Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") which we refer to in this report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements are not historical facts, they reflect our current expectations, estimates and projections regarding future results and events, including matters related to our mining business, including resource estimates, exploration efforts, results and expenditures, development initiatives at the SJG mine, estimated production and capacity, costs, capital expenditures, expenses, recoveries, gold prices, sufficiency of assets, ability to discharge liabilities, liquidity management, financing needs, environmental compliance expenditures, environmental, social and governance ("ESG") and human capital management initiatives, risk management strategies, capital resources and use, cash flow maximization, mine life and other strategic initiatives. Such forward-looking statements are identified by the use of words such as "believes," "intends," "expects," "hopes," "may," "will", "should," "plan," "projected," "contemplates," "anticipates" or similar words and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward-looking information in this report includes, but is not limited to, statements regarding the beliefs, plans, expectations or intentions of management, as of the date of report, regarding: (i) DynaResource, Inc.'s (the "Company") ability to develop its exploration assets via operational cash flow from gold concentrate production; and (ii) the Company's plans and expectations regarding its proposed 2025 exploration program for its SJG mine. Although the Company believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that these expectations will be realized. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including, without limitation, risks related to: (1) fluctuations in commodity price, particularly gold and silver; (2) the Company's ability to retain or engage qualified employees or contractors necessary to conduct operations at the SJG mine; (3) fluctuations in the demand for gold, silver and other minerals; (4) unexpected difficulties with the milling and the extraction of minerals from the Company's projects; (5) unexpected interruptions and problems encountered in the operation of the SJG mine; (6) factors that delay or cause difficulties in timing of shipments of concentrates by the Company; (7) potential negative financial impact from regulatory investigations, claims, lawsuits and other legal proceedings and challenges; (8) the possibility that the Company may not have sufficient capital to operate its SJG mine or facilitate the further exploration of the SJG district; (9) inflationary pressures; (10) continued access to financing sources; (11) government orders that may require temporary suspension of operations or effects on our suppliers (12) the effects of environmental and other governmental regulations and government shut-downs; (13) the risks inherent in the ownership or operation of or investment in mining properties or businesses in foreign countries; (14) our ability to raise additional financing necessary to conduct our business, make payments or refinance our debt; and (15) other factors beyond the Company's control. Additional risks are discussed in our Annual Report on Form 10K for the year ended December 31, 2025, and other filings with the SEC.

There is a significant risk that such forward-looking statements will not prove to be accurate. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Given current economic volatility and commodity fluctuations, any forward-looking statements or projections may be impacted significantly. Consequently, there is no representation by the Company that actual results achieved will be the same as those forecast. You are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Company

The Company is a minerals investment, production, and exploration company, currently advancing its high-grade SJG gold mine in Mexico through its operating subsidiary, DynaMéxico. Activities are focused on exploration, technical evaluation, and project development aimed at expanding the mineral resource base.

The Company conducts operations in Mexico through its wholly-owned subsidiary, DynaMéxico. As of the date of this report, the Company owns 100% of the outstanding shares of DynaMéxico, which in turn holds 100% ownership of the mining concessions, equipment, camp, and related facilities which comprise the SJG mine.

In addition to advancing the SJG mine, the Company has also focused on strengthening its corporate governance practices, with the objective of meeting the listing requirements of additional stock exchanges in the United States and/or Canada.

Project Improvements, Expansion and Increased Output

Since 2015, the Company has carried out limited site-scale processing and operational activities at the SJG mine to support its exploration and evaluation programs. These activities have been directed toward enhancing the technical understanding of the deposit, optimizing on-site infrastructure, and advancing project development. In 2022, the Company expanded its exploration efforts at the SJG mine with the objective of increasing the project's mineral resource base, primarily targeting gold mineralization.

From initial small-scale operations averaging 100 tons per 24-hour operating day in 2015, throughput has steadily increased, reaching an average of approximately 710 tons per day in 2025. For 2026, the Companies objective is to increase average daily throughput to between 750 to 800 tons per day with current installed optimized processing capacity of 3 ball mills only. During the first Quarter 2026 average process plant throughput was a pleasing 767 tons per day within targeted range.

Summary of Mining and Mill Operations

Annual Results from 2018 to 2025:

In 2025, on-site operational activities at the SJG mine resulted in the processing of approximately 260,694 tons of material and the production of approximately 21,393 gross ounces of gold ("Au Oz"). After applying dry weight adjustments pursuant to settlement terms with the buyer, approximately 20,848 Au Oz were sold.

