6. CONTRACTUAL OBLIGATIONS, COMMITMENTS AND SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2014

Notes to Financial Statements

NOTE 6 - CONTRACTUAL OBLIGATIONS, COMMITMENTS AND SUBSEQUENT EVENTS

a) On February 21, 2012, a consulting agreement was fully executed between the Company and another company controlled by a director and officer of the Company, effective January 1, 2012 for a term of 48 months, whereby the related company agreed to provide the services of its shareholder as the Company’s CEO, COO, CFO and Corporate Secretary.  As compensation, the Company was to pay $90,000 per annum, in equal monthly installments of $7,500, in arrears and plus applicable taxes.  The Company also agreed to reimburse reasonable business and/or entertainment and automobile expenses during the duration of the consulting agreement. Effective July 1, 2012, the agreement was revised to amend the compensation to be monthly installments of $9,000 CAD plus applicable taxes, with the 48 month term to commence from the new effective date.

The final monthly installment under the above agreement was paid in July, 2014. The Company and the service provider (the related company) are negotiating a settlement agreement and the parties have agreed that payments subsequent to July, 2014 are advances on the settlement amount. $6,713 of such payments is included in prepaid fees and advances at September 30, 2014 (December 31, 2013: $Nil)

b) On August 29, 2014, the Company entered into a Letter of Intent (“the LOI”) with Lode Star Gold Inc. (“LSG”), a Nevada registered private company, regarding a proposed purchase by the Company of an interest in LSG’s mineral property. Pursuant to the LOI, the Company has agreed to issue shares of its common stock and make certain payments to LSG in consideration for the interest. The two companies have agreed to use their best efforts to negotiate and execute a definitive agreement setting out the full terms of the transaction within 30 days. The definitive agreement will be subject to a number of closing conditions including satisfactory completion of due diligence and the receipt of all necessary governmental and regulatory approvals.

On October 4, 2014, the Company and LSG entered into a definitive mineral option agreement (the "Definitive Agreement") for the Company to acquire an interest in LSG’s Nevada Goldfield Bonanza property (the "Property").  Certain conditions to closing the proposed takeover remain outstanding, including the execution and delivery of settlement agreements between the Company and certain of its creditors.

Pursuant to the Definitive Agreement, the Company is required to issue to LSG 35,000,000 shares of common stock at a deemed price of $0.02 per share for a total value of $700,000 in order to earn a 20% undivided interest in the Property. In order to earn an additional 60% interest in the Property (for a total of 80%), the Company is required to fund all expenditures on the Property and pay LSG an aggregate of $5 million in cash from the Property’s mineral production proceeds in the form of a net smelter returns (“NSR”) royalty.

Until such time as the Company has earned the additional 60% interest, the NSR royalty will be split as to 79.2% to LSG and 19.8% to the Company since the Property is subject to a pre-existing 1% NSR royalty in favor of a third party.

If the Company fails to make any cash payments to LSG within one year of signing the definitive agreement, the Company has agreed to pay LSG an additional $100,000, and in any subsequent years in which the Company fails to complete the payment of the entire $5 million described above, it must make quarterly cash payments to LSG of $25,000 until such time as it has earned the 60% interest in the Property.

Management has evaluated subsequent events and the impact on the reported results and disclosures and has concluded that no other significant events require disclosure as of the date these financial statements were issued.