We lease office space at 13403 N. Government Way, Suite 212, in Hayden, Idaho, as well as at 25 Church Street, Hamilton HM12, Bermuda, and at 34 King Street East, Suite 1200, Toronto, Ontario, Canada. In addition, see Part I, Item 1, “Business-Investment Strategy” of this Report for a description of certain properties owned by Till and our controlled subsidiary, SPD.
· Gross premiums written were $39,682,000 and net premiums earned were $131,000.
· Reserve for unpaid losses and loss adjustment expenses was $13,212,000.
The following table summarizes Till’s consolidated results of operations for 2016 and 2015:
As a result of RRL’s novations in 2015 of the insurance contracts written that were assumed in 2014, Till reversed premium revenue of $5.2 million and reversed losses and loss adjustment expenses of $5.1 million. There were no insurance contract novations during 2016.
Investment income, inclusive of net realized investment gains and losses, increased from a loss of $0.8 million in 2015 to income of $3.1 million in 2016. The increase in net investment income was due to successful trading of futures and options strategies, along with increases in the market value of legacy natural resource investments, many of which were liquidated during 2016 as part of Till’s ongoing business strategy to focus on the insurance industry. The loss in 2015 occurred as a result of Till’s disposal of natural resource investments that were owned by AMB at the time of the Arrangement and were not considered to coincide with Till’s prospective forward-looking insurance business strategy. Several of those natural resource investments were sold at substantial losses.
The $2.7 million gain from loss of control of subsidiary in 2015 resulted from the loss of control of GPY in 2015. No loss of control event occurred during 2016.
Other revenue amounted to $0.5 million in both 2015 and 2016. Other revenue is comprised principally of consulting and service fee income earned by Focus.
Losses and loss adjustment expenses decreased from $0.5 million in 2015 to $0.3 million in 2016. The decrease in losses and loss adjustment expenses was due to in the net favorable development in 2016 as compared to the 7.5 months in 2015.
As noted above, there were no insurance contract novations during, 2016. Accordingly, expenses related to the novations of RRL’s insurance contracts decreased from $5.1 million in 2015 to $-0- in 2016.
Foreign exchange gain increased from an expense of $0.7 million in 2015 to a gain of $0.3 million in 2016. That increase is due primarily to a decrease in value of the Canadian dollar relative to the U.S. dollar during 2015 as compared with an increase in the value of the Canadian dollar during 2016.
The $2.4 million of reinsurance recoverables at December 31, 2016 is comparable to the $2.0 million at December 31, 2015 and represents amounts due from reinsurers that are collectible under the reinsurance contracts.
The deferred policy acquisition costs (“DPAC”) amounted to $0.5 million at December 31, 2016 and 2015. Acquisition costs deferred increased substantially during 2016 as compared to 2015 due to the volume of business written by Omega in 2016; however, similar to 2015, due to the short-tail nature of Omega’s insurance business, generally covering a 12-month period, the majority of the amounts capitalized were fully amortized during the same year.
Net cash used in operation activities was $6.7 million in 2016 as compared to $6.2 million used in 2015, a change of $0.6 million. The increase in cash used in 2016 is primarily due to the decrease in reinsurance payables of $1.8 million resulting from the reimbursement paid to a loss portfolio assumption in 2016 and gains on investments of $3.2 million in 2016.
Net cash from investing activities were $10.0 million in 2016, as compared to cash used of $8.9 million in 2015. The increase is primarily the result of 2016 net sales of investments that contributed $10.5 million in positive cash flow in 2016 and in the cash outflow of $13.0 million in 2015 related to the purchase of Holdings.
The information contained in Note 3 to the Consolidated Financial statements in Part II, Item 8, of this Report includes a description of critical accounting estimates that is incorporated herein by reference.
The information contained in Note 3 to the Consolidated Financial Statements in Part II, Item 8, of this Report that includes a description of recent accounting pronouncements, including Till’s expected dates of adoption and the estimated effects on Till’s results of operations and financial condition, is incorporated by reference herein.
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016 and 2015
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Till Capital Ltd. and subsidiaries as of December 31, 2015, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, as of January 1, 2016, the Company transitioned to accounting principles generally accepted in the United States of America. The impact of the transition was applied retrospectively to all periods presented.
