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Commitments
3 Months Ended
Mar. 31, 2016
Commitments [Abstract]  
COMMITMENTS

NOTE 13 – COMMITMENTS

 

Mining Properties

 

During the year ended December 31, 2009, the Company entered into a Joint Venture Agreement with the Moeller Family Trust for the lease of the Trust’s Yellow Hammer property in the Gold Hill Mining District of Utah.  Pursuant to the agreement, if the Company does not place the Yellow Hammer property into commercial production within a three-year period it will be required to make annual penalty payments to the Trust of $50,000.  The Yellow Hammer operated for several months in 2011.  Under the terms of the Joint Venture Agreement, the Company is required to pay a 6% net smelter royalty on the production of base metals and a net smelter royalty on gold and silver based on a sliding scale of between 2% and 15% based on the price of gold and silver, as applicable.  There were no sales and no royalty expense on this property to date in 2016 or in 2015. No penalty payment has been made on this property and no official forfeiture notice has been received regarding this nonpayment of the annual penalty payment.

 

Also during the year ended December 31, 2009, the Company entered into a Joint Venture Agreement with the Clifton Mining Company and the Woodman Mining Company for the lease of their property interests in the Gold Hill Mining District of Utah.  Under the terms of the Joint Venture Agreement, the Company is required to pay a 4% net smelter royalty on base metals in all other areas except for production from the Kiewit gold property and a net smelter royalty on gold and silver, except for production from the Kiewit gold property, based on a sliding scale of between 2% and 15% based on the price of gold or silver, as applicable.  The Company is also required to pay a 6% net smelter return on any production from the Kiewit gold property.  Additionally, if the Company does not place the Kiewit property, the Clifton Shears-Smelter Tunnel property, and the Cane Springs property into commercial production within a three year period, it will be required to make annual penalty payments to Clifton Mining in the amount of $50,000 per location.  In 2014, the Company had not begun commercial production and the payments due on July 24, 2014 were paid and accepted by Clifton Mining for the Clifton Shears and Kiewit properties. The Cane Springs property penalty payment was not made in 2013 and this claim was released back to Clifton Mining at that time.  Production at the Kiewit property has since begun. Royalty expense of $17,160 and $73,012 was recognized during the quarters ended March 31, 2016 and 2015 with $103,746 still payable to Clifton Mining Company at March 31, 2016. This amount is expected to be paid in 2016.

 

Mining severance tax in the amount of $1,931, based on production, was accrued at March 31, 2016.

 

Personal property tax due to Tooele County, Utah in the amount of $71,398, based on income projections, was accrued and past due at March 31, 2016.

 

Employment Agreements

 

In September 2010 the Company entered into an employment agreement with Mr. Havenstrite as President of the Company, which is ongoing. The agreement requires Mr. Havenstrite to meet certain time requirements and limits the number of other board member obligations in which he can participate. The agreement allows for a base annual salary of $120,000 plus certain performance compensation upon fulfillment of established goals, allows the Board to terminate Mr. Havenstrite’s employment at any time, providing for a severance payment upon termination without cause.

 

As of March 31, 2016 and March 31, 2015, accrued compensation of $353,885 and $193,500, and consulting fees payable of $0 and $15,000, respectively, were due to directors and officers. Of the amounts accrued at March 31, 2016 and 2015, accrued compensation of $282,693 and $165,000 is due to Rick Havenstrite and $71,192 and $28,500 is due to Marianne Havenstrite. In addition, on May 1, 2014 Rick Havenstrite was awarded 3,137,066 shares of common stock as a management incentive.