Asset Retirement Obligations

3 Months Ended

Mar. 31, 2019

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation Disclosure [Text Block]

Asset Retirement Obligations

Reclamation Financial Assurance

GQM LLC is required to provide the Bureau of Land Management, the State Office of Mine Reclamation and Kern County with a revised reclamation cost estimate annually. The financial assurance is adjusted once the cost estimate is approved.

This estimate, once approved by state and county authorities, forms the basis of reclamation financial assurance. The reclamation assurance provided as at March 31, 2019 was $1,749 (December 31, 2018

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$1,749).

GQM LLC is also required to provide financial assurance with the Lahontan Regional Water Quality Control Board (the “Regional Board”) for closure and reclamation costs related to the lined impoundments, which are defined as the Stage 1 and Stage 2 heap leach pads, the overflow pond, and the solution collection channel. The reclamation financial assurance estimate as at March 31, 2019 was $2,450 (December 31, 2018

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$2,450).

In addition to the above, GQM LLC is required to obtain and maintain financial assurance for initiating and completing corrective action and remediation of a reasonably foreseeable release from the Project’s waste management units as required by the Regional Board. The reclamation financial assurance estimate as at March 31, 2019 is $320 (December 31, 2018

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$278).

As at March 31, 2019 GQM LLC had entered into $5,507 (December 31, 2018

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$4,921) in surety bond agreements in order to release its reclamation deposits and a bond for power of $443 (December 31, 2018 - $443). GQM LLC pays a yearly premium of $100 (2018

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$100). Golden Queen Ltd. has provided a corporate guarantee on the surety bonds. In addition, a certificate of deposit for $1,000 was posted as collateral to reclamation bonding in 2018.

Asset Retirement Obligation

The total asset retirement obligation as at March 31, 2019 was $2,966 (December 31, 2018

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$2,497).

The Company estimated its asset retirement obligations based on its understanding of the requirements to reclaim and remediate its property based on its activities to date. As at March 31, 2019, the Company estimates the cash outflow related to these reclamation activities will be incurred in 2029. Reclamation provisions are measured at the expected value of future cash flows discounted to their present value using a discount rate based on a credit adjusted risk-free interest rate of 7.9% and an inflation rate of 2.4%.

The following is a summary of asset retirement obligations:

	March 31, 2019		December 31, 2018
Balance, beginning of the period	$	2,497	$	1,838
Accretion		52		167
Changes in cash flow estimates		417		492
Balance, end of the period	$	2,966	$	2,497