Reclamation and Environmental Obligation

12 Months Ended

Jun. 30, 2022

Environmental Remediation Obligations [Abstract]

Reclamation and Environmental Obligation

Note 9. Reclamation and Environmental Obligation:

Reclamation and environmental costs are based principally on legal requirements. Management estimates costs associated with reclamation of mineral properties and properties under mine closure. On an ongoing basis the Company evaluates its estimates and assumptions; however, actual amounts could differ from those based on estimates and assumptions.

The Company has posted several cash bonds as financial security to satisfy reclamation requirements for its BLM mining claims. The balance of posted cash reclamation bonds at June 30, 2022 is $498,276 (June 30, 2021 - $533,703).

Paramount is responsible for managing the reclamation activities from the previous mine operations at the Sleeper Gold Mine as directed by the BLM and the Nevada State Department of Environmental Protection (“NDEP”). Paramount has estimated the undiscounted reclamation costs for existing disturbances at the Sleeper Gold Project required by the BLM to be $3,557,944. These costs are expected to be incurred between the calendar years 2022 and 2060. At June 30, 2022, Paramount has also estimated undiscounted reclamation cost as required by the NDEP to be $5,280,000 (2021- $1,470,000). These costs include on-going monitoring and new requests from the NDEP to convert three processing ponds from the historical operations to evaporation cell ponds by 2023. These costs are expected to be incurred between calendar years 2022 and 2039. The sum of expected costs by year are discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement to the time it incurs the obligation. The asset retirement obligation for the Sleeper Gold Project recorded on the balance sheet is equal to the present value of the estimated reclamation costs as required by both the BLM and NDEP.

The following variables were used in the calculation for the fiscal years ending June 30, 2022 and 2021:

	Year Ended June 30, 2022			Year Ended June 30, 2021
Weighted-average credit adjusted risk free rate		9.94	%		9.89	%
Weighted-average inflation rate		2.32	%		2.31	%

Changes to the Company’s asset retirement obligation for the Sleeper Gold Mine for the years ended June 30, 2022 and 2021 are as follows:

	Year Ended June 30, 2022			Year Ended June 30, 2021
Balance at beginning of period	$	1,849,644		$	615,170
Accretion expense		183,693			60,040
Change in estimates		2,475,169			179,150
Additions		—			1,319,800
Settlements		(33,236	)		(324,516	)
Balance at end of period	$	4,475,270		$	1,849,644

The balance of the reclamation and environmental obligation of $4,475,270 (2021 - $1,849,644) is comprised of a current portion of $120,000 (2021 - $310,022) and a non-current portion of $4,355,270 (2021 - $1,539,622).