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4. Mineral Property Interests

6 Months Ended

Jun. 30, 2013

4. Mineral Property Interests



		Mineral Properties
Carson Property acquisition (a)		$ 185,186
Garrett Property acquisition (b)		200,000
Balance at December 31, 2011		385,186
Elijah Property acquisition (c)		145,000
Kenty Property acquisition (d)		1,976,000
Carson Property disposition (a)		(185,186)
Balance at December 31, 2012		$ 2,321,000
Coppell Property acquisition (e)		28,000
Mortimer Property acquisition (f)		234,166
Neville Property acquisition (g)		150,000
Cree Property acquisition (h)		650,000
Balance at June 30, 2013		$ 3,383,166

a) Carson Property

On December 23, 2010, the Company entered into a mineral property acquisition agreement with 2214098 Ontario Ltd. pursuant to which the Company acquired the mining lease to the Carson Property. Under the acquisition agreement, the Company is required to pay:

1. Cash consideration of $99,060 ($100,000 CAD) to be paid according to an installment schedule between April 30, 2011 and September 30, 2015;

2. Equity consideration of 1,000,000 shares of common stock to be issued on or before March 30, 2011; and

3. Royalty of 3% of all net smelter returns upon commencement of commercial production of the property.

The Carson Property is 1,812 acres in area and is located north-north-west of the City of Yellowknife, in the Northwest Territories, Canada. The Company’s interest in the property consists of a 21 year mining lease, which expires on June 30, 2024 and for which the Company is responsible for making annual lease payment of $1,141, in order to keep the lease in good standing.

In accordance with the Company’s accounting policy, the only costs related to the property that can be capitalized are the costs of acquisition of a mineral interest from a third party. As such, annual lease payments are expensed as incurred. The capital cost of the lease is amortized on the straight-line basis over the remaining term of the lease. For the year ended December 31, 2011, amortization on the Carson Property totaled $14,978.

On December 13, 2012, the Company terminated its acquisition agreement for the Carson Lake Property with 2214098 Ontario Ltd. Under the terms of the agreement, the Company returned the property to the vendor, and both parties are released from any further obligation under the agreement. The Company has reflected the termination as a loss on disposal of mineral property on the statement of operations of $112,686.

b) Garrett Property (formerly known as the Eric and Huffman Property)

On June 25, 2011, the Company entered into a mineral property acquisition agreement (the “Fire Lake Acquisition Agreement”) with Fire Lake Resources Inc. (“Fire Lake”) whereby the Company agreed to purchase from Fire Lake certain mineral interests located in the townships of Eric and Huffman in the Province of Ontario, Canada (the “Eric and Huffman Property,” now known as the “Garrett Property”) in consideration for the sum of CDN $50,000 and 2,000,000 shares of common stock of the Company (the “Firelake Shares”), to be paid by Company to Fire Lake as follows: CDN$25,000 on or before January 31, 2012; CDN$25,000 on or before January 31, 2013; and delivery of the Fire Lake Shares on or before January 31, 2012. Additionally, upon commencement of commercial production of the Garrett Property, the Company will pay to Fire Lake a royalty equal to two percent (2%) of all net smelter returns on minerals from the Property.

c) Lucas Property (formerly known as the Elijah Property)

On February 7, 2012, the Company entered into and closed a mineral property acquisition agreement (the “Original Agreement”), as amended and restated on February 13, 2012 (the “Amended Agreement”), with Shining Tree Resources Corp. (“Shining Tree”), pursuant to which Shining Tree agreed to sell to Company an undivided fifty percent (50%) interest in and to certain mineral interests located in the Townships of Churchill and Asquith, Ontario, Canada (the “Lucas Property”). As consideration for the sale of the Lucas Property, the Company agreed to deliver the following to Shining Tree in the manner set forth below:

1) CDN$50,000 according to the following schedule:

(a) CDN$10,000 upon execution of the Agreement;

(b) CDN$15,000 due on March 30, 2012;

(d) CDN$10,000 due on July 30, 2012.

2) subject to the approval of the Board of Directors of the Company, 1,000,000 common shares of Company on or before March 30, 2012; and

3) complete CDN$200,000 of Expenditures (as defined in the Original and Amended Agreement) on the Lucas Property on or before February 10, 2014. Upon completion of payment for the Lucas Property in the aggregate amount of CDN$50,000 of Expenditures on the Lucas Property, Shining Tree will issue to Company 1,000,000 common shares of Shining Tree on or before July 30, 2012.

d) Kenty Gold Property

McClay Conveyed Property. On October 4, 2012, the Company entered into and closed a mineral property acquisition agreement (the “McClay Agreement”) with Brian McClay, a British Columbia, Canada resident (“McClay”), pursuant to which McClay agreed to sell to Company an undivided one hundred percent (100%) interest in and to certain mineral interests found on the Kenty Gold Property located in the Townships of Swayze and Dore, Ontario, Canada (the “McClay Conveyed Property”).

