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Formation of Joint Venture
12 Months Ended
Jun. 30, 2016
Jun. 30, 2012
Debt Disclosure [Abstract]    
Line of Credit  
Formation of Joint Venture Company
On January 8, 2015, the Company and Royal Gold, through their wholly-owned subsidiary, consummated the Transactions contemplated under the Master Agreement, including the formation of a joint venture to advance exploration of the Company’s Tetlin Property, for gold and associated minerals prospects.
In connection with the Closing of the Transactions the Company contributed to the Joint Venture Company its Tetlin Property, together with other property (the “Contributed Assets”) at an agreed value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiary, entered into a Limited Liability Company Agreement for the Joint Venture Company (the “Joint Venture Company LLC Agreement”).
Royal Gold will serve as the Manager of the Joint Venture Company ("the Manager") and will initially manage, direct, and control the operation of the Joint Venture Company.
As a condition to the Closing, the Company and the Tetlin Tribal Council entered into a Stability Agreement dated October 2, 2014, pursuant to which the Company and the Tetlin Village Council, among other things, acknowledged the continued validity of the Tetlin Lease and all its terms notwithstanding any future change in the status of the Tetlin Village Council or the property subject to the Tetlin Lease.
At Closing, Royal Gold, as an initial contribution to the Joint Venture Company, contributed $5 million (the “Royal Gold Initial Contribution”). The Royal Gold Initial Contribution did not entitle Royal Gold to a percentage interest in the Joint Venture Company. Therefore, at Closing, Royal Gold’s percentage interest in the Joint Venture Company equaled 0% and the Company’s percentage interest in the Joint Venture Company equaled 100%. In addition, as part of the Closing, Royal Gold paid the Company $750,000 which was utilized to partially reimburse the Company for costs and expenses incurred in the Transactions and is included as an expense reimbursement on our consolidated statements of operations. The initial contribution of $5 million was the only contribution that Royal Gold made to the Joint Venture Company during the fiscal year ended 2015. During the fiscal year ended June 30, 2016, Royal Gold contributed $5.7 million to the Joint Venture Company and earned a percentage interest of 11.0%.
The Joint Venture Company's LLC Agreement provides Royal Gold with the right, but not the obligation, to obtain an economic interest in the Joint Venture Company (up to a maximum of 40%) by making additional contributions of capital to the Joint Venture Company in an aggregate amount equal to $30 million (inclusive of the Royal Gold Initial Contribution of $5 million) during the period beginning on the Closing and ending on October 31, 2018. If Royal Gold makes the full $30 million capital contribution by October 31, 2018, it will receive a 40% economic interest in the Joint Venture Company, and the Company will retain a 60% economic interest in the Joint Venture Company. As of June 30, 2016, Royal Gold has contributed a total of $10.7 million (including the initial $5 million contribution) to the Joint Venture Company and earned a percentage interest of 11.0%.
The proceeds of Royal Gold’s contributions to the Joint Venture Company (including the Royal Gold Initial Contribution) will be used by the Joint Venture Company to fund further exploration activities on the Tetlin Property included in the Contributed Assets.
Both the Company and Royal Gold will have the right to transfer each of their respective percentage interests in the Joint Venture Company to a third party, subject to certain terms and conditions set forth in the Joint Venture Company's LLC Agreement. If either member intends to transfer all or part of its percentage interest to a bona fide third party, the other member will have the right to require the transferring member to include in the intended transfer the other member’s proportionate share of its percentage interests at the same purchase price and terms and conditions. Once Royal Gold has obtained a 40% economic interest in the Joint Venture Company, it will have the additional right to require the Company to sell up to 20% of the Company’s economic interest in the Joint Venture Company in a sale of Royal Gold’s entire 40% economic interest to a bona fide third party purchaser. If Royal Gold exercises this right, the Company will be obligated to sell the relevant portion of its percentage interest to a bona fide third party on the same terms and conditions as the interest being sold by Royal Gold.
After October 31, 2018, or such earlier time as Royal Gold has obtained a 40% economic interest in the Joint Venture Company, the members will contribute funds to approved programs and budgets in proportion to their respective economic interests in the Joint Venture Company. If a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its economic interest will be recalculated by dividing (i) the sum of (a) the value of its initial contribution plus (b) the total of all of its capital contributions plus (c) the amount of the capital contribution it elects to fund, by (ii) the sum of (a), (b) and (c) above for both members multiplied by 100.
The Joint Venture Company is a variable interest entity as defined by FASB ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company is not the primary beneficiary since it does not currently have the power to direct the activities of the Joint Venture Company. The Company's ownership interest in the Joint Venture Company is therefore accounted under the equity method.
