As filed with the Securities and Exchange Commission on May 17, 2011
Registration No. _________________



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
__________________________


FORM S-1


REGISTRATION STATEMENT
UNDER
SECURITIES ACT OF 1933

______________________________


       MAGELLAN GOLD CORPORATION       

(Name of small business issuer in its Charter)


         Nevada      
(State or other jurisdiction of
incorporation or organization)

     1000        
(Primary Standard Industrial
Classification Code Number)

      27-3566922         
(IRS Employer
Identification Number)


John C. Power
President, Chief Executive Officer, and Director

       P.O. Box 114, 60 Sea Walk Drive       

     The Sea Ranch, CA  95497    

                      Office: (707) 884-3766                               
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)


     Richard Harris      

Harris & Thompson

6121 Lakeside Drive, Suite 260

Reno, NV  89511     

    Telephone:  775-825-4300    
(Name, address, including zip code, and telephone number of agent for service of process)


Copies to:

Clifford L. Neuman, Esq.
Clifford L. Neuman, PC
1507 Pine Street
Boulder, Colorado  80302
(303) 449-2100
(303) 449-1045 (fax)
                                 


Approximate date of commencement of proposed sale to public:  As soon as practicable after the effective date of the Registration Statement.


If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    [   ]




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If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   [   ]


If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [   ]


If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  [   ]


If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [   ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,  a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and ”smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):


Large accelerated filer [___]  Accelerated filer [__] Non-accelerated filer [___]  Smaller reporting company  [   X  ]







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Calculation of Registration Fee



Title of Each Class
of Securities to be
Registered


Amount
To be
Registered(1)

Proposed Maximum
Offering Price
Per Unit(1)

Proposed Maximum
Aggregate
Offering Price(1)


Amount of Registration Fee

Common stock, $0.001 par value


3,000,000


$0.0003


$1,000


$100


(1)  Consists of common stock of Magellan Gold Corporation ("Magellan") to be distributed by Athena Silver Corporation, a Delaware corporation, (“Athena”) to the holders of Athena common stock on December 31, 2010 (the "Spin-off Record Date") to effect a spin-off of the Company's shares.  The Athena shareholders will not be charged or assessed for the Magellan common stock, and Athena will receive no consideration for the distribution of the foregoing shares in the Spin-off.  There currently exists no market for Magellan Gold Corporation common stock.  Magellan Gold Corporation has an accumulated capital deficit.  As a result, the registration fee has been calculated based on one-third (1/3) of the par value of the shares in accordance with the provisions of Rule 457(f)(2).


The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.






iii



MAGELLAN GOLD CORPORATION

Cross-Reference Index


 

Item No. and Heading
In Form S-1
Registration Statement


Location
in Prospectus

   

1.

Forepart of the Registration Statement and Outside Front Cover Page of Prospectus

Forepart of Registration Statement and
Outside Front Cover Page of Prospectus

   

2.

Inside Front and Outside Back Cover Pages of Prospectus

Inside Front and Outside Back Cover Pages of Prospectus

   

3.

Summary Information, Risk Factors and

Ratio of Earnings to Fixed Charges

Prospectus Summary; Risk Factors

   

4.

Use of Proceeds

*

   

5.

Determination of Offering Price

*

   

6.

Dilution

*

   

7.

Selling Securityholders

*

   

8.

Plan of Distribution

Plan of Distribution

   

9.

Description of Securities to be Registered

Description of Securities

   

10.

Interests of Named Experts and Counsel

Experts

   

11.

Information with Respect to the Registrant

The Business

   

11A

Material Changes

*

   

12.

Incorporation of Certain Information by Reference

 
   

12A.

Disclosure of Commission Position on Indemnification for Securities Act Liabilities

Indemnification for Securities Act Liabilities

   

13.

Other Expenses of Issuance and Distribution

Other Expenses of Issuance and Distribution

   

14.

Indemnification of Directors and Officers

Indemnification of Directors and Officers

   

15.

Recent Sales of Unregistered Securities

Recent Sales of Unregistered Securities

   

16.

Exhibits and Financial Statement Schedules

Exhibits and Financial Statement Schedules

   

17.

