Daisy Mining & Land, LLP leased the claims to KRC which then assigned key provisions of the lease to AGC. AGC staked an additional seven contiguous claims on public land that was open to mineral entry. Under the terms of the agreement, KRC will mine and transport the mineralized materials from the Neal Property approximately 23 miles, to KRC’s property located on Amyx Lane for crushing and delivery to AGC. AGC will process the materials at the KRC property. In addition to the contract mining and transportation costs, AGC will be responsible for payment of a tonnage royalty of US$3 per dry ton of delivered tonnage and a 3% net smelter return royalty payable to the owner of the Neal Property.
Processing of the material from the Neal Property will enable AGC to further test and improve upon the processing equipment and procedures (described in the Company’s news release of June 10, 2014) prior to implementing the process at AGC’s Atlanta Project on the bulk sample scheduled to be taken in 2014. The agreement with KRC will also enable the processing of material from the Neal Property to continue during the winter months when the Atlanta Project is largely inaccessible.
To assist in funding the expenditures necessary to acquire the processing equipment and commence processing, the Company has reached an agreement with a corporation controlled by Eric Sprott to borrow US$600,000. The loan is unsecured and non-interest bearing and is to be repaid by delivery to the lender of 1,000 troy ounces of gold (or the cash equivalent thereof) payable in installments over an 18-month period. The loan will be convertible at the lender’s election at a conversion price of C$0.05 during the initial 12 months and at C$0.10 per share thereafter. The lender will also receive a 5-year option to purchase, solely from gold produced from the Neal Property, up to 2,500 ounces of gold at US$1,400 per ounce. The financing transaction is subject to the approval of the TSX Venture Exchange.
"Having property that has access in all seasons with similar metallurgy to Atlanta will advance the research required to verify the Company’s objective of producing a mined product with the least environmental impact. This is also an opportunity for the Boise operations to provide work for seasonal employees to be extended to a longer period. It will reduce the turnover and attract qualified and experienced personnel. The network of all involved to achieve this opportunity has been encouraging," said Ernest Simmons, President and CEO of the Company.
