the Company signed a non-binding Letter of Intent ("LOI") with NeoRe SpA ("NeoRe") for a nine-month exclusive right to perform due diligence on the economic viability of extracting rare earth elements from NeoRe's mining concessions located near Conception, Chile. There is no obligation to move past the due diligence phase, however, the LOI contains an option for acquiring the NeoRe mining concessions, if the economics are determined to be favorable.

We have not generated revenues to date. Our limited operations have included the formation of the Company and its wholly-owned subsidiary Baltum Mineria SpA, oversight of cobalt exploration and concession acquisition activities, business development activities and sustainability framework development activities. These limited operations have been funded by capital raised through the issuance of our common stock, preferred stock, and debt. From December 4, 2017 through November 14, 2025, we raised a total of $31,393,047 from accredited investors through the issuance of our common stock, preferred stock, and debt. This total does not include the $56,272 of stock-based compensation inferred by the issuance of 216,429 shares for the retainer for services provided by Collingwood Capital Partners AG at $0.26 per share on March 19, 2024, the $1,890,000 acquisition of El Cofre and additional La Cobaltera concessions by the issuance of 4.5 million shares to Cobalt Chile SpA at $0.42 per share on September 12, 2025 or any other non-cash amounts for other stock-based compensation, dividends paid-in-kind or similar.

We have limited business operations and have achieved losses since inception. We have been issued a going concern opinion from our auditors as a result of not generating sufficient business to date.

Our monthly "burn rate," the amount of expenses we expect to incur on a monthly basis, is approximately $117,000 for a total of $1,404,000 for the following 12 months. This is for baseline expenditures with costs of acquisition, exploration that includes feasibility assessment and drilling and direct and soft costs for an uplisting to a national exchange, not factored into those averages. Acquisition expenditures, if funding is achieved to proceed, could exceed $10,000,000, drilling and feasibility expenditures could exceed $2 million, while direct and soft costs to achieve an uplisting to a national exchange would possibly fall in the range of $300,000 to $500,000. We have relied and will continue to rely on capital raised from third parties to fund operations during the upcoming 12 months and we have plans to raise $2,000,000 to $4,000,000 imminently via a private raise, with board approval to do so, potentially another $10 million in the next three to six months via convertible debt and up to $20,000,000 or more in 2026, potentially as a public offering as part of an uplisting to a national market. We expect to be able to further our acquisition and exploration plans, if we are successful in raising the anticipated working capital.

In order to complete our plan of operations, which entails proving out feasibility, commencing production and generating saleable product, we estimate that approximately $325 million in funds will be required.

For the years ended December 31, 2024 and 2023, we generated no revenues and reported net losses of $882,574 and $1,292,742, respectively, and negative cash flow from operating activities of $791,706 and $929,418, respectively. For the three-months ended September 30, 2025 and September 30, 2024, we reported net losses of $2,287,316 and $192,968, respectively, and negative cash flow from operating activities of $412,280 and $199,321, respectively. For the nine-months ended September 30, 2025 and September 30, 2024, we reported net losses of $2,932,125 and $666,278, respectively, and negative cash flow from operating activities of $973,946 and $580,257, respectively. Our management has concluded that our historical recurring losses from operations and negative cash flows from operations as well as our dependence on securing private equity and other financings raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit reports for the fiscal years ended December 31, 2024 and 2023.As noted in our unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q, we had an accumulated stockholders' deficit of approximately $36,314,937 and recurring losses from operations as of September 30, 2025. See the risk factor in our Annual Report on Form 10-K titled, "Risk Factors - We have a history of operating losses and our management has concluded that factors raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit report for the fiscal years ended December 31, 2024 and 2023."

