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Mine Reclamation Obligation
9 Months Ended
Sep. 30, 2022
Mine Reclamation Obligation  
Mine Reclamation Obligation

6. Mine Reclamation Obligation

 

The Company is required to mitigate long-term environmental impacts by stabilizing, contouring, re-sloping, and revegetating various portions of our site after mining and mineral processing operations are completed. These reclamation efforts are conducted in accordance with plans reviewed and approved by the appropriate regulatory agencies.

 

 

The fair value of the long-term liability of $723,535 and $674,074 as of September 30, 2022 and December 31, 2021, respectively, for our obligation to reclaim our mine facility is based on our most recent reclamation plan, as revised, submitted and approved by the Honduran Institute of Geology and Mines (INHGEOMIN) and Ministry of Natural Resources and Environment (SERNA). Such costs are based on management’s current estimate of then expected amounts for the remediation work, assuming the work is performed in accordance with current laws and regulations and using a credit adjusted risk-free rate of 18.00% and an inflation rate of 5.3%. It is reasonably possible that, due to uncertainties associated with the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology, the ultimate cost of reclamation and remediation could change in the future. We periodically review the accrued reclamation obligation for information indicating that our assumptions should change.

 

Changes to the asset retirement obligation were as follows:

 

   September 30, 2022   December 31, 2021 
Balance, Beginning of Year  $674,074   $602,337 
Liabilities incurred   49,461    71,737 
Disposal   -    - 
Balance, End of Year  $723,535   $674,074