| MINERAL PROPERTIES | Bruner and Vernal Properties Pursuant to a
Property Option Agreement (BV Agreement), dated as of July 25, 2003, with MinQuest, Inc., a Nevada corporation (MinQuest),
we acquired the option to earn a 100% interest in the Bruner and Vernal mineral exploration properties located in Nevada. Together,
these two properties originally consisted of 28 unpatented mining claims on a total of 560 acres in the northwest trending Walker
Lane located in western central Nevada. The Bruner position was subsequently expanded from 16 unpatented mining claims to 80 unpatented
mining claims bringing the total at Bruner to approximately 1,653 acres. Any additional claims agreed by the Company to be
staked by MinQuest within 2 miles from the existing perimeter of the Property boundaries shall form part of the BV Agreement. In order to earn
a 100% interest in these two properties, option payments totaling $92,500 and an additional $500,000 in exploration expenditures
were required. All mining interests in the property are subject to MinQuest retaining a 3% royalty of the aggregate proceeds received
by us from any smelter or other purchaser of any ores, concentrates, metals or other material of commercial value produced from
the property, minus the cost of transportation of the ores, concentrates or metals, including related insurance, and smelting
and refining charges, including penalties. Pursuant to the
BV Agreement, we have a one-time option to purchase a portion of MinQuests royalty interest at a rate of $1,000,000 for
each 1%. We may exercise our option 90 days following completion of a bankable feasibility study of the Bruner and Vernal properties,
which, as it relates to a mineral resource or reserve, is an evaluation of the economics for the extraction (mining), processing
and marketing of a defined ore reserve that would justify financing from a banking or financing institution for putting the mine
into production. To date, the
Company has paid the option payments totaling $92,500, and has accumulated approximately $625,070 and $83,740 of exploration expenditures
on the Bruner and Vernal properties respectively. These expenditures have satisfied the requirements of the BV Agreement and 100%
interest in these two properties have been transferred to Patriot, subject to MinQuest retaining a 3% royalty. On April 16,
2010, the Company entered into an Assignment Agreement with its wholly owned subsidiary, Provex Resources, Inc., a Nevada corporation
(Provex), to assign the exclusive option to an undivided right, title and interest in the Bruner, Bruner Expansion
and Vernal Properties to Provex. Pursuant to the Agreement, Provex assumed the rights, and agreed to perform all of the duties
and obligations, of the Company arising under the original property option agreements. On May 28, 2010
Provex entered into an exclusive right and option agreement with Canamex Resources Corp. (Canamex) whereby Canamex
may earn a 70% (or up to 75% if a bankable feasibility study is performed) undivided interest in the Bruner, and Bruner Expansion
properties, herein after collectively referred to as (the Bruner Properties). Upon the completion of the terms of
the Agreement by Optionee, and upon earning its initial interest, the parties have agreed to negotiate a definitive joint
venture agreement in good faith which will supersede the current agreement. On April 1, 2009,
the Company entered into a Property Option Agreement (the AIV Agreement) with American International Ventures Inc.
(AIV), to acquire the exclusive option to an undivided right, title and interest in 28 patented Federal mining claims
and mill sites located in Nye County, Nevada. Simultaneous with the execution and delivery of the Agreement, the Company paid
AIV $30,000. In order to earn its option in the Property, the Company agreed to make annual property option payments each year
on April 1 consisting of $35,000 in 2010, $40,000 in 2011, $45,000 in 2012, $50,000 in 2013, $55,000 in 2014, $60,000 in 2015,
and $1,185,000 in 2016. Following which the Company would be deemed to have exercised its option under the Agreement and would
be entitled to an undivided 100% right, title and interest in and to the Bruner Property Expansion subject to a 1.5% Net Smelter
Return (NSR) royalty payable to AIV and a 2% NSR payable to the former Property owner. The 2% NSR royalty may be
purchased by the Company for a total payment of $500,000 and 1% of AIVs 1.5% NSR royalty can be purchased by the Company
for an additional payment of $500,000 at any time up to 30 days after beginning mine construction. The claims optioned under
the agreement with AIV are contiguous with the Companys existing Bruner property claims and therefore are also subject
to the terms and conditions of the original BV Agreement with MinQuest. In November 2015,
Canamex announced that it had completed the purchase of the patented claims from AIV for US$760,000, securing ownership of those
claims for the joint venture (in anticipation of Canamex earning 70% of the Bruner project) and saving the joint venture US$425,000.
