IMMC, through its wholly-owned subsidiary, International Millennium Mining Inc., holds a 100% interest in 104 of the 122 contiguous mining claims that make up the Nivloc Property. IMMI has executed an option agreement to acquire an 85% interest in the remaining 18 mining claims subject to the terms and conditions of Option and Joint Venture Agreement between IMMI and Silver Reserve Corp. (SRC). The terms of the claim ownership and acquisition agreements are presented in more detail in below.
In September 2007, IMMC purchased, from private individuals, a 100% interest in two mining properties near Silver Peak, Nevada for US$ 75,000 cash and 110,000 IMMC shares. The properties include three lode claims covering most of the historic Nivloc Mine workings and six additional lode staked claims lying to the northeast of the Nivloc Mine workings. Together these 9 claims total approximately 76 hectares (188 acres). SRC has the right to participate in these claims by paying an amount equal to 15% of certain expenditures under the terms of the IMMI/SRC Option and Joint Venture Agreement referred to under the ‘Silver Reserve Corp. Option Claims’.
Pursuant to the Option and Joint Venture Agreement dated February 25, 2011 with Addendum thereto, dated May 22, 2012 (Option Agreement), IMMI has the sole and exclusive right and option to purchase an 85% undivided right, title and interest in and to the 18 Silver Reserve Corp. Optioned Claims (Optioned Claims) in consideration of cash payments to SRC in the total sum of US $350,000 and the issuance to SRC of 1,925,000 shares of the capital stock of IMMC. After IMMI has paid for and acquired the 85% interest in the Optioned Claims, SRC will retain a 15% undivided interest in the Optioned Claims, and further, SRC shall have the option to purchase a 15% interest in the 104 IMMC Claims (SRC Option), pursuant to the following protocol: following IMMI's completion of the acquisition of the undivided 85% interest in the Optioned Claims, IMMI shall be required to prepare and present to SRC a feasibility study, as
described in the Option Agreement; and, prepare and present to SRC a written one-year exploration plan and budget for the Nivloc Property, accompanied by a cash call notice to SRC for an amount equal to 15% certain expenditures (“Cash Call”). Upon receipt of the feasibility study, exploration plan and budget and the Cash Call, SRC shall thereupon have a sole and exclusive right and option, for a period not to exceed 120 days from the date of the Cash Call, to acquire a 15% undivided right, title and interest in and to the IMMC Claims, and concurrently retain its 15% undivided right, title and interest in and to the Optioned Claims as consideration for paying to IMMI the amount set forth in the Cash Call. In the event SRC does not exercise the SRC Option, as described herein, the SRC Option shall terminate and SRC's participating interest in the Optioned Claims and IMMC Claims shall transfer to IMMI and IMMI shall have an
undivided 100% right, title and interest in and to all of the Optioned Claims and IMMC Claims, and shall be the sole and exclusive owner of all rights, title and interest in and to the Nivloc Property. In this event, SRC shall nevertheless be entitled to retain and receive a royalty equal to 2% of the net smelter returns from operations on the Nivloc Property, as provided in the Option Agreement.
In the event SRC does not exercise the SRC Option and the Cash Call is not fully funded thereafter by IMMI and/or IMMC within 3 months of the date that the subject Cash Call was delivered to SRC, the status of the property ownership and relationship between SRC and IMMI shall revert to the status prior to the Cash Call, i.e., SRC shall own 15% and IMMI shall own 85% undivided right, title and interest in and to the Optioned Claims.
In the event SRC exercises its SRC Option and pays the amount of the Cash Call, the parties shall thereupon be deemed to have entered into a joint venture with respect to all subsequent exploration, development and mining on the Nivloc Property.
The 18 Optioned Claims total approximately 150 hectares (372 acres).
Subsequent to the IMMC acquisition of the original 9 claims and the 18 SRC optioned claims, an additional 95 claims were acquired by staking. The 95 claims total approximately 747 hectares (1,845 acres). SRC has the right to participate in these claims by paying an amount equal to 15% of certain expenditures under the terms of the IMMI/SRC Option and Joint Venture Agreement referred to under the ‘Silver Reserve Corp. Option Claims’.