The Stockade Property consists of 261 unpatented lode mining claims that cover an area of over 6,790 acres, located in Malheur County, Oregon approximately 85 kilometers southeast of Burns Oregon, or 150 kilometers southwest of Boise Idaho. The property was explored by BHP, Phelps Dodge and Placer Dome with only shallow drill holes targeting bulk tonnage potential in the 1980s and 90s.
The Company has signed a mineral lease and option agreement with Bull Mountain Resources LLC (“BMR”), an arm’s length private company, to lease a 100% interest in the Stockade Property. The principals of BMR include Perry Durning and Frank (Bud) Hillemeyer, who received the PDAC Thayer Lindsley International Mineral Discoveries Award in 2010 in recognition of their outstanding record of grassroots discoveries in Mexico, particularly the San Sebastian silver-gold mine, the San Agustin gold mine, the Pitarrilla silver deposit and the Camino Rojo gold discovery. Additionally, Durning and Hillemeyer discovered the Los Gatos silver-base-metal deposit subsequent to the Thayer Lindlsey Award.
The Company plans to complete a 43-101 property report compiling the historical field work and drill results, as well as initiate a systematic exploration program by completing airborne and ground geophysical studies, in combination with further prospecting, geochemical sampling, geologic mapping and drilling.
Mineral Lease and Option Terms
Under the terms of the mineral lease and option agreement, the Company has the right to use the property for exploration and mining for a minimum of 50 years provided it continues to make the following preproduction payments:
- US$20,000 and 100,000 common shares in the capital of the Company on signing the agreement (the “Effective Date”);
- US$10,000 six-months after the Effective Date;
- US$10,000 12-months after the Effective Date;
- US$15,000 18-months after the Effective Date;
- US$25,000 30-months after the Effective Date and every six months thereafter.
The term of the agreement may continue after 50 years provided active mining operations are being conducted on the property. The Company is also required to incur minimum work expenditures on the property of US$30,000 in the first year and a minimum of 2,000 meters of drilling in the second year.
On achievement of production on the property, a production royalty of 2% of net smelter returns is payable on claims owned by BMR and 0.5% of net smelter returns is payable on third party claims and claims acquired within the area of influence, provided that a minimum production royalty of US$25,000 is payable quarterly. On payment to BMR of US$10,000,000 in any combination of pre-production payments, production royalties and minimum royalties, the production royalty on claims owned by BMR reduces to 1% and on third-party claims and claims acquired within the area of influence to 0.25%.