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Canwealth Mining Claims – Acquisition and Retention of Title
Each of our mining claims that we intend to explore, which are listed on Annex A attached to this prospectus, were initially acquired by an agent of Canwealth, who subsequently transfers the mining claims to us. In order to retain title to each mining claim, we are required, within the two-year claim term, to either spend at least CAD1,200 per claim on exploration of the property underlying the claim, or make a CAD1,200 cash payment to the MNR (or, where applicable, an amount equal to the difference between CAD1,200 and the cost of the exploration work performed on the property underlying the claim). Any amount in excess of CAD1,200 disbursed to perform exploration work on the property may be applied to subsequent terms of the claim. The expiration date, prior to which we must spend at least CAD1,200 on exploration, with respect to each of our mining claims is set forth in Annex A, which is attached to this prospectus. Failure to spend the required exploration costs with respect to any claim prior to its expiration date would cause the claim to lapse and we would risk losing our rights to such claim permanently if our agent is not able to re-acquire the claim on our behalf.
We previously held approximately 260 claims for which we paid our agent CAD56 per claim. Many of those claims lapsed, resulting from our inability to perform the requisite exploration work within the initial two-year term due to a lack of sufficient funding. The Company elected not to re-acquire many of these mining claims because the land underlying certain claims on mineral properties was designated for other uses by the Quebec government which prohibited or significantly restricted mining activities, or because the Company otherwise believed that exploration of such property was not desirable. On August 26, 2013, our agent acquired 140 of the lapsed mining claims and transferred such claims to us for an aggregate purchase price of CAD14,000, which amount was paid by issuing a promissory note to our agent. Such promissory note is non-interest bearing and matures on August 26, 2014. On November 1, 2013, our agent acquired and transferred to us 22 mining claims (including five previously lapsed mining claims of ours) for an aggregate purchase price of CAD2,200, which amount was paid by issuing a promissory note to our agent. Such promissory note is non-interest bearing and matures on November 1, 2014. As a result of the foregoing, we currently own 179 mining claims that we intend to explore with respect to six mineral properties.
Accordingly, to date we have paid, by cash or promissory note, approximately CAD31,000 to acquire, and in some cases re-acquire, our mining claims. In order for us to comply with the requirement to spend at least CAD1,200 per claim on exploration costs, we will be required to spend at least an additional CAD214,800 in the aggregate on exploration costs with respect to our 179 current mining claims.
Each of our mining claims is a lode claim, entitling us to the minerals within the rocks on the properties subject to our mining claims. No mining leases or other permits are required at the present time because of the early stage of exploration by Canwealth. We expect that our future exploration activities will likely require us to obtain mining leases, but the requirement for, and the scope of, any such mining leases or other permits will be contingent on the findings and recommendations of our geological team. At this early stage, we have not yet identified any current holders of non-mining rights with respect to the parcels of land on which we have mining rights or the extent of permissions or approvals, if any, required from any such holders with respect to our future exploration or mining activities on such land.
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