Option Agreement

9 Months Ended

Apr. 30, 2013

4. OPTION AGREEMENT

On September 14, 2012, the Company entered into an agreement (as amended and restated on November 15, 2012) with AHL Holdings Ltd. and Golden Sands Exploration Inc. for the exclusive option to purchase a 70% interest in and to certain mining claims from AHL Holdings and Golden Sands, which claims are situated in the Empress and Winnemucca Mountain Properties in Nevada.

If the option is exercised, the option agreement provides that AHL Holdings and Golden Sands will enter into a joint venture agreement. The Company will solely be responsible for financing the joint venture and will act as sole operator in consideration of a fee.

On February 1, 2013, the option agreement was amended and restated. The amended and restated agreement serves to defer, by 90 days, option payments of $30,000 and $200,000 that were previously due by December 31, 2012 and September 14, 2013, respectively. In addition, the Company’s obligation to incur $150,000 in exploration expense by February 15, 2013 will be deferred until July 1, 2013, and the initial $20,000 royalty advance payable to the optionors shall be deferred from December 31, 2012 until April 1, 2013. In consideration of the extended payment and expense deadlines, the Company must pay a $10,000 penalty to the optionors by April 1, 2013.

Therefore in order to exercise the right, the Company is now required to pay $1,715,000 in aggregate as follows:

$50,000 on signing (the Optionors acknowledge this was paid);

a further $25,000 ($5,000 of which is a penalty) by November 15, 2012 (which is a firm commitment and the Optionors acknowledge this was paid);

a further $10,000 (which is a penalty) by the signing of the amended and restated agreement (this has been paid);

a further $30,000 by April 1, 2013 (which is firm commitment);

a further $200,000 by December 15, 2013;

a further $300,000 by September 14, 2014;

a further $400,000 by September 14, 2015;

a further $700,000 by September 14, 2016; and

Issue and deliver 100,000 shares by September 30, 2012 (the Optionors acknowledge this has been done) and incur exploration expense of $4,000,000 as follows:

incur exploration expense of at least $150,000 by July 1, 2013;

incur cumulative exploration expense of at least $500,000 by December 31, 2013 (which is a firm commitment);

incur cumulative exploration expense of at least $1,000,000 by December 31, 2014;

incur cumulative exploration expense of at least $2,000,000 by December 31, 2015;

incur cumulative exploration expense of at least $4,000,000 by December 31, 2016;

Further an advance royalty payment of $20,000 was paid on April 19, 2013 as per required by the agreement.