In conjunction with the approval by the United States Forest Service of the Company’s operational plan for the Project in April 2015, the USFS imposed an annual seasonal drilling moratorium on the project extending from March 1 to September 30 to ensure that the breeding season of certain species of wildlife is not disturbed.

Subsequent to the USFS’ approval of the Operational Plan, two environmental activist groups applied to the United States District Court for the District of Arizona for an order to set aside such approval.

Although the Company is confident that the USFS decision to approve the Operational Plan will be upheld and the Company will be permitted to commence drilling activities in accordance with the approved Operational Plan, the Court has not yet provided its ruling on the matter.

If the ruling is not issued before the expiry of the moratorium on September 30, there is a possibility that the activist groups will seek an injunction to prevent the Company from undertaking any drilling activities on the Project pending delivery of the Court’s decision.