What was Western Mining thinking?
On October 15, 2012, the Company entered into an agreement to Lease with Option to Purchase the six 160 acre mining claims known as the Gold Star from Western Gold Company, LLC. The claims, totaling 960 acres, are located on U.S. Bureau of Land Management administered land in western Nevada. The twenty-four month lease option required monthly payments of $5,000 due on the 15th of each month beginning on October 15, 2012. The exercise price of the option was specified to be the greater of $400,000,000 or 0.1% of the total measured, indicated and inferred precious metals and rare earth element values contained in the claims, computed as of the date of the sale and utilizing the values established by the subsequent testing specified under the terms of the Agreement.
Subsequently on October 17, 2012, the Company amended the Lease/Option Agreement wherein Western Gold Company, LLC agreed to transfer 100% of the ownership of the Gold Star Mining Claims into the Company in exchange for 38,000,000 shares of Series I Preferred Stock. Each share of Series I preferred stock converts into 10 shares of the Company’s common stock.
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