ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Jul. 31, 2012

ASSET RETIREMENT OBLIGATIONS [Text Block]

NOTE 10: ASSET RETIREMENT OBLIGATIONS

The Company's asset retirement obligations ("ARO") relates to site restoration for the Hobson Processing Facility, Palangana Mine and Mt. Lucas assumed as part of the STMV Acquisition.

		July 31, 2012			July 31, 2011
Opening balance	$	3,027,803		$	2,243,840
Revision in estimate of asset retirement obligations		567,069			126,000
Liabilities assumed		-			1,798,387
Liabilities settled with cash		(619,772	)		(1,212,942	)
Liabilities settled with common shares		-			(54,000	)
Accretion		137,274			126,518
		3,112,374			3,027,803
Less: current portion of asset retirement obligations		(133,298	)		(675,872	)
Long-term asset retirement obligations	$	2,979,076		$	2,351,931
		July 31, 2012			July 31, 2011
Undiscounted amount of estimated cash flows	$	3,662,233		$	3,677,822
Payable in years		2.5 to 7.5			3.5 to 8.5
Inflation rate		1.56% to 2.43%			2.25%
Discount rate		5.00% to 10.5%			5.00%

During Fiscal 2012, the Company settled asset retirement obligations of $619,772 with cash of $1,064,220. As a result, a loss on settlement of asset retirement obligations of $444,448 was recorded on the consolidated statements of operations.

The undiscounted amounts of estimated cash flows for the next five years and beyond are as follows:

Undiscounted estimated cash flow for the next five years

July 31, 2013	$	133,298
July 31, 2014		640,714
July 31, 2015		623,964
July 31, 2016		74,241
July 31, 2017		-
Remaining Balance		2,190,016
	$	3,662,233