Plan of Operation

New Jersey Mining Company is a gold producer focused on diversifying and building its asset base and cash flows through a portfolio of mineral properties located in historic producing gold districts in Idaho and Montana.

The Company's plan of operation is to generate positive cash flow, while reducing debt and growing its production and asset base over time while being mindful of corporate overhead. The Company's management is focused on utilizing its in-house skills to build a portfolio of producing mines and milling operations with a primary focus on gold and secondary focus on silver and base metals.

The Company's properties include: the Golden Chest Mine (currently in production), the New Jersey Mill (majority ownership interest), and a 50% carried to production interest in the past producing Butte Highlands Mine located in Montana. In addition to its producing and near-term production projects, New Jersey Mining Company has additional exploration prospects, including the McKinley-Monarch and Eastern Star located in Central Idaho, and additional holdings near the Golden Chest in the Murray Gold Belt including the 876 acres of patented claims in Alder Gulch purchased in the first quarter of 2020 and 2021. In early 2020, the Company added the Roberts and Diamond Creek rare earth element properties in Idaho. Both properties are listed as belonging to the national inventory as recognized by the USGS and other agency reports. If a large economic deposit of rare earth elements becomes a reality on either of these properties, they could become an important source of critical minerals for the United States. The Company added these projects to its portfolio of exploration properties to diversify its holdings and build potential shareholder value from the anticipated demand for these elements in the electrification of motorized vehicles, permanent magnets, and other products focused on a low-carbon and "green" future.

COVID-19 Coronavirus Pandemic Response and Impact

Following the outbreak of the COVID-19 coronavirus global pandemic ("COVID-19") in early 2020, in March 2020 the U.S. Centers for Disease Control issued guidelines to mitigate the spread and health consequences of COVID-19. The Company implemented changes to its operations and business practices to follow the guidelines and minimize physical interaction, including using technology to allow employees to work from home when possible and altering production procedures and schedules, asset maintenance, and limiting discretionary spending. As long as they are required, the operational practices implemented could have an adverse impact on our operating results due to deferred production and revenues or additional costs. The negative impact of COVID-19 remains uncertain, including on overall business and market conditions. There is uncertainty related to the potential additional impacts COVID-19 could have on our operations and financial results for the year.

Highlights during the third quarter of 2021 include:

·At the Golden Chest, ore mined from underground stopes totaled approximately 6,310 tonnes of which about one-half was from the 833 stope and the remainder from the 824 stope. Development waste tonnage totaled 3,160 tonnes as the Main Access Ramp (MAR) was extended at depth. A second ventilation and escapeway raise was partially completed by the Company's in-house mining crews during the quarter. During the quarter, operations were temporarily halted due to a rock fall and injury to one miner working in the 833N stope. Access to the 833N stope was restricted for two weeks, but access to the rest of the mine was permitted. This and a temporary road closure due to area forest fires also impacted operations during the 3rd quarter.

·Open pit mining progressed from the 1017 bench to the 1011 bench as production averaged 1,180 tonnes per day. Mining continued through the Klondike area as historic stopes were encountered that reduced the ore tonnage modeled.

·For the quarter ended September 30, 2021 a total of 12,554 dry metric tonnes (dmt) were processed at the Company's New Jersey mill with a flotation feed head grade of 3.22 gpt with gold recovery of 87.8%

·The Company drilled 1,416 meters during the quarter and released core drilling results from the Joe Dandy area of the Golden Chest mine which is on the southern end of the property. The intercepts are summarized below:

oGC 21-194 intercepted 0.5 meters of 7.8 gpt gold in the upper vein and 0.4 meters of 4.6 gpt gold in the lower vein.

oGC 21-195 intercepted 0.5 meters of 3.8 gpt gold in the upper vein and 0.4 meters of 2.9 gpt gold in the lower vein.

