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5. The Congo Project

12 Months Ended

Dec. 31, 2013

On October 18, 2012, the Company entered into an agreement with Nueva Pudahuel S.A. dba Sociedad Minera Pudahuel ("SMP") pursuant to which the Company acquired the land, laboratory, tailings and other assets of the closed mine of La Africana, commonly known as the "Congo Project”, in the Santiago, Chile metropolitan area. The land is approximately 81.2 hectares and contains an estimated 2.4 million tons of copper-rich tailings.

The Company entered into the agreement through Procesamiento de Relaves Pudahuel Limitada dba Mineraltus Pudahuel Ltd., a newly created subsidiary owned 99% by the Company's subsidiary Mineraltus SA.

The Company agreed to remove the tailings and restore the value of the property so that it can be used for real estate development projects. The Company was told that the project, known in the industry as the "Congo Project," has received all necessary approvals and permits from the Chilean authorities, however this is currently in dispute.

Financing for the project was to be provided by the Company as a loan, and the Company would be entitled to 100% of the profits. The project was structured as a purchase / buy-back to ensure that all necessary assets remain under our control for the duration of the project. The Company purchase price was $7 million payable as follows:

$360,000 was paid on November 26, 2012 for the right to use all assets and facilities;

$436,828 payable upon completion of the copper sulfate processing plant on site no later than November 13, 2014 as the final payment for the assets;

$6,203,172 payable in equal monthly installments of $77,540 beginning on July 1, 2013 for the lease of the Lo Aguirre main pit. SMP may request that the final 12 lease payments not be made by the Company in exchange for the return of 60.2 hectares of land at their option on or before date the 69th lease payment is made. Lease payments had not yet begun and were in default as of the time of this filing. The agreement is in dispute and the Company is currently in arbitration regarding this agreement. (see Note 13 - subsequent events)

We reviewed our long lived assets as of December 31, 2013 based on ASC 932-360-35, Extractive Activities-Mining, Property, Plant and Equipment, Subsequent Measurement. ASC 932-360-35 states that all relevant facts and circumstances shall be evaluated when determining whether an entity is making sufficient progress on assessing the reserves and the economic and operating viability of the project.

The required lease payments for the Congo Project have not been made to date and production of the copper sulfate processing plant on the property has not yet begun. We have accrued $465,239 of these lease payments as of December 31, 2013. We are currently disputing the validity of the contract in arbitration. It is our position that the contract is invalid because the project was not permitted as we were told it was at the time the contract was signed. The Company was unable to perform under the terms of the contract due to the lack of permits required. The Company is currently in negotiations to amend the original agreement through arbitration but no agreement has been finalized. Because the Company was in default under the original terms of this agreement and the resolution of said default is currently unknown, the Company elected to fully reserve for the $360,000 paid for the right to use as of December 31, 2013. There is approximately $3,017,191 claimed against the Company in arbitration in this matter. Should the arbitrator decide against the Company, it may be forced to liquidate some or all of its assets to satisfy the judgment. (See Note 14 -Subsequent Events).