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Note 7 - Formation of Joint Venture Company | 12 Months Ended
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Jun. 30, 2018
Notes to Financial Statements |
Formation of Joint Venture Company [Text Block] | 7. Formation of Joint Venture Company On January 8, 2015, the Company and Royal Gold, through their wholly-owned subsidiaries, consummated the Transactions contemplated under the Master Agreement, including the formation of a joint venture to advance exploration and development of the Company ’s Peak Gold Joint Venture Property, for gold ore and associated minerals prospects . In connection with the Closing of the Transactions, the Company formed the Joint Venture Company. The Company contributed to the Joint Venture Company the Peak Gold Joint Venture Property near Tok, A laska, together with other property (the “Contributed Assets”) with a historical book value of $1.4 million and an agreed fair value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiaries, entered into the JV LLCA . Royal Gold serves as manager of the Joint Venture Company ("the Manager") and will initially manage, direct, and co ntrol the operations of the Joint Venture Company . As a condition to the Closing, the Company and the Tetlin Village Council entered into a Stability Agreement dated October 2, 2014, pursuant to which the Company and the Tetlin Village Council, among oth er things, acknowledged the continued validity of the Tetlin Lease and all its terms notwithstanding any future change in the status of the Tetlin Village Council or the property subject to the Tetlin Lease . At Closing, Royal Gold, as an initial contribu tion to the Joint Venture Company, contributed $5.0 million (the “Royal Gold Initial Contribution”). The Royal Gold Initial Contribution did not entitle Royal Gold to a percentage interest in the Joint Venture Company. Therefore, at Closing, Royal Gold’s percentage interest in the Joint Venture Company equaled 0% and the Company’s percentage interest in the Joint Venture Company equaled 100%. In addition, as part of the Closing, Royal Gold paid the Company $750,000 which was utilized to partially reimburse the Company for costs and expenses incurred in the Transactions and is included as an expense reimbursement on our consolidated statements of operations . The JV LLCA provides Royal Gold with the right, but not the obligation, to earn a percentage interest in the Joint Venture Company (up to a maximum of 40% ) by making additional contributions of capital to the Joint Venture Company of up to $30.0 million (inclusive of the Royal Gold Initial Contribution of $5 million) during the period beginning on the Closing and ending on October 31, 2018. Now that Royal Gold has funded its full $30.0 million investment, it has a percentage interest of 40.0% in the Joint Venture Company, and the Company has a percentage interest of 60.0% in the Joint Venture Company. From inception through June 30, 2018, Royal Gold has contributed approximately $31.7 million (inclusive of the Royal Gold Initial Contribution of $5.0 million) to the Joint Venture Company and earned a percentage interest of 40.0% . The proceeds of Royal Gold ’s contributions to the Joint Venture Company (including the Royal Gold Initial Contribution) have been used by the Joint Venture Company to fund further exploration activities on the Peak Gold Joint Venture Property . Both the Company and Royal Gold will have the right to transfer each of their respective percentage interests in the Joint Venture Company to a third party, subject to certain terms and conditions set forth in the JV LLCA. If either member intends to transfer all or part of its percentage interest to a bona fide third party purchaser, the other member will have the right to require the transferring member to include in the intended transfer the other member’s proportionate share of its percentage interests at the same purchase price and terms and conditions. Once Royal Gold has earned a 40.0% interest in the Joint Venture Company, it will have the additional right to require the Company to sell up to 20.0% of the Company’s interest in the Joint Venture Company in a sale of Royal Gold’s entire 40.0% interest to a bona fide third party purchaser. If Royal Gold exercises this right, the Company will be obligated to sell the relevant portion of its percentage interest to a bona fide third party purchaser on the same terms and conditions as the interest being sold by Royal Gold . Now that Royal Gold has funded $30.0 million, the Company and Royal Gold are required to jointly fund the joint venture operations in proportion to their interests in the Joint Venture Company. If a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its percentage interest will be recalculated by dividing (i) the sum of (a) the value of its initial contribution plus (b) the total of all of its capital contributions plus (c) the amount of the capital contribution it elects to fund, by (ii) the sum of (a), (b) and (c) above for both members multiplied by 100. The Joint Venture Company is a variable interest entity as defined by FASB ASU No. 2015 - 02, Consolidation (Topic 810 ): Amendments to the Consolidation Analysis . The Company is not the primary beneficiary since it does not currently have the power to direct the activities of the Joint Venture Company. The Company's ownership interest in the Joint Venture Company is therefore accounted under the equity method.

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- Definition Complete disclosure for the formation of the Joint Venture Company. + References No definition available. + Details
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