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oGC 21-196 intercepted 0.6 meters of 8.3 gpt gold in the upper vein and 1.7 meters of 2.7 gpt gold in the lower vein.

oGC 21-197 intercepted 2.56 meters of 10.98 gpt gold (including 0.94 meters of 28.7 gpt gold) in the upper vein and 0.53 meters of 2.60 gpt gold in the lower vein.

·The Company released core drilling results from the Klondike area of the Golden Chest mine which is located on the northern end of the property, and the intercepts are summarized below.

oGC 21-203 intercepted 1.8 meters of 14.4 gpt gold (including 0.8 meters of 31.8 gpt gold).

oGC 21-204 intercepted 7.5 meters of 5.2 gpt gold (including 3.3 meters of 9.4 gpt gold) in the upper vein and 3.4 meters of 12.2 gpt gold (including 1.1 meters of 34.1 gpt gold) in the lower vein.

oGC 21-205 intercepted multiple zones of gold mineralization summarized below:

o1.4 meters of 12.2 gpt gold from 117.9 to 118.9 m.

o1.1 meters of 6.4 gpt gold from 126.4 to 127.5 m.

o2.3 meters of 15.5 gpt gold from 165.0 to 167.3 m (including 0.5 meters of 35.4 gpt gold and 0.1 meter of 138 gpt gold).

o7.6 meters of 1.9 gpt gold from 175.2 to 186.3 m (including 1.3 meters of 6.9 gpt gold).

o1.8 meters of 3.8 gpt gold from 207.9 to 209.7 m.

o6.0 meters of 3.1 gpt gold from 225.21 to 231.2 m (including 3.1 meters of 5.4 gpt gold).

o1.5 meters of 3.3 gpt gold from 233.5 to 235.0 m.

o3 meters of 7.8 gpt gold from 246.6 to 247.9 m.

·The Company's Roberts and Diamond Creek Rare Earth Element projects were included in the Earth MRI program overseen by the United States Geologic Survey (USGS) and conducted by the Idaho Geologic Survey (IGS). Additional groundwork was completed at Diamond Creek, including advancing the plan of operations for a 10-hole drill program. Furthermore, it is anticipated that core samples from this drill program are to be included in future partnership discussions with the IGS and University of Idaho, with an eye toward further drilling, extraction, separation, and processing of REE's in Idaho.

Results of Operations

Our financial performance during the quarter is summarized below:

·The Company had a gross profit of $278,010 and $568,855 for the three and nine-month periods ended September 30, 2021 compared to a gross loss of $107,237 and gross profit of $24,033 for the comparable periods in 2020. Gross profit increased primarily because of improved grade of mineralized material being mined and processed and increased production.

·Cash costs per ounce decreased for the three and nine-month periods ended September 30, 2021, to $1,256.75 and $1,296.27 per ounce compared to $1,855.58 and $1,372.68, respectively, per ounce in 2020 because of increased grade of mineralized material being mined and processed in the periods and increased production. AISC per ounce decreased to $1,592.34 for the three-month period ended September 30, 2021 compared to $2,368.21 for the comparable period in 2020 as a result of increased grade of mineralized material being mined and processed in the periods and increased production. AISC per ounce increased to $1,741.66 per ounce for the nine-month period ended September 30, 2021 compared to $1,628.91 for the comparable period in 2020 due to additional exploration core drilling completed by an outside drill contractor in the first quarter of 2021.

·Revenue was $2,098,849 and $5,865,708 for the three and nine-month periods ended September 30, 2021 compared to $1,556,070 and $4,281,401 for the comparable periods of 2020. The increase was a result of a higher average gold grade and increased production in 2021 compared to 2020.

·An operating loss of $219,345 for the three-month period ended September 30, 2021 compared to operating income of $10,707 in the comparable period of 2020. This was a result of increased exploration spending for the three months ended September 30, 2021. An operating loss of $1,975,020 for the nine-month period ended September 30, 2021 compared to operating loss of $315,774 in the comparable period of 2020. The increased loss for the nine-month period in 2021 was mostly a result of increased core drilling and expense for stock options granted in the first quarter of 2021.

