The Purchase Agreement contains a royalty provision whereby royalties of 4% are due to PDK on gold and silver recovered from mining operations at the Kiewit site and sold by the Company to a third party. Under the Purchase Agreement, the Company also pays a 5% withholding tax to the state of Utah on the PDK royalty payments. Royalties are payable within 30 days following the end of each fiscal quarter. PDK-related royalties and royalty withholding payable at June 30, 2021 and December 31, 2020 were $347,942 and $221,897, respectively. The June 30, 2021 balance includes royalties payable for the second, third and fourth quarters of 2020 and the first and second quarters of 2021.

Prepaid forward gold contract liability, description

a cumulative of 6,076 and 655 ounces, respectively, were scheduled to be delivered to PDK under the terms of the Purchase Agreement. The ounces due but unpaid to PDK at June 30, 2021 have been reflected in current liabilities at the amount calculated based on the Company’s option to pay cash in lieu of delivery at $500 per ounce.

the Company notified PDK that it would not be able to make the December delivery of gold and elected to use one of the delivery postponement options under the Purchase Agreement, as amended. This provision permits the Company to delay delivery by up to 30 days by delivering the amount of gold due within 30 days, plus interest calculated at the default interest rate, thereby causing the December ounces to be come due in January 2021. At the end of this 30-day extension period the Company was unable to deliver the December payment and the amount became due on January 25, 2021.