Undertakings

Undertakings



*  Omitted from prospectus because Item is inapplicable or answer is in the negative



iv






 

The information in this prospectus is not complete and may be changed.  We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell the securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 
   

SUBJECT TO COMPLETION, DATED _____________, 2011


Prospectus


MAGELLAN GOLD CORPORATION


Spin-Off of Magellan Gold Corporation by the Distribution of

Up to 3,000,000 Shares of Common Stock


We are furnishing this Prospectus to the shareholders of Athena Silver Corporation, a Delaware corporation (“Athena”).  Athena will distribute most of its outstanding common shares of Magellan Gold Corporation (“Magellan”) that it owns in a special distribution to the shareholders of Athena, pro rata, in the nature of a stock dividend distribution.  


Shareholders of Athena entitled to participate in the spin-off distribution will receive one (1) of our shares for every ten (10) shares of Athena which they owned as of the record date of the distribution, which has been set at December 31, 2010.   Fractional shares will be rounded to the nearest whole.  These distributions will be made within ten (10) days of the date of this Prospectus.  We are bearing all costs incurred in connection with this distribution.  


Before this offering, there has been no public market for our common stock and our common stock is not listed on any stock exchange or on the over-the-counter market.  This distribution of our common shares is the first public distribution of our shares.  It is our intention to seek a market maker to publish quotations for our shares on the OTC Electronic Bulletin Board; however, we have no agreement or understanding with any potential market maker.  Accordingly, we can provide no assurance to you that a public market for our shares will develop and if so, what the market price of our shares may be.  


Investing in our common stock involves a high degree of risk.  You should read the "Risk Factors" beginning on Page 8.


Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities or passed on the adequacy or accuracy of the disclosures in the prospectus.  Any representation to the contrary is a criminal offense.


The date of this prospectus is __________, 2011.




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About this Prospectus


You should rely only on the information contained in this prospectus. We have not, and Athena has not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.  We and Athena believe that the information contained in this prospectus is accurate as of the date on the cover.  Changes may occur after that date; and we and Athena may not update this information except as required by applicable law.


Prospectus Summary Information


Please note that throughout this prospectus the words "we," "our," or "us" refers to Magellan Gold Corporation, a Nevada corporation (“Magellan” or the “Company”).  


About Our Company


Magellan Gold Corporation was formed and organized effective September 28, 2010 under the laws of the State of Nevada.  We are an exploration stage company and our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable. We were formed and organized by Athena Silver Corporation (“Athena”) a Delaware corporation, and by two of the control persons and principal shareholders of Athena.  Athena is engaged in the exploration of minerals at its principal project known as the Langtry Properties located in San Bernardino County, California.


Our Properties


We have three principal mineral interests that we intend to engage in exploration and, if commercially recoverable deposits are found, mineral development activities.  To date, we have only begun preliminary exploration work.  Our properties are located in Washoe and Churchill Counties, Nevada:


WASHOE COUNTY, NEVADA


Secret Canyon Project


We have both patented claims under lease option and unpatented BLM claims under lease that together comprise this project.


Unpatented Claims:  we have a ten (10) year mining lease covering seventy (70) unpatented mining claims to explore, develop and conduct mining operations on a group of unpatented lode mining claims located in Washoe County, Nevada.  We have annual obligations to maintain our lease.


Pantented Claims: Cowles Option and Mining Lease:  We have entered into an option and mining lease for the Gypsy, Morningstar extension, Carter, Denver, Whitehill #2, Whitehill, Morningstar, Gold Queen and Granite Mining Claims whereby we obtained the option, and possible subsequent lease and purchase, of the above-referenced claims.  




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CHURCHILL COUNTY, NEVADA


Randall Claims:  we have a ten (10) year mining lease covering ten (10) unpatented mining claim to explore, develop and conduct mining operations on a group of unpatented lode mining claims located in Churchill County, Nevada.  We have annual obligations to maintain our lease.


Pony Express Claims:  we have filed two unpatented lode mining claims with the BLM giving us the right to explore, develop and conduct mining operations on these claims located in Churchill County, Nevada.  We have annual obligations to maintain our claims with the BLM, the State of Nevada and Churchill County.


Our mineral rights include "unpatented" mining claims created and maintained in accordance with the U.S. General Mining Law of 1872, which we refer to in this prospectus as the General Mining Law. Unpatented mining claims are unique U.S. property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations that supplement the General Mining Law. Also, unpatented mining claims and related rights, including rights to use the surface, are subject to possible challenges by third parties or contests by the federal government. The validity of an unpatented mining claim, in terms of both its location and its maintenance, is dependent on strict compliance with a complex body of federal and state statutory and decisional law. In addition, there are few public records that definitively control the issues of validity and ownership of unpatented mining claims. We have not filed a patent application for any of our unpatented mining claims that are located on federal public lands in the United States and, under possible future legislation to change the General Mining Law, patents may be difficult to obtain.



