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SALES AGREEMENT

12 Months Ended

Dec. 31, 2011

SALES AGREEMENT [Text Block]

13.

SALES AGREEMENT

The Company has entered into a long term copper cathode sales agreement effective February 1, 2008, with Red Kite Master Fund Limited ("Red Kite") for 100% of the copper cathode production from the Johnson Camp Mine. The agreement runs through December 31, 2012 with renewable extensions by mutual agreement of both parties. Pursuant to the agreement, Red Kite will accept delivery of the cathode at the Johnson Camp Mine, and pricing will be based on the average monthly COMEX price for high–grade copper. Accordingly, during the years ended December 31, 2011 and 2010, the Company sold approximately and 3,582,142 pounds (1,625 metric tons) and 9,081,475 pounds (4,120 metric tons) of copper cathode, respectively, to Red Kite under the terms of the agreement which represented 100% of the Company’s copper sales. In addition, amounts due from Red Kite comprised 95% and 94% of total accounts receivable as of December 31, 2011 and 2010, respectively.

The entire disclosure for arrangements in which the entity has agreed to expend funds to procure goods or service from one or more suppliers, or to commit resources to supply goods or services to one or more customers. May include identification of the goods or services to be purchased, the goods or services to be furnished, identity of the buyer or seller, pricing, effects on pricing (such as penalties) of failing to reach minimum quantities required to be purchased, effects on pricing (such as penalties) of failing to deliver minimum quantities required to be furnished, cancellation rights, and termination provisions.

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