UNPROVEN MINERAL PROPERTIES

12 Months Ended

Dec. 31, 2012

Unproved Properties Disclosure [Table Text Block]

3. UNPROVEN MINERAL PROPERTIES

On April 23, 2010, the Company loaned $200,000 to KMR Resources, Inc. a Nevada corporation (“KMR”) in order for KMR to fund certain of its operations. In exchange for the funds, KMR executed a promissory note in that amount, which was payable on demand by the Company including interest of 8% per annum. On August 12, 2010, the Company and KMR entered into a Debt Repayment Agreement (“Debt Repayment Agreement”), pursuant to which KMR agreed to repay the Company the amount due under the promissory note dated April 23, 2010, by assigning all of KMR’s rights to certain mineral claims as further described below. The amount of the note receivable repayment, including interest, was $204,910.

On August 12, 2010, pursuant to the Debt Repayment Agreement with KMR, the Company was assigned KMR’s rights to the following:

(i)

a mineral lease and option to purchase agreement between KMR and Cliff ZZ L.L.C., which provides that Cliff ZZ L.L.C shall lease certain patented mining claims located in Esmeralda and Nye Counties, Nevada, including the Tonopah Extension Mine, to KMR, and that KMR shall have the option to acquire ownership of those claims (the “Tonopah Extension Mine”), and

(ii)	a mining lease between KMR and Rubicon Resources, Inc., which provides that KMR shall own the exclusive rights to explore, develop and mine certain unpatented mining claims located in Eureka County, Nevada (“Golden Trend Property”).

In addition, on August 12, 2010, the Company was assigned the rights to a Mining Lease for certain unpatented mining claims in Eureka County, Nevada. The lease term is ten (10) years and is subject to a net smelter return royalty on production at the rate of 3.0% of net smelter returns (NSR’s). An initial Advanced Minimum Royalty (AMR) of $45,000 was paid upon signing and additional AMR’s of $15,000 shall be paid at 6-month intervals. All AMR’s shall be recaptured before any NSR’s are paid from production. There is no annual work commitment.

On August 12, 2010, the Company was assigned the rights a Mining Lease and Option to Purchase Agreement for certain patented mineral claims in Esmeralda and Nye Counties of Nevada. This lease is for five (5) years with the option to purchase for a total of $1,000,000 to be paid over a period of 5 years, beginning with a $10,000.00 initial payment made by KMR on June 30, 2010. A 4% net smelter royalty is reserved. The Company has made three (5) required minimum payments in the aggregate of $290,000 through December 31, 2012, as discussed in Note 6.

Coyote Resources, Inc. 10-K