ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Jul. 31, 2015

ASSET RETIREMENT OBLIGATIONS [Text Block]

NOTE 9: ASSET RETIREMENT OBLIGATIONS

The Company's asset retirement obligations relate to future remediation and decommissioning activities at the Palangana Mine and Hobson Processing Facility.

Balance, July 31, 2014	$	3,967,589
Revision in estimate of asset retirement obligations		(365,754	)
Accretion		325,011
Balance, July 31, 2015		3,926,846
Less: current portion of asset retirement obligations		(340,827	)
Long-term asset retirement obligations	$	3,586,019

During Fiscal 2015, certain assumptions related to the ARO of the Palangana Mine and Hobson Processing Facility were revised resulting in a reduction of their respective ARO liabilities of $77,125 and $288,629, for a total of $365,754. Refer to Notes 4 and 5.

During Fiscal 2014, the Company settled asset retirement obligations of $12,146 with cash payments of $13,551. In connection with the release of the Mount Lucas Project to unrestricted use, the Company derecognized the remaining ARO liabilities of $11,236 associated with the Mount Lucas Project, resulting in the recognition of a gain on settlement of asset retirement obligations of $9,831.

The estimated amounts and timing of cash flows and assumptions used for the ARO estimates are as follows:

		July 31, 2015		July 31, 2014
Undiscounted amount of estimated cash flows	$	6,600,868	$	6,382,549
Payable in years		2.5 to 15		2.5 to 12
Inflation rate		2.02% to 2.25%		1.56% to 2.43%
Discount rate		6.56% to 8.00%		5.00% to 10.50%

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

Fiscal 2016	$	340,827
Fiscal 2017		1,280,989
Fiscal 2018		635,932
Fiscal 2019		-
Fiscal 2020		-
Remaining balance		4,343,120
	$	6,600,868