The business strategy for both RRL and Holdings is to produce both underwriting profits and investment-related returns by investing reinsurance premiums and corporate capital.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to fairly present the consolidated financial position of Till and its subsidiaries at December 31, 2016 and 2015 and the results of operations and cash flows for the years then ended. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates.
The consolidated financial statements have been prepared in U.S. dollars as if the U.S. dollar had been the presentation currency since January 1, 2015. The functional currency for Till is the U.S. dollar. The exchange rates used in converting Canadian dollars to U.S. dollars were as follows:
In May 2015, Till completed a U.S. exchange listing to broaden its access to capital markets. Till’s restricted voting shares commenced trading on the NASDAQ Market Exchange ("NASDAQ") on May 26, 2015. Till’s Board of Directors also made a decision to change the currency presentation in Till's financial statements from Canadian dollars to U.S. dollars so that (i) investors in the U.S. can more easily understand Till’s financial results of operations and financial position, and (ii) Till's financial statements are more comparable to other companies in the U.S. market.
The fair values of quoted investments are determined based on the closing prices on the last business day of the reporting period from recognized exchanges (e.g., NASDAQ, the New York Stock Exchange, etc.), recognized indices, or pricing vendors. Securities that do not have quoted prices available in active markets are valued using observable inputs such as quoted prices in inactive markets, quoted prices in active markets for similar instruments, benchmark interest rates, broker quotes, and other relevant inputs. Till’s estimate of fair value corresponds with the interest rate environment that existed as of the close of business on December 31, 2016.
Derivatives are recognized at estimated fair value on the date a contract is entered into, the trade date, and are subsequently carried at estimated fair value. Derivative instruments with a positive estimated fair value are reported as derivative financial assets and those with a negative estimated fair value are reported as derivative financial liabilities.
For the purpose of presenting the consolidated financial statements, the assets and liabilities of Till’s foreign operations, being those entities that have a functional currency different from that of Till, are translated into U.S. dollars at the rate of exchange prevailing at the end of the reporting period. Opening balances in shareholders' equity are translated at their historic rates.
Quarterly, Till performs an assessment of its investments to determine if any are impaired. An investment is impaired when the fair value of the investment declines to an amount less than the cost or amortized cost of that investment. As part of the assessment process, Till determines whether the impairment is temporary or “other-than-temporary”. Till bases its assessment on both quantitative criteria and qualitative information, considering a number of factors, including, but not limited to, how long the security has been impaired, the amount of the impairment, whether, in the case of equity securities, Till intends to hold, and has the ability to hold, the security for a period sufficient for Till to recover its cost basis, or whether, in the case of debt securities, (i) Till intends to sell the investment or it is more-likely-than-not that Till will have to sell the investment before it recovers the amortized cost or cost, (ii) the financial condition and near-term prospects of the issuer, as to whether the issuer is current on contractually-obligated interest and principal payments, and (iii) whether the market decline was affected by macroeconomic conditions.
A large portion of Till’s investment portfolio consists of fixed maturity securities that may be adversely affected by changes in interest rates as a result of governmental monetary policies, domestic and international economic and political conditions, and other factors beyond Till’s control. A rise in interest rates would decrease the net unrealized holding gains of Till's investment portfolio, offset by Till’s ability to earn higher rates of return on funds reinvested. Conversely, a decline in interest rates would increase the net unrealized holding gains of Till's investment portfolio, offset by lower rates of return on funds reinvested.
Assumption reinsurance includes retroactive loss portfolio transfer contracts. Premiums are received from other insurance companies and those premiums are reported as revenue over the estimated period of run-off of the underlying insurance portfolio. At the same time, the actuarially determined estimate of unpaid losses, including loss adjustment expenses, the impact of any existing reinsurance on the portfolio transferred, and other costs of the transaction, are also reported over the estimated period of run-off of the underlying insurance portfolio assumed.
Deferred policy acquisition costs (“DPAC”) are reviewed regularly for recoverability from unearned premiums, including investment income thereon. A premium deficiency, i.e., unrecoverable DPAC, occurs to the extent that unearned premiums plus anticipated investment income are not considered adequate to cover all DPAC and related insurance claims and expenses, and would be recognized in the period the deficiency is identified. Till has determined that no premium deficiency existed at December 31, 2016 or 2015.
