NOTES RECEIVABLE

6 Months Ended

Jun. 30, 2019

NOTES RECEIVABLE

NOTES RECEIVABLE

4. NOTES RECEIVABLE

Laramide Note Receivable

As part of the consideration for the sale of Hydro Resources, Inc. (HRI), the Company currently holds a promissory note with a current balance of $2.0 million, secured by a mortgage over the Churchrock and Crownpoint properties owned by Laramide Resources Ltd. (“Laramide”). The note is in the final year of a three-year term and carries an initial interest rate of 5%. The final principal payment of $2.0 million is due and payable on January 5, 2020. Interest is payable on a quarterly basis during the final year. Laramide will have the right to satisfy up to half of the final principal payment by delivering shares of its common stock to the Company, which shares will be valued by reference to the volume weighted average price (“VWAP”) for Laramide’s common stock for the 20 trading days before January 5, 2020. The fair value of this note receivable was determined using the present value of the future cash receipts discounted at a market rate of 9.5%.

As of June 30, 2019, the Company has received three tranches of Laramide common shares as partial consideration for the sale of HRI, which has resulted in the receipt of 2,218,133,  1,982,483 and 2,483,034 Laramide common shares in January 2017, January 2018 and January 2019, respectively. These share payments represent the initial consideration from the January 2017 sale of HRI and two note installments in January 2018 and January 2019. The first note installment in the amount of $1.5 million in January 2018, consisted of $750,000 in cash and the issuance of 1,982,483 of Laramide’s common shares. The second note installment in the amount of $1.5 million in January 2019, consisted of $750,000 in cash and the issuance of 2,483,034 of Laramide’s common shares. Additionally, Laramide has made interest payments of $70,764 in cash during the six months ending June 30, 2019 and Laramide made an interest payment for Q2 2019 in the amount of $25,258 on July 18, 2019.

For the six months ended June 30, 2019, the Company sold the third tranche of 2,483,034 Laramide common shares and 2,218,133 Laramide warrants resulting in net proceeds of $0.5 million and a net loss on sale of marketable securities of $0.7 million.

The following tables show the notes receivable, accrued interest and unamortized discount on the Company’s notes receivable as of June 30, 2019 and December 31, 2018.

	June 30, 2019
					Less
					Unamortized		Note Balance
	Note		Plus Accrued		Note		per Balance
(thousands of dollars)	Amount		Interest		Discount		Sheet
Current Assets
Notes receivable Laramide – current	$	2,000	$	26	$	(259)	$	1,767
Total Notes Receivable – current and non-current	$	2,000	$	26	$	(259)	$	1,767

	December 31, 2018
					Less
					Unamortized		Note Balance
	Note		Plus Accrued		Note		per Balance
(thousands of dollars)	Amount		Interest		Discount		Sheet
Current Assets
Notes receivable Laramide – current	$	1,500	$	45	$	—	$	1,545
Non-current Assets
Notes receivable – Laramide – non-current		2,000		—		(507)		1,493
Total Notes Receivable – current and non-current	$	3,500	$	45	$	(507)	$	3,038