·Net loss of $237,671 and $2,040,843 for the three and nine-month periods ended September 30, 2021 compared to net loss of $7,327 and $382,028 for the three and nine-month periods ended September 30, 2020. the reasons for these changes are the same as those for the operating loss described above.

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·Exploration costs increased in 2021 compared to 2020 as a result of contract core drilling that the Company had done in the first quarter of 2021 and additional core drilling completed by the Company's drill in 2021. A total of 3,500 meters of core drilling was completed by a contractor in the first quarter of 2021.

·Management, professional services, and general and administrative expenses increased in the nine-month period ended September 21, 2021 compared to 2020 as a result of options being granted to management, directors, and employees for a total cost of $604,572.

·Timber revenue decreased in 2021. In 2020 more sales of timber at the Company's Potosi property were realized.

·The consolidated net loss for the nine-months ended September 30, 2021 and 2020 included non-cash charges as follows: depreciation and amortization of $595,227 ($425,641 in 2020), write off of equipment of $0 in 2021 ($9,537 in 2020), adjustment on inventory to net realizable value of $0 in 2021 ($32,098 in 2020), accretion of asset retirement obligation of $7,476 ($7,170 in 2020), stock-based compensation of $614,431 in 2021 ($0 in 2020) , and the issuance of common stock for services $6,500 in 2021 ($0 in 2020).

Cash Costs and All-In Sustaining Costs Reconciliation to GAAP-Reconciliation of cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) to cash cost per ounce and all-in sustaining costs (AISC) per ounce (non-GAAP).

The table below presents reconciliations between the most comparable GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of cash cost per ounce and all in sustaining costs per ounce for the Company's gold production in the three and nine-month periods ended September 30, 2021 and 2020.

Cash cost per ounce is an important operating measure that we utilize to measure operating performance. AISC per ounce is an important measure that we utilize to assess net cash flow after costs for pre-development, exploration, reclamation, and sustaining capital. Current GAAP measures used in the mining industry, such as cost of goods sold do not capture all of the expenditures incurred to discover, develop, and sustain gold production.



                                           2021                        2020
                                 Three Months  Nine Months   Three Months  Nine Months
Cost of sales and other direct
production costs and
depreciation and amortization    $   1,820,839  $ 5,296,853  $   1,663,306  $ 4,257,368
Depreciation and amortization        (217,054)    (595,227)      (156,324)    (425,641)
Change in concentrate inventory         37,535      146,431         64,526       33,407
Cash Cost                        $   1,641,320  $ 4,848,057  $   1,571,508  $ 3,865,134
Exploration                            267,643    1,193,520         44,613      133,529
Sustaining capital                      78,380      349,363        274,199      286,889
General and administrative             101,430      751,272        117,762      308,233
Less stock-based compensation
and other non-cash items               (9,178)    (628,407)        (2,426)      (7,170)
All in sustaining costs          $   2,079,595  $ 6,513,805  $   2,005,657  $ 4,586,614
Divided by ounces produced               1,306        3,740            847        2,816
Cash cost per ounce              $    1,256.75  $  1,296.27  $    1,855.58  $  1,372.68
All in sustaining cost (AISC)                      1,741.66
per ounce                        $    1,592,34  $            $    2,368.21  $  1,628.91

Financial Condition and Liquidity



                                          For the Nine Months Ended September 30,
Net cash provided (used) by:                      2021                  2020
Operating activities                     $          (758,113)  $            121,737
Investing activities                              (2,684,936)           (1,149,669)
Financing activities                                1,384,291             3,960,948
Net change in cash and cash equivalents           (2,058,758)             2,933,016
Cash and cash equivalents, beginning of
period                                              2,539,945               217,796
Cash and cash equivalents, end of        $                     $
period                                                481,187             3,150,812

The Company is currently producing from both the open-pit and underground at the Golden Chest Mine. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months.

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