Canamex purchased the claims directly from American International Ventures Inc. (AIV), subject to Patriot Golds
rights under an Option Agreement dated April 1, 2009 that gives Patriot Gold the ability to purchase those patented claims by
making a final payment of US$1,185,000 on or before April 1, 2016. Both Canamex and Patriot Gold expect, however, that those patented
claims will be conveyed to the joint venture once the more comprehensive joint venture agreement has been executed. During the first
half of 2016 it was determined by the company that Canamex had successfully earned a 70% interest in the Bruner Property according
to the terms of the Bruner Option Agreement, and the parties have began working to negotiate terms of a definitive joint venture
agreement. This joint venture agreement is still being negotiated. As of May 31,
2016, the Company has incurred approximately $625,070 and $83,740 of accumulated exploration expenses on the Bruner and Vernal
properties respectively. During the years ended May 31, 2016 and 2015, the Company incurred exploration expenses of $nil and $nil
on the Bruner property, respectively, and $1,990 and $1,990 on the Vernal property, respectively. Moss Property The Moss Property
consists of 104 unpatented claims and 15 patented claims located in the Oatman Mining District of Mohave County, Arizona. The
Company acquired these claims in a series of transactions during fiscal 2004 and 2005. We hold the MinQuest
claims via 104 unpatented mining claims that were acquired from MinQuest. On March 4, 2004 the Company signed a Letter Agreement
(the Agreement) that earned it a 100% interest in these claims by paying MinQuest a one-time fee of $50,000. This
$50,000 fee was paid on July 7, 2004. Subject to the terms and conditions of the Agreement, MinQuest will retain a 3% NSR on any
and all production derived from the unpatented mining claims listed under the Agreement and on public lands within 1 mile of MinQuest,
Inc.s outside perimeter of the present claim boundary; a 1.0% NSR on patented claims with no other royalty within the property;
and a 0.5% overriding NSR on all production within the property derived from patented claims with other royalty interests. On February 28,
2011, the Company entered into an Exploration and Option to Enter Joint Venture Agreement (the Moss Agreement),
with Idaho State Gold Company, LLC, (ISGC) whereby the Company granted the option and right to earn a vested seventy
percent (70%) interest in the property and the right and option to form a joint venture for the management and ownership of the
properties called the Moss Property, Mohave County, Arizona. Pursuant to the Moss Agreement, ISGC paid US $500,000 upon execution,
and agreed to spend an aggregate total of US $8 million on exploration and related expenditures over the next five years and subsequent
to exercise the earn-in, ISGC and Patriot Gold would form a 70/30 joint venture. Under this agreement financing of future work
on the property would be on a proportional basis under the direction of a management committee with voting rights proportional
to ownership percentage. Either party could be diluted on the basis of a standard formula if it does not contribute to the planned
programs. If either party is diluted below 10 percent, their interest would convert to a three percent NSR (net smelter return)
royalty. An existing 3-3.5 percent NSR exists on the Moss Mine Property. In March, 2011,
ISGC transferred its rights to the Exploration and Option Agreement dated February 28, 2011, to Northern Vertex Mining Corp. (Northern
Vertex). On January 21,
2016, an arbitrator ruled that Northern Vertex met the required expenditures, successfully carried out pilot production, and produced
a feasibility study thereby fulfilling the Exploration and Option Agreement terms entitling them to have earned an undivided 70%
interest in the Moss Property. On May 12, 2016,
the Company entered into a material definitive Agreement for Purchase and Sale of Mining Claims and Escrow Instructions (the Purchase
and Sale Agreement) with Golden Vertex Corp., an Arizona corporation (Golden Vertex, a wholly-owned Subsidiary
of Northern Vertex) whereby Golden Vertex agreed to purchase the Companys remaining 30% working interest in the Moss Gold/Silver
Mine for $1,155,600 (C$1,500,000) plus the retention by the Company of a 3% net smelter returns royalty. Specifically, the Company
conveyed all of its right, title and interest in those certain patented and unpatented lode mining claims situated in the Oatman
Mining District, Mohave County, Arizona together with all extralateral and other associated rights, water rights, tenements, hereditaments
and appurtenances belonging or appertaining thereto, and all rights-of-way, easements, rights of access and ingress to and egress
from the claims appurtenant thereto and in which the Company had any interest. The purchase price consisted of $924,479 (C$1,200,000)
in cash payable at closing and the remaining $231,120 (C$300,000) was paid by the issuance of Northern Vertex common shares to
the Company valued at $0.26 (C$0.35) (857,140 shares), issued pursuant to the terms and provisions of an investment agreement
entered between the Company and Northern Vertex contemporaneous to the Purchase and Sale Agreement. The investment agreement prohibits
the resale of the shares during the four-month period following the date of issuance and thereafter, the Company will not sell
the shares in an amount exceeding 100,000 shares per month. As of May 31, 2016, the Company recognized a gain on sale of mineral
property of $1,155,600 in the Consolidated Statements of Operations. During the years
ended May 31, 2016 and 2015, MinQuest earned a 1.0% NSR totaling $12 and $26,827, respectively, generated from minerals recovered
and sold during a Phase 1 plant operation completed by Northern Vertex. In accordance with the agreements, Northern Vertex paid
the NSR to the Company and the Company paid the NSR to MinQuest. The receipt and disbursement of the NSR are recorded in mineral
costs in the Consolidated Statement of Operations for a net effect of $nil. As part of the Purchase and Sale Agreement of the
Moss Property, MinQuest retains their 1.0% NSR and will be paid directly by Northern Vertex. As of May 31,
2016, the Company has incurred approximately $1,538,141 of accumulated exploration expenses on the Moss Property, $21,660 and
$161 were spent on exploration for the years ended May 31, 2016 and 2015, respectively. Windy Peak
Property The Windy Peak
Property, (Windy Peak) consists of 79 unpatented mineral claims covering approximately 1630 acres, 3 miles NNE of
the Bell Mountain and 7 miles east of the Fairview mining district in southwest Nevada. Windy Peak was
acquired on May 22, 2015 when the Company entered into an Assignment and Assumption Agreement with Goldfields International, Inc.,
for the assignment of the rights, title and interest in the Windy Peak property for $75,000. Consideration for the assignment
is included in the Consolidated Statement of Operations as mineral costs during the year ended May 31, 2015. Right of First
Refusal - Peak Mineral Claims On July 20, 2015,
Patriot entered into a Right of First Refusal Agreement, (the ROFR Peak Agreement), with an unrelated third party
whereby Patriot was granted a right of first refusal with respect to certain mineral claims which are located in British Columbia
and registered to the third party. In consideration of the ROFR Peak Agreement, Patriot paid the sum of $12,977 ($16,500 CAD).
Subject to the exercise of the ROFR Patriot would have the opportunity to enter into a mutually agreeable option with the third
party to earn up to a 100% undivided interest in the property subject to Peak retaining a net smelter royalty. The ROFR expired
on June 30, 2016. |