Quarterly Results for the Three Months Ended March 31, 2026 and 2025:

The decrease in feed grade at the processing facility during the first quarter of 2026 resulted from a planned reduction in the mining of certain high-grade zones in accordance with the mine plan, as well as higher than expected dilution

encountered in the processed material. Increased throughput at the SJG process plant also contributed to a greater volume of lower-grade ore being treated.

2026 FIRST QUARTER HIGHLIGHTS

Operational Performance

During the first quarter of 2026, the Company continued to advance the optimization program at the SJG mine. This program The plan of operation for 2026 includes the continued enhancement is focused on increasing process plant throughput and recoveries, improving maintenance and equipment utilization, and ultimately enhancing operational efficiencies and profit margins at the SJG mine. Operational results for Q1 2026 showed marked improvement performance across several critical operational metrics (particularly in mill ore processing tonnes per day and unit costs) due to the ongoing optimization program.

The capital works program to add a primary gravity gold circuit to the processing plant, involved the installation of three new Falcon gravity concentrators installed downstream of the ball mills to recover a significant portion of the free gold present in the San Pablo, San Pablo Sur, Tres Amigos and La Mochomera deposits. The three new Falcon concentrator units are performing as design recovering approximately 30% of the gold in a specific gravity gold concentrate (average ~300 g/t Au) which achieves a higher payability factor. The target for 2026 is for the process plant to achieve a processing rate between 750 to 800 tpd.

Process plant reliability during the quarter was on target at 91%, which included several planned major maintenance shutdowns. Milled ore for Q1 2026 was 69,816 tons (approximately 767 tons per day) within the target objective for 2026 of between 750 to 800 tons per day. With the current high ball mill availability, the Company is evaluating cost-effective strategies to utilize additional processing capacity of approximately 50 wet tons per day. Gold metal recoveries for the quarter averaged 74%, similar to the 74% gold recovery achieved in Q1 2025. Higher gravity gold recovery in the quarter was offset by lower head grades.

During Q1 2026, metal production totaled 4,840 ounces of gold compared to 5,781 ounces in Q1 2025. The average gold feed grade was 2.90 g/t for Q1 2026 compared to 3.63 g/t for Q1 2025.

Mine development for Q1 2026 was on budget with 3,219 meters of development completed, compared to 3,172 meters in Q4 2025. The completion of new development drifts enabled the Company to maintain more than 20 stopes in production by the end of the quarter. This additional mining flexibility is expected to positively impact ore tonnage and grades in 2026. The Company has also completed a capital works program to enhance mine ventilation across all three mines which included connecting the Mochomera and San Pablo Sur mines which has had an immediate impact on the working environment. Improved ventilation time has resulted in an improvement in working conditions and faster re-entry times following blasting activities. Planning for a central Raise Bore ventilation shaft was cancelled due to unfavorable geotechnical conditions and this planned ventilation location was moved to Palo Chinos. This capital works program will involve approximately 100 metres of decline development and in addition to helping ventilation will bring mine development closer to the Purisima historical works. Numerous exploration targets have been identified in this southern area of the mineral field. This ventilation development will also be a platform for underground exploration.

Detailed Activities by Deposit:

Tres Amigos

Original mine planning at Tres Amigos anticipated closure by the end of Q1 2025. However, geological reinterpretations and targeted short exploration drifts identified two additional mineralized structures - the Victoria and Alexa veins - located within 40 meters of existing underground infrastructure.

To date approximately 45,000 tonnes of high-grade ore have been extracted from this high-grade structure. In addition, a new ore drive was completed on the upper levels of the Tres Amigos North Zone which is an area well known for free gold occurrences, providing access to a new high-grade ore face. Mining from this face is expected to continue throughout 2026.

This new access will also enable future diamond drilling to test the north and south extensions of the deposit, with the goal of increasing inventory. In Q1, 2026 approximately 37% of the process plant feed was sourced from the Tres Amigos area.

San Pablo Viejo and San Pablo Sur

Throughout Q1 2026, the Company continued mining multiple faces at the San Pablo and San Pablo Sur deposit while advancing development toward the deeper southern extensions of these deposits. San Pablo and San Pablo Sur are expected to be minor sources of gold production through 2026, with approximately 15% of the process plant feed sourced from these workings. There is the additional upside potential in these deposits and what is particularly promising is the South Extension at the 500 level, which could yield high-grade ("Bonanza"-style) gold mineralization in the short to mid-term.

