Sale of AGC Resources LLC

194 Months Ended

Sep. 30, 2011

Sale of AGC Resources LLC

4.  Sale of AGC Resources LLC
	On June 14, 2011, the Company, entered into an Asset Purchase Agreement with Devtec Management Ltd. (“Devtec”), pursuant to which the Company sold its subsidiary, AGC, which owns certain properties in Boulder, Colorado (see note 3(b) for a discussion of the specific assets purchased by AGC in June 2010), to Devtec for a total of $2 million, plus royalty. Under the terms of the agreement, Devtec will pay the Company $1 million upon production of the cumulative total of 1,000 ounces of gold and/or silver, and a further $1 million on the nine month anniversary of the payment of the first $1 million. Additionally, Devtec will pay the Company a 5% royalty from the start of production.
	The Company is unable to reasonably estimate the amount of minerals the properties will produce, if any, and thus there is uncertainty as to whether the purchase price will be collected. Further, the collection of any purchase price is also contingent on the outcome of the court case described in note 3(b). Given these factors, collection of the purchase price is not considered reasonably possible at the time of these consolidated financial statements given the current uncertain status of exploration work on the Boulder, Colorado properties and the uncertainties of the related legal action and thus no purchase price has been recorded as of September 30, 2011. Once collection of the purchase price becomes assured and the aforementioned uncertainties resolved, the purchase price will be recorded in the Consolidated Statements of Operations. Therefore, the Company is recognizing a loss on the sale of its subsidiary of $2,757,511 for the nine months ended September 30, 2011, which represents the net book value of the assets transferred to Devtec on June 14, 2011 (no liabilities were assumed by Devtec) as follows:

Reclamation bonds	$	245,221
Buildings and equipment		753,605
Participating interest in mineral property		1,758,685
	$	2,757,511

Subsequent to the sale of AGC, the Company determined it would not retain ownership to the reclamation bonds asset associated with the properties. A loss of $245,221, the carrying value of the bonds, was recorded during the three months ended September 30, 2011. The disclosed total loss from the sale of AGC was adjusted to include the loss on the disposition of the reclamation bonds.