As consideration for the sale of the McClay Conveyed Property, the Company agreed to deliver the following to McClay in the manner set forth below:

(a) Closing Date. CDN$50,000 within three (3) business days following the closing date.

(b) February 4, 2013.

(i) CDN$100,000 on or before February 4, 2013; and

(ii) 200,000 common shares of Company on or before February 4, 2013.

(i) CDN$150,000 on or before April 4, 2013; and

(ii) 200,000 common shares of Company on or before April 4, 2013.

(d) October 4, 2013.

(i) CDN$300,000 on or before October 4, 2013; and

(ii) 250,000 common shares of Company on or before October 4, 2013.

(e) April 4, 2014.

(i) CDN$300,000 on or before April 4, 2014; and

(ii) 250,000 common shares of Company on or before April 4, 2014.

(f) October 4, 2014.

(i) CDN$300,000 on or before October 4, 2014; and

(ii) 250,000 common shares of Company on or before October 4, 2014.

(g) April 4, 2015.

(i) CDN$300,000 on or before April 4, 2015; and

(ii) 550,000 common shares of Company on or before April 4, 2015.

(h) Reserve. Upon completion of a NI 43-101 compliant Indicated Reserve of 1,000,000 Troy Ounces of Gold (Aurum Metal) on the McClay Conveyed Property, Company shall pay CDN$1,000,000 to McClay.

(i) Production.

(i) Upon production of 1,000,000 Troy Ounces of Gold (Aurum Metal) from the McClay Conveyed Property, Company shall pay CDN$1,000,000 to McClay.

(ii) Upon production of 3,000,000 Troy Ounces of Gold (Aurum Metal) from the McClay Conveyed Property, Company shall pay CDN$2,000,000 to McClay.

(iii) Upon production of 5,000,000 Troy Ounces of Gold (Aurum Metal) from the McClay Conveyed Property, Company shall pay CDN$2,000,000 to McClay.

(j) Early Buyout Option. Company shall have the option of early buyout within one year of execution for a cash payment of CDN$750,000 and 750,000 common shares of Company.

In addition, upon the Commencement of Commercial Production (as defined in the McClay Agreement), Company shall pay to McClay a royalty in an amount equal to three percent (3%) of all Net Smelter Returns (as defined in the McClay Agreement) on minerals mined from the McClay Conveyed Property (the “Seller NSR”) on the terms and conditions as set out in the McClay Agreement. Notwithstanding the foregoing, at any point in time following the closing date and upon Company’s sole election, McClay shall sell to Company fifty percent (50%) of the Seller NSR for a purchase price of CDN$1,500,000.

e) Coppell Claims.

Through a certain mineral property acquisition agreement executed and closed on January 17, 2013 (the “Coppell Agreement”), the Company acquired certain mineral interests found on the Kenty Gold Property located in the Coppell Township, Ontario, Canada (the “Coppell Claims”) from Shelly Moretti, Jacques Robert, and Michael Tremblay, collectively, the beneficial owners of an undivided one hundred percent interest in the Coppell Claims (collectively, the “Sellers”). As consideration for the sale of the Coppell Claims, the Company agreed to deliver the following to the Sellers in the manner set forth below:

(a) CDN$4,000 within ten (10) days following the Closing Date;

(b) 80,000 common shares of the Company on or before February 4, 2013; and

(c) Upon the commencement of Commercial Production (as defined in the Coppell Agreement), the Company shall pay to Sellers a royalty in an amount equal to two percent (2%) of all Net Smelter Returns (as defined in the Coppell Agreement) on minerals mined from the Coppell Claims (the “Seller NSR”) on the terms and conditions as set out in the Coppell Agreement. Notwithstanding the foregoing, at any point in time following the closing date and upon Company’s sole election, Sellers shall sell to Company fifty percent (50%) of the Seller NSR for a purchase price of CDN$1,000,000.

f) Mortimer Claims.

On February 11, 2013, the Company entered into and closed a mineral property acquisition agreement (the “Red Pine Agreement”) with Red Pine Exploration Inc., an entity formed under the laws of Canada (“Red Pine”), pursuant to which Red Pine agreed to sell to Company an undivided one hundred percent (100%) interest in and to certain mineral interests found on the Kenty Property located in the Townships of Swayze, Rollo, Denyes, Heenan and Dore, Ontario, Canada (the “Mortimer Claims”). As consideration for the sale of the Mortimer Claims, the Company agreed to deliver the following to Red Pine in the manner set forth below:

(a) On the Closing Date. CDN$25,000 within ten (10) business days following the Closing Date;

(b) After the Closing Date.

(i) CDN$100,000 on or before March 15, 2013; and

(ii) 250,000 shares of the Company’s common stock to be issued on or before March 15, 2013 (the “Purchase Shares”). The Purchase Shares shall have an implied market value of CDN$100,000 on the date of issue. If, on July 15, 2013, the market value of the Purchase Shares is less than CDN$100,000 on a Recognized Stock Exchange, then the Company, at its sole option, will (a) issue to the Red Pine additional shares necessary so that the aggregate market value of the Purchase Shares and the additional shares is equal to CDN$100,000 or (b) pay to Red Pine the difference between the market value of the Purchase Shares and CDN$100,000.