Our Formation


We were formed and organized in September 2010 to acquire the Secret Canyon Claims, Randall Claims and Pony Express Claims (collectively our “Claims” or our “Properties”).  Effective September 2010, we issued an aggregate of 33 million shares of common stock to our founders in consideration of $.0025 per share:  30 million shares were issued to our two principal shareholders, John C. Power and John Gibbs, and 3 million shares were issued to Athena. The majority of the shares issued to Athena shall be distributed, in the nature of a spin-off of such shares to the shareholders of Athena, pro rata.  The common stock acquired by Athena is being distributed to the Athena shareholders as of a Record Date of December 31, 2010.  Athena has agreed to pay for the expenses associated with the distribution of our common stock to the Athena shareholders. 

  


Our principal executive offices are currently located at P.O. Box 114, 60 Sea Walk Drive, The Sea Ranch, CA 95497.  Our telephone number is (707) 884-3766, and our internet website is under development.  





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Questions And Answers About The Spin-Off


Q:

How Many Magellan Shares Will I Receive?

  

A:

Athena will distribute to you one (1) share of Magellan common stock for every ten (10) shares of Athena you owned on the record date.  No cash distributions will be paid for fractional shares, which will be rounded to the nearest whole.

  

Q:

What Are Shares Of Magellan Worth?

  

A:

The value of our shares will be determined by their trading price after the spin-off.  We do not know what the trading price will be and we can provide no assurances as to value.

  

Q:

What Will Magellan Do After The Spin-Off?

  

A:

Magellan will continue to explore and develop its mineral interests in the Secret Canyon Claims, the Randall Claims and the Pony Express Claims.  Magellan may also acquire exploration and mining interest in additional properties, although no further opportunities have been identified as of the date of this prospectus.

  

Q:

Will Magellan’s Shares Be Listed On A National Stock Exchange Or The Nasdaq Stock Market?

  

A:

Our shares will not be listed on any national stock exchange or the Nasdaq Stock Market.  It is our hope that the shares will be quoted by one or more marketmakers on the OTC Electronic Bulletin Board, although we have no agreements or understandings with any marketmaker to do so.  

  

Q:

What Are The Tax Consequences To Me Of The Spin-Off?

  

A:

We have not requested and do not intend to request a ruling from the Internal Revenue Service or an opinion of tax counsel that the distribution will qualify as a tax-free spin-off under U.S. tax laws.  This is because one of the requirements under U.S. tax laws for the transaction to constitute a tax-free spin-off is that Athena would need to own at least 80% of the voting power of our outstanding capital stock and at least 80% of the number of shares of each class of our outstanding voting capital stock.  As we have issued stock to various persons, Athena does not own at least 80% of our shares, as a result, we believe that the distribution will not qualify as a tax-free spin-off.  Consequently, the total value of the distribution, as well as your initial tax basis in our shares, will be determined by the fair market value of our common shares at the time of the spin-off.  A portion of this distribution will be taxable to you as a dividend and the remainder will be a tax-free reduction in your basis in your Athena shares.

  



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Q:

What Do I Have To Do To Receive My Magellan Shares?

  

A:

No action by you is required.  You do not need to pay any money or surrender your Athena common shares to receive Magellan common shares.  The number of Athena common shares you own will not change.  If your Athena common shares are held in a brokerage account, our common shares will be credited to that account.  If you own your Athena common shares in certificated form, certificates representing your Magellan common shares will be mailed to you.



Summary Financial Data


The following summary financial data is derived from our unaudited financial statements as of and for the three months ended March 31, 2011.   The summary financial data is incomplete and should be read in conjunction with the complete financial statements contained elsewhere in this prospectus.  Our historical operating information may not be indicative of our future operating results.


