3. Mineral Property Interests | 3 Months Ended |
Mar. 31, 2014 |
Notes to Financial Statements | ' |
Mineral Property Interests | ' |
Boulder Hill Claims |
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On 16 December 2011, the Company entered into a Purchase and Sale Agreement (the “BHM Purchase”) with Boulder Hill Mines, Inc., an Idaho corporation (“Boulder Hill”), to purchase from Boulder Hill three unpatented mining claims situated in Lincoln County, Montana (the “Boulder Hill Claims”) by making the following considerations to Boulder Hill: |
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· | Issue 500,000 restricted shares of the Company’s common stock by 21 December 2011 (issued on 16 December 2011 and valued at $15,000); |
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· | Pay $25,000 in cash by 5 May 2013 (unpaid); and |
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· | Pay $25,000 in cash by 16 December 2013. |
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On 15 January 2013, the Company amended the agreement entered into on 12 October 2012 with Boulder Hill to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Claims until 5 May 2013. |
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During the year ended 31 December 2012, the Company was in default related to certain obligations related to the Boulder Hill Claims. As of December 31, 2013, the Company recorded a write-down of mineral property in the amount of $15,000 related to the Boulder Hill Claims. |
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Boulder Hill Project |
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On 30 September 2011, the Company entered into a non-binding letter of intent (“LOI”) with Boulder Hill to acquire by way of an assignment from Boulder Hill all of its rights, responsibilities and obligations under a state mineral lease and agreement (the “Option Agreement”) dated 15 July 2008 by and among Boulder Hill, James Ebisch (“James E”) and Ryan Riech (“Riech”). |
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James E and Riech, under the terms of the Option Agreement, hold the mining and mineral rights to a certain Montana State Metallferrous Gold Lease entered into with the State of Montana (the “Montana Gold Lease”) under which Boulder Hill was granted the exclusive right to prospect, explore, develop and mine for gold, silver and other minerals on a property situated in Lincoln County, Montana (the “Boulder Hill Property”). The Montana Gold Lease is for a 10-year term and is subject to the 5% net smelter return (“NSR”) due to the State of Montana. The Option Agreement was amended on 1 August 2011 to reflect James E as the sole owner of the Montana Gold Lease. |
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On 16 December 2011 (the “Effective Date”), the Company entered into an Assignment and Assumption Agreement (“BHM Assignment”) with Boulder Hill and James E, whereby Boulder Hill transferred and assigned the Company all of its right, title and interest, in, to and under the Option Agreement and the Company assumed the assignment of the Option Agreement agreeing to be bound, the same extent as Boulder Hill, to the terms and conditions of the Option Agreement. |
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The BHM Assignment required the Company to make the following considerations to Boulder Hill: |
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· | Issue 500,000 restricted shares of the Company’s common stock by 21 December 2011 (issued on 16 December 2011 and valued at $15,000); |
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· | Pay $25,000 in cash by 30 September 2013 (unpaid); and |
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· | Pay $25,000 in cash by 16 December 2013. |
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The Option Agreement and the BHM Assignment provide that the Company will have exercised the option to acquire an undivided 100% of James E’s right, title and interest in and to the Montana Gold Lease after incurring an aggregate of $210,000 in exploration expenditures, paying James E an aggregate of $80,000 plus 5% of any joint-venture and buyout payments (the “JVBP”) and paying filing fees over the term of the Option Agreement. |
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The Option Agreement provides that the cash payments payable to James E shall be made according to the following schedule: |
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· | $20,000 on or before 30 September 2013 plus 5% of any JVBP, of which an initial payment of $3,000 is to be made on or before 30 October 2011 ($3,000 paid on 12 January 2012); |
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· | $15,000 on or before 30 September 2013 plus 5% of any JVBP (unpaid); |
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· | $20,000 on or before 15 July 2014 plus 5% of any JVBP; and |
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· | $25,000 on or before 15 July 2015 plus 5% of any JVBP. |
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The Option Agreement and claim purchase agreement require that the exploration expenditures of an aggregate of not less than $210,000 on the Property shall be incurred as follows: |
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· | On or before 30 September 2013, incur not less than an aggregate of $49,000 in exploration expenditures (an aggregate of $34,769 incurred); and |
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· | On or before 13 December 2013, incur not less than an aggregate of $210,000 in exploration expenditures. |
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In addition to the foregoing cash payments and exploration expenditures, in order to maintain James E’s leasehold interest in the Boulder Hill Property the Company will be responsible for paying filing fees over the term of the Option Agreement and Boulder Hill Agreement and the following: |
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· | Make advance royalty payments to James E of $25,000 per year, commencing on 15 July 2015 and continuing on 15 July each and every year thereafter for so long as the Company retains its leasehold interest in the Boulder Hill Property; and |
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· | Incur a minimum of $100,000 of annual exploration expenditures on the Boulder Hill Property on or before 15 July each and every year after 15 July 2011 (not incurred), which could be offset by exploration expenditures in excess of $100,000 in any prior annual period. |
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On 15 January 2013, the Company amended the agreement entered into on 12 October 2012 with Boulder Hill and James E to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Property until 5 May 2013. |
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On 5 May 2013, the Company amended the waiver entered into on 15 January 2013 with Boulder Hill and James E to extend the waiver of certain required cash payment and/or exploration expenditure related to the Boulder Hill Property until 30 September 2013 (not completed). |
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During the year ended 31 December 2012, the Company was in default related to certain obligations related to the Boulder Hill Project and as a result, the Company recorded a write-down of mineral property in the amount of $18,000 related to the Boulder Hill Project, as of December 31, 2012. |
