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Note 4 - Mineral Properties
 9 Months Ended
Feb. 28, 2019
Notes to Financial Statements  
Mineral Industries Disclosures [Text Block]
4.
MINERAL PROPERTIES
 
The Company had the following activity related to capitalized acquisition costs:
 
    North Bullfrog     Mother Lode     Total  
    (note 4a))     (note 4b))        
                   
Balance, May 31, 2018   $
4,428,752
     $
810,037
     $
5,238,789
  
                         
Cash payments (note 4a)(ii)(1)    
47,318
      
—  
      
47,318
  
Shares issued (note 4a)(ii)(1)    
59,500
      
—  
      
59,500
  
Asset retirement obligations    
—  
      
1,742
      
1,742
  
Currency translation adjustments    
75,567
      
13,829
      
89,396
  
                         
Balance, February 28, 2019   $
4,611,137
     $
825,608
     $
5,436,745
  
 
The following table presents costs incurred for exploration and evaluation activities for the
nine
months ended
February 28, 2019:
 
    North Bullfrog     Mother Lode     Total  
    (note 4a))     (note 4b))        
                   
Exploration costs:                        
Assay   $
2,990
     $
439,889
     $
442,879
  
Drilling    
1,239
      
1,438,354
      
1,439,593
  
Equipment rental    
—  
      
49,655
      
49,655
  
Field costs    
356
      
187,757
      
188,113
  
Geological/ Geophysical    
28,362
      
483,319
      
511,681
  
Land maintenance & tenure    
337,178
      
258,274
      
595,452
  
Permits    
7,546
      
90,907
      
98,453
  
Studies    
85,578
      
719,095
      
804,673
  
Travel    
3,731
      
83,961
      
87,692
  
                         
Total expenditures for the period   $
466,980
     $
3,751,211
     $
4,218,191
  
 
The following table presents costs incurred for exploration and evaluation activities for the
nine
months ended
February 28, 2018:
 
    North Bullfrog     Mother Lode     Total  
    (note 4a))     (note 4b))        
                   
Exploration costs:                        
Assay   $
44,148
     $
576,806
     $
620,954
  
Drilling    
(3,265
 )    
1,423,671
      
1,420,406
  
Equipment rental    
15,698
      
65,678
      
81,376
  
Field costs    
32,121
      
236,373
      
268,494
  
Geological/ Geophysical    
66,473
      
456,948
      
523,421
  
Land maintenance & tenure    
267,977
      
125,699
      
393,676
  
Permits    
6,395
      
92,254
      
98,649
  
Studies    
473,213
      
115,415
      
588,628
  
Travel    
10,243
      
69,537
      
79,780
  
                         
Total expenditures for the period   $
913,003
     $
3,162,381
     $
4,075,384
  
 
a)
North Bullfrog Project, Nevada
 
The Company’s North Bullfrog project consists of certain leased patented lode mining claims and federal unpatented mining claims owned
100%
by the Company.
 
(i)
Interests acquired from Redstar Gold Corp.
 
On
October 9, 2009,
a US subsidiary of ITH at the time (Corvus Nevada) completed the acquisition of all of the interests of Redstar Gold Corp. (“Redstar”) and Redstar Gold U.S.A. Inc. (“Redstar US”) in the North Bullfrog project, which consisted of the following leases:
 
(
1
)		 Pursuant to a mining lease and option to purchase agreement made effective
October 27, 2008
between Redstar and an arm’s length limited liability company, Redstar has leased (and has the option to purchase)
twelve
patented mining claims referred to as the “Connection” property. The
ten
-year, renewable mining lease requires advance minimum royalty payments (recoupable from production royalties, but
not
applicable to the purchase price if the option to purchase is exercised) of USD
10,800
(paid) on signing and annual payments for the
first
three
anniversaries of USD
10,800
(paid) and USD
16,200
for every year thereafter (paid to
October 27, 2018).
Redstar has an option to purchase the property (subject to the net smelter return (“NSR”) royalty below) for USD
1,000,000
at any time during the life of the lease. Production is subject to a
4%
NSR royalty, which
may
be purchased by the lessee for USD
1,250,000
per
1%
(USD
5,000,000
for the entire royalty).
 
