Mineral Rights and Properties, Net

9 Months Ended

Sep. 30, 2020

Mineral Industries Disclosures [Abstract]

Mineral rights and properties consisted of the following:


	September 30, 2020		December 31, 2019
Dayton resource area	$	2,971,838	$	2,971,838
Spring Valley area	1,530,332		1,530,332
Oest area	307,522		307,522
Occidental area	1,002,172		1,002,172
Northern extension	157,205		157,205
Northern targets	121,170		121,170
Other mineral properties	317,405		317,405
Water rights	90,000		90,000
Total mineral rights and properties	$	6,497,644	$	6,497,644

These mineral rights and properties are segmented based on the Company’s identified resource areas and exploration targets.

On February 25, 2020, the Company sold two patented mining claims and five unpatented mining claims (the "Wild Horse" properties) to Hercules Gold USA LLC ("Hercules") for a total purchase price of $100,000 plus a 2% net smelter returns royalty on future mineral production from these properties. Hercules has the option to purchase the royalty for $75,000 for each one

percent (1%) per each patented or unpatented claim. There was no book value for the Wild Horse properties, so the entire purchase price represented a gain recorded in other income.

On May 5, 2020, the Company renewed the lease with Fred Garrett et al for one patented mining claim located in Storey County, Nevada. The new lease terms provide for a five-year Exploration Term followed by a fifteen-year Development Term. The lease remains in effect as long as exploration, development, mining, or processing operations are being conducted on a continuous basis, without a lapse of activity for more than 180 days. The lease fee is $250 per month, increasing to $1,000 per month when all permits for placing the property into production have been obtained.

On May 21, 2020, the Company exercised its option with New Daney Company Inc. ("New Daney") to purchase seven unpatented lode mining claims located in Spring Valley, south of the Company's Dayton resource area. These claims have been leased from New Daney since 2010. The claims are being purchased for a total of $100,000, inclusive of a 3% net smelter returns royalty. The Company paid $10,000 upon signing, and $1,000 on June 4, 2020. Additional payments of $1,000 per month will be made, with a final $85,000 payment at closing, on or before November 26, 2020. Until closing, these payments are shown on the condensed consolidated balance sheets in prepaid expenses and other current assets. On October 8, 2020, the Company closed the transaction with a payment in full for the $85,000 balance.

On July 9, 2020, the Company amended the lease with Renegade Mineral Holdings for 26 unpatented mining claims in the area of our Occidental exploration target. Under the terms of the amendment, the Additional Term was lengthened to ten years, and an optional ten-year Second Additional Term was added, which would extend the lease through September 30, 2039. The lease payment remains $2,250 per quarter, and will increase to $3,000 per quarter in the Second Additional Term. The work commitment was increased to $250,000 by September 30, 2021, and a cumulative $500,000 by September 30, 2023.

On September 1, 2020, the Company entered into a new mineral exploration and mining lease with the Sutro Tunnel Company ("Sutro") (a related party through the Company's 25% interest in Pelen LLC, owner of the Sutro Tunnel Company). The lease covers patented mining claims, exploration rights, and access over and through town lots in Gold Hill and Virginia City. The lease also provides the right to explore the Sutro Tunnel. The previous lease with Sutro expired December 31, 2017, and had been extended on a month-to-month basis since.

The new Sutro lease provides the right to explore, develop, and mine all minerals on or in the property, including surface dumps. The lease is for a term of five years, with automatic renewals for an addition ten years, and then continues thereafter for so long as operations continue on the property, or on a month-to-month basis so long as the Company continues to make the monthly rental payments, unless explicitly terminated. The rental payment is $5,000 per month for the first five years, increasing to $10,000 per month and then $15,000 per month in the second and third five-year periods, respectively. During the extended period after the first fifteen years, the rental payment increases to $20,000 per month. Total mineral lease payments to Sutro were $5,000 and $11,000 for the three and nine months ended September 30, 2020, and $2,250 and $6,750 for the three and nine months ended September 30, 2019, respectively.

All the Company's mineral exploration and mining lease payments are classified as costs applicable to mining in the condensed consolidated statements of operations.