As used in the Red Pine Agreement, “Recognized Stock Exchange” means (a) the Toronto Stock Exchange, (b) the Toronto Venture Stock Exchange, (c) any US securities exchange registered with the Securities and Exchange Commission under Section 6(a) of the Exchange Act, (d) the OTC Bulletin Board (OTCBB), or (e) Pink OTC Markets, Inc.

If Red Pine desires to dispose of the shares on or after July 15, 2013, and Company’s common shares are not then listed on a Recognized Stock Exchange, then, upon notice to Company from Red Pine, Company shall pay an amount equal to CDN$100,000 less any additional amount paid pursuant to Section 3(b)(ii) of the Red Pine Agreement to repurchase the Purchase Shares and any additional shares issued pursuant to Section 3(b) of the Red Pine Agreement. If the Company is unable to pay such amount, Red Pine has the right to require the Company to transfer the properties back into the Red Pine’s name.

(i) the Company shall pay to Red Pine a royalty in an amount equal to three percent (3%) of all Net Smelter Returns (as defined in the Red Pine Agreement) on minerals mined from the Mortimer Claims (the “Red Pine NSR”) on the terms and conditions as set out in the Red Pine Agreement. Notwithstanding the foregoing, at any point in time following the closing date and upon Company’s sole election, Red Pine shall sell to Company one hundred percent (100%) of the Red Pine NSR for a purchase price of CDN$2,000,000.

(ii) the Company will pay to Charlie Mortimer a royalty equal to 2% of all net smelter returns on minerals from the Mortimer Claims, with a buyout option of One Percent (1%) of the net smelter royalty for a one-time payment of CDN$1,000,000.

g) Neville Claims.

On June 3, 2013, the Company entered into and closed a mineral property acquisition agreement (the “Neville Agreement”) with Midnight Capital Corp., an entity formed under the laws of Canada (“MCC”), pursuant to which MCC agreed to sell to Company an undivided one hundred percent (100%) interest in and to certain mineral interests consisting of six (6) staked land claims located in the Townships of Neville and St. Louis, Ontario, Canada (the “Neville Property”). As consideration for the sale of the Neville Property, the Company paid CDN$1 and issued 500,000 shares of the Company’s common stock. Scott Keevil is the president and sole shareholder of MCC. Immediately prior to the closing of the Neville Agreement, Mr. Keevil held a 4.63% beneficial ownership interest in the Company.

h) Cree Lake Property Claims.

On June 25, 2013, the Company entered into and closed a mineral property acquisition agreement (the “Cree Lake Agreement”) with MCC, pursuant to which MCC agreed to sell to Company an undivided one hundred percent (100%) interest in and to certain mineral interests found on property located in the Township of Swayze in the Province of Ontario, Canada (the “Cree Lake Property Claims”). As consideration for the sale of the Cree Lake Property Claims, the Company agreed to pay CDN$200,000 and issue 1,500,000 shares of the Company’s common stock. Immediately prior to the closing of the Cree Lake Agreement, Mr. Keevil held a 5.23% beneficial ownership interest in the Company.

In addition, the Company shall pay to Mantis Mineral Corp. (“Mantis”) a royalty in the amount of one and one-half percent (1.5%) Net Returns (as defined in the Cree Lake Agreement) from any production on the Cree Lake Property Claims on the terms and conditions as set out in the Cree Lake Agreement (the “Mantis NSR”). Notwithstanding the foregoing, the Company may, at any time after closing, repurchase one-half (1/2) of the Mantis NSR (equal to seventy-five hundredths percent (0.75%) Net Returns) from Mantis for additional consideration of CDN$1,500,000.

The Cree Lake Property Claims are subject to a NSR (as defined in the Cree Lake Agreement) providing for a royalty payment by the Company in the amount of one and one-half percent (1.5%) from any production on claim numbers 4203295, 4203275, 4203296, and 4209811. This NSR was granted in favor of Mr. Richard Rintala and Mr. Cecil Johnson prior to the execution of the Cree Lake Agreement.

The Cree Lake Property Claims are also subject to the Elcora Option (as defined in the Cree Lake Agreement) entered into between Elcora Resources Corp. (“Elcora”) and Mantis on October 3, 2012. The Elcora Option provides Elcora the right to acquire a fifty-one percent (51%) undivided interest in the Cree Lake Property Claims by making cash payments in the amount of CDN$50,000, issuing 3,000,000 common shares of Elcora, and completing work programs on the Cree Lake Property Claims with a total minimum value of CDN$1,000,000 over a four (4) year period. Mantis is entitled to the first payment under the Elcora Option consisting of CDN$25,000 and 300,000 common shares of Elcora. Thereafter, the Company is entitled to receive all subsequent payments made under the Elcora Option so long as the Company remains the sole holder of the Cree Lake Property Claims.