OPTION ON MINERAL PROPERTY UNPROVEN MINERAL INTERESTS

9 Months Ended

Feb. 29, 2012

OPTION ON MINERAL PROPERTY UNPROVEN MINERAL INTERESTS [Text Block]

NOTE 4 – OPTION ON MINERAL PROPERTY – UNPROVEN MINERAL INTERESTS

Mineral Property Interests – State of Nevada – U.S.A.

On August 23, 2010, we entered into three agreements with TAC Gold Inc., a Canadian reporting issuer, in regards to the acquisition of certain property interests. The interests that we have acquired are as follows:

• An option to acquire a 70% interest in a mineral exploration property called the “Belleville” property in Mineral County, Nevada. TAC has an underlying option agreement with Minquest Inc. for the acquisition of a 100% interest in the property (under which agreement Minquest has retained a 3% net smelter return royalty);

• An option to acquire a 35% interest in a mineral exploration property called the “Goldfield West” property in Esmeralda County, Nevada. TAC has an underlying option agreement with Minquest Inc. for the acquisition of a 100% interest in the property; and

• A right of first refusal on an additional exploration property called the “Iowa Canyon” property in Lander County, Nevada for period of 12 months; In September, 2011, we converted that right to an option to acquire a 15% interest in the property and then terminated the agreement on January 18, 2012 in order to focus on the Goldfield and Belleville prospects. TAC has an underlying option agreement with Minquest Inc. for the acquisition of a 100% interest in the property.

Pursuant to the terms of the above noted option agreements, in order to earn the 70% interest in the Belleville property we have assumed our 70% portion of the obligations of TAC Gold under their option agreements with Minquest which consist of:

• Making payments in the aggregate amount of $170,000 in payments ranging from $20,000 to $50,000, to the sixth anniversary of the underlying option agreement; and

• Incurring exploration expenditures in the aggregate amount of $1,320,000 in annual amounts ranging from $120,000 to $400,000, to the seventh anniversary of the underlying option agreement.

In regards to the option agreement for the Goldfield West property, in order to earn the 35% interest in the property we have assumed our 35% portion of the obligations of TAC Gold under their option agreements with Minquest which consist of:

• Making payments in the aggregate amount of $98,000 in annual periodic payments ranging from $7,000 to $24,500 to the seventh anniversary of the underlying option agreement and initial payments of $300,000; and

• Incurring exploration expenditures in the aggregate amount of $770,000 in annual amounts ranging from $70,000 to $175,000 to the seventh anniversary of the underlying option agreement.

Upon payment of the $300,000 to TAC Gold Inc. (paid as to $200,000 on September 14, 2010, and $100,000 on November 24, 2010), we earned a 35% interest in the Goldfield West Property. In order to maintain this 35% interest, we are required to aggregate cash payments of $98,000 over a seven year period and incur an aggregate of $770,000 in exploration expenditures over a seven year period as described in the table below.

In regards to the option agreement for the Iowa Canyon property, in order to earn the 15% interest in the property we had assumed our 15% portion of the obligations of TAC Gold under their option agreements with Minquest which consist of:

• Making payments in the aggregate amount of $89,000 in annual periodic payments ranging from $4,500 to $10,500, through the seventh anniversary of the Underlying Option Agreement.

• Incurring exploration expenditures in the minimum aggregate amount of $300,000 in annual amounts ranging from $30,000 to $75,000, through the seventh anniversary of the Underlying Option Agreement.

In addition, TAC Gold is required to make certain share issuances to Minquest under the terms of their option agreements (700,000 shares in regards to the Belleville property, 1,000,000 shares in regards to the Goldfield West Property and 825,000 shares in regards to the Iowa Canyon property, periodically over the terms of the agreements). We are obligated to reimburse TAC Gold in either cash for the fair market value of the TAC Gold shares that are issued to Minquest or in the issuance of the equivalent value of All American shares as have a market value equal to the amount of the payment then due. The common shares of TAC Gold are listed for trading on the Canadian National Stock Exchange.

