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

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

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

Northern Dynasty Minerals Ltd. (the "Company") is incorporated under the laws of the Province of British Columbia, Canada, and its principal business activity is the exploration of mineral properties. The Company is listed on the Toronto Stock Exchange ("TSX") under the symbol "NDM" and on the NYSE American Exchange ("NYSE American") under the symbol "NAK". The Company’s corporate office is located at 1040 West Georgia Street, 14^th floor, Vancouver, British Columbia.

The condensed consolidated interim financial statements of the Company as at and for the three months ended March 31, 2026, include financial information for the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities"). The Company is the ultimate parent. The Group’s core mineral property interest is the Pebble Copper-Gold-Molybdenum-Silver-Rhenium Project (the "Pebble Project") located in Alaska, United States of America ("USA" or "US"). All US dollar amounts when presented are denoted "US$" and expressed in thousands, unless otherwise stated.

The Group is in the process of exploring and evaluating the Pebble Project and has not yet determined whether the Pebble Project contains mineral reserves that are economically recoverable. The Group’s continuing operations and the underlying value and recoverability of the amounts shown for the Group’s mineral property interests is entirely dependent upon the existence of economically recoverable mineral reserves; the ability of the Group to obtain financing to complete the exploration and development of the Pebble Project; the Group obtaining the necessary permits to mine; and future profitable production or proceeds from the disposition of the Pebble Project.

As of March 31, 2026, the Group had $52,494 (December 31, 2025 – $54,734) in cash and cash equivalents for its operating requirements. However, the Group has a working capital deficit (current assets minus current liabilities) of $22,309 (December 31, 2025 – working capital deficit of $46,059). Working capital has been negatively impacted by the recognition in current liabilities of the convertible notes liability and derivative on convertible notes which total $73,258 (December 31, 2025 – $100,446) (note 7). These Financial Statements have been prepared on a going concern basis, which assumes that the Group will be able to raise sufficient funds to continue its exploration and development activities and satisfy its obligations as they come due. During the three months ended March 31, 2026, the Group recognized net income of $21,128 (2025 – net loss of $40,374) and had a deficit of $816,108 as of March 31, 2026 (December 31, 2025 – $837,236). The Group has prioritized the allocation of its financial resources to meet key corporate and Pebble Project expenditure requirements for the next twelve months, including funding the Group’s challenge of the US Environmental Protection Agency ("EPA")’s final determination and the US Army Corps of Engineers ("USACE") 2024 record of decision (discussed further below). Additional financing will be required to progress any material expenditure relating to the permitting of the Pebble Project. Additional financing may include any of or a combination of debt, equity (subject to terms of the convertible notes (note 7)), royalties and/or contributions from possible new Pebble Project participants.

Given the uncertainty surrounding the EPA’s final determination and the USACE’s 2024 record of decision (as discussed below), there can be no assurances that the Group will be successful in obtaining additional financing or funding when required. If the Group is unable to raise the necessary capital resources or generate sufficient cash flows to meet its obligations as they come due, the Group may need to, at some point, consider reducing or curtailing its operations. Accordingly, these conditions give rise to a material uncertainty that raises substantial doubt about the Group’s ability to continue as a going concern.

These Financial Statements do not reflect adjustments to the carrying values and classification of assets and liabilities that might be necessary should the Group be unable to continue as a going concern, and such adjustments could be material.   

Pebble Project Permitting and Administrative Process

The Group, through the Pebble Limited Partnership ("Pebble Partnership”), initiated federal permitting for the Pebble Project under the National Environmental Protection Act ("NEPA") by filing an application for a Clean Water Act ("CWA") 404 permit with the USACE in December 2017. The USACE issued a draft Environmental Impact Statement ("EIS") in February 2019 and completed a 120-day public comment period in early July 2019.

On July 24, 2020, the USACE published the final EIS. On November 25, 2020, the USACE issued a record of decision ("2020 ROD") denying the permit, citing alleged deficiencies in the proposed compensatory mitigation plan and concluding the project was contrary to the public interest.

The Pebble Partnership appealed the 2020 ROD in January 2021 with the USACE Pacific Ocean Division ("USACE POD"). In June 2021, the USACE POD completed the ‘administrative record’ for the appeal and provided a copy to the Pebble Partnership, following which the Pebble Partnership and its legal counsel reviewed the voluminous record for completeness and relevance to the USACE’s permitting decision, and its sufficiency to support a fair, transparent, and efficient review. An appeal conference was held in July 2022. In April 2023, the USACE POD granted the appeal and remanded the permit decision to the USACE Alaska District (the "District") for reconsideration of specific issues. Despite multiple extensions, the District ultimately declined to conduct the remand review.

