BATOVI DIAMOND PROJECT

9 Months Ended

Apr. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

BATOVI DIAMOND PROJECT

NOTE 9 – BATOVI DIAMOND PROJECT

On November 20, 2014, the Company entered into a formal joint venture agreement (the “Joint Venture Agreement”) with Mineracao Batovi Ltda (“Mineracao Batovi”) which contemplates the Company acquiring partial ownership in Mineracao Batovi to develop, finance and operate the Batovi Diamond Project.  Pursuant to the Joint Venture Agreement, the Company must contribute $1,000,000 in cash to Mineracao Batovi in order to acquire a 20% equity interest.  The Company may earn an additional 29% equity interest in Mineracao Batovi by funding $2,000,000 of exploration expenses no later than November 20, 2017.  As at the date of these financial statements, the Company has insufficient financial resources to complete the acquisition of its initial 20% equity interest in Mineracao Batovi.

The Joint Venture Agreement provides that Mineracao Batovi is to be managed by a board of directors comprised of two representatives from each of the Company and the existing Mineracao Batovi management, provided that if the Company fails to earn an additional 29% equity interest in Mineracao Batovi by November 20, 2017, Mineracao Batovi's board of directors will be comprised of three representatives of Mineracao Batovi existing management and one representative of the Company.

The parties originally agreed to cause Mineracao Batovi to engage Kel-Ex, a privately-held British Columbia corporation that is under common control with Mineracao Batovi, to carry out exploration activities on the Batovi Diamond Project in accordance with approved budgets.  As the operator of the project, Kel-Ex would have been entitled to charge a 10% administration fee on all exploration expenditures incurred under $50,000 and 5% on all exploration expenditures incurred over $50,000.

On November 20, 2014, the Company issued 2,700,000 fully-paid and non-assessable common shares to Kel-Ex pursuant to the Joint Venture Agreement in connection with Kel-Ex's anticipated appointment as the operator of the Batovi Diamond Project.

By the Company’s letter agreement dated February 27, 2015, effective upon acceptance by Mineracao Batovi and Kel-Ex on March 9, 2015, the parties amended the Joint Venture Agreement to provide that the Company would be engaged to act as operator of the Batovi Diamond Project on terms whereby the Company will be entitled to charge a 10% administration fee on all exploration expenditures incurred under $50,000 and 5% on all exploration expenditures incurred over $50,000.  The Company has discretion to subcontract with third parties, including Kel-Ex, to enable it to fulfill its role as operator.