Plan of Operations

In order to complete our plan of operations, including Phase 2 exploration work, during the next 12 months, we estimate that approximately $1,284,000 in additional funds will be required. In order to pursue our strategic priorities of progressing mining rights acquisition and consolidation and uplisting to a national exchange, along with both brownfield and greenfield exploration and having a longer operational runway, we will require raising approximately $2,000,000 to $3,000,000. To complete mining rights acquisition and consolidation along with drilling and feasibility assessments will require substantially more funding. The source of such funds is anticipated to come from private and public placements of our securities as discussed in the Overview above. If we fail to raise the amounts we require, we may not be able to fully carry out our plan of operations. Assuming that we are able to raise the amounts discussed above, we believe we can satisfy our cash requirements during the next 12 months and begin to implement our long-term business plan.

For the next twelve months, we intend to implement our business plan as follows:

	·	Exploration and Development Expenses. During this period, we intend to, among other things, continue exploration and development of the mining sites, both La Cobaltera and El Cofre, in addition to any new mining sites that are successfully acquired. The exploration and development expenses are expected to encompass Artificial Intelligence ("AI") pilot studies, sampling, mapping and trenching in greenfield areas and further diamond drilling and work towards establishing pre-feasibility and/or definitive feasibility studies in brownfield areas. To achieve our Phase 2 objectives, we expect this to cost approximately $350,000. To progress into feasibility assessment and drilling is expected to cost approximately $2,000,000 to $4,000,000, or more, depending on the breadth of the follow-up exploration program.
	·	Possible Strategic Acquisition Opportunities. During this period, we intend to, among other things, consider possible strategic acquisitions of other possible mining sites in addition to the 3,742 hectares of full-exploitation mining concessions that were recently acquired. There continue to be sites that the Company has expressed interest in acquiring and the ability to close on these acquisitions is dependent on the Company's success in achieving its capital raise objectives and being able to negotiate favorable terms with mining concession sellers in the areas of cash, equity and net smelter royalties, as applicable.
	·	General and Administrative Expenses. During this period, we intend to, among other things, hire additional staff or engage additional advisors to assist with operations. We also intend to continue incurring the same level of general and administrative expenses, such as corporate insurance, professional services, public filer services, marketing, site and conference travel and other administrative costs in order to further our plan. The general and administrative expenses are expected to be approximately $1,100,000 to $1,200,000, depending on the phases of the business plan that are able to be engaged.

Any major acquisition and the underlying funding source would need to be approved at the board level as a prerequisite to closing. We are seeking to secure a source of equity financing, such as through a private offering and/or a public offering as part of an uplisting to a national exchange, or convertible debt to fund our exploration and development efforts within our mining concessions that comprise our La Cobaltera cobalt-copper project and our El Cofre copper-cobalt project, as well as other mining concessions we are evaluating within the San Juan mining district in northern Chile. The overall financing requirements may also include a potential debt funding package of up to $317,400,000 pursuant to a June 4, 2024 non-binding letter of interest we received from the Export-Import Bank of the United States and the extension notice that makes it applicable until June 14, 2026. There can be no assurance that a private offering, public offering upon uplisting to a national exchange, convertible debt or debt financing, when instituted can occur as planned or at all. Our future is dependent upon our ability to obtain further financing, the successful execution of our business plan, securing favorable downstream processing arrangements, and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. Even if additional financing is available, it may not be available on terms we find favorable. At this time, there are no anticipated sources of additional funds in place. Failure to secure the needed additional financing will have an adverse effect on our ability to remain in business.

Components of revenues and costs and expenses

Exploration and development expense. Our exploration and development costs are incurred during the exploration and development of mining sites. We incurred light exploration and development expenses during the quarter ended September 30, 2025, related to the Company's AI pilot program. In addition, the Company finalized the acquisition of 3,724 additional hectares of full-exploitation mining concessions in the district, which are now being incorporated into the overall exploration plan and evaluated for incorporation into the AI pilot program. Throughout the year, the Company has worked diligently to get an extension to its letter of interest with the Export-Import Bank of the United States, in addition to finalizing the definitive arrangement for Glencore's right of first and last refusal for product offtake with Glencore, an international commodity trading and mining company. The letter of interest with the Export-Import Bank of the United States serves as the Company's long-term debt funding strategy and the definitive arrangement for offtake with Glencore is critical, especially when combined with a letter of intent with United States Strategic Metals for putting in place an eventual three-party Americas-centric cobalt and copper upstream and downstream processing relationship. During 2025, the Company has brought on technical consultants Dr. Brian Townley and Cesar Vargas to assist Dr. Lawrence W. Snee, its Executive Vice President of Exploration. Dr. Snee has the responsibility for developing and executing the Company's exploration activities, which includes progressing the AI trial exploration campaign and contributing to the overall corporate strategic plan.

