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6. Mineral Properties

12 Months Ended

Dec. 31, 2019

6. Mineral Properties

6. Mineral Properties

Mineral properties at December 31, 2019 and 2018 are as follows:

		2019		2018
New Jersey	$	248,289	$	248,289
McKinley		200,000		250,000
Golden Chest		1,677,972		1,677,972
Crown Point		-		333,333
Butte Potosi		274,440		274,440
Less accumulated amortization		(37,683)		(24,695)
Total	$	2,363,018	$	2,759,339

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. In the third quarter of 2019, a $50,000 non-refundable deposit was received from PM&G Company along with a letter of intent contemplating purchase of the McKinley project from the Company. The carrying value of the McKinley project was reduced by $50,000 in 2019 reflecting receipt of this payment. The transaction has not been completed as of the issuance date of these consolidated financial statements.

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 $118,223 and $77,758 was recognized as costs of sales and other direct production costs in the years ended December 31, 2019 and 2018, respectively.

Crown Point

On March 2, 2018, the Company entered into an agreement with J-J Farms LLC and Achievement Holdings LLC (“Crown Point”) to lease a group of patented and unpatented mining claims. The initial payment was 1,333,333 shares of the Company’s restricted common stock valued at $0.175/share for a fair value of $233,333. An additional payment was made in September of 2018 for $100,000 in cash. Per the agreement, future payments for the mineral property were as follows:

·1,333,333 shares of the Company’s common stock on September 30, 2019.

·Cash payments of $100,000 and $200,000 on September 30, 2019 and 2020, respectively.

The Company made no payments under this agreement in 2019. In December of 2019, the Company abandoned the property and recognized a loss of $333,333.

Butte Potosi

In 2018, the Company purchased the Butte Potosi property near its Golden Chest mine for $250,440 and a 2% net smelter return on all ores mined and shipped from the property. The Company incurred an additional $24,000 to improve access to the property. This property consists of patented mining claims some of which include both the surface and mineral rights and some of which include only the mineral rights.

Toboggan

Toboggan was a gold and silver exploration project consisting of 106 claims covering 2,100 acres of federal land administered by the U.S. Forest Service. The Little Baldy prospect which was a part of the Toboggan project was under a 2011 lease agreement with Hecla Mining Company (“Hecla”). The lease had a 20-year term and called 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. In 2018 which was the seventh year of the lease the Company sold property including the Little Baldy and Toboggan to Hecla for $3,000,000. This sale resulted in a net gain of $2,947,862 which was recognized in 2018.