(
2
)		 Pursuant to a mining lease made and entered into as of
May 8, 2006
between Redstar and
two
arm’s length individuals, Redstar has leased
three
patented mining claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties) of USD
4,000
on execution, USD
3,500
on each of
May 8, 2007,
2008
and
2009
(paid), USD
4,500
on
May 8, 2010
and each anniversary thereafter, adjusted for inflation (paid to
May 8, 2018).
The lessor is entitled to receive a
2%
NSR royalty on all production, which
may
be purchased by the lessee for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty).
 
(
3
)		 Pursuant to a mining lease made and entered into as of
May 8, 2006
between Redstar and an arm’s length private Nevada corporation, Redstar has leased
two
patented mining claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties) of USD
2,000
on execution, USD
2,000
on each of
May 8, 2007,
2008
and
2009
(paid), USD
3,000
on
May 8, 2010
and each anniversary thereafter, adjusted for inflation (paid to
May 8, 2018).
The lessor is entitled to receive a
3%
NSR royalty on all production, which
may
be purchased by the lessee for USD
850,000
per
1%
(USD
2,550,000
for the entire royalty). On
May 29, 2014,
the parties signed a First Amendment Agreement whereby the lease is amended to provide that in addition to the advance minimum royalty payments payable in respect of the original claims, the lessee will now pay to the lessor advance minimum royalty payments in respect of the Yellow Rose claims of USD
2,400
on execution, USD
2,400
on each of
May 29, 2015,
2016
and
2017
(paid), USD
3,600
on
May 29, 2018
and each anniversary thereafter (paid to
May 29, 2018).
The lessor is entitled to receive a
3%
NSR royalty on all production from the Yellow Rose claims, which
may
be purchased by the lessee for USD
770,000
per
1%
(USD
2,310,000
for the entire royalty).
 
(
4
)		 Pursuant to a mining lease made and entered into as of
May 16, 2006
between Redstar and an arm’s length individual, Redstar has leased
twelve
patented mineral claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties) of USD
20,500
on execution and USD
20,000
on each anniversary thereafter (paid to
May 16, 2018).
The lessor is entitled to receive a
4%
NSR royalty on all production, which
may
be purchased by the lessee for USD
1,000,000
per
1%
(USD
4,000,000
for the entire royalty).
 
(
5
)		 Pursuant to a mining lease made and entered into as of
May 22, 2006
between Redstar and an arm’s length individual, Redstar has leased
three
patented mineral claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties) of USD
8,000
on execution, USD
4,800
on each of
May 22, 2007,
2008
and
2009
(paid), USD
7,200
on
May 22, 2010
and each anniversary thereafter, adjusted for inflation (paid to
May 22, 2018).
The lessor is entitled to receive a
2%
NSR royalty on all production, which
may
be purchased by the lessee for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty).
 
(
6
)		 Pursuant to a mining lease made and entered into as of
June 16, 2006
between Redstar and an arm’s length individual, Redstar has leased
one
patented mineral claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the lessee. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties) of USD
2,000
on execution, USD
2,000
on each of
June 16, 2007,
2008
and
2009
(paid), USD
3,000
on
June 16, 2010
and each anniversary thereafter, adjusted for inflation (paid to
June 16, 2018).
The lessor is entitled to receive a
2%
NSR royalty on all production, which
may
be purchased by the lessee for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty).
 
As a consequence of the acquisition of Redstar and Redstar US’s interest in the foregoing leases, Corvus Nevada is now the lessee under all of such leases.
 
(ii)
Interests acquired directly by Corvus Nevada
 
(
1
)		 Pursuant to a mining lease and option to purchase agreement made effective
December 
1,
 
2007
between Corvus Nevada and a group of arm’s length limited partnerships, Corvus Nevada has leased (and has the option to purchase) patented mining claims referred to as the “Mayflower” claims which form part of the North Bullfrog project. The terms of the lease/option are as follows:
 
°
Terms
: Initial term of
five
years, commencing
December 1, 2007,
with the option to extend the lease for an additional
five
years. The lease will continue for as long thereafter as the property is in commercial production or, alternatively, for an additional
three
years if Corvus Nevada makes advance minimum royalty payments of USD 
100,000
per year (which are recoupable against actual production royalties). Pursuant to an extension agreement dated
January 15, 2016
and fully executed and effective as of
November 22, 2017,
the parties agreed to extend the lease and option granted for an additional
ten
years with the same lease payment terms.
 