General and administrative expense. Our general and administrative expenses include compensation of staff and overhead, which includes depreciation and foreign currency transaction (gains) and losses.

Interest expense, interest income, net. Interest expense consists of interest expense associated with debt obligations. Interest income consists of interest income earned on our cash, cash equivalents and short-term investments.

Provision for Income Taxes. Provision for income taxes consists of an estimate of U.S. federal and state income taxes and income taxes in certain foreign jurisdictions in which we conduct business, as adjusted for allowable credits, deductions and the valuation allowance against deferred tax assets.

Gain (loss) on retirement/sale of assets. When fixed assets are sold, retired or disposed, there is either a non-cash gain or loss associated with the action depending on whether there is receipt of proceeds (in the case of a sale) and the extent of depreciation that has already been claimed on the fixed asset that is being removed from the books. For a gain, there must be proceeds received in excess of the residual book value of the asset, whereas, otherwise, there is no loss or a loss by the amount that the residual book value exceeds any applicable proceeds.

Results of Operations - Three-Months Ended September 30, 2025 Compared to the Three-Months Ended September 30, 2024

		Three-Months Ended September 30, 2024				Three-Months Ended September 30, 2025				Increase (Decrease)
Revenue		$	0			$	0			$	0
Cost of Sales			0				0				0
Gross Profit		$	0			$	0			$	0
Gross Profit %			0%				0%				0%
Operating Expenses:
Cost of Mineral Exploration		$	0			$	28,440			$	28,440
General and administrative expenses and foreign currency transaction loss			195,832				380,500				184,668
Interest (income) expense, net			(2,864	)			(2,706	)			158
Gain (loss) on retirement/sale/impairment of assets			0				(1,881,082	)			1,881,082
Loss before income taxes			(192,968	)			(2,287,316	)			2,094,348
Provision for income taxes			0				0				0
Net Loss		$	(192,968	)		$	(2,287,316	)		$	2,094,348

Operating losses for the three-months ended September 30, 2025, compared to September 30, 2024, were much higher due primarily to the impairment write-down of the recently acquired mining concessions as it was determined to be impractical to achieve a reliable independent valuation in order to support the value on the financial statements. In addition, exploration costs in the current period, not experienced in the same period for the previous year, higher mining concession patent costs for Baltum, including the added patent costs for the newly acquired mining concessions, were a substantial driver of increased net losses. Those factors combined with higher legal costs in Chile related to due diligence on acquisitions and patent fee rate changes, higher cash-based compensation, due to employee additions to the management suite, along with higher non-cash option compensation to directors, officers and advisors, along with somewhat higher costs across the remaining expense categories for the remainder of the difference.

Results of Operations - Nine-Months Ended September 30, 2025 Compared to the Nine-Months Ended September 30, 2024

		Nine-Months Ended September 30, 2024				Nine-Months Ended September 30, 2025				Increase (Decrease)
Revenue		$	0			$	0			$	0
Cost of Sales			0				0				0
Gross Profit		$	0			$	0			$	0
Gross Profit %			0%				0%				0%
Operating Expenses:
Cost of Mineral Exploration		$	0			$	48,238			$	48,238
General and administrative expenses and foreign currency transaction loss			681,051				1,018,494				337,443
Interest income, net			(14,773	)			(15,689	)			(916	)
Gain (loss) on retirement/sale/impairment of assets			0				(1,881,082	)			1,881,082
Loss before income taxes			(666,278	)			(2,932,125	)			2,265,847
Provision for income taxes			0				0				0
Net Loss		$	(666,278	)		$	(2,932,125	)		$	2,265,847

