Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements ("interim financial statements") of Dakota Territory Resource Corp. ("we", "us", "our", the "Company", "Dakota Territory") have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and the rules of the Securities and Exchange Commission ("SEC") for interim statements, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report on Form 10-K, for the year ended March 31, 2021 as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended March 31, 2021 as reported in our Annual Report on Form 10-K, have been omitted. The year-end balance sheet data was derived from the audited financial statements. Unless otherwise noted, there have been no material changes to the footnotes from those accompanying the audited consolidated financial statements contained in the Company's Annual Report on Form 10-K.

Uncertainties and Economic Development

In March 2020, the World Health Organization designated the new coronavirus ("COVID-19") as a global pandemic. Federal, state and local governments have mandated orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, restrictions on travel, and work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has resulted in significant volatility in the financial markets. The restrictions put in place by federal, state and local governments could delay our exploratory programs on our mineral properties. Furthermore, the impact of the pandemic on the global economy could also negatively impact the availability and cost of future borrowings should the need arise. It is unknown how long the adverse conditions associated with the pandemic will last and what the complete financial effect will be to the Company. The Company continues to monitor the impact that the pandemic, including relief bills enacted in response thereto, may have on operations. Currently, the Company is unable to determine the impact that the pandemic will have on its financial condition, results of operations, or liquidity.

Reverse Stock Split

On May 13, 2021, the Board of Directors of the Company approved a reverse stock split of the Company's common stock at a ratio of 1-for-4. The reverse stock split was made effective on May 25, 2021 and all share numbers and common stock prices presented give effect to the reverse split.

Merger Agreement

Pursuant to thean Amended and Restated Merger Agreement (the "Merger Agreement"), JR Resources Corp. ("JR") will change its name to Dakota Gold Corp. and the Company have incorporatedwill merge (the "Merger") into a new company ("NewCo") that will acquire all of the outstanding securitiessubsidiary of JR, andwith shareholders of the Company in exchange for securities of NewCo (the "Merger"). Shareholders of JR will receive a number of NewCo shares of common stock equal to their percentage shareholding in JR multiplied by the 35,641,667 Dakota Territory shares that JR owns. Shareholders of the Company other than JR will receivereceiving one share of common stock of NewCoJR for each share of common stock of the Company.

In addition, at the closing of the Merger, (i) each outstanding option to purchase the Company's common stock, whether vested or unvested, will be assumed and converted into an option with respect to a number of shares of NewCoJR common stock in the manner set forth in the Merger Agreement (ii) each outstanding warrant to purchase JR common stock, whether or not exercisable, will be assumed and converted into a warrant with respect to a number of shares of NewCo common stock in the manner set forth in the Merger Agreement, (iii)(ii) any outstanding awards of restricted stock units with respect to shares of the Company's common stock will be assumed and converted into the right to receive an award of restricted stock units representing a right to receive a number of shares of NewCoJR common stock in the manner set forth in the Merger Agreement and (iv) NewCoAgreement. On or prior to the closing of the Merger, JR will change its namehave completed a reverse stock split such that the total number of JR shares will be proportionately reduced to "Dakota Gold Corp."35,641,667.

The remunerationJonathan Awde was appointed Chief Executive Officer and Gerald Aberle resigned as Chief Executive Officer and was appointed Chief Operating Officer. He is also a director and significant shareholder of directors and other membersthe Company. Under a March 2021 agreement, Jonathan Awde earns a fixed consulting fee of key management personnel during the three months ended June 30, 2021 and 2020 was as follows:$23,750 per month, plus approved expenses.

In July 2020, the Company staked 166 unpatented lode mining claims covering approximately 3,152 acres located immediately north and adjacent to the Company's City Creek Property. Through this staking, the City Creek project area was expanded from approximately 1,176 acres to 4,319 acres. The City Creek Property is comprised of a combination of patented and unpatented mining claims covering the continuous extension of the iron-formation gold host northeast of the Homestake Mine. The City Creek geology is dominated by the Homestake, Ellison and Poorman stratigraphic sequence that has been delineated by more than 40,000 ft of core drilling across the property. The historic drilling also documents the occurrence of gold mineralization in the classic quartz vein, chlorite-arsenopyrite style of the Homestake Mine.

