Mineral Properties and Rights

9 Months Ended

Aug. 31, 2011

Mineral Properties and Rights [Text Block]

6.	Mineral Properties and Rights
	The Company holds interests in four groups of mineral properties, Nolan, Ester Dome, Hammond and Eagle Creek, in Alaska, U.S.A. All of these properties are in the exploration stage and have no proven reserves as of August 31, 2011. The Nolan property has a probable reserve; however, a more extensive feasibility study is required to ascertain if such probable reserve can be classified as a proven reserve.
	Since the Company has no proven reserves on its properties as of August 31, 2011, the Company does not amortize the capitalized mineral costs, but evaluates the capitalized mineral costs periodically for impairment in accordance with ASC 360 and has not recognized any impairment. A summary of such capitalized direct costs for the nine months ended August 31, 2011, and for the fiscal year ended November 30, 2010 is as follows:

		Nolan		Ester Dome		Hammond		Eagle Creek		Total
		(a)		(b)		(c)		(d)
Balance as of November 30, 2009	$	743,859	$	40,702	$	525,900	$	88,140	$	1,398,601
Additions during the year:
Claim fees paid during the year		85,953		9,398		8,400		13,090		116,841
Royalty payment		–		–		–		5,000		5,000
Accrued royalty payment		–		–		80,000		–		80,000
Balance as of November 30, 2010		829,812		50,100		614,300		106,230		1,600,442
Additions during the period:
Claim fees paid during the period		85,540		140		8,400		–		94,080
Royalty payment		–		–		–		5,000		5,000
Accrued royalty payment		–		–		60,000		–		60,000
Balance as of August 31, 2011	$	915,352	$	50,240	$	682,700	$	111,230	$	1,759,522

a)	Nolan Gold Project, Wiseman Mining District, Alaska
	The Nolan Gold Project consists of 5 contiguous claim groups covering approximately 6 square miles, 8 miles west of Wiseman and 175 miles north of Fairbanks, Alaska. In addition, The Clara Creek and Marion Creek claim groups are located approximately 1.5 and 3 miles north of Coldfoot, Alaska, and are situated near the Dalton Highway. Both Clara Creek and Marion Creeks are left limit tributaries to the Middle Fork of the Koyukuk River.
	In total, the Company owns a 100% interest in 204 federal placer mining claims and 407 federal lode claims in the Nolan Gold Project. The specific claim groups at this site are as follows:

i)	Nolan Placer: This claim group consists of 148 unpatented federal placer claims.
ii)	Thompson’s Pup: This claim group consists of 6 unpatented federal placer claims and is subject to a royalty of 3% of net profits on 80% of production.
iii)	Dionne (Mary’s Bench): This claim group consists of 15 unpatented federal placer claims.
iv)	Smith Creek: This claim group consists of 28 unpatented federal placer claims.

v)	Marion Creek and Clara Creek: This claim group consists of 2 unpatented federal placer mining claims located on Marion Creek and 5 unpatented federal placer mining claims located on Clara Creek.
vi)	Nolan Lode: this claim group consists of 407 unpatented federal lode claims.

	The Company currently is in a transitional phase between exploration and development on this property. The preliminary feasibility study, effective January 1, 2009 and amended on June 1, 2009 to reflect additional data, supported a probable mineral reserve of antimony and gold underlying the southwestern portion of the Solomon Shear Zone, an area referred to by the Company as Workman’s Bench.
b)	Ester Dome Gold Project, Fairbanks Mining District, Alaska
	The Ester Dome Gold Project encompasses all of the Company’s properties on Ester Dome, which is accessible by road 10 miles northwest of Fairbanks, Alaska. This property consists of 1 unpatented Federal claim and 52 state mineral claims. The specific properties at this site are as follows:

i)	Grant Mine: This property consists of 26 state mineral claims subject to payments of 15% of net profits until $2,000,000 has been paid and a royalty payment of 3% of net profits thereafter. The mill has remained inactive since February 1989 and the plant and equipment cost was written down on our accounting records. During fiscal 2009, the work on Grant Mine was limited to assessment work. Upon payment of the $2,000,000, the titles of the mineral claims will be transferred.
ii)	May (St. Paul)/Barelka: This gold property consists of 22 state mineral claims subject to payments of 15% of net profits until $2,000,000 has been paid and a royalty payment of 3% of net profits thereafter.
iii)	Dobb’s: This leased property consists of 1 unpatented Federal mineral claim and 4 State mineral claims subject to payments of 15% of net profits until $1,500,000 has been paid and 3% of net profits thereafter.

	The Company has maintained claim rental payments and continued with assessment work for this property.
c)	Hammond Property, Wiseman Mining District, Alaska
	This property consists of 24 Federal placer claims and 36 Federal lode claims covering one and one-half square miles and adjoining the Nolan Gold Properties. The Company has leased this property from Alaska Mining Company, Inc. (“Alminco”) since December 14, 1994 and is obligated to pay a royalty equal to 10% of gross production and is subject to a minimum royalty of $80,000 per year. As of August 31, 2011, the capitalized mineral rights of $682,700 (November 30, 2010 - $614,300) for the Hammond property includes royalty accruals totalling $610,000 (November 30, 2010 - $550,000) that are unpaid, and are included in mineral claims payable on the accompanying consolidated balance sheets. During the nine months ended August 31, 2011, the Company accrued $60,000 in payable royalties.
d)	Eagle Creek Property, Fairbanks Mining District, Alaska
	This property consists of 77 state mineral claims. All claims are contiguous and are located in the Fairbanks North Star Borough. The Company owns a 50% interest and has an option to purchase a full 100% interest in the property for $400,000, towards which $33,000 remains to be paid. This property is subject to a royalty of 15% of net profits. A payment in the amount of $5,000 is due on August 1st of each year until the remaining $33,000 is paid. Such yearly payment is required to keep the option in good standing. Ownership of the claims is in the name of the Company’s subsidiary, Silverado Gold Mines Inc. On August 1, 2011, the Company paid the required $5,000 option payment.