Mineral Properties and Interests

6 Months Ended

Jun. 30, 2019

Mineral Industries Disclosures [Abstract]

MINERAL PROPERTIES AND INTERESTS

NOTE 7 – MINERAL PROPERTIES AND INTERESTS

Mineral properties and interests as of June 30, 2019 and December 31, 2018 are as follows:

	June 30, 2019			December 31, 2018
Kiewit and all other sites	$	3,700,000		$	600,000
Less accumulated amortization		(49,281	)		(36,948	)
		3,650,719			563,052
Asset retirement obligation
Kiewit Site		452,193			452,193
Kiewit Exploration		11,126			11,126
Cactus Mill		-			26,234
Total		463,319			489,553
Less accumulated amortization		(172,597	)		(173,604	)
		290,722			315,949
Total	$	3,941,441		$	879,001

In 2009, the Company entered into a Joint Venture Agreement with the Clifton Mining Company ("Clifton") and the Woodman Mining Company for the lease of their property interests in the Gold Hill Mining District of Utah. In March 2019, the Company and Clifton entered into a Second Amended and Restated Lease Agreement (the "Amended Lease").   Under the terms of this Amended Lease, the Company relinquished its leasehold interest in all but 10 of the patented mining claims, for which it retained only the surface rights, and 66 of the unpatented lode mining claims previously held by the Company. The Cactus Mill property was returned to Clifton Mining Company as part of this agreement.

As consideration for entering into the Amended Lease, the Company issued 5,500,000 shares of its common stock with a fair value of $2,200,000 to Clifton which was added to the carrying value of the mineral properties and interests. In addition, the Company and Clifton entered into a Registration Rights Agreement to register for resale the shares issued to Clifton which requires the Company to register the shares within 18 months following the Initial Funding. In the event the Company does not register the shares within the 18-month period, the Company is obligated to pay Clifton a royalty equal to 2.5% of the net smelter returns from the minerals generated from the Company's mining claims.

Under the terms of the initial Joint Venture Agreement, the Company was required to pay a 4% net smelter royalty ("NSR") on base metals in all other areas except for production from the Kiewit gold property and a NSR 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 was also required to pay Clifton a 6% NSR on any production from the Kiewit gold property.  

As part of the Purchase Agreement (Note 3) finalized in March 2019, these NSRs were bought out by the Company from Clifton and two other minority royalty holders at a cost of $900,000 which was added to the carrying value of the mineral properties and interests. The buyer in the Purchase Agreement (Note 3), PDK, acquired a 4% NSR, previously held by Clifton, on the Kiewit property for $2,200,000. A 4% NSR on any production from the Kiewit gold property is now due to PDK.

Production in the three months ended June 30, 2019 was minimal and amortization based on total units of production in the second quarter of 2019, plus an adjustment in total expected ounces expected to be produced from the mineral properties and interests, resulted in an amortization of $13,878 for the three and six months ended June 30, 2019. There was no amortization in the three and six months ended June 30, 2018 due to the lack of production.