Till’s insurance subsidiaries assume and cede reinsurance. Ceded reinsurance can provide the opportunity for increased diversification of business and an ability to minimize the net loss potential attributable to the insured risks. Ceded reinsurance does not relieve the ceding company of its primary obligation to its policyholders. For both ceded and assumed reinsurance, risk transfer requirements must be met to properly account for the related contract as reinsurance.
Reinsurance receivable represents balances due from reinsurance companies for paid losses and unpaid premiums due from the reinsurer. In the event that losses are incurred that are recoverable under its reinsurance program, Till records amounts recoverable from its reinsurers on paid losses plus an estimate of amounts recoverable on unpaid losses. As is the case with the estimate of unpaid losses and loss adjustment expenses, Till's estimate of amounts recoverable on unpaid losses and loss adjustment expenses is a function of Till’s liability for unpaid losses and loss adjustment expenses associated with the reinsured policies; therefore, those amounts can change in conjunction with any changes to the estimate of unpaid losses and loss adjustment expenses. The estimate of amounts recoverable from reinsurers on unpaid losses and loss adjustment expenses may change at any point in the future because of its relation to Till’s reserves for unpaid losses and loss adjustment expenses, which change could vary significantly from the initial estimates.
Reinsurance receivable is reported net of uncollectible reinsurance determined based on a review of the financial conditions of the reinsurers and other factors. At December 31, 2016 and 2015, there was no provision for uncollectable reinsurance.
If it is determined that capitalized costs are not recoverable, the property is abandoned, or, if management has determined that there is an impairment in value, the property is written down to its recoverable amount. Mineral properties are reviewed for impairment when facts and circumstances suggest that the carrying amount may exceed the recoverable amount.
Income tax expense represents the sum of the tax currently payable and deferred. The tax currently payable is based on taxable earnings for the period. Taxable income differs from income as reported in the consolidated statements of comprehensive loss because it excludes items of income or expense that are taxable or deductible in non-current periods and it further excludes items that are never taxable or deductible. Till’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Till recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Till measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which it expects to recover or settle those temporary differences. Should a change in tax rates occur, Till recognizes the effect on deferred tax assets and liabilities in operations in the period that includes the enactment date of the related change. Realization of Till’s deferred income tax assets depends on Till having sufficient future taxable income.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is recognized in equity.
Basic income (loss) per share is computed by dividing net income (loss) attributable to restricted voting shares by the weighted average number of shares outstanding during the reporting period. Diluted income (loss) per share is computed similar to basic income (loss) per share computation except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. In periods of loss, all unexercised options and warrants are considered anti-dilutive.
In May 2015, the FASB issued ASU No. 2015-09, Financial Services - Insurance (Topic 944), that requires additional disclosures for short-duration insurance contracts. Till adopted those disclosures as of December 31, 2016, and has included, in Note 7, disclosures that provide more information about initial claim estimates and subsequent adjustments to those estimates, the methodologies and judgments used to estimate claims, and, if available, the timing, frequency, and severity of claims. This guidance requires a change in disclosure only and adoption of this guidance did not have any effect on Till's financial condition or results of operations.
In September 2015, the FASB issued ASU Topic 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, that allows an entity to recognize adjustments to provisional amounts in a business combination in the reporting period in which the adjustment amounts are determined. Topic 805 is effective for fiscal year 2017 and is expected to be adopted by Till in 2017. Till does not expect the adoption of this standard to have a material impact on its financial statements.
In January 2017, the FASB issued updated guidance on goodwill impairment testing requiring entities to calculate the implied fair value of goodwill through a hypothetical purchase price allocation. Under the updated guidance, impairment will have to be recognized as the amount by which a reporting unit’s carrying value exceeds its fair value. The standard is effective for Till in the first quarter of 2020 on a prospective basis with early adoption permitted. Till is evaluating the impact of this guidance.
No other new accounting pronouncement issued or effective during 2016 had or is expected to have a material impact on Till's consolidated financial statements or disclosures.
In the second quarter of 2015, Till reported a purchase price of $14,062,970 for Holdings, an amount that represented 1.2 times Holdings' book value as of the closing date and an additional amount for two pending insurance transactions then in process. All payments were subject to a 5% hold-back to be paid to Holdings' shareholders based on Holdings' 2015 results of operations, and adjusted to give effect to any adverse development above 10% in loss reserves, as calculated from the closing date until December 31, 2015. Subsequent to December 31, 2015, it was determined that Holdings' results required payment of the holdback; that holdback amount was paid in March 2016.