On September 15, 2020, we completed the acquisition of 50 unpatented lode mining claims covering approximately 840 acres at the historic Ragged Top Gold Camp, of the Black Hills of South Dakota. Tertiary-aged gold mineralization inWest Corridor Property and the Ragged Top area is hosted primarily in the Paha Sapa Limestone formationCity Creek Property through both acquisitions and has been mined from both vertical fissures called "Verticals" and from collapsed breccias. The Ragged Top acquisition is located just northwest of the producing Wharf Mine (Coeur Mining) and approximately 3 miles southwest of the former Richmond Hill Mine (Barrick Gold).staking.

On October 26, 2020, the Company completed the purchase of the Maitland Gold Property from Homestake Mining Company of California ("HMCC"), a wholly owned subsidiary of Barrick Gold Corporation ("Barrick"). At closing, the Company paid Barrick $3.5 million cash and issued 750,000 shares of its common stock valued at $1.76 per share, for total consideration of $4.82 million. Additionally, Barrick retained a 2.5% net smelter returns royalty on the property. The 2,112 mineral-acre Maitland acquisition is an important component of the Company's exploration and development strategy for the structural corridor that extends from the Homestake Gold Mine to the Company's Blind Gold Property at the northern end of the Homestake District.

On November 25, 2020,October 14, 2021 the Company acquired 64 unpatented lode mining claims covering approximately 1,092 acres located south andentered into an option agreement to acquire the westRichmond Hill Property in the Homestake District, South Dakota. Under the terms of the former Homestake Gold Mine at Lead, South Dakota.agreement, Dakota Territory has a three-year option to acquire 2,126 acres of surface and mineral rights with attendant facilities. The Poorman Anticline geological structure isCompany issued 400,000 Shares to Barrick and will make annual Option payments of $100,000 during the southwestern-most known extensionoption period. The Company may exercise the Option on or before September 7, 2024, by assuming all of the Homestake iron-formation host inliabilities and bonds associated with the district. Gold mineralization was discovered undergroundRichmond Hill Property. In addition, on the 2,600 and 4,100 foot levels in the far western extentsexercise of the Homestake Mine inoption, the 1950'sCompany will issue Barrick an additional 400,000 shares and 60'sgrant a 1% NSR to Barrick with little historic follow-up exploration inrespect to any gold that may be recovered from the Poorman Anticline closer to surface. Dakota Territory's targeting in the Poorman Anticline is based on the presence of the Homestake iron-formation host and projected intersections with important shear fabric that is known to have conducted fluids necessary to the deposition of gold mineralization in the northern extents of the structural corridor.Richmond Hill Property.

On January 26,September 7, 2021 the Company acquired 143 unpatented lode mining claims covering approximately 2,468 acres.entered into an option agreement to acquire surface rights and certain residual facilities in the Homestake District, South Dakota from the HMCC. The acquisition was based on continuing analysis of the Company'sagreement provides for exclusive access to Homestake's extensive historic data sets coupledwhich chronicle its 145-year exploration and mining history throughout South Dakota. Under the terms of the agreement, the Company has a three-year option to acquire 4,261 acres of surface rights with new insights derivedattendant facilities and data held by HMCC. In consideration for the option, the Company made a cash payment of US$1.3 million and issued 1 million shares of common stock to Barrick and will make annual Option payments of US$300,000 during the Option period. The Company may exercise the option on or before September 7, 2024, by assuming all of the liabilities and bonds currently held by HMCC in the Homestake District. In addition, on exercise of the Option, Dakota Territory will issue Barrick 3 million Shares and grant a 2.5% NSR to Barrick with respect to any gold that may be recovered from the Company's district-scale airborne geophysical survey flown during the summer of 2020 and increased the acreage covered by three of the Company's existing project areas. At the west side of the Homestake District, the Tinton property was extended to the north and northwest adding approximately 1,966 acres to the original claim block. In the central region of the District, the West Corridor property was extended west to Cleopatra Creek covering approximately 242 additional acres between Richmond Hill and Wharf gold mines, and the Blind Gold Property was expanded west adding approximately 260 acres immediately north of the Richmond Hill Mine.

