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6. Mineral Properties

12 Months Ended

Dec. 31, 2017

6. Mineral Properties

Mineral properties are as follows:

		December 31, 2017		December 31, 2016
New Jersey	$	248,289	$	215,127
McKinley		250,000		250,000
Golden Chest		1,649,142		1,586,324
Toboggan		5,000		5,000
Less accumulated amortization		(16,475)		(9,551)
Total	$	2,135,956	$	2,046,900

During the year ended December 31, 2016, $6,253 of interest was capitalized for the construction at the Golden Chest property. No interest was capitalized in the year ended December 31, 2017.

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.

McKinley

The McKinley project is located near the town of Lucille, Idaho and encompasses three historic hard rock mines on private land in central Idaho. The Company started exploring the property in 2013. A prior lessee is due a 1% to 2% NSR sliding scale royalty on future production based on the price of gold 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. A 2% Net Smelter Royalty is payable on production at the Golden Chest to a former joint venture partner. Royalty expense of $80,865 and $6,916 was recognized as costs of sales and other direct production costs in the years ended December 31, 2017 and 2016, respectively.

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 Mining Company (“Hecla”). The lease has a 20-year term and calls for annual payments to the Company 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 to the Company. The Company is currently in the sixth year of the lease. The annual requirement for 2018 is a payment of $15,000 and work commitment of $200,000 between 2018 and 2020, which will be paid by Hecla.