Note 7. Reclamation and Environmental:

The Company holds an insurance policy which is in effect until 2033 related to its Sleeper Gold Project. The policy covers reclamation costs up to an aggregate of $25 million in the event the Company’s bond is insufficient to cover any mandated reclamation obligations.

As a part of its insurance policy, the Company has funds in a commutation account which is used to reimburse reclamation costs and indemnity claims. The balance of the commutation account at September 30, 2018 is $1,677,008 (June 30, 2018 - $1,769,501).

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 asset retirement obligation at the Sleeper Gold Project has been measured using the following variables: 1) Expected costs for earthwork, re-vegetation, in-pit water treatment, on-going monitoring, labor and management, 2) Inflation adjustment, and 3) Market risk premium. The sum of the expected costs by year is discounted using the Company’s credit adjusted risk free interest rate from the time it expects to pay the retirement obligation to the time it incurs the obligation. The reclamation and environmental obligation recorded on the balance sheet is equal to the present value of the estimated costs.

The current undiscounted estimate of the reclamation costs for existing disturbances at the Sleeper Gold Project is $3,835,050 as required by the U.S Bureau of Land Management and the Nevada Department of Environmental Protection. Assumptions used to compute the asset retirement obligations as at September 30, 2018 and June 30, 2018 for the Sleeper Gold Project included a credit adjusted risk free rate and inflation rate of 9.76% (June 30, 2018– 9.76%) and 2.0% (June 30, 2018 – 2.0%), respectively. Expenses are expected to be incurred between the years 2018 and 2056.

Changes to the Company’s asset retirement obligations for the three-month period ended September, 2018 and the year ended June 30, 2018 are as follows:

	Three Month Period 2018			Year Ended June 30, 2018
Balance at beginning of period	$	1,072,551		$	1,261,034
Accretion expense		41,376			150,736
Payments		(99,001	)		(339,219	)
Change in estimate of existing obligation		—			—
Balance at end of period	$	1,014,926		$	1,072,551

The balance of the asset retirement obligation of $1,014,926 (June 30, 2018 -$1,072,551 ) is comprised of a current portion of $101,593 (June 30, 2018 -$101,593 ) and a non-current portion of $913,333 (June 30, 2018 -$970,958).