On March 8, 2021, the Company acquired 39 unpatented lode mining claims covering approximately 806.5 acres at the eastern boundary of the Company's Tinton Property. Tinton was the site of placer mining activity between 1876 and the turn of the century, the lode source for which has not been discovered. Our original Tinton claim block was located based on historic research and exploration conducted by members of our technical team at Homestake Mining Company in the 1980's and 1990's, which suggested a Pre-Cambrian lode source at depth. The latest property acquisition is focussed on additional younger Tertiary-aged gold mineralization in the younger sedimentary and igneous rocks covering theGrizzly Gulch property.

On March 9, 2021, Dakota Territory acquired, by option, 25 patented mining claims covering approximately 307 acres at the eastern boundary of the northern segment of the Company's Ragged Top Property. NaN additional unpatented lode claims covering approximately 29 acres were also acquired by staking and added at the north end of the property. The Ragged Top Property has been subject to historic mining operations producing Tertiary-aged gold and silver mineralization primarily from vertical fissures and collapsed breccias within the Paha Sapa limestone unit. The Ragged Top property is located just northwest of the producing Wharf Mine (Coeur Mining) and approximately 3 miles southwest of the former Richmond Hill Mine (Barrick Gold).

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments of our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "estimates" or "intends", the negatives thereof, variations thereon and similar expressions or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

• the progress, potential and uncertainties of our exploration program at our properties located in the Homestake District of the Black Hills of South Dakota (the "Project");
• the success of getting the necessary permits for future drill programs and future project exploration;
• expectations regarding the ability to raise capital and to continue our exploration plans on our properties; and
• plans regarding anticipated expenditures at the Project.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

• risks associated with the Merger (as defined herein);Merger;
• risks associated with lack of defined resources that are not SEC Guide 7 Compliant Reserves, and may never be;
• risks associated with our history of losses and need for additional financing;
• risks associated with our limited operating history;
• risks associated with our properties all being in the exploration stage;
• risks associated with our lack of history in producing metals from our properties;
• risks associated with our need for additional financing to develop a producing mine, if warranted;
• risks associated with our exploration activities not being commercially successful;
• risks associated with ownership of surface rights at our Project;
• risks associated with increased costs affecting our financial condition;
• risks associated with a shortage of equipment and supplies adversely affecting our ability to operate;
• risks associated with mining and mineral exploration being inherently dangerous;
• risks associated with mineralization estimates;
• risks associated with changes in mineralization estimates affecting the economic viability of our properties;
• risks associated with uninsured risks;
• risks associated with mineral operations being subject to market forces beyond our control;
• risks associated with fluctuations in commodity prices;
• risks associated with permitting, licenses and approval processes;
• risks associated with the governmental and environmental regulations;
• risks associated with future legislation regarding the mining industry and climate change;
• risks associated with potential environmental lawsuits;
• risks associated with our land reclamation requirements;
• risks associated with gold mining presenting potential health risks;
• risks associated with the COVID-19 pandemic;
• risks associated with cybersecurity and cyber-attacks;
• risks related to title in our properties;
• risks related to competition in the gold and silver mining industries;

• risks related to economic conditions;

• risks related to our ability to manage growth;
• risks related to the potential difficulty of attracting and retaining qualified personnel;
• risks related to our dependence on key personnel;
• risks related to our SEC filing history; and
• risks related to our securities.

This list is not exhaustive of the factors that may affect our forward-looking statements. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, we disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

This management's discussion and analysis should be read in conjunction with our financial statements and notes thereto as set forth herein. Readers are also urged to carefully review and consider the various disclosures made by us, which attempt to advise interested parties of the factors which affect our business, including without limitation, the disclosures made under "Risk Factors""Risk Factors" of our most recent Form 10-K.

Our unaudited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Since we are an exploration stage company and have not generated revenues to date, our business is subject to numerous contingencies and risk factors beyond our control, including exploration and development risks, competition from well-funded competitors, and our ability to manage growth.

Overview

Our goal is to create shareholder value through the acquisition, responsible exploration and future development of high caliber gold properties in the Black HillsHomestake District of South Dakota. Our management and technical teams have more than 50 combined years of mining and exploration experience in the Black Hills with Homestake Mining Company, which we believe has uniquely positioned Dakota Territory to leverage our direct experience and knowledge of past exploration endeavors to focus our programs at the point where Homestake Mining Company left off in the 1990's.