La Mochomera

The La Mochomera vein is also expected to be a significant source of gold production in 2026, and in Q1 2026 the Mochomera mine development provided approximately 48% of the process plant ore feed, with especially promising high-grade potential at depth. During 2025, development activities intersected a previously unrecognized high-grade mineralized structure, now designated as the "532 Vein" and mine extraction from this vein in Q1 2026 added to the Mochomera production profile.

OUTLOOK (SJG MINE)

With the development progress achieved in Q4 2025 and the increase in mining faces now available to the Company, management remains confident in the ongoing progress and long-term performance of the SJG mine. The Company's focus for 2026 is to improve production and grade through the implementation of additional and ongoing operational enhancements and development work.

While the Company made significant headway in 2025, optimization efforts will continue to focus on improving gold ore grades to the mill, throughput rates, and recoveries. San Pablo Sur, San Pablo, La Mochomera, Palos Chinos and the Tres Amigos ore bodies are expected to remain the main contributors to production in the year ahead. Further development in these areas will also be a key focus to access additional high-grade zones and additional mining faces.

A new tailings dam was completed during Q3 2024, with an estimated storage capacity of 670,751 cubic meters, distributed over four stages to accommodate up to three years of additional tailings. The third-stage facility is currently in use, and planning for construction of the fourth stage is underway. The Company has also begun evaluating a potential location for a third tailings storage facility at the SJG mine. These studies include environmental and geotechnical surveys to identify a preferred site.

Results for the Three Months Ended March 31, 2026 and 2025

REVENUE: Revenue for the three months ended March 31, 2026 and 2025 was $18,047,699 and $13,696,401, respectively. The increase was primarily due to a higher realized gold prices.

OPERATING COSTS: Operating costs for the three months ended March 31, 2026 and 2025 were $10,681,774 and $10,171,638, respectively, primarily due to higher tonnage mined and processed.

GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for the three months ended March 31, 2026 and 2025 were $1,373,528 and $1,250,244, respectively. These represent corporate overhead not directly attributable to site operations, including management, accounting, and legal expenses. Increases to general and administrative expenses in Q1 2026 primarily relate to an increase in consulting and professional fees related to the Company's legal matters.

STOCK-BASED COMPENSATION EXPENSE: Stock-based compensation expense was $183,179 and $251,707 for the three months ended March 31, 2026 and 2025 respectively. The expense primarily relates to the vesting of restricted stock awards and other equity awards granted in prior periods. The decrease in stock based compensation expense in the first quarter of 2026 reflects the normal run off of expense associated with the vesting schedules of previously granted awards, with no significant new equity grants issued during the quarter.

DEPRECIATION AND DEPLETION: Depreciation and depletion expense for the three months ended March 31, 2026 and 2025 were $528,720 and $162,566, respectively. With the Company's transition from Exploration Stage to Production Stage under S-K 1300, in 2025, the Company began capitalizing mine development costs and commenced depreciation and depletion charges on a units-of- production basis.

ACCRETION EXPENSE. Accretion expense for the three months ended March 31, 2026 and 2025 was $34,640 and $4,986, respectively. Mainly connected to the Company's asset retirement obligation, related to estimated costs to decommission the milling

plant and tailings pond at the estimated life of the mines in operation at the establishment of the ARO in 2025 as a result of the expansion of the milling operation.

OTHER EXPENSE: Other expense for the three months ended March 31, 2026 and 2025 were $1,297,412 and $309,476, respectively. Included in 2026 was interest expense of $398,513, mark-to-market gain on the derivative liability of $71,373, currency translation loss of $124,751, and other expense of $845,521. Included in 2025 was interest expense of $376,834, mark-to-market gain on the derivative liability of $71,373, currency translation loss of $15,155 and other income of $11,140.

OTHER COMPREHENSIVE INCOME (LOSS): Comprehensive income (loss) includes the Company's net income (loss) plus the unrealized foreign currency translation gain for the period. The Company's other comprehensive income (loss) for the three months ended March 31, 2026 and 2025 were $620,139 and ($37,992), respectively.

Liquidity and Capital Resources

As of March 31, 2026, the Company had negative working capital of $33,380,539 comprised of current assets of $8,182,362 and current liabilities of $41,562,901. This represented an increase of $1,644,831 from the Company's negative working capital of $31,735,708 as of December 31, 2025, primarily due a higher accounts payable and accrued liabilities as of March 31, 2026.

Net cash provided by operating activities for the three months ended March 31, 2026 was $2,038,148 compared to $1,825,105 during the three months ended March 31, 2025. The improvement in the cash flow from operations was primarily attributable to the Company's income generated in the three months of 2026, driven by increased revenue.