In April 2024, the District the issued a further record of decision denying the permit without prejudice, and stating that the EPA’s Section 404(c) Final Determination constituted a controlling factor. This determination was not based on a reconsideration of the technical issues raised in the administrative appeal.

The EPA Section 404(c) Veto

In October 2021, a federal court vacated the EPA’s 2019 withdrawal of a proposed Section 404(c) determination, reinstating the proposed veto. In May 2022, the EPA issued a revised proposed determination with public comments closing in early September 2022.

On January 30, 2023, the EPA issued a Final Determination under Section 404(c) of the CWA, imposing restrictions on the use of certain waters in the Bristol Bay watershed for mine-related discharges. This action represents the final step in the EPA’s administrative process under 40 C.F.R. Part 231, which governs the EPA’s authority under Section 404(c) to veto permit decisions.

Litigation

In March 2024, the Group commenced two actions in US federal courts:

In June 2024, the Group amended its Alaska action to add the District as a defendant, alleging that the District’s permit decision was arbitrary and capricious. The Court granted the amendment in August 2024.

The State of Alaska and Alaska Native Village Corporations, Iliamna Natives Ltd. ("INL") and Alaska Peninsula Corp. ("APC"), also filed actions challenging the EPA’s veto. These actions have been consolidated with the Group’s action.

Following periods of Court-approved abeyance in 2025, a summary judgement briefing schedule was requested after separate discussions with the EPA failed to reach a settlement and was completed in April 2026. A hearing has been scheduled for June 25, 2026. Industry organization, including national and Alaska-based mining associations and the US Chamber of Commerce, have filed amicus briefs opposing to the EPA’s veto.

Current Status

The Group continues to assert its position that the EPA’s 404(c) veto is unlawful and intends to continue to work with the relevant government agencies.

These condensed consolidated interim financial statements ("Financial Statements") have been prepared in accordance with IAS 34, Interim Financial Reporting, using the same accounting policies and methods of application as the audited consolidated financial statements of the Group for the year ended December 31, 2025 (the "annual financial statements"), which were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB"). These Financial Statements should be read in conjunction with the annual financial statements.

These Financial Statements were authorized for issue by the Audit and Risk Committee on May 13, 2026.

In preparing these Financial Statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

There was no change in the use of significant estimates and judgements during the current period as compared to those described in Note 2 in the annual financial statements.

Adoption of amendments to accounting standards

The Group adopted the following amendments that are effective for annual periods beginning on or after January 1, 2026:

There was no material impact on the Financial Statements from the adoption of these amendments.

New standard issued but not yet effective

In April 2024, the IASB issued amendments to IFRS 18, Presentation and Disclosure in Financial Statements. These amendments, effective for annual periods beginning on or after January 1, 2027, replace IAS 1, Presentation of Financial Statements, and introduce new requirements for the presentation and disclosure of information in financial statements. They aim to improve the consistency and comparability of financial reporting, particularly in the income statement, and introduce new requirements for management-defined performance measures. The Group is currently assessing the implications of applying these amendments and from an initial observation there are potentially the following impacts:

The Group’s exploration and evaluation assets are comprised of the following:

Notes to table:  

Comprises the Pebble Project, a contiguous block of 1,840 mineral claims covering approximately 274 square miles located in southwest Alaska, 17 miles (30 kilometers) from the villages of Iliamna and Newhalen, and approximately 200 miles (320 kilometers) southwest of the city of Anchorage. 

ROU Assets, which relate to the use of office space, office equipment and yard storage are included under plant and equipment.  The following comprises ROU Assets:

For the three months ended March 31, 2026, total depreciation was $42 (2025 – $44) of which ROU Asset depreciation was $41 (2025 – $44).  ROU Asset depreciation of $27 (2025 – $28) is included in general and administrative expenses (note 10(b)).  The remainder of the ROU Asset depreciation is included in exploration and evaluation expenses under site expenses.

The Group’s cash and cash equivalents at March 31, 2026 and December 31, 2025, consisted of cash on hand and was invested in business and savings accounts.

The Group has cash deposited with a US financial institution that has been pledged as collateral to the surety provider for a US$2,000 surety bond that was placed with the Alaskan regulatory authorities for a performance guarantee related to any potential reclamation liability as a condition of the Miscellaneous Land Use Permit granted to the Pebble Partnership for its ongoing activities on the Pebble Project. The cash deposit and any income earned will be released once any required reclamation work has been performed and assessed by the Alaskan regulatory authorities. The cash is invested in a money market fund. For the three months ended March 31, 2026, the Group earned income of $8 (2025 – $8) which was re-invested.