°
Lease Payments
: USD
5,000
(paid) and
25,000
common shares of ITH (delivered) following regulatory acceptance of the transaction; and an additional USD
5,000
and
20,000
common shares on each of the
first
through
fourth
lease anniversaries (paid and issued). Pursuant to an agreement with the lessors, in lieu of the
20,000
ITH common shares due
December 1, 2010,
Corvus Nevada paid USD
108,750
on
November 10, 2010
and delivered
46,250
common shares of the Company on
December 2, 2010.
If Corvus Nevada elects to extend the lease for a
second
five
-year term, it will pay USD
10,000
and deliver
50,000
common shares of ITH upon election being made, and an additional
50,000
common shares of ITH on each of the
fifth
through
ninth
anniversaries (USD
10,000
paid on
October 31, 2012
and
50,000
common shares of ITH delivered on
October 25, 2012
paid with cash of
$126,924;
USD
10,000
paid on
November 13, 2013
and
50,000
common shares of ITH delivered on
November 25, 2013
paid with cash of
$35,871;
USD
10,000
paid on
November 17, 2014
and
50,000
common shares of ITH delivered on
November 7, 2014
paid with cash of
$21,200;
USD
10,000
paid on
November 23, 2015
and
50,000
common shares of ITH delivered on
November 5, 2015
paid with cash of
$19,237;
USD
10,000
paid on
November 17, 2016
and
50,000
common shares of ITH, purchased for
$53,447
in the market by the Company, were delivered on
November 10, 2016;
USD
10,000
paid on
November 22, 2017
and
50,000
common shares of ITH, purchased for
$25,655
in the market by the Company, were delivered on
November 30, 2017;
and USD
10,000
paid on
November 15, 2018
and
50,000
common shares of ITH, purchased for
$34,116
in the market by the Company, were delivered on
November 6, 2018).
 
°
Anti-Dilution:
Pursuant to an amended agreement agreed to by the lessors in
March 2015,
the Company shall deliver a total of
85,000
common shares (issued) of the Company for the years
2011
to
2014
(
2011:
10,000
common shares;
2012
to
2014:
25,000
common shares each year). All future payments will be satisfied by the delivery of an additional ½ common shares of the Company for each of the ITH common shares due per the original agreement (issued
25,000
common shares of the Company on
November 18, 2015;
25,000
shares of the Company on
November 18, 2016;
25,000
shares of the Company on
November 30, 2017
and
25,000
shares of the Company on
November 26, 2018).
 
°
Work Commitments
: USD
100,000
per year for the
first
three
years (incurred), USD 
200,000
per year for the years
four
to
six
(incurred), USD
300,000
for the years
seven
to
ten
(incurred) and USD
300,000
for the years
11
–
20
(incurred). Excess expenditures in any year
may
be carried forward. If Corvus Nevada does
not
incur the required expenditures in year one, the deficiency is required to be paid to the lessors.
 
°
Retained Royalty
: Corvus Nevada will pay the lessors a NSR royalty of
2%
if the average gold price is USD
400
per ounce or less,
3%
NSR if the average gold price is between USD 
401
and USD
500
per ounce and
4%
NSR if the average gold price is greater than USD 
500
per ounce.
 
(
2
)		 Pursuant to a mining lease and option to purchase made effective
March 1, 2011
between Corvus Nevada and an arm’s length individual, Corvus Nevada has leased, and has the option to purchase,
two
patented mineral claims which form part of the North Bullfrog project holdings. The lease is for an initial term of
ten
years, subject to extension for an additional
ten
years (provided advance minimum royalties are timely paid), and for so long thereafter as mining activities continue on the claims. The lessee is required to pay advance minimum royalty payments (recoupable from production royalties, but
not
applicable to the purchase price if the option to purchase is exercised) of USD
20,000
on execution (paid), USD
25,000
on each of
March 1, 2012 (
paid),
2013
(paid) and
2014
(paid), USD
30,000
on
March 1, 2015
and each anniversary thereafter (paid to
March 1, 2019),
adjusted for inflation. The lessor is entitled to receive a
2%
NSR royalty on all production. The lessee
may
purchase the NSR royalty for USD
1,000,000
per
1%.
If the lessee purchases the entire NSR royalty (USD
2,000,000
) the lessee will also acquire all interest of the lessor in the subject property.
 
