DAYUAN GOLD MINING PROJECT

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

DAYUAN GOLD MINING PROJECT

NOTE 6. DAYUAN GOLD MINING PROJECT

On May 6, 2011, the Company, through its variable interest entity, Yantai Jinguan Investment Co., Ltd. (“Yantai”), entered into a lease agreement with Longkou Dayuan Gold Mining Co. Ltd., an unrelated third party being the legal owner and holding the mining license of the Dayuan gold mine (the “Lease Property”) regarding Dayuan Gold Mine. Under the agreement, the Company agrees to pay the aggregate rental payments of approximately $20 million for a term of 10 years commencing from April 1, 2011 through April 1, 2021 to obtain the right to manage and operate the Lease Property in the repayment schedule, whereas the Company is committed to pay $12 million equal to 6 years’ rental, no later than September 30, 2011 and the remainder will be paid no later than March 1, 2017. On September 25, 2011, both parties signed a Supplemental Agreement agreed to defer the aforesaid balance of payment of $6 million to March 31, 2012. On January 21, 2013, the payment was agreed to further extend to September 30, 2013.

Concurrently, the Company entered into an equipment transfer agreement (the “Transfer Agreement”) with Longkou Datong Industry and Trade Co., Ltd. for the acquisition of mining assets and auxiliary equipment currently being used in the Dayuan gold mine at a purchase price of approximately $2.3 million. As of December 31, 2012, the Company made the prepayment for mining rights of $6.5 million.

	As of December 31,
	2012		2011
Prepaid mining rights – Dayuan Gold Mine	$	6,522,948	$	6,454,355
Less: accumulated amortization		(3,266,561)		(1,174,909)
Less: foreign translation adjustment		(39,989)		(18,884)
Net book value	$	3,216,398	$	5,260,562

The lease expense on prepaid operating lease for the years ended December 31, 2012 and 2011 was $2,091,652 and $1,174,909, respectively. As of December 31, 2012, the estimated annual amortization of the prepaid operating lease for the next five years and thereafter is as follows:

Years ending December 31:
2013	$	2,100,072
2014		893,591
2015		31,819
2016		31,819
2017		31,819
Thereafter		127,278
Total:	$	3,216,398