At March 31, 2026, and December 31, 2025, authorized share capital consisted of an unlimited number of common shares ("Shares") with no par value, of which 559,989,162 (December 31, 2025 – 558,461,162) Shares were issued and fully paid.

The warrants were issued pursuant to the unit private placement in December 2023.

The following reconciles the issued and outstanding options for the three months ended March 31, 2026 and year end December 31, 2025:

For the three months ended March 31, 2026 and year end December 31, 2025, the Group did not recognize share-based compensation ("SBC") for options in the Statement of Comprehensive (Income) Loss as no options were granted and all options previously granted were fully vested in 2023.

Details of options exercised during the three months ended March 31, 2026 were as follows:

In the three months ended March 31, 2025, 664,700 options at an exercise price of $0.41 per option were exercised with a weighted average market share price of $1.08 per option.

The following table summarizes information on the outstanding options as at the following dates:

Note:

The weighted average contractual life for options outstanding, which are all exercisable, is 1.28 (2025 – 1.22) years per option.

The following reconciles DSUs outstanding for the three months ended March 31, 2026, and December 31, 2025:

Notes:

Notes:

For the three months ended March 31, 2026, the Group recognized a gain of $115 (2025 – loss of $127) on the remeasurement of the RSU liability in SBC. 

The foreign currency translation reserve represents accumulated exchange differences arising on the translation of the results of operations and net assets of the Group’s subsidiaries with a US dollar functional currency into the Group’s presentation currency, the Canadian dollar.

Convertible notes liability

The debt host has been accounted for at amortised cost with a 30.1% effective interest rate. The following reconcile movements at the reported dates:

Derivative on convertible notes

The following reconcile movements at the reported dates:

The fair value of the conversion option was estimated using the Binomial Option Pricing Model with formulae based on the Cox-Ross-Rubenstein approach, with consideration to the intrinsic value, with the following inputs and assumptions: 

In addition to the conversion option, the convertible notes include a financing redemption option and change of control ("CoC") option.  With the former, the Group would be required to redeem the principal amount of the convertible notes at 150% in cash at the election of the notes holders.  In a CoC circumstance, the Group would be required to redeem the convertible notes holders at 101% of the principal amount of the notes, which as of the reporting date is US$12,864, if no election to convert is made by the notes holders.  The Group estimated the discounted cash flow ("DCF") value of the options assuming the events that trigger these options occur mid-point between the convertible notes issuance and maturity.  The Group has estimated the probability for the occurrence of the financing redemption option, the CoC option and conversion at the conversion price to be 55%, 10% and 35%, respectively. 

At March 31, 2026 and December 31, 2025, the Group determined from the DCF analysis that there was no additional value provided by the redemption and CoC options over and above the conversion option. The estimated fair value of the conversion option, which was in the money at March 31, 2026 and December 2025, was determined using intrinsic value and was estimated at US$50,631 ($70,459) (2025 – US$71,246 ($97,799)).

For the three months ended March 31, 2026, the Group has recorded a gain in the change in fair value of $27,340 (2025 – loss of $34,476) for the embedded derivative.

The valuation of the embedded derivative is sensitive to changes in the Company’s share price. If the share price is reduced/increased by 10%, the fair value of the embedded derivative reduces/increases by approximately 10%.

The components of transactions to related parties are as follows:

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation.  Details between the Group and other related parties are disclosed below.

The aggregate value of transactions with KMP, which are the Group’s directors and the Chief Executive Officer ("CEO") and senior management: the Chief Financial Officer ("CFO"), Group Secretary and General Counsel, Executive Vice President ("EVP"), Environment and Sustainability, EVP, Corporate Development, EVP, Investor Relations, Vice President ("VP"), Engineering, and the Pebble Partnership’s CEO, VP, Public Affairs and Senior Permitting Advisor, was as follows for the three months ended March 31, 2026 and 2025: 

Notes to table:

During the three months ended March 31, 2026, 1,040,000 (2025 – Nil) options were exercised by KMP with a weighted average exercise price of $1.24 and a weighted average market price on exercise of $2.95 for proceeds to the Group of $1,290.

HDSI is a private company that provides geological, engineering, environmental, corporate development, financial, administrative and management services to the Group and its subsidiaries at annually set rates pursuant to a management services agreement. The annually set rates also include a component of overhead costs such as office rent, information technology services and general administrative support services. HDSI also incurs third party costs on behalf of the Group, which are reimbursed by the Group at cost. Two directors and several other key management personnel of HDSI, who are close business associates, are also key management personnel of the Group.

For the three months ended March 31, 2026, and 2025, transactions with HDSI were as follows: