Fair Value Measurements

9 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization with the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described below:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs that are both significant to the fair value measurement and unobservable.

Financial assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Our financial instruments include cash and cash equivalents, accounts payable, accrued liabilities, the royalty conversion feature on the Debenture (see Note 6) and convertible debt. Due to their short maturity of our cash and cash equivalents, accounts payable and accrued liabilities, we believe that their carrying amounts approximate fair value as of March 31, 2025 and June 30, 2024.

The Company determined that the Royalty conversion feature (Note 6) embedded in the Debenture is required to be accounted for separately from the Debenture as a derivative liability and recorded at fair value and the remaining value allocated to the Debenture net the unamortized debt issuance costs. The derivative liability will be fair valued at each reporting period, with changes in fair value recorded as a gain or loss in the Consolidated Statement of Operations. During the three and nine month periods ended March 31, 2025, the fair value derivative liability increased by $11,874 and $175,929, respectively, and it was recorded in Change in derivative liability on royalty convertible debenture on the Condensed Consolidated Interim Statement of Operations.

As of March 31, 2025, the Royalty conversion feature is recorded at $3,818,034 (June 30, 2024 - $3,642,105) and is valued based on Level 3 inputs. Several steps were used to calculate the fair value of the Royalty conversion feature on the Debenture. First utilizing the Royalty Agreement's royalty rate of 4.75% for the life of mine, the annual gross royalty amounts were calculated from estimated expected gross revenues of the proposed Grassy Mountain Mine. The annual royalty amounts were discounted using a long term

stock market rate of return of 10%. Second, a Black-Scholes model was used to calculate the fair value of the conversion option. The key assumptions in valuing the royalty conversion option derivative include:

	March 31, 2025			At June 30, 2024
Cumulative present value of royalty stream	$	16,314,011		$	15,188,299
Conversion threshold is set as the value of the Debenture	$	15,000,000		$	15,000,000
Term in years	3.99			4.49
Volatility (A five year portfolio volatility of gold and silver, weighted by relative value in the project, is used as the historical volatility for the royalty stream)		14.72	%		16.65	%
Risk-Free Rate (Derived from a term-matched coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve)		3.84	%		4.27	%
Dividend yield1		0	%		0	%

1.Dividend yield is set to 0% as no value of the royalty is lost given that production is assumed to begin in year 5