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Note 11 - Investment in the Peak Gold, LLC

12 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures Disclosure [Text Block]

11. Investment in Peak Gold, LLC

The Company recorded its investment at the historical book value of the assets contributed to the Peak Gold JV which was approximately $1.4 million. As of June 30, 2022, the Company has contributed approximately $19.4 million to the Peak Gold JV. KG Mining acquired 70% of the Peak Gold JV on September 30, 2020 in connection with the Kinross Transactions. As of June 30, 2022, the Company held a 30.0% membership interest in the Peak Gold JV.

The following table is a roll-forward of our investment in the Peak Gold JV from January 8, 2015 (inception) to June 30, 2022:

	Investment
	in Peak Gold, LLC
Investment balance at June 30, 2014	$	—
Investment in Peak Gold, LLC, at inception January 8, 2015		1,433,886
Loss from equity investment in Peak Gold, LLC		(1,433,886	)
Investment balance at June 30, 2015	$	—
Investment in Peak Gold, LLC		—
Loss from equity investment in Peak Gold, LLC		—
Investment balance at June 30, 2016	$	—
Investment in Peak Gold, LLC		—
Loss from equity investment in Peak Gold, LLC		—
Investment balance at June 30, 2017	$	—
Investment in Peak Gold, LLC		2,580,000
Loss from equity investment in Peak Gold, LLC		(2,580,000	)
Investment balance at June 30, 2018	$	—
Investment in Peak Gold, LLC		4,140,000
Loss from equity investment in Peak Gold, LLC		(4,140,000	)
Investment balance at June 30, 2019	$	—
Investment in Peak Gold, LLC		3,720,000
Loss from equity investment in Peak Gold, LLC		(3,720,000	)
Investment balance at June 30, 2020	$	—
Investment in Peak Gold, LLC		3,861,252
Loss from equity investment in Peak Gold, LLC		(3,861,252	)
Investment balance at June 30, 2021		—
Investment in Peak Gold, LLC		3,706,000
Loss from equity investment in Peak Gold, LLC		(3,706,000	)
Investment balance at June 30, 2022	$	—

In conjunction with the CORE Transactions, and Kinross assuming the role of manager of the Peak Gold JV, the Peak Gold JV converted its method of accounting from US GAAP to International Financial Reporting Standards (“IFRS”) and changed its fiscal year end from June 30 to December 31, effective for the quarter ended December 31, 2020. The condensed financial statements presented below have been converted from IFRS to US GAAP for presentation purposes for the fiscal year ended 2022.

The following table presents the condensed balance sheets for the Peak Gold JV as of June 30, 2022 and 2021 in accordance with US GAAP:

	June 30, 2022		June 30, 2021
ASSETS
Current assets	$	9,022,315	$	2,836,411
Non-current assets		4,548,709		2,127,343
TOTAL ASSETS	$	13,571,024	$	4,963,754

LIABILITIES AND MEMBERS’EQUITY
Current liabilities	$	3,057,873	$	3,138,804
Non-current liabilities		416,081		387,102
TOTAL LIABILITIES	$	3,473,954	$	3,525,906

MEMBERS’ EQUITY		10,097,070		1,437,848
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	13,571,024	$	4,963,754

The following table presents the condensed results of operations for the Peak Gold JV for the year ended June 30, 2022 and 2021, and for the period from inception through June 30, 2022 in accordance with US GAAP:

	Year Ended		Year Ended		Period from Inception January 8, 2015 to
	June 30, 2022		June 30, 2021		June 30, 2022

EXPENSES:
Exploration expense	$	9,534,764	$	11,190,248	$	58,411,527
General and administrative		1,290,013		1,618,045		12,281,019
Total expenses		10,824,777		12,808,293		70,692,546
NET LOSS	$	10,824,777	$	12,808,293	$	70,692,546

The Company’s share of the Peak Gold JV’s results of operations for the year ended June 30, 2022 was a loss of $3.3 million. The Company’s share in the results of operations for the year ended June 30, 2021 was a loss of $4.0 million. The Peak Gold, LLC loss does not include any provisions related to income taxes as Peak Gold, LLC is treated as a partnership for income tax purposes. As of June 30, 2022 and June 30, 2021, the Company’s share of the Peak Gold JV’s inception-to-date cumulative loss of $42.0 million and $38.7 million, respectively, exceeds the sum of the historical book value of our initial investment in Peak Gold, LLC, of $1.4 million and our subsequent contributions of $18.0 million. Therefore, the investment in Peak Gold, LLC had a balance of zero as of June 30, 2022. The investment also had a balance of zero at June 30, 2020. The Company is currently not obligated to make additional capital contributions to the Peak Gold JV and therefore only records losses up to the point of its cumulative investment which is $19.4 million. The portion of the cumulative loss that exceeds the Company’s investment will be suspended and recognized against earnings, if any, from the Company’s investment in the Peak Gold JV in future periods. The suspended losses for the period from inception to June 30, 2022 are $22.6 million.