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Reclamation and Environmental
 6 Months Ended
Dec. 31, 2022
Environmental Remediation Obligations [Abstract]  
Reclamation and Environmental

Note 9. Reclamation and Environmental

Reclamation and environmental costs are based principally on legal requirements. Management estimates costs associated with reclamation of mineral properties and properties under mine closure. On an ongoing basis the Company evaluates its estimates and assumptions; however, actual amounts could differ from those based on estimates and assumptions.

The Company has posted several cash bonds as financial security to satisfy reclamation requirements. The balance of posted cash reclamation bonds at December 31, 2022 is $499,476 (June 30, 2022 - $498,276).

Paramount is responsible for managing the reclamation activities from the previous mine operations at the Sleeper Gold Mine as directed by the Bureau of Land Management ("BLM") and the Nevada State Department of Environmental Protection (“NDEP”). Paramount has estimated the undiscounted reclamation costs for existing disturbances at the Sleeper Gold Project required by the BLM to be $3,639,771. These costs are expected to be incurred between the calendar years 2023 and 2060. Paramount has also estimated undiscounted reclamation cost as required by the NDEP to be $5,280,000. These costs include on-going monitoring and new requests from the NDEP to convert three processing ponds from the historical operations to evaporation cell ponds by the 2nd half of calendar year 2023. On-going monitoring costs are expected to be incurred between 2022 and 2039. The sum of expected costs by year are discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement to the time it incurs the obligation. The reclamation and environmental costs for the Sleeper Gold Project recorded on the balance sheet is equal to the present value of the estimated reclamation costs as required by both the BLM and NDEP.

The following variables were used in the calculation for the periods ending December 31, 2022 and June 30, 2022:

 

 

 

Six Months Ended
December 31, 2022

 

 

Year Ended June 30, 2022

 

Weighted-average credit adjusted risk free rate

 

 

9.94

%

 

 

9.94

%

Weighted-average inflation rate

 

 

2.32

%

 

 

2.32

%

 

Changes to the Company’s reclamation and environmental costs for the Sleeper Gold Mine for the six-month period ended December 31, 2022 and the year ended June 30, 2022 are as follows:

 

 

 

Six Months Ended
December 31, 2022

 

 

Year Ended June 30, 2022

 

Balance at beginning of period

 

$

4,475,270

 

 

$

1,849,644

 

Accretion expense

 

 

223,122

 

 

 

183,693

 

Additions and change in estimates

 

 

—

 

 

 

2,475,169

 

Settlements

 

 

(60,000

)

 

 

(33,236

)

Balance at end of period

 

$

4,638,392

 

 

$

4,475,270

 

 

The balance of the reclamation and environmental obligation of $4,638,392 at December 31, 2022 (June 30, 2022 -$4,475,270) is comprised of a current portion of $120,000 (June 30, 2022 -$120,000 ) and a non-current portion of $4,518,392 (June 30, 2022 - $4,355,270). The Company recorded an accretion expense for the three and six-month period ended December 31, 2022 of $111,561 and $223,122, respectively (2021 - $45,969 and $91,938).