NONCONTROLLING INTEREST IN JOINT VENTURE

Formation of joint venture

April 27, 2011,

the Company entered into a Joint Venture Agreement with

CR. Pursuant to the agreement, the Company received

$5,000,000

and agreed to transfer

100%

interests in Mego and Getik Mining Company, LLC into the Joint Venture Company. The Company recorded this transaction in accordance with the provisions of ASC

810,

“Consolidation.”

Transfer of interest

September 26, 2012,

the Company conditionally transferred

100%

interests in Mego and Getik

Mining Company, LLC at carrying value into the joint venture in accordance with ASC

805

30.

According to ASC

805

30,

when accounting for a transfer of assets between entities under common control, the entity that receives the net assets shall initially measure assets and liabilities transferred at their carrying amounts at the date of transfer.

Consolidation of Joint Venture Company

The Company consolidates the Joint Venture Company in accordance with ASC

810

based on the determination that it co

ntrols the Joint Venture Company due to its

51%

ownership interest and including the following characteristics:

●

The noncontrolling interest lacks participation rights in significant decisions made in the ordinary course of business; and

●

The

noncontrolling interest does

not

have the ability to dissolve the Joint Venture Company

Recognize and measure noncontrolling interest

Changes in a parent

’s ownership interest while retaining its controlling financial interest are accounted for as an equity transaction. The carrying amount of the noncontrolling interest is adjusted to reflect the change in its ownership interest in the subsidiary. The difference between the fair value of the consideration received and the amount by which the noncontrolling interest is adjusted is recognized as equity attributable to the parent. Further, the carrying amount of the accumulated other comprehensive income is adjusted to reflect the change in the ownership interest in the subsidiary through a corresponding charge to equity attributable to the parent.

The following table summarizes the changes in Non-Controlling Interest for the

six

months ended

June 30, 2017.

Balance, December 31, 2016	$	(4,718,505	)

Net loss attributable to the non-controlling interest		(411,684	)
Foreign currency translation gain		27,402
Balance, June 30, 2017	$	(5,102,787	)