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Exploration License | 9 Months Ended
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Sep. 30, 2020
Exploration License [Abstract] |
Exploration License | NOTE E – EXPLORATION LICENSE On July 9, 2019 we acquired a 79.9% interest in Bismarck Mining Corporation (PNG) Limited (“Bismarck”), a Papua New Guinea company that was organized for the purpose of exploring the deep waters off the coast for precious metals. We evaluated the transaction under ASU 2017-01 Business Combinations (Topic 805) and determined that Bismarck did not meet the definition of a business so the transaction represented an acquisition of assets rather than a business combination. Asset acquisitions do not give rise to goodwill. Rather, the sum of the fair value of the consideration given, together with transaction costs is allocated to the individual assets acquired and liabilities assumed based on their relative fair values which were more clearly evident and, thus, more reliably measurable at the date of acquisition under ASC 805-50-30-2 Initial Measurement . In the future, the recoverability will be tested whenever events or changes in circumstances indicate that its carrying amount may not be recoverable per the guidance of ASC 360-10-35-21 Subsequent Measurement. The consideration paid for the asset acquisition consisted of the following:
Fair value of 249,584 common shares issued |  | $ | 1,407,653 |
Direct transaction costs |  |  | 46,113 |
Total consideration paid |  | $ | 1,453,766 |
The consideration was allocated as follows:
Intangible asset- exploration license rights |  | $ | 1,821,251 |
Current assets |  |  | 1,747 |
Current liabilities |  |  | (3,516 | )
Less: Non-controlling interest |  |  | (365,716 | )
Total net assets acquired |  | $ | 1,453,766 |
Included in this acquisition are the rights Bismarck’s exploration license which is renewable every two years. Per ASC 350-30-35-3, management has deemed the rights to this license to have an indefinite life. In determining if the rights to the license has an indefinite or finite life required us to consider the nature of the renewal process and any additional economic factors, if any, required when renewing this license. We currently expect to use and renew the related license indefinitely, and we do not believe there are currently any legal, regulatory, or contractual provisions that are expected to limit the useful life of the related exploration license or indicate that the useful life is other than indefinite. The exploration license is also not dependent on, or specifically associated with, another asset or group of assets that would limit the useful life of the intangible asset or indicate that the useful life is other than indefinite. Management’s assumptions regarding our ability to successfully renew or extend the exploration license are based on Bismarck’s historical experience. Bismarck was established in 2006 and they have historically renewed and extended the exploration license without a lapse in their ability to use the license. The license has also never been revoked. We will not incur significant maintenance costs related to the license. There is an annual fee of approximately $14,000 to maintain the license. This amount is much less than the carrying amount of the license and the cost is not expected to prohibit continued renewals of the license in the future. Based on all the factors considered above, management believes it is appropriate to assign indefinite useful life to the acquisition of the rights for the exploration license.

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