BATOVI DIAMOND PROJECT

9 Months Ended

Apr. 30, 2014

Equity Method Investments and Joint Ventures [Abstract]

BATOVI DIAMOND PROJECT

NOTE 5 – BATOVI DIAMOND PROJECT

On February 10, 2014, we finalized a letter agreement to acquire up to a 75% interest in the Batovi Diamond Project and form a joint venture with the owner of the claims in the property, Mineracao Batovi. The project is located 220 kilometers north of Paranatinga in Mato Grosso, Brazil. Although the letter agreement provided that we have 45 days to conduct our due diligence and enter into a definitive earn-in agreement prior to May 24, 2014 (the "Deadline Date"), we have not yet entered into a definitive agreement with Mineracao Batovi. Notwithstanding that the letter agreement dated February 10, 2014 provided that if we fail to enter into a definitive agreement by the Deadline Date, the letter agreement will terminate, we are anticipating entering into a definitive agreement with Mineracao Batovi. Therefore, the terms of the joint venture are not binding until and unless the Company and Mineracao Batovi enter into a definitive agreement. The Company also needs to complete its due diligence on the project, including without limitation, verifying that Mineracao Batovi has the ability to enter into this proposed arrangement with the Company.

In order to acquire up to 75% interest in the project, we will need to fund the project as follows:

(i) A 49% interest if (1) the Company funds an initial $2,400,000 of exploration expenses on the project, with an additional $600,000 funding prior to the right described in (ii) below, within three years from the Deadline Date; (2) the definitive earn-in agreement is executed prior to the Deadline Date; and (3) the Company pays $150,000 to a joint trust account between Mineracao Batovi and the Company;

(ii) A 60% interest if the Company funds an additional $37,000,000 of continued exploration or completes a bankable feasibility study; and

(iii) An additional 15% upon the funding of continued exploration, feasibility studies and mine construction to achieve commercial production.

If the Company fulfills its obligations to earn the 49% interest but fails to obtain the 60% interest, the Company will have earned an interest in the project pro rated based upon the payments made on the following basis: for every $1,000,000 paid (in addition to the $3,000,000 contributed to earn the 49% interest) of the $37,000,000 the Company shall earn an additional 0.297% interest (in addition to the 49% interest) in the project.

We agreed that if the Company owns the 75% interest upon completion of a positive feasibility it will put a mine into commercial production within 4 years of the completion of a positive feasibility study.  Mineracao Batovi's portion of mine construction costs will be repaid from 80% of its share of mine profits (i.e., 25%).  Until we has complete a feasibility study on the project or invest $40,000,000, Mineracao Batovi has the right to enter into an agreement with a major mining company to operate, finance and construct a mine in the project. The major mining company must commit to invest no less than $250,000,000, and in such instance the Company and Mineracao Batovi shall be diluted based on their interest in the project.

We intend to focus our energies on the due diligence required for this project and the negotiation and execution of a definitive agreement with Mineracao Batovi.