One of the two pending insurance transactions closed in the third quarter of 2015 and the other one closed in October 2015. The final amount for the two insurance transactions was $730,994. Accordingly, the final purchase price was $14,042,084.
Transaction-related costs in the amount of $47,911 were expensed in general and administrative expenses in 2015.
In the second quarter of 2015, Till's controlled subsidiary, Silver Predator Corp. ("SPD"), announced its intention to realize value from some of its assets by initiating a process to sell all, or part, of the tangible and mineral property assets at some of its properties in Nevada. SPD’s Board of Directors and management committed to a plan to sell Springer Mining Company ("SMC") and the Taylor mill. Since initiating that process, active negotiations have been held related to the sale of those assets. On August 10, 2016, SPD completed a private placement whereby SPD sold 15,000,000 shares of its common shares at CDN$0.05 per share for total proceeds of CDN$732,556 (US$560,868), including CDN$17,444 (US$13,356) in share issuance costs.
During the fourth quarter of 2016, SPD received $224,990 from the sale of multiple pieces of equipment at the Taylor mill resulting in a gain of $224,990 as the Taylor mill assets had a book value of $-0-.
SPD has informed Till that SPD considers it probable that (i) the sale of SMC will be completed in one year; therefore, those assets are classified as assets held for sale and are measured at the lower of carrying amount and fair value less cost to sell at December 31, 2016 and (ii) the sale of the remaining Taylor mill assets is expected to be completed within one year; therefore, those assets are classified as assets held for sale and are measured at the lower of carrying amount and fair value less cost to sell at December 31 2016. Assets held for sale at December 31, 2016 and 2015 are as follows:
6. PROMISSORY NOTE RECEIVABLE AND INVESTMENT IN GOLDEN PREDATOR MINING CORP.
On September 2, 2015, Till entered into a separation agreement with Mr. William M. Sheriff, a former officer and director. As part of that process, 7,100,000 shares of Till's controlled subsidiary, Golden Predator Mining Corp. ("GPY"), were transferred to Mr. Sheriff. As a result, Till no longer has a controlling interest in GPY. Accordingly, Till consolidated GPY through September 2, 2015 and recognized a $2,696,834 gain from loss of control of subsidiary. The remaining 11,812,154 GPY shares held by Till were reported as an available for sale investment.
The first option was for Mr. Sheriff to purchase up to 5,500,000 of Till’s GPY shares, according to a staggered schedule and price, was as follows:
c) if exercised by November 30, 2015, at CDN$0.13 per share
e) if exercised after December 23, 2015 and before March 1, 2017, at CDN$0.15 per share
Mr. Sheriff and an assignee have exercised all 11,812,154 GPY share options. The first transaction was completed on September 30, 2015 for 500,000 shares at an exercise price of CDN$0.11 per share, the second transaction was completed on October 30, 2015 for 800,000 shares at an exercise price of CDN$0.12 per share, the third transaction was completed on May 17, 2016 for 200,000 shares at an exercise price of CDN$0.15, and the fourth and final transaction was completed on June 7, 2016 for 10,312,154 shares at an exercise price of CDN$0.15. As a result, as of December 31, 2016, there is no derivative liability associated with the options and Till no longer owns shares of GPY. For reference purposes, as of December 31, 2016, the exchange rate was CDN$1.00 equaled US$0.74.
The first installment of CDN$717,450 (US$546,545) was received on May 25, 2016. The remaining balance of that promissory note is repayable in amounts, including interest, of CDN$1,256,000 on June 1, 2017, CDN$1,364,000 on June 1, 2018, and CDN$1,232,000 on June 1, 2019. All amounts are to be paid in cash. That promissory note is secured by the shares of GPY's 100% owned subsidiary, Golden Predator Exploration, Ltd., and by GPY's interests in the Brewery Creek and 3 Aces properties.
The following tables summarize the differences between cost or amortized cost and fair value, by major investment category, at December 31, 2016 and 2015:
The following tables summarize Till's fixed maturities by contractual maturity periods. Actual results may differ as issuers may have the right to call or prepay obligations, with or without penalties, prior to the contractual maturity of those obligations.
