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6. Mineral Properties

12 Months Ended

Dec. 31, 2016

Mineral properties are as follows:

		December 31, 2016		December 31, 2015
New Jersey	$	215,127	$	215,127
McKinley		250,000		250,000
Golden Chest		1,586,324		1,445,229
Toboggan		5,000		5,000
Less accumulated amortization		(9,551)		(8,267)
Total	$	2,046,900	$	1,907,089

In the year ended December 31, 2016, $6,253 of interest was capitalized for the construction at the Golden Chest property. No interest was capitalized for development in 2015.

New Jersey

The Coleman property is located at the New Jersey Mine area of interest and consists of 62 acres of patented mining claims, mineral rights to 108 acres of fee land, 80 acres of land for which the Company owns the surface but not the mineral rights, and approximately 130 acres of unpatented mining claims. The Coleman property was acquired in October 2002. As of December 31, 2015, an impairment analysis determined that the property’s value had been impaired based upon current mineral prices and market conditions and a impairment loss of $70,098 was recognized. Fair value of the property at December 31, 2015 was determined using Level 3 fair value inputs based on recent sales of comparable properties in the immediate area.

McKinley

The McKinley Project is an exclusive exploration and mining lease which covers several historic mines and prospects, including the McKinley Mine, Ibex Mine, and Big Easy Mine, on private land located in central Idaho near the town of Lucile. On December 31, 2013, NJMC received all rights and agreements, intellectual property, historic and recent due diligence, surveys and maps, along with a 12-month option to purchase the historic McKinley Mine, located on 62 acres within the overall land package. The purchase option has an exercise price of $285,000. NJMC can perform certain due diligence, including exploration drilling, prior to the exercise date, which has been extended to November 2017. A prior lessee of the McKinley Mine is due a 1.0% to 2.0% NSR sliding scale royalty on future production based on the price of gold, which is capped at a total of $500,000.

Golden Chest

The Golden Chest is an exploration and underground mine project located near Murray, Idaho consisting of 25 patented and 70 unpatented mining claims. Previously owned by GCJV, the property is now owned by NJMC after the Company acquired the remaining 52.22% interest in 2015 (Note 14). A 2% Net Smelter Royalty is payable to Marathon Gold on production at the Golden Chest and $6,916 was paid in the fourth quarter of 2016.

Silver Button/Roughwater

The Silver Button claim is the remaining property of the ten claims acquired from Roughwater Mining Company. During 2005, the other nine Roughwater unpatented claims were dropped. In 2001, the Company purchased the property through the issuance of 255,000 shares of its common stock to Roughwater Mining Company. The shares were valued at $0.10 per share, for a total acquisition cost of $25,500. As of December 31, 2015 an impairment analysis determined that the property had no value using Level 3 fair value inputs based on current mineral prices and market conditions and an impairment loss for the entire $25,500 carrying value was recognized.

Toboggan

Toboggan is a gold and silver exploration project consisting of 106 claims covering 2,100 acres of federal land administered by the U.S. Forest Service. In 2001, the Company issued 50,000 shares of stock to an individual to acquire the rights. The shares were valued at $0.10 per share for a total acquisition cost of $5,000. This cost was for a portion of the claims in the Toboggan property that were purchased; the remaining claims were staked by the Company.

The Little Baldy prospect which a part of the Toboggan project is under lease to Hecla. The lease has a 20-year term and calls for annual payments to NJMC of $10,000 through the fifth year, then escalating to $15,000 for three years, $20,000 for one year, and $48,000 thereafter. Should gold production be realized from the leased claims, a 2% net smelter return royalty is due NJMC. The Company is currently in the fifth year of the lease. The annual requirement for 2017 is a payment of $15,000 and work commitment of $200,000 which will be paid by Hecla.