  

Three Months Ended March 31, 2011

 

From Inception (September 28, 2010) through March 31, 2011

 

Statements of Operations Data:

       

Total Revenues

 

$

 

$

 

Operating expenses

  

26,354

  

34,759

 

Net (loss)

  

(26,354

)

 

(34,759

)

Basic and diluted loss per share

 

$

(0.00)

    

Shares used in computing basic and diluted loss per share

  

33,000,000

    
        
  

March 31, 2011

 

December 31, 2010

 

Balance Sheet Data:

       

 Working capital

 

$

2,173

 

$

34,373

 

 Total assets

  

55,429

  

81,035

 

 Total liabilities

  

8,189

  

7,441

 

 Stockholders' equity

  

47,240

  

73,594

 





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Safe Harbor for Forward-looking Statements


In General


This report contains statements that plan for or anticipate the future.  In this report, forward-looking statements are generally identified by the words "anticipate," "plan," "believe," "expect," "estimate," and the like.  


With respect to our mineral exploration business, these forward-looking statements include, but are not limited to, statements regarding the following:


 

*

our exploration and development plans;

   
 

*

consulting and strategic business relationships;

   
 

*

statements about our future business plans and strategies;

   
 

*

adequacy of our financial resources;

   
 

*

competitive pressures;

   
 

*

changing economic conditions;

   
 

*

expectations regarding competition from other companies; and

   
 

*

our ability to commercially develop our mining interests.


Forward looking statements may include estimated mineral reserves and resources which could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ materially from those projected in the forward-looking statements include:


 

*

the risk factors set forth below under “Risk Factors”;

   
 

*

risks and hazards inherent in the mining business (including environmental hazards, industrial accidents, weather or geologically related conditions);

   
 

*

changes in the market prices of precious minerals, including gold;

   
 

*

uncertainties inherent in the Company’s exploratory and developmental activities, including risks relating to permitting and regulatory delays;

   
 

*

uncertainties inherent in the estimation of ore reserves;

   
 

*

changes that could result from the Company’s future acquisition of new mining properties or businesses;

   
 

*

effects of environmental and other governmental regulations;

   



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*

the worldwide economic downturn and difficult conditions in the global capital and credit markets; and

   
 

*

the Company’s ability to raise additional financing necessary to conduct its business.


Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly these forward-looking statements, whether as a result of new information, future events or otherwise.


In light of the significant uncertainties inherent in the forward-looking statements made in this prospectus, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.





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Risk Factors


You should carefully consider the risks and uncertainties described below and the other information in this prospectus before deciding to invest in shares of our common stock.


The occurrence of any of the following risks could materially and adversely affect our business, financial condition and operating results.  In this case, the trading price of our common stock could decline and you might lose all or part of your investment.



Risks Related to Our Business


We have no history of or experience in mineral production.


We have no history of or experience in producing gold or other metals.  As a result, we would be subject to all of the risks associated with establishing a new mining operation and business enterprise. We may never successfully establish mining operations, and any such operations may not achieve profitability.


We have no proven or probable reserves.


We are currently in the exploration stage and have no proven or probable reserves, as those terms are defined by the SEC, on any of our properties.   


In order to demonstrate the existence of proven or probable reserves under SEC guidelines, it would be necessary for us to advance the exploration of our Properties by significant additional delineation drilling to demonstrate the existence of sufficient mineralized material with satisfactory continuity which would provide the basis for a feasibility study which would demonstrate with reasonable certainty that the mineralized material can be economically extracted and produced. We do not have sufficient data to support a feasibility study with regard to the Properties, and in order to perform the drill work to support such feasibility study, we must obtain the necessary permits and funds to continue our exploration efforts. It is possible that, even after we have obtained sufficient geologic data to support a feasibility study on the Properties, such study will conclude that none of the identified mineral deposits can be economically and legally extracted or produced. If we cannot adequately confirm or discover any mineral reserves of precious metals on the Properties, we may not be able to generate any revenues. Even if we discover mineral reserves on the Properties in the future that can be economically developed, the initial capital costs associated with development and production of any reserves found is such that we might not be profitable for a significant time after the initiation of any development or production. The commercial viability of a mineral deposit once discovered is dependent on a number of factors beyond our control, including particular attributes of the deposit such as size, grade and proximity to infrastructure, as well as metal prices. In addition, development of a project as significant as the ones we are planning will likely require significant debt financing, the terms of which could contribute to a delay of profitability.



8




The exploration of mineral properties is highly speculative in nature, involves substantial expenditures and is frequently non-productive.


Mineral exploration is highly speculative in nature and is frequently non-productive. Substantial expenditures are required to:


•  establish ore reserves through drilling and metallurgical and other testing techniques;

•  determine metal content and metallurgical recovery processes to extract metal from the ore;  and,

•  design mining and processing facilities.