The schedule of payments, stock issuances & required property expenditures under the agreements is:

BELLEVILLE – ALL AMERICAN’S 70% INTEREST

All American’s Portion Anniversary Date	70% Payment	Share Issuance	70% Property Expenditure
August 4, 2010	Paid by TAC	Nil	Paid by TAC
August 4, 2011	$14,000 (paid)	9,804	$84,000 (paid)
August 4, 2012	$21,000	TBD	$105,500
August 4, 2013	$21,000	TBD	$140,000
August 4, 2014	$28,000	TBD	$140,500
August 4, 2015	$35,000	TBD	$175,000
August 4, 2016	$0	TBD	$280,000
TOTALS	$133,000		$995,000

As of the date of this periodic report, we are in full compliance with the terms of the option agreement on the Belleville property and are current in all payments, exploration expenditures or advances on planned exploration programs and share issuances to TAC under the option agreements.

GOLDFIELD – ALL AMERICAN 35% INTEREST

All American must pay to TAC Gold $200,000 on date of execution and $100,000 by November 21, 2010 (fully paid)

All American’s Portion Anniversary Date	35% of TAC Payment	Share Issuance	35% Property Expenditure
September 14, 2010	$200,000 (paid)	Nil	Nil
November 21, 2010	$100,000 (paid)	Nil	Nil
January 20, 2011	$7,000 (paid) *	9,651	$70,000 (paid)
January 20, 2012	$10,500 (paid)	41,677	$70,000
September20, 2013	$10,500	TBD	$87,500
January 20, 2014	$14,000	TBD	$105,000
January 20, 2015	$14,000	TBD	$122,500
January 20, 2016	$17,500	TBD	$140,000
January 20, 2017	$24,500	TBD	$175,000
TOTALS	$398,000		$770,000

* included as a credit as part of the cost of the acquisition of the option agreement and paid by TAC Gold

As of the date of this periodic report, we are in full compliance with the terms of the option agreement on the Goldfield West property and are current in all payments, exploration expenditures or advances on planned exploration programs and share issuances to TAC under the option agreements. At this time, neither TAC nor Minquest are in a position to present a geological exploration and drilling program for the current year and do not expect to be until sometime in the late Spring or early summer. Therefore, TAC has postponed the requirement of the Option Agreement that requires the property expenditure payment be made on January 20, 2012, until September 20, 2012, or until such time as they are prepared to made specific recommendations as to an exploration program for the current year. In the event that we elected to terminate the option agreement, no payment would be required to be made. Should TAC fail to make its required property expenditures, All American would either have to negotiate with Minquest and form a new option agreement between Minquest and All American or terminate the option and lose our interest in the property or make some other mutually agreeable arrangement with the parties involved. The share issuance to TAC under the option agreement was made subsequent to the end of the quarter. As of the date of this periodic report, we are otherwise in full compliance with the terms of the option agreement on the Goldfields West property and are current in all other payments, exploration expenditures or advances on planned exploration programs and share issuances to TAC under the option agreements.

IOWA CANYON – ALL AMERICAN 15% INTEREST

All American must pay to TAC Gold $50,000 on date of execution (paid) and a further $50,000 by January 11, 2012 which has not been made. On January 12, 2012, the Board of Directors decided not to proceed further with the Iowa Canyon property at this time because raising the required funds would strain or jeopardize our ability to secure the funds that we require to continue moving forward with our two primary targets – the Belleville and Goldfield West projects. At this point there will be no further expenditures made in regards to the Iowa Canyon property.

Gao Feng Gold Property – Jiangxi Province, China

In April, 2007 the Company entered into an Option to Purchase and Royalty Agreement, as amended May 15, 2010, to acquire a 25% interest in a mining property with no known reserves, in Jiangxi Province, China. As at November 30, 2009, the Company had paid for its portion of the first phase of a planned two-phase exploration program in the amount of $20,000. The field work for the first phase was carried out between February 15 and March 3, 2010, to determine if there are commercially exploitable deposits of gold and silver. On January 31, 2011, the agreement was terminated as a result of insufficient results being obtained from the first phase of exploration and the high costs of a projected second phase as reported and recommended in a geological engineering report dated January 18, 2011. No further payments or consideration are required as a result of the termination of the agreement.