The Black Hills of South DakotaHomestake District has yielded approximately 44.6 million ounces of gold production from thea 100 square mile area known as the Homestake District.area. Despite the historic gold endowment ofgold production from the area, we believe the District is generally underexplored and lacks a concerted effort to search for gold under the cover of younger sedimentary and igneous rocks that dominate the surface. The Black Hills of South DakotaHomestake District is a safe low-cost jurisdiction with well-developed mining infrastructure and is a jurisdiction in which regulatory authorities have consistently demonstrated a willingness to work with responsible operators to permit well-planned compliant projects.

Since 2012, we have consistently pursued a strategy of expanding our portfolio of brownfields exploration properties located exclusively within the Homestake District to build a dominant land position with the goal of consolidating the remaining mineral potential. Our property acquisitions have been based on our past exploration experiences, the extensive data sets we have assembled over the past 8 years, and new research we have conducted on the gold system that created the District. We currently hold eight exploration properties covering a total of approximately 19,604 mineral acres. We have not established that any of our projects or properties contain any proven or probable reserves under SEC Industry Guide 7.

Planned Activities

Our planned activities during fiscal 2022 are focussed on advancing our Maitland, Blind Gold, City Creek and Tinton gold exploration properties and to continue to build on our overall property position in the Homestake District of the Black Hills of South Dakota.

We continue to model data acquired by our broad high definitionhigh-definition airborne geophysical survey - as well as a recent and extensive ground geophysics survey covering a large area in the Homestake District - to enhance our current drill targets, as well as to screen other areas of interest within the district. We have budgeted for several field sampling/mapping programs and to continue to locate and add historic information to our extensive data sets. We have planned to complete site preparations and to conduct our first drill program on the deep Maitland iron-formation target and other tertiary-replacement targets in the Maitland area.area - as well as deep iron-formation targets and other tertiary-replacement targets at our City Creek Property, and targets in the new option agreement area at Richmond Hill. Additionally, our budget provides for the commencement of necessary permit work for the Blind Gold, Tinton and City Creek Properties and provides for our general operating expenses and the maintenance of the Company's mining claims and leases.

As at the date of this management's discussion and analysis, the company has commitments to purchase three exploration properties, totaling approximately $503,000, which are expected to close in November and December 2021.

Merger Agreement

Pursuant to an Amended and Restated Merger Agreement (the "Merger Agreement"), JR Resources Corp. ("JR") will change its name to Dakota Gold Corp. and the Company will merge (the "Merger") into a subsidiary of JR, with shareholders of the Company receiving one share of common stock of JR for each share of common stock of the Company.

In addition, at the closing of the Merger, (i) each outstanding option to purchase the Company's common stock, whether vested or unvested, will be assumed and converted into an option with respect to a number of shares of JR common stock in the manner set forth in the Merger Agreement and (ii) any outstanding awards of restricted stock units with respect to shares of the Company's common stock will be assumed and converted into the right to receive an award of restricted stock units representing a right to receive a number of shares of JR common stock in the manner set forth in the Merger Agreement. On or prior to the closing of the Merger, JR will have completed a reverse stock split such that the total number of JR shares will be proportionately reduced to 35,641,667.

On or before completion of the Mergers: (i) JR will have changed its name to Dakota Gold Corp.; (ii) JR will have completed a reverse stock split such that the total number of JR shares will be proportionately reduced to 35,641,667 JR shares; (iii) shareholders of Dakota Territory other than JR will receive one share of common stock of JR Resources for each share of common stock of Dakota Territory; (iv) each outstanding option to purchase Dakota Territory common stock, whether vested or unvested, will be assumed and converted into an option with respect to a number of shares of JR common stock in the manner set forth in the Merger Agreement; and (v) each outstanding award of restricted stock units with respect to shares of Dakota Territory common stock will be assumed and converted into the right to receive an award of restricted stock units representing a right to receive a number of shares of JR common stock in the manner set forth in the Merger Agreement.

The completion of the Merger is subject to customary closing conditions for a transaction of this nature, including securities law compliance and the approval of the Company's shareholders.

Liquidity and Capital Resources

We are an exploration-stage company and do not generate revenues. As such, we finance our operations and the acquisition and exploration of our mineral properties through the issuance of share capital.capital, and we could be materially adversely affected if we were unable to raise capital because of market or other factors.