If we discover ore at the Properties, we expect that it would be several additional years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production could change. As a result of these uncertainties, there can be no assurance that our exploration programs will result in new proven and probable reserves in sufficient quantities to justify commercial operations.


Even if our exploration efforts at the Properties are successful, we may not be able to raise the funds necessary to develop the Properties.


If our exploration efforts at the Properties are successful, our current estimates indicate that we would be required to raise approximately $50 million in external financing to develop and construct the mines. Sources of external financing could include bank borrowings and debt and equity offerings, but financing has become significantly more difficult to obtain in the current market environment. The failure to obtain financing would have a material adverse effect on our growth strategy and our results of operations and financial condition. There can be no assurance that we will commence production at any of our Properties or generate sufficient revenues to meet our obligations as they become due or obtain necessary financing on acceptable terms, if at all, and we may not be able to secure the financing necessary to begin or sustain production at the Properties. In addition, should we incur significant losses in future periods, we may be unable to continue as a going concern, and we may not be able to realize our assets and settle our liabilities in the normal course of business at amounts reflected in our financial statements included or incorporated herein by reference.


We may not be able to obtain permits required for development of the Properties.


In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. We will be required to obtain numerous permits for our Properties. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings.  Our efforts to develop the Properties may also be opposed by environmental groups.   In addition, mining projects require the evaluation of environmental impacts for air, water, vegetation, wildlife, cultural, historical, geological, geotechnical, geochemical, soil and socioeconomic conditions. An Environmental Impact Statement would be required before we could commence mine development or mining activities. Baseline environmental conditions are the basis on which direct and indirect impacts of the Properties are evaluated and based on which potential mitigation measures would be proposed. If the Properties were found to significantly adversely



9



impact the baseline conditions, we could incur significant additional costs to avoid or mitigate the adverse impact, and delays in the development of Properties could result.

Permits would also be required for, among other things, storm-water discharge; air quality; wetland disturbance; dam safety (for water storage and/or tailing storage); septic and sewage; and water rights appropriation. In addition, compliance must be demonstrated with the Endangered Species Act and the National Historical Preservation Act.


The mining industry is intensely competitive.


The mining industry is intensely competitive. We may be at a competitive disadvantage because we must compete with other individuals and companies, many of which have greater financial resources, operational experience and technical capabilities than we do. Increased competition could adversely affect our ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future. We may also encounter increasing competition from other mining companies in our efforts to locate acquisition targets, hire experienced mining professionals and acquire exploration resources.


Our future success is subject to risks inherent in the mining industry.


Our future mining operations, if any, would be subject to all of the hazards and risks normally incident to developing and operating mining properties. These risks include:


•  insufficient ore reserves;

•  fluctuations in metal prices and increase in production costs that may make mining of reserves uneconomic;

•  significant environmental and other regulatory restrictions;

•  labor disputes; geological problems;

•  failure of underground stopes and/or surface dams;

•  force majeure events; and

•  the risk of injury to persons, property or the environment.


Our future profitability will be affected by changes in the prices of metals.


If we establish reserves, and complete development of a mine, our profitability and long-term viability will depend, in large part, on the market price of gold. The market prices for metals are volatile and are affected by numerous factors beyond our control, including:


• global or regional consumption patterns;

• supply of, and demand for, gold and other metals;

• speculative activities;

• expectations for inflation; and,

• political and economic conditions.


The aggregate effect of these factors on metals prices is impossible for us to predict. Decreases in metals prices could adversely affect our ability to finance the exploration and development of our properties, which would have a material adverse effect on our financial condition and results of operations and cash flows. There can be no assurance that metals prices will not decline. As reported on the website www.kitco.com, during the three-year period ended December 31, 2010, the average high and low settlement prices for gold were $1,421.00 and $1,058.00 per ounce.



10



The price of gold may decline in the future. If the price of gold is depressed for a sustained period, we may be forced to suspend operations until the prices increase, and to record asset impairment write-downs. Any continued or increased net losses or asset impairments would adversely affect our financial condition and results of operations. 


 We are subject to significant governmental regulations.


Our operations and exploration and development activities are subject to extensive federal, state, and local laws and regulations governing various matters, including:


•  environmental protection;

•  management and use of toxic substances and explosives;

•  management of natural resources;

•  exploration and development of mines, production and post-closure reclamation;

•  taxation;

•  labor standards and occupational health and safety, including mine safety; and

•  historic and cultural preservation.


Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining or curtailing operations or requiring corrective measures, installation of additional equipment or remedial actions, any of which could result in us incurring significant expenditures. We may also be required to compensate private parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of any future operations and delays in the exploration of our properties.


Changes in mining or environmental laws could increase costs and impair our ability to develop our properties.


From time to time the U.S. Congress may consider revisions in its mining and environmental laws. It remains unclear to what extent new legislation may affect existing mining claims or operations. The effect of any such revisions on our operations cannot be determined conclusively until such revision is enacted; however, such legislation could materially increase costs on properties located on federal lands, such as ours, and such revision could also impair our ability to develop the Properties and to explore and develop other mineral projects.


We might be unable to raise additional financing necessary to complete capital needs, conduct our business, make payments when due.


We will need to raise additional funds in order to meet capital needs and implement our business plan.  Any required additional financing might not be available on commercially reasonable terms, or at all. If we raise additional funds by issuing equity securities, holders of our common stock could experience significant dilution of their ownership interest, and these securities could have rights senior to those of the holders of our common stock.

  



11



The estimation of the ultimate recovery of metals contained within a heap leach pad inventory is inherently inaccurate and subjective and requires the use of estimation techniques. Actual recoveries can be expected to vary from estimations.


We expect to use the heap leach process to extract gold from ore. The heap leach process is a process of extracting gold by placing ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained gold, which are then recovered in metallurgical processes.

  

We will use several integrated steps in the process of extracting gold to estimate the metal content of ore placed on the leach pads. Although we will refine our estimates as appropriate at each step in the process, the final amounts are not determined until a third-party smelter converts the doré and determines final ounces of gold available for sale. We will then review this end result and reconcile it to the estimates we developed and used throughout the production process. Based on this review, we may adjust our estimation procedures when appropriate. As a result, actual recoveries can vary from estimates, and the amount of the variation could be significant and could have a material adverse impact on our financial condition and results of operations.


The estimation of ore reserves is imprecise and depends upon subjective factors. Estimated ore reserves may not be realized in actual production. Our operating results may be negatively affected by inaccurate estimates.

  

Should we determine that our Properties contain mineral reserves reportable in accordance with Industry Guide 7 of the SEC, those reserves may be estimated made by our technical consultants . Reserve estimates are a function of geological and engineering analyses that require us to make assumptions about production costs and gold market prices. Reserve estimation is an imprecise and subjective process. The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation, judgment and experience. Assumptions about gold market prices are subject to great uncertainty as those prices have fluctuated widely in the past. Declines in the market prices of gold may render reserves containing relatively lower grades of ore uneconomic to exploit, and we may be required to reduce reserve estimates, discontinue development or mining at one or more of our properties, or write down assets as impaired. Should we encounter mineralization or geologic formations at any of our mines or projects different from those we predicted, we may adjust our reserve estimates and alter our mining plans. Either of these alternatives may adversely affect our actual production and operating results.

 

 

Gold mining involves significant production and operational risks. We may suffer from the failure to efficiently operate our mining projects.

  

Gold mining involves significant degrees of risk, including those related to mineral exploration success, unexpected geological or mining conditions, the development of new deposits, climatic conditions, equipment and/or service failures, compliance with current or new governmental requirements, current availability of or delays in installing and commissioning plant and equipment, import or customs delays and other general operating risks. Problems may also arise due to the quality or failure of locally obtained equipment or interruptions to services (such as power, water, fuel or transport or processing capacity) or technical support, which results in the failure to achieve expected target dates for exploration or production activities and/or result in a requirement for greater expenditure. The right to develop gold reserves may depend on obtaining certain licenses and quotas, the granting of which may be at the discretion of the relevant regulatory authorities. There may be



12



delays in obtaining such licenses and quotas, leading to our results of operations being adversely affected, and it is possible that from time to time mining licenses may be refused.

  

Mineral exploration and development inherently involves significant and irreducible financial risks. We may suffer from the failure to find and develop profitable mineral deposits.

  

The exploration for and development of mineral deposits involves significant financial risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Unprofitable efforts may result from the failure to discover mineral deposits. Even if mineral deposits are found, such deposits may be insufficient in quantity and quality to return a profit from production, or it may take a number of years until production is possible, during which time the economic viability of the project may change. Few properties which are explored are ultimately developed into producing mines. Mining companies rely on consultants and others for exploration, development, construction and operating expertise.

