NOTES PAYABLE IN GOLD

12 Months Ended

Dec. 31, 2021

Notes Payable In Gold

NOTES PAYABLE IN GOLD

7. NOTES PAYABLE IN GOLD

During 2013, the Company issued notes payable in gold totaling $820,000, less a discount of $205,000, for net proceeds of $615,000. Under the terms of the notes, the Company agreed to deliver gold to the holders at the lesser of $1,350 per ounce of fine gold or a 25% discount to market price as calculated on the contract date and specify delivery of gold in November 2014.

After several amendments to the terms of the note agreements, through the date of the issuance of these financial statements, the gold notes have not been paid and the note holders have not demanded payment or delivery of gold. At December 31, 2021 and 2020, 266.788 ounces of fine gold was due and deliverable to the holders of the Notes. No demand has been made for payment.

The Company estimates the fair value of the notes, based on the market approach with Level 2 inputs of gold delivery contracts based upon previous contractual delivery dates, using the market price of gold on December 31, 2021 of approximately $1,806 per ounce as quoted on the London PM Fix market or $481,780 in total. The valuation resulted in a decrease in gold notes payable of $21,810 during the year ended December 31, 2021. At December 31, 2020, the Company had outstanding total notes payable in gold with a fair value of $503,590 or $1,888 per ounce as quoted on the London PM Fix market.

Interest of $41,884 on the notes was expensed during the year ended December 31, 2021, and $93,407 is accrued at December 31, 2021 and is included in interest payable. Interest of $38,043 on the notes was expensed during the year ended December 31, 2020, and $51,523 is accrued at December 31, 2020 and is included in interest payable.