Red Lake is a startup exploration stage company without operations, and is in the business of gold exploration. There is no assurance that a commercially viable mineral deposit exists on Red Lake's mineral claims. Additional exploration will be required before a final evaluation as to the economic and legal feasibility of Red Lake's mineral claims can be determined.
On November 15, 2005, Red Lake acquired three mineral claims from Ridgestake Resources Inc. for $9,000. See Exhibit 10.1 - Property Agreement for more details. Under the Ontario Mining Act, title to Ontario mineral claims can only be held by individuals or Canadian corporations. Because of this regulation, Red Lake's president is holding the mineral claims in trust for Red Lake until Red Lake can determine whether there are commercially viable gold deposits on any of its mineral claims.
If Red Lake determine that there is a commercially viable gold deposit on any of its mineral claims, Red Lake will incorporate a Canadian subsidiary to hold title to the mineral claims and its president will transfer the mineral claims to the subsidiary. The transfer will be at no cost to us, other than the costs associated with the incorporation of the Canadian subsidiary.
