ADVANCED ROYALTY PAYMENTS
|6 Months Ended|
Feb. 29, 2020
|Advanced Royalty Payments [Abstract]|
|ADVANCED ROYALTY PAYMENTS||
Advance royalty payments to Asphalt Ridge, Inc.
During the year ended August 31, 2015, the Company acquired TMC Capital, LLC, which has a mining and mineral lease with Asphalt Ridge, Inc. (the “TMC Mineral Lease”) (Note 8(a)). The mining and mineral lease with Asphalt Ridge, Inc. required the Company to make minimum advance royalty payments which can be used to offset future production royalties for a maximum of two years following the year the advance royalty payment was made.
Effective February 21, 2018, a third amendment was made to the TMC Mineral Lease. The amended advanced royalty payments required are a minimum of $100,000 per quarter from July 1, 2018 to June 30, 2020 and a minimum of $150,000 per quarter thereafter. Royalties payable on production range from 8% to 16% of adjusted revenues, dependent on hydrocarbon prices.
As at February 29, 2020, the Company has paid advance royalties of $2,350,336 (August 31, 2019 - $2,250,336) to the lease holder, of which a total of $1,586,169 have been used to pay royalties as they have come due under the terms of the TMC Mineral Lease. During the six months ended February 29, 2020, $100,000 in advance royalties were paid and $203,862 have been used to pay royalties which have come due. The royalties expensed have been recognized in cost of goods sold on the unaudited condensed consolidated statements of loss and comprehensive loss.
As at February 29, 2020, the Company expects to record minimum royalties paid of $432,500 from these advance royalties either against production royalties or for the royalties due within a twelve month period.