The following table presents information about Till’s assets stated at fair value:
The following table presents an aging of Till’s unrealized investment losses on available for sale investments by investment class as of December 31, 2016 and December 31, 2015:
Summary of changes in outstanding losses and loss adjustment expenses ("LAE") and amounts ceded
Average annual percentage payout of incurred losses by duration, net of reinsurance, as of December 31, 2016:
The following table presents written premiums, earned premiums, and the effects of those components on the Till’s consolidated statements of income (loss) and comprehensive income (loss):
Till's income tax expense consisted of Canadian current taxes of $16,430 in 2016 and a Canadian deferred tax (benefit) expense of ($104,017) and $22,079 in 2016 and 2015, respectively.
Till's income (loss) before income taxes and loss on equity method investments consisted of:
Tax attributes are subject to review and potential adjustment by tax authorities. Till's April 2014 reorganization involved multiple transactions with various tax considerations that Till believes have no material effect on its current or deferred income tax position.
Till's Board of Directors may, from time to time and in its sole discretion, issue warrants to acquire shares of the restricted voting stock of Till. At December 31, 2016, Till has 179,500 warrants outstanding with a weighted average exercise price of CDN$9.92 (U.S.$7.39) and a weighted average remaining term of 2.94 years.
The intrinsic value of outstanding Till warrants and stock options at December 31, 2016 is zero.
On December 1, 2016, Till announced that it had renewed its normal course issuer bid ("NCIB"). Under the NCIB, Till has approval to bid for up to 262,860 common shares, representing 10% of the 2,628,600 shares that represented Till's public float at that date. Purchased shares will be returned to treasury and canceled. Till's Board of Directors believes that the current and recent market prices for Till's common shares do not give full effect to their underlying value and that the purchase of common shares under the NCIB will increase the proportionate share interest of, and be advantageous to, all remaining shareholders. Till also believes the NCIB purchases will provide increased liquidity to current shareholders who would like to sell their shares. Purchases subject to the NCIB will be carried out pursuant to open market transactions through the facilities of the TSX-V/NASDAQ by Canaccord Genuity Corp. on behalf of Till. During 2016, Till purchased 138,400 common shares for $563,629 through the NCIB program.
On September 25, 2015, Till announced that it had initiated an NCIB. Under that NCIB, Till had approval to bid for up to 265,502 common shares, representing 10% of the 2,655,025 shares that represented Till's public float at that date. During 2015, Till purchased 119,600 common shares for $691,620 through the NCIB program. Those purchased shares were returned to treasury and canceled.
In April 2014, Till acquired American Bullion Royalty Corp. in a reverse takeover by way of a plan of arrangement (the “Arrangement”). Effective December 31, 2014, Till completed a quasi-reorganization that, among other consequences, restated and reduced the then common stock and paid in capital and eliminated the historical deficit and the accumulated other comprehensive loss.
Stock options to purchase 119,952 restricted voting shares were outstanding at December 31, 2016 (December 31, 2015 - 167,641). Warrants to purchase 179,500 restricted voting shares were outstanding at December 31, 2016 and 2015. Those stock options and warrants were excluded in the calculation of diluted earnings per share because the exercise price of the awards was greater than the weighted average market value of the restricted voting shares in the years ended December 31, 2016 and 2015.
Till is party to service agreements with SPD whereby Till provides accounting, corporate communications, and technical services on a cost-plus recovery basis, and was a party to service agreements with GPY whereby Till provided similar services to GPY on a cost-plus recovery basis. The agreements with GPY were terminated on July 31, 2015. The technical service agreement with SPD was terminated on January 1, 2016, leaving only the accounting and corporate communications service agreements in effect. During the years ended December 31, 2016 and 2015, Till charged SPD a total of $36,000 and $242,786, respectively, and charged GPY $-0- and $82,082, respectively, for those services.
Till Management Company ("TMC") pays a performance bonus to certain TMC members based on a formal method approved by the Till Board of Directors. Based on that performance bonus plan, $162,182 and $-0- was paid related to the respective 2016 and 2015 investment results. The 2016 bonus was paid in 2017.
In the first quarter 2016, $252,875 was paid to Till's former Chief Financial Officer as part of a separation agreement that is included in total compensation. No additional payments are required under that separation agreement.