As of JuneSeptember 30, 2021, we had working capital of approximately $23,451,000$51,754,820 and our accumulated deficit as of JuneSeptember 30, 2021 was approximately $20,724,000.$25,755,696. We had a net loss for the threesix months ended JuneSeptember 30, 2021 of approximately $12,181,000. On June 23,$17,212,912.

During the six months ended September 30, 2021, wethe Company issued 2,311,000a total of 11,203,661 shares of common stock at a price of $4.50 per share, for net proceeds of approximately $10,399,500.$49,504,424.

During our fiscal year ending March 31, 2022, we planthe Company plans to spend approximately $13.4 million. The timing of these expenditures is dependent upon a number of factors, including the availability of contractors.

Results of Operations

Three months ended JuneSeptember 30, 2021 and 2020

Revenue

We had no operating revenues for the three months ended JuneSeptember 30, 2021 and 2020. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $20,724,000 as of June 30, 2021.

Exploration Costs

During the three months ended JuneSeptember 30, 2021 and 2020, our exploration costs were approximately $2,184,000$1,847,676 and $126,000,$355,728, respectively. Included in these costs were share-based compensation and payments of annual claim maintenance fees related to our mineral properties. The largest increase year over year related to $1,916,030$878,250 of share-based compensation expense in the three months ended JuneSeptember 30, 2021 (2020 - $0) and having additional funds as a result of the financing proceeds from JR (the "Purchase Agreement"), which funded the airborne geophysical survey and review and compilation of historical geological data.

General and Administrative

Our general and administrative expenses for the three months ended JuneSeptember 30, 2021 and 2020 were approximately $9,906,000$3,157,804 and $152,000,$214,372, respectively. These expenditures were primarilylargest expense was for $8,688,218$1,832,465 of share-based compensation expense in the three months ended JuneSeptember 30, 2021 (2020 - $0), while legal, accounting &and professional fees and investor relations accounted for $597,887 (2020 - $90,663).

Revenue

We had no operating revenues for the six months ended September 30, 2021 and are currently not profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $25,755,696 as of September 30, 2021.

Exploration Costs

During the six months ended September 30, 2021, our exploration costs were approximately $4,031,317 (2020 - $482,189). Included in these costs were share-based compensation and payments of annual claim maintenance fees related to our mineral properties. The increase year over year related to $2,794,280 of share-based compensation expense in the six months ended September 30, 2021 (2020 - $0) and having additional funds as a result of the financing proceeds from JR (the "Purchase Agreement"), which funded the airborne geophysical survey and review and compilation of historical geological data.

General and Administrative

Our general and administrative expenses for the six months ended September 30, 2021 and 2020 were approximately $13,063,396 and $365,902, respectively. The largest expense was $10,520,683 for share-based compensation in the six months ended September 30, 2021 (2020 - $0). Other general and administrative expenses necessary for our operations.operations accounted for $1,593,952 during the six-month period (2020 - $190,639) and legal, accounting and professional fees and investor relations during the six-month period were $911,715 (2020 - $175,403).

We had losses from operations for the threesix months ended JuneSeptember 30, 2021 and 2020 totaling approximately $12,089,000$17,094,713 and $278,000,$848,091, respectively. We had total net losses for the threesix months ended JuneSeptember 30, 2021 and 2020 of approximately $12,181,000$17,212,912 and $346,000,$1,119,600, respectively. We incurred interest expense from notes payable for the threesix months ended JuneSeptember 30, 2021 and 2020, respectively, in the amounts of $101$12 and $69,744$273,509 and recognized a loss on settlement of related party debt of $92,045$124,521 and $0, respectively.respectively. Our money market account generated interest income during the threesix months ended JuneSeptember 30, 2021 and 2020, respectively, in the amounts of $237$6,334 and $2,000.$2,000

Off-Balance Sheet Arrangements

For the three months ended JuneAs at September 30, 2021 and 2020, we have off-balance sheet arrangements for annual payments in relation to the mineral leases as disclosed in Note 3 of the financial statements.

Critical Accounting Estimates

Management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with US GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with US GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Management believes that the following critical accounting estimates and judgments have a significant impact on our financial statements: valuation of options granted to directors and officers using the Black-Scholes model and fair value of mineral properties. The accounting policies are described in greater detail in Note 2 to our audited annual financial statements in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

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