Formation of Joint Venture Company [Text Block]
Formation of Joint Venture Company
On January 8, 2015, the Company and Royal Gold, through their wholly-owned subsidiary, consummated the Transactions contemplated under the Master Agreement, including the formation of a joint venture to advance exploration of the Company’s Tetlin Property, for gold and associated minerals prospects.
In connection with the Closing of the Transactions the Company contributed to the Joint Venture Company its Tetlin Property, together with other property (the “Contributed Assets”) at an agreed value of $45.7 million (the “Contributed Assets Value”). At the Closing, the Company and Royal Gold, through their wholly-owned subsidiary, entered into a Limited Liability Company Agreement for the Joint Venture Company (the “Joint Venture Company LLC Agreement”).
Royal Gold will serve as the Manager of the Joint Venture Company ("the Manager") and will initially manage, direct, and control the operation of the Joint Venture Company.
As a condition to the Closing, the Company and the Tetlin Tribal Council entered into a Stability Agreement dated October 2, 2014, pursuant to which the Company and the Tetlin Village Council, among other things, acknowledged the continued validity of the Tetlin Lease and all its terms notwithstanding any future change in the status of the Tetlin Village Council or the property subject to the Tetlin Lease.
At Closing, Royal Gold, as an initial contribution to the Joint Venture Company, contributed $5 million (the “Royal Gold Initial Contribution”). The Royal Gold Initial Contribution did not entitle Royal Gold to a percentage interest in the Joint Venture Company. Therefore, at Closing, Royal Gold’s percentage interest in the Joint Venture Company equaled 0% and the Company’s percentage interest in the Joint Venture Company equaled 100%. In addition, as part of the Closing, Royal Gold paid the Company $750,000 which was utilized to partially reimburse the Company for costs and expenses incurred in the Transactions and is included as an expense reimbursement on our consolidated statements of operations. The initial contribution of $5 million was the only contribution that Royal Gold made to the Joint Venture Company during the fiscal year ended 2015. During the fiscal year ended June 30, 2016, Royal Gold contributed $5.7 million to the Joint Venture Company and earned a percentage interest of 11.0%.
The Joint Venture Company's LLC Agreement provides Royal Gold with the right, but not the obligation, to obtain an economic interest in the Joint Venture Company (up to a maximum of 40%) by making additional contributions of capital to the Joint Venture Company in an aggregate amount equal to $30 million (inclusive of the Royal Gold Initial Contribution of $5 million) during the period beginning on the Closing and ending on October 31, 2018. If Royal Gold makes the full $30 million capital contribution by October 31, 2018, it will receive a 40% economic interest in the Joint Venture Company, and the Company will retain a 60% economic interest in the Joint Venture Company. As of June 30, 2016, Royal Gold has contributed a total of $10.7 million (including the initial $5 million contribution) to the Joint Venture Company and earned a percentage interest of 11.0%.
The proceeds of Royal Gold’s contributions to the Joint Venture Company (including the Royal Gold Initial Contribution) will be used by the Joint Venture Company to fund further exploration activities on the Tetlin Property included in the Contributed Assets.
Both the Company and Royal Gold will have the right to transfer each of their respective percentage interests in the Joint Venture Company to a third party, subject to certain terms and conditions set forth in the Joint Venture Company's LLC Agreement. If either member intends to transfer all or part of its percentage interest to a bona fide third party, the other member will have the right to require the transferring member to include in the intended transfer the other member’s proportionate share of its percentage interests at the same purchase price and terms and conditions. Once Royal Gold has obtained a 40% economic interest in the Joint Venture Company, it will have the additional right to require the Company to sell up to 20% of the Company’s economic interest in the Joint Venture Company in a sale of Royal Gold’s entire 40% economic interest to a bona fide third party purchaser. If Royal Gold exercises this right, the Company will be obligated to sell the relevant portion of its percentage interest to a bona fide third party on the same terms and conditions as the interest being sold by Royal Gold.
After October 31, 2018, or such earlier time as Royal Gold has obtained a 40% economic interest in the Joint Venture Company, the members will contribute funds to approved programs and budgets in proportion to their respective economic interests in the Joint Venture Company. If a member elects not to contribute to an approved program and budget or elects to contribute less than its proportionate interest, its economic interest will be recalculated by dividing (i) the sum of (a) the value of its initial contribution plus (b) the total of all of its capital contributions plus (c) the amount of the capital contribution it elects to fund, by (ii) the sum of (a), (b) and (c) above for both members multiplied by 100.
The Joint Venture Company is a variable interest entity as defined by FASB ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company is not the primary beneficiary since it does not currently have the power to direct the activities of the Joint Venture Company. The Company's ownership interest in the Joint Venture Company is therefore accounted under the equity method.