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During the year ended 31 December 2013, the Company decided to cancel the portion of the Boulder Hill project involving the state lease, and is in the process of re-staking unpatented mining claims. During the three month period ended 31 March 2014 the Company spent $1,250 in consulting fees related to preparation for the re-staking ($0 exploration costs during three month period ended 31 March 2013). |
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South Idaho Silver Project |
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On 7 December 2011 (the “Effective Date”), the Company entered into an Assignment and Assumption Agreement (the “CCS Assignment”) with Castle Creek Silver Inc. (“Castle Creek”), an Idaho corporation, and Robert Ebisch (“Robert E”) to acquire by way of assignment from Castle Creek all of its rights, responsibilities and obligations under an Option to Purchase and Royalty Agreement (the “Purchase Agreement”) dated 15 July 2011, by and between Castle Creek and Robert E. Castle Creek, under the Purchase Agreement, had the option to acquire an undivided 100% of the right, title and interest of Robert E in the unpatented mining claims owned and situated in Owyhee County, Idaho (the “South Idaho Property”). |
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Pursuant to the terms of the CCS Assignment, Castle Creek transferred and assigned the Company all of its right, title and interest, in, to and under the Purchase Agreement and the Company assumed the assignment of the Purchase Agreement agreeing to be bound, the same extent as Castle Creek, to the terms and conditions of the Purchase Agreement. The Company agreed to make the following considerations to Castle Creek: |
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· | Issue 1,000,000 restricted shares of the Company’s common stock by 12 December 2011 (issued on 7 December 2011 and valued at $30,000); |
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· | Pay $50,000 by 15 July 2013 (unpaid); and |
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· | Castle Creek will be entitled to a 1% net smelter return (“NSR”) from any ore produced from the South Idaho Property. At any time from the Effective Date, the Company has the right to acquire the 1% NSR payable to Castle Creek for $250,000. |
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The Purchase Agreement and assignment of Castle Creek’s right, title and interest, in, to and under the Purchase Agreement provide that the Company will have exercised the option to acquire an undivided 100% of Robert E’s right, title and interest in and to the Property after incurring an aggregate of $210,000 in exploration expenditures, paying Robert E an aggregate of $80,000 plus 5% of any JVBP. The Purchase Agreement provides that the cash payments payable to Robert E shall be made according to the following schedule: |
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· | $2,500 on or before 31 January 2012 plus 5% of any JVBP (paid); |
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· | $2,500 on or before 20 June 2013 plus 5% of any JVBP (paid); |
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· | $5,000 on or before 15 September 2013 plus 5% of any JVBP (unpaid); |
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· | $10,000 on or before 15 September 2014 plus 5% of any JVBP; |
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· | $15,000 on or before 15 September 2015 plus 5% of any JVBP; |
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· | $20,000 on or before 15 September 2016 plus 5% of any JVBP; and |
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· | $25,000 on or before 15 September 2017 plus 5% of any JVBP. |
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The Purchase Agreement provides that the exploration expenditures of an aggregate of not less than $210,000 on the South Idaho Property shall be incurred as follows: |
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· | On or before 15 April 2012, incur not less than an aggregate of $10,000 in exploration expenditures (an aggregate of $10,000 incurred); |
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· | On or before 15 July 2013, incur not less than an aggregate of $20,000 in exploration expenditures (an aggregate of $30,620 incurred); |
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· | On or before 15 September 2013, incur not less than an aggregate of $100,000 in exploration expenditures (not incurred); and |
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· | On or before 15 September 2014, incur not less than an aggregate of $210,000 in exploration expenditures. |
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In addition to the foregoing cash payments, exploration expenditures and filing fees, in order to maintain its interest in the South Idaho Property the Company will be responsible for the following: |
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· | Make advance royalty payments to Robert E of $25,000 per year, commencing on 15 September 2015 and continuing on 15 September each and every year thereafter for so long as the Company retains its interest in the South Idaho Property; and |
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· | Incur a minimum of $100,000 of annual exploration expenditures on the South Idaho Property on or before 15 September each and every year after 15 September 2015, which could be offset by exploration expenditures in excess of $100,000 in any prior annual period. |
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On 7 December 2012, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until renegotiation after 31 March 2013 and before 30 June 2013, provided that a cash payment of $1,200 is paid prior to 31 March 2013 (paid). |
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On 31 May 2013, the Company entered into an agreement with Castle Creek to waive certain required cash payment and/or exploration expenditure related to the South Idaho Property until 15 July 2013, provided that a cash payment of $3,500 is paid prior to 15 July 2013 (unpaid). Further, the Company may secure a waiver at any time during the year ended 31 December 2013 for the requirements that become due in 2014 in exchange for cash payment of or issuance of common shares valued at $50,000. |
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The Company is currently in default with regards to certain obligations related to the South Idaho Property and is in the process of renegotiating the terms with Castle Creek, or determining to re-stake the mining claims. During 2013, the Company recorded a provision for write-down of mineral property interests of in the amount of $36,650 related to the South Idaho Property. During the three month period ended 31 March 2014, the Company paid $1,250 for a review and update of its database in preparation of re-staking (no exploration costs incurred during the three month period ended 31 March 2013). |
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Uranium Claim Prospect |
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The Company acquired through location two unpatented mining claims in eastern Washington state in July 2013 comprising approximately forty acres, which the company relinquished in the three month period ended 31 March 2014. |