Operating losses for the nine-months ended September 30, 2025, compared to September 30, 2024, were much higher generally due to the same factors that drove quarterly costs higher, as explained above, such as impairment write-down costs, exploration costs in the current year, not applicable in the previous year, higher mining concession patent costs for Baltum, along with higher legal costs in Chile related to due diligence on acquisitions and patent fee changes, higher cash-based compensation, due to employee additions to the management suite, along with higher non-cash option compensation to directors, officers and advisors, along with somewhat higher costs across the remaining expense categories for the remainder of the difference.

Liquidity and Capital Resources

Liquidity

We have primarily financed our operations through the sale of unregistered equity. As of September 30, 2025, our Company had cash totaling $189,157 current assets totaling $334,496 and total assets of $337,454. As of September 30, 2025, we had total liabilities of $24,242 (all current), positive working capital of $310,254, and stockholders' equity of $313,212.

Sources and Uses of Cash for the Nine-Months Ended September 30, 2025 and 2024

The following table summarizes our cash flows for the nine-months ended September 30, 2024 and 2025.

		Nine-Months Ended September 30, 2024				Nine-Months Ended September 30, 2025				Increase (Decrease)
Net Cash Provided By (Used In) Operating Activities		$	(580,257	)		$	(973,946	)		$	(393,689	)
Net Cash Provided By (Used In) Investment Activities			0				0				0
Net Cash Provided By (Used In) Financing Activities			0				830,945				830,945
Effect of foreign exchange rate on cash			(843	)			849				1,692
Net Increase (Decrease) in Cash		$	(581,100	)		$	(142,152	)		$	438,948

Net cash used in operations

Net cash used in operating activities was $580,257 for the nine-months ended September 30, 2024 versus net cash used in operating activities of $973,946 for the nine-months ended September 30, 2025. The increase in cash flow used in operating activities was primarily due to the annual patent fee reimbursement to seller of newly acquired mining concessions, higher cash-based compensation and payroll tax impacts, as additional employees were hired to the management suite, and higher annual mining concession patent payments related to the long-held mining concessions by Baltum. To a lesser degree, but still impactful, were increased professional service costs, primarily in the areas of environmental sustainability consulting and legal services for both US-based and Chile-based for acquisition due diligence and higher outlays for AI pilot studies and more expenditures for marketing and Company awareness. Each of these factors along with nominal impacts from various other expense areas contributed to the $393,689 higher use in net cash for operations in the current period compared to the same period in the previous year.

Net cash used in investment activities

Net cash used in investment activities was $-0- for the nine-months ended September 30, 2024 versus net cash used in investment activities of $-0- for the nine-months ended September 30, 2025. There were no changes in cash flow used in investment activities between years. The acquisition of the 3,724 hectares of full-exploitation mining concessions was a non-cash transaction through the issuance of the Company's common stock, as noted in the supplemental disclosure of non-cash investing and financing activities in the financial statements.

Net cash provided by financing activities

Net cash provided by financing activities of $-0- in the nine-months ended September 30, 2024, versus net cash provided by financing activities of $830,945 in the nine-months ended September 30, 2025, which included an aggregate of $757,514 of proceeds for the sale of an aggregate of 1,683,365 shares of Series B convertible preferred and collection of $73,431 in subscriptions receivable. The issuance of 4,500,000 shares at $0.42 per share for an overall value of $1,890,000 was a non-cash transaction for the acquisition of 3,724 hectares of full-exploitation mining concessions, as noted in the supplemental disclosure of non-cash investing and financing activities in the financial statements.

