Investment In Eagle Creek Property

9 Months Ended

Sep. 30, 2016

Note 4. Investment In Eagle Creek Property

On August 29, 2016, the Company acquired through NAFS-CA acquired the Eagle Creek Properties. A description of the mineral leases are as follow:

A description of the Company’s mineral leases is as follows:

*Lease*	*Description of Lease*	*Lease Rate*

# 1	Section 11, NE ¼ of Section 2, N (½) of Section 3, in Township 38, Range 10, West of the 3^rd Meridian, as to the surface rights referenced in the Certificate of Title.	Up-front payment of $3,000. Ten-year lease dated July 17, 2015, automatically extended for second 10 years if royalties are being paid. Lease rate is $1 per acre per year. Royalty rate is $5.00 per ton of processed ore sold at $80 per metric ton or less, and $5.00 plus the 10% of the difference between sales price greater than $80 and $80 per metric ton.
# 2	West ½ of Section 2, Township 38, Range 10, West of the 3^rd Meridian, portion of NW (¼) of Section 35 on Township 37, Range 10, West of the 3^rd Meridian, as to the surface rights referenced in the Certificate of Title.	Ten-year lease dated June 21, 2008, automatically extended for second 10 years if royalties are being paid. Lease rate is $1 per acre per year. Royalty rate is $3.00 per ton if 25% waste, $4.00 per ton if 20% waste, and $5.00 per ton if 15% or less waste.

Prior to acquisition, the leases have been explored through extensive drilling operations. As there has not been an economic evaluation of the mineral leases, the investment in the mineral leases have been expensed as Impairment of mineral leases of $1,539,430. On May 27, 2016, the Company entered into an agreement with Northwest Corporation to undertake exploration activities and to prepare an economic evaluation through the preparation NI43-101 report on the mineral leases. As of September 30, 2016, the Company had expended approximately $69,485. As these expenditures were undertaken prior to the effective date of the transaction, they have not been incorporated into the consolidated financial statements.

North America Frac Sand, Inc. 10-Q