(
3
)		 Pursuant to a purchase agreement made effective
March 28, 2013,
Corvus Nevada agreed to purchase the surface rights of
five
patented mining claims owned by
two
arm’s length individuals for USD
160,000
paid on closing (
March 28, 2013).
The terms include payment by Corvus Nevada of a fee of USD
0.02
per ton of overburden to be stored on the property, subject to payment for a minimum of
12
million short tons. The minimum tonnage fee (USD
240,000
) bears interest at
4.77%
per annum from closing and is evidenced by a promissory note due on the sooner of the commencing of use of the property for waste materials storage or
December 31, 2015 (
balance paid
December 17, 2015).
As a result, the Company recorded
$406,240
(USD
400,000
) in acquisition costs with
$157,408
paid in cash and the remaining
$248,832
(USD
240,000
) in promissory note payable during the year ended
May 31, 2013.
 
(
4
)		 In
December 2013,
SoN completed the purchase of a parcel of land approximately
30
kilometres north of the North Bullfrog project which carries with it
1,600
acre feet of irrigation water rights. The cost of the land and associated water rights was cash payment of
$1,100,118
(USD
1,034,626
).
 
(
5
)		 On
March 30, 2015,
Lunar Landing, LLC signed a lease agreement with Corvus Nevada to lease private property containing the
three
patented Sunflower claims to Corvus Nevada, which are adjacent to the Yellow Rose claims leased in
2014.
The term of the lease is
three
years with provision to extend the lease for an additional
seven
years, and an advance minimum royalty payment of USD
5,000
per year with USD
5,000
paid upon signing (paid to
March 2019).
The lease includes a
4%
NSR royalty on production, with an option to purchase the royalty for USD
500,000
per
1%
or USD
2,000,000
for the entire
4%
NSR royalty. The lease also includes the option to purchase the property for USD
300,000.
 
b)
Mother Lode Property, Nevada
 
Pursuant to a purchase agreement made effective
June 9, 2017
between Corvus Nevada and Goldcorp USA, Inc. (“Goldcorp USA”), Corvus Nevada has acquired
100%
of the Mother Lode property (the “Mother Lode Property”). In addition, Corvus Nevada staked
two
additional adjacent claim blocks to the Mother Lode Property. In connection with the acquisition, the Company issued
1,000,000
common shares at a price of
$0.81
per common share to Goldcorp USA. The Mother Lode Property is subject to an NSR in favour of Goldcorp USA. The NSR pays
1%
from production at the Mother Lode Property when the price of gold is less than USD
1,400
per ounce and an additional
1%
NSR for a total of
2%
NSR when gold price is greater than or equal to USD
1,400
per ounce.
 
Acquisitions
 
The acquisition of title to mineral properties is a detailed and time-consuming process. The Company has taken steps, in accordance with industry norms, to verify title to mineral properties in which it has an interest. Although the Company has taken every reasonable precaution to ensure that legal title to its properties is properly recorded in the name of the Company (or, in the case of an option, in the name of the relevant optionor), there can be
no
assurance that such title will ultimately be secured.
 
Environmental Expenditures
 
The operations of the Company
may
in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are
not
predictable. The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation by application of technically proven and economically feasible measures.
 
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future removal and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the related business operation, net of expected recoveries.
 
The Company has estimated the fair value of the liability for asset retirement that arose as a result of exploration activities to be
$374,642
(USD
284,000
) (
May 31, 2018 -
$366,641
(USD
283,000
)). The fair value of the liability was determined to be equal to the estimated reclamation costs. Due to the early stage of the projects, and that extractive activities have
not
yet begun, the Company is unable to predict with any precision the timing of the cash flow related to the reclamation activities.