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Golden Cycle Gold Corporation
| – Illipah Gold Prospect – CC&V Gold Mining Company – SAR Philippine Prospect – Table Top Gold Prospect – Colorado Exploration |
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Illipah Gold Mining Prospect – Nevada The Company entered into an agreement, effective August 23, 2006, with Tornado Gold International Corporation (TOGI-Q) (“Tornado“) pursuant to which Tornado acquired certain mining claims referred to as the Illipah claims. Tornado paid the Company US$50,000 upon execution of the agreement. Under the agreement Tornado paid the Company an additional US$50,000 and 50,000 shares of Tornado common stock which was due within ninety days of the date of the agreement, and an additional 100,000 shares of Tornado common stock which was due within one hundred eighty days of the date of the agreement. An additional 200,000 shares of Tornado common stock is due to be paid to the Company within one year of the signing of the agreement (due August 23, 2007). Upon execution of the agreement, Tornado assumed Golden Cycle’s obligations in an underlying exploration and mining lease agreement on the claims, and granted to Golden Cycle a production royalty of two percent of net smelter returns on all rents and mineral production from the property. Tornado has the option, exercisable at any time prior to commercial production on any of the Illipah claims, to reduce Golden Cycle production royalties from two percent to one percent by paying Golden Cycle, at Golden Cycle’s option, either US$1 million, or its equivalent in gold bullion at the August 23, 2006 closing price of gold on the New York Commodity Exchange. Tornado also agreed to undertake an exploration program on the Illipah property and related area of interest, and incur exploration and development expenditures of at US$750,000 within two years, of which US$250,000 must be expended during the first year of the agreement. In the event of a default under the agreement by Tornado, Golden Cycle may reacquire the Illipah claims under certain circumstances, such as default by Tornado.
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