Note 11 - Commitments and Contingencies

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

11.

Commitments and Contingencies

Tetlin Lease

. The Tetlin Lease had an initial

ten

year term beginning

July 2008

which was extended for an additional

ten

years to

July 15, 2028,

and for so long thereafter as the Joint Venture Company initiates and continues to conduct mining operations on the Tetlin Lease.

Pursuant to the terms of the Tetlin Lease, the Joint Venture Company was required to spend

$350,000

per year until

July

 

15,

2018

in exploration costs. The Company’s exploration expenditures through the

2011

exploration program have satisfied this requirement because exploration funds spent in any year in excess of

$350,000

are credited toward future years’ exploration cost requirements. Additionally, should the Joint Venture Company derive revenues from the properties covered under the Tetlin Lease, the Joint Venture Company is required to pay the Tetlin Tribal Council a production royalty ranging from

2.0%

to

5.0%,

depending on the type of metal produced and the year of production. As of

March 31, 2020,

the Company had paid the Tetlin Tribal Council

$225,000

in exchange for reducing the production royalty payable to them by

0.75%.

These payments lowered the production royalty to a range of

1.25%

to

4.25%.

On or before

July 15, 2020,

the Tetlin Tribal Council has the option to increase their production royalty by (i)

0.25%

by payment to the Joint Venture Company of

$150,000,

(ii)

0.50%

by payment to the Joint Venture Company of

$300,000,

or (iii)

0.75%

by payment to the Joint Venture Company of

$450,000.

Until such time as production royalties begin, the Joint Venture Company must pay the Tetlin Tribal Council an advance minimum royalty of

$50,000

per year. On

July 

15,

2012,

the advance minimum royalty increased to

$75,000

per year, and subsequent years are escalated by an inflation adjustment.

Gold Exploration.

The Joint Venture Company’s Triple Z, Tok/Tetlin, Eagle, Bush, West Fork, and Noah claims are all located on state of Alaska lands. The annual claim rentals on these projects vary based on the age of the claims, and are due and payable in full by

November 

30

of each year. Annual claims rentals for the

2019

-

2020

 assessment year totaled

$323,248.

The Joint Venture Company has met the annual labor requirements for the state of Alaska acreage for the next

four

years, which is the maximum time allowable by Alaska law.

Royal Gold Royalties

. The Joint Venture Company is obligated to pay Royal Gold (i) an overriding royalty of

3.0%

should the Joint Venture Company derive revenues from the Tetlin Lease, the Additional Properties and certain other properties and (ii) an overriding royalty of

2.0%

should the Joint Venture Company derive revenues from certain other properties.

Retention Agreements.

In

February 2019,

the Company entered into Retention Agreements with its then Chief Executive Officer, Brad Juneau, its Chief Financial Officer, Leah Gaines, and

one

other employee providing for payments in an aggregate amount of 

$1,500,000

upon the occurrence of certain conditions. The Retention Agreements, as amended, are triggered upon a change of control (as defined in the applicable Retention Agreement) that takes place prior to

August 6, 2025,

provided that the recipient is employed by the Company when the change of control occurs.  Mr. Juneau and Ms. Gaines will receive a payment of

$1,000,000

and

$250,000,

respectively, upon a change of control.