Till views capital as a scarce and strategic resource. That resource protects the financial well-being of the organization, and is also critical in enabling Till to pursue strategic business opportunities. Adequate capital also acts as a safeguard against possible unexpected losses, and as a basis for confidence in Till by shareholders, policyholders, creditors, and others. For the purpose of capital management, Till has defined capital as shareholders’ equity, excluding accumulated other comprehensive income ("AOCI"). Capital is monitored by Till's Board of Directors. Till's insurance subsidiaries are subject to minimum capital requirements that, in the case of RRL, is $1 million, and, in the case of Omega, the Minimum Capital Test (“MCT”) is calculated based on guidelines established by OSFI. Those amounts are not available to satisfy liabilities of Till or other subsidiaries. Both RRL and Omega are in compliance with those requirements.
OSFI has set out expectation of a 100% MCT as the minimum and have also set out 150% MCT as the supervisory target for Canadian property and casualty insurance companies. As of December 31, 2016, Omega had total capital available of CDN$9.42 (U.S.$7.02) million (December 31, 2015 - CDN$9.29 (U.S.$6.70) million) and a total capital required of CDN$1.89 (U.S.$1.41) million (December 31, 2015 - CDN$2.27 (U.S.$1.64) million) resulting in a MCT of 499% (December 31, 2015 - 410%) of the required amount. As of December 31, 2016 and 2015, Omega is in compliance with OSFI's MCT requirement.
As of and for the years ended December 31, 2016 and 2015, the equity and net income (loss) on a statutory basis and GAAP basis for RRL and Omega were as follows:
Omega principally issues general insurance contracts in personal property, commercial property, and liability lines of business. Under those general insurance contracts, Omega is exposed to certain risks defined in the general insurance contracts, usually for durations of one to twelve months.
The following table sets forth the unpaid losses and LAE by line of business:
Liquidity risk is the risk that Till is unable to meet its financial obligations as they come due. Till manages this risk by the continuous monitoring of its working capital to determine that its investments exceed its estimated obligations.
The following table provides a summary of the unaudited quarterly financial information for the periods presented:
Till and its subsidiaries are party to various litigation-related matters in the ordinary course of our business. Till cannot estimate with certainty the ultimate legal and financial liability with respect to those pending litigation matters. However, Till believes, based on its knowledge of such matters, that Till's ultimate liability with respect to those matters will not have a material adverse effect on Till's financial position, results of operations, or cash flows.
In January 2017, SPD gave 100% of its ownership of the Springer Property to RRL in exchange for the release of a related party debt owed to RRL. Until the transfer of the Springer Property to RRL, SPD owned a 100% interest in the Springer Property, a non-operating former tungsten production facility located on the east flank of the Eugene Mountains, approximately 25 miles southwest of the city of Winnemucca, Nevada. In addition to the former tungsten production facility, the project consists of 209 lode mineral claims, 25 placer claims, and fee lands for a total area of approximately 6,400 acres, including all mineral claims and fee lands, subject to a 2% net smelter royalty. The Springer production facility consists of a 1,360-foot vertical shaft and underground workings, a 1,200 ton per day mill with automated rod/ball mill grinding and flotation circuits, plus all water rights, and most of the permits necessary for operation of the facility. SPD did not conduct any significant exploration on the Springer Property in 2015 or 2016, and SPD has no plans for any significant further exploration expenditures.
In the second quarter of 2015, SPD announced its intention to realize value from its assets by initiating a process to sell all, or part, of the tangible and intangible assets at some of its properties in Nevada. At that time, SPD disclosed that mining and production at the facility could be restarted with additional capital expenditures required for exploration to determine the existence of mineral reserves, modernization, and refurbishment.
On April 3, 2017, SPD announced that it had entered into an option agreement with Montego Resource, Inc. (“Montego”) whereby Montego has the right to acquire certain Taylor mining claims in Nevada (the “Mining Claims”) from SPD. The terms of that agreement specify, among other things, that Montego (i) make a series of cash payments totaling $1.2 million over a three-year period, (ii) issue a total of 2,500,000 shares of Montego’s common stock over a three-year period to SPD, and (iii) expend at least $700,000 on the Mining Claims. In addition to the foregoing conditions, the completion of the transaction is subject to a number of closing conditions. As such, there can be no assurance that all of those conditions will be satisfied or that Montego will ultimately acquire a 100% interest in the Mining Claims. See Note 5 in these Consolidated Financial Statements.