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Note 5 - Mineral Properties
 12 Months Ended
May 31, 2019
Notes to Financial Statements  
Mineral Industries Disclosures [Text Block]
5.
MINERAL PROPERTIES
 
The Company had the following activity related to capitalized acquisition costs:
 
    North
Bullfrog		   Mother Lode   Total
    (note 5a))   (note 5b))    
             
Balance, May 31, 2017   $
4,527,740
     $
–
     $
4,527,740
  
Acquisition costs                        
Cash payments (note 5a)(ii)(1))    
38,384
      
–
      
38,384
  
Shares issued (note 5a)(ii)(1), 5b) and 6)    
37,000
      
810,000
      
847,000
  
Asset retirement obligations    
9,899
      
30,475
      
40,374
  
Currency translation adjustments    
(184,271
 )    
(30,438
 )    
(214,709
 )
                         
Balance, May 31, 2018    
4,428,752
      
810,037
      
5,238,789
  
                         
Acquisition costs                        
Cash payments (note 5a)(ii)(1))    
47,318
      
–
      
47,318
  
Shares issued (note 5a)(ii)(1) and 6)    
59,500
      
–
      
59,500
  
Asset retirement obligations    
24,765
      
11,485
      
36,250
  
Currency translation adjustments    
200,922
      
36,226
      
237,148
  
                         
Balance, May 31, 2019   $
4,761,257
     $
857,748
     $
5,619,005
  
 
The following table presents costs incurred for exploration and evaluation activities for the year ended
May 31, 2019:
 
    North
Bullfrog		   Mother Lode   Total
    (note 5a))   (note 5b))    
             
Exploration costs:                        
Assay   $
14,839
     $
567,274
     $
582,113
  
Drilling    
208,421
      
1,788,433
      
1,996,854
  
Equipment rental    
33,173
      
66,780
      
99,953
  
Field costs    
13,620
      
248,059
      
261,679
  
Geological/ Geophysical    
83,972
      
650,424
      
734,396
  
Land maintenance & tenure    
414,636
      
271,749
      
686,385
  
Permits    
7,546
      
155,661
      
163,207
  
Studies    
98,904
      
891,297
      
990,201
  
Travel    
14,035
      
107,818
      
121,853
  
                         
Total expenditures for the year   $
889,146
     $
4,747,495
     $
5,636,641
  
 
The following table presents costs incurred for exploration and evaluation activities for the year ended
May 31, 2018:
 
    North
Bullfrog		   Mother Lode   Total
    (note 5a))   (note 5b))    
             
Exploration costs:                        
Assay   $
44,703
     $
742,751
     $
787,454
  
Drilling    
(3,265
 )    
1,885,504
      
1,882,239
  
Equipment rental    
15,698
      
89,965
      
105,663
  
Field costs    
33,310
      
315,406
      
348,716
  
Geological/ Geophysical    
80,771
      
658,575
      
739,346
  
Land maintenance & tenure    
337,695
      
144,985
      
482,680
  
Permits    
9,036
      
113,246
      
122,282
  
Studies    
478,904
      
270,754
      
749,658
  
Travel    
10,245
      
104,897
      
115,142
  
                         
Total expenditures for the year   $
1,007,097
     $
4,326,083
     $
5,333,180
  
 
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
six
leases covering
33
patented mining claims. The leases have an initial term of
ten
years, and for so long thereafter as mining activities continue on the claims or contiguous claims held by the Company:
 
The Company is required to pay annual advance minimum royalty payments (recoupable from production royalties) for as long as there are mining activities continuing on the claims or contiguous claims held by the Company. The required annual advance minimum royalty payments are:
 
¤
39,800
USD
¤
17,700
USD (adjusted annually for inflation)
 
The lessor is entitled to receive a separate NSR royalty related to all production from the leased property of the various individual leases which
may
be purchased by the Company as follows:
 
¤ a
4%
NSR royalty, which
may
be purchased by the Company for USD
1,250,000
per
1%
(USD
5,000,000
for the entire royalty).
¤ a
2%
NSR royalty on all production, which
may
be purchased by the Company for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty).
 
¤ a
3%
NSR royalty on all production, which
may
be purchased by the Company for USD
850,000
per
1%
(USD
2,550,000
for the entire royalty).
¤ a
3%
NSR royalty on all production which
may
be purchased by the Company for USD
770,000
per
1%
(USD
2,310,000
for the entire royalty).
¤ a
4%
NSR royalty on all production, which
may
be purchased by the Company for USD
1,000,000
per
1%
(USD
4,000,000
for the entire royalty).
¤ a
2%
NSR royalty on all production, which
may
be purchased by the Company for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty).
¤ a
2%
NSR royalty on all production, which
may
be purchased by the Company for USD
1,000,000
per
1%
(USD
2,000,000
for the entire royalty)
 
The various NSR royalties above relate only to the property covered by each specific lease and are
not
cumulative.
 
The Company has an option to purchase a property related to
twelve
patented mining claims for USD
1,000,000
at any time during the life of the lease (subject to the net smelter return (“NSR”) royalty of
4%
which
may
be purchased by the Company for USD
1,250,000
per
1%
(USD
5,000,000
for the entire royalty).
 
(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. 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
: Corvus Nevada will pay USD
10,000
and deliver
50,000
common shares of ITH (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, 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
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%
if the average gold price is between USD 
401
and USD
500
per ounce and
4%
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
30,000
(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%
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 (note
6
). 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
$419,286
(USD
309,000
) (
May 31, 2018 -
366,641
(USD
283,000
)). The fair value of the liability was determined to be equal to the estimated remediation costs. Due to the early stages of the project, 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.