NOTE 7:

OTHER LONG-TERM ASSETS

At April 30, 2017, other long-term assets totaled $1,904,919, which were comprised of $1,553,388 for considerations paid and to be paid for the acquisition of the Alto Parana Project and $351,531 in transaction costs primarily for the pending acquisition of the Reno Creek Project. Refer to Note 16: Subsequent Event.

On March 4, 2016, we entered into a share purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant to which we acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”), a wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC Resources (Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s principal assets include land located in the department of Alto Parana in the Republic of Paraguay. CIC is the beneficial owner of Paraguay Resources Inc. which is the 100% owner of the Alto Parana Project, comprising of certain titanium mineral concessions located in the departments of Alto Parana and Canindeyú in the Republic of Paraguay.

Pursuant to the SPOA, the Company issued 1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the Company pays or causes to pay on the Vendor’s behalf certain maintenance payments and assessment work required to keep the Alto Parana Project in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition (the “Option Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance with the SPOA, the Vendor satisfies certain conditions precedent to exercise, the Company will be deemed to have exercised the Option. Upon exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to the Vendor and to grant to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Alto Parana Project as contemplated by a proposed net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise of the Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period of six years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.

By way of an amending letter dated March 3, 2017, the Company and the Vendor agreed to extend the Option Period by one year to March 4, 2018.

We hold a variable interest in CIC as a result of the Option, however, we are not the primary beneficiary due to the fact that we do not have the power over decisions that significantly affect CIC’s economic performance. Accordingly, we do not consolidate the results of CIC and therefore, the other long-term asset of $1,553,388 effectively represents the amount paid in advance for CIC’s assets totaling $1,303,388 and $250,000 to be paid upon the exercise of the Option for the Acquisition of CIC.

At April 30, 2017, the carrying value of the other long-term asset relating to the Acquisition of CIC and our maximum exposure to loss from the unconsolidated variable interest entity, which would arise if we are unable to exercise the Option, is as follows:

	April 30, 2017		July 31, 2016
Other Long-Term Asset	$	1,553,388	$	1,553,388
Cash Payable Upon Exercise of the Option		(250,000)		(250,000)
Maximum Exposure to Loss	$	1,303,388	$	1,303,388