Going Concern

Based upon our working capital of $310,254 compared to our $973,946 cash used in operating activities year-to-date through September 30, 2025, that annualized would equate to cash used in operating activities of $1,298,595, which exceeds our existing working capital, coupled with our accumulated deficit of ($36,314,937), as of September 30, 2025, we require additional equity and/or debt financing to continue our operations. These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date of this filing. As a result of the foregoing factors, together with our recurring losses from operations and negative cash flows since inception, our independent registered public accounting firm included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited consolidated financial statements for the fiscal years ended December 31, 2024 and 2023 and as footnoted in our unaudited quarterly condensed consolidated financial statements for the quarters ended September 30, 2025 and 2024.

Availability of Additional Funds

Our capital requirements going forward will consist of financing our operations until we are able to reach a level of revenues and gross margins adequate to equal or exceed our ongoing operating expenses. Other than the possibility of borrowings from related and third parties, it should be noted that we do not have any credit agreement or source of liquidity immediately available to us.

Since inception our operations have primarily been funded through proceeds from existing shareholders in exchange for equity. There can be no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. We expect to have ongoing needs for working capital in order to (a) fund operations; plus (b) exploration and development. To that end, we may be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund its liabilities, or (d) seek protection from creditors.

In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our shareholders or that result in our shareholders losing all of their investment in our Company.

If we are able to raise additional capital, we do not know what the terms of any such capital raising would be. In addition, any future sale of our equity securities would dilute the ownership and control of your shares and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.

Our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), which contemplate our continuation as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

Public Company Expenses

We expect to incur direct, incremental selling, general and administrative expenses as a result of being a publicly traded company, including, but not limited to, where applicable, increased scope of our operations and costs associated with hiring new personnel, implementation of compensation programs that are competitive with our public company peer group, annual and quarterly reports to shareholders, tax return preparation, independent registered public accounting firm fees, investor relations activities, legal and registration fees, registrar and transfer agent fees, incremental director and officer liability insurance costs and independent director compensation. Some of these direct, incremental selling, general and administrative expenses are not yet applicable in our historical results of operations.

Climate Change

The potential physical impacts of climate change on our operations are highly uncertain and are specific to the geographic circumstances of areas in which we operate. These may include changes in rainfall and storm patterns and intensities, droughts and water shortages, changing sea levels and changing temperatures, and an increase in the number and severity of weather events and natural disasters. These changes may have a material adverse effect on our future operations, including cobalt extraction and production processes, as well as transportation of raw materials and delivery of products to customers. We may also face more stringent customer and regulatory requirements to accelerate water use reduction initiatives, more reliance on renewable energy sources and more water re-use and re-cycling. Climate change may also exacerbate socio-economic and political issues around the world and have other direct impacts to ecosystems, human health and quality of life, ranging from destruction of habitats to air, water and land quality to growing incidences of famines, pandemics and population shifts.

In addition, a number of governmental bodies have introduced or are contemplating legislative and regulatory change in response to the potential impacts of climate change. Such legislation or regulation, if enacted, potentially could include provisions for a "cap and trade" system of allowances and credits or a carbon tax, among other provisions. There is also a potential for climate change legislation and regulation to adversely impact the cost of purchased energy and electricity.

The growing concerns about climate change and related increasingly stringent regulations may provide us with new or expanded business opportunities. Our future product contributes to the efforts of our customers to revolutionize their product lines and markets. As a key part of the EV and battery supply chain, we would eventually be providing cobalt-containing solutions that help enable the growth of electric transportation and the shift away from fossil fuels. As demand for, and legislation mandating or incentivizing the use of, alternative fuel technologies that limit or eliminate greenhouse gas emissions increases, we will continue to monitor the market and offer solutions where we have appropriate technology.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders' equity or that are not reflected in our condensed consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our estimates form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the financial statements. We believe that our critical accounting policies reflect the most significant estimates and assumptions used in the preparation of the consolidated financial statements.

We believe that the assumptions and estimates associated with our mining concession capitalization and stock-based compensation and the valuation of stock option grants have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

Principal Accounting Policies and Related Financial Information

Refer to Note 3. "Summary of Significant Accounting Policies Basis of Presentation" in the accompanying unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's current financial position and results of operations.