Cash used in investing activities for the three months ended March 31, 2026 totaled $2,792,467 compared to $2,657,884 during the three months ended March 31, 2025. Mainly due a higher capitalization of mine development costs in Q1 2026, in comparison with Q1 2025.

Cash used by financing activities for the three months ended March 31, 2026 and 2025 was $907,512 and $1,029,108, respectively. Mainly as result of payment of credit line combined with the operating leasing payments in the related period.

Through March 31, 2026, the Company's available liquidity and operations have been financed primarily through its operations and the revenue generated from the sale of product.

Although the Company has incurred positive net income and net cash inflows from operating activities for the three months ended March 31, 2026, there were many expenditures associated with investing activities which were made that were not expended for the production of revenue during the current period, such as underground development and mine expansion costs. If these expenses had not been made, the Company's net decrease in cash would have been minimized. Future capital requirements will depend on many factors, including the Company's rate of mining, milling, and exploration activities and growth. To the extent that existing capital and revenue growth are not sufficient to fund future activities, the Company may need to raise capital through additional equity or debt financings. Additional funds may not be available on terms favorable to the Company or at all. Failure to raise additional capital, if needed, could have a material adverse effect on the Company's financial position, results of operations and cash flows.

Off-Balance Sheet Arrangements

As of March 31, 2026, the Company had no off-balance sheet arrangements that would have a material adverse effect on its financial condition, results of operations, or liquidity.

Plan of Operation

The plan of operation for 2026 includes the continued enhancement of site infrastructure and processing capabilities, along with expanded exploration drilling at the SJG mine. During 2025, the Company processed an average of approximately 710 tons of material per day. For Q1 2026 an average of 767 tons of material was milled and the Company anticipates increasing daily processing throughput towards an average of 750 to 800 tons per day. The Company has installed processing capacity of up to 900 tons per day (with three ball mills), with a target rate of achieving an average of 800 tons per day taking into consideration planned maintenance downtime. The Company has continued underground development as part of its exploration activities on additional target areas (Vein 532, Victoria and Palos Chinos structures) which are anticipated to yield higher-grade material for processing. The Company expects that a combination of higher-grade feed material, increased processing throughput, and higher gold prices will produce a significant increase in revenue in 2026, as part of its ongoing exploration and project optimization efforts.

The Company plans to commence its exploration drilling program from underground in the later half of 2026 with firm quotes achieve to undertake this work received. Management and geologists will make decisions based on drill results, corporate strategies, market conditions, surface mapping, sampling, and target generation. The Company has contracted with a "Qualified Person," within the

meaning of S-K 1300, to interpret the collected data and compile a formal Mineral Resource Estimate update which was filed on May 20, 2025.

Capital Expenditures

Primary capital expenditures in 2026 will be directed toward increasing underground infrastructure development and enhancing processing capacity at the SJG mine. Average underground capitalized development in Q1 2026 was 383 meters per month, compared to 673 meters per month in Q1 2025. Processing systems have been upgraded through the installation of new Falcon Gravity gold concentrators and the repurposing of the original grinding mill. Additional equipment acquisitions and infrastructure improvements have also enhanced site access and operational capacity and the company is targeting an average daily production rate of between 750 to 800 tpd.

The Company is implementing a major Ventilation Upgrade in the La Mochomera and San Pablo mines with the installation of approximately 100 metres of mine development and a 30 metre raise ventilation shaft. Works for this shaft are scheduled to finish Q2 2026.

Exploration Activity

The Company continues to invest in exploration spending on near-mine extensions as well as geological studies and reinterpretations. The Company completed an S-K 1300 Mineral Resource Estimate in Q2 2025 covering San Pablo Sur, San Pablo, La Mochomera and the Tres Amigos ore bodies which includes development proposals for additional exploration of ore veins in the short and mid-term.

The Company intends to prioritize exploration of high-grade underground targets that can be readily incorporated into the mine plan, as well continue the regional program to better understand the broader potential of the SJG land package. Additionally, planning for deeper and lateral drilling between the San Pablo and Tres Amigos veins has highlighted the potential to extend high-grade underground resources at the SJG mine, especially in areas previously considered discontinuous due to faulting. The Company has identified opportunities to develop San Pablo, San Pablo Sur, La Mochomera, and Tres Amigos exploration potential. At the La Mochomera deposit, the Company plans to explore southward toward the historic Palos Chinos and Purisima mines, which operated over 100 years ago as high-grade producers. Of note is the Palos Chinos exploration target, located within 40 meters of the existing La Mochomera mine infrastructure. A 4,000 metre drill program has been designed for these targets which is planned to commence in the later half of 2026.