  

Substantial expenditures are required to establish ore reserves, extract metals from ores and, in the case of new properties, to construct mining and processing facilities. The economic feasibility of any development project is based upon, among other things, estimates of the size and grade of ore reserves, proximity to infrastructures and other resources (such as water and power), metallurgical recoveries, production rates and capital and operating costs of such development projects, and metals prices. Development projects are also subject to the completion of favorable feasibility studies, issuance and maintenance of necessary permits and receipt of adequate financing.

  

Once a mineral deposit is developed, whether it will be commercially viable depends on a number of factors, including: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; government regulations including taxes, royalties and land tenure; land use, importing and exporting of minerals and environmental protection; and mineral prices. Factors that affect adequacy of infrastructure include: reliability of roads, bridges, power sources and water supply; unusual or infrequent weather phenomena; sabotage; and government or other interference in the maintenance or provision of such infrastructure. All of these factors are highly cyclical. The exact effect of these factors cannot be accurately predicted, but the combination may result in not receiving an adequate return on invested capital.

  

Significant investment risks and operational costs are associated with our exploration, development and mining activities. These risks and costs may result in lower economic returns and may adversely affect our business.


Mineral exploration, particularly for gold, involves many risks and is frequently unproductive. If mineralization is discovered, it may take a number of years until production is possible, during which time the economic viability of the project may change.

  

Development projects may have no operating history upon which to base estimates of future operating costs and capital requirements. Development project items such as estimates of reserves, metal recoveries and cash operating costs are to a large extent based upon the interpretation of geologic data, obtained from a limited number of drill holes and other sampling techniques, and feasibility studies. Estimates of cash operating costs are then derived based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates of metals from the ore, comparable facility and equipment costs, anticipated climate conditions and other factors. As a result, actual cash operating costs and economic returns of any and all



13



development projects may materially differ from the costs and returns estimated, and accordingly, our financial condition and results of operations may be negatively affected.

  

There will be significant hazards associated with our mining activities, some of which may not be fully covered by insurance. To the extent we must pay the costs associated with such risks, our business may be negatively affected.

  

The mining business is subject to risks and hazards, including environmental hazards, industrial accidents, the encountering of unusual or unexpected geological formations, cave-ins, flooding, earthquakes and periodic interruptions due to inclement or hazardous weather conditions. These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability. Insurance fully covering many environmental risks (including potential liability for pollution or other hazards as a result of disposal of waste products occurring from exploration and production) is not generally available to us or to other companies in the industry. Although we maintain insurance in an amount that we consider to be adequate, liabilities might exceed policy limits, in which event we could incur significant costs that could adversely affect our financial condition, results of operation and liquidity.

  

We are subject to significant governmental regulations, and their related costs and delays may negatively affect our business.


Mining activities are subject to extensive federal, state, local and foreign laws and regulations governing environmental protection, natural resources, prospecting, development, production, post-closure reclamation, taxes, labor standards and occupational health and safety laws and regulations including mine safety, toxic substances and other matters related to our business. The costs associated with compliance with such laws and regulations are substantial. Possible future laws and regulations, or more restrictive interpretations of current laws and regulations by governmental authorities could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the development of our properties. Changes in the federal government may increase the likelihood that mining companies generally will be subject to new laws, regulations and regulatory investigations.


Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

  

Compliance with environmental regulations and litigation based on environmental regulations could require significant expenditures.

  

Environmental regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-



14



compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees.

  

To the extent we are subject to environmental liabilities, the payment of such liabilities or the costs that it may incur to remedy environmental pollution would reduce funds otherwise available to us and could have a material adverse effect on our financial condition and results of operations. If we are unable to fully remedy an environmental problem, we might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The environmental standards that may ultimately be imposed at a mine site impact the cost of remediation and may exceed the financial accruals that have been made for such remediation. The potential exposure may be significant and could have a material adverse effect on our financial condition and results of operations.

  

Moreover, governmental authorities and private parties may bring lawsuits based upon damage to property and injury to persons resulting from the environmental, health and safety impacts of our operations, which could lead to the imposition of substantial fines, remediation costs, penalties and other civil and criminal sanctions. Substantial costs and liabilities, including for restoring the environment after the closure of mines, are inherent in our proposed operations.

  

Some mining wastes are currently exempt to a limited extent from the extensive set of federal Environmental Protection Agency (“EPA”) regulations governing hazardous waste under the Resource Conservation and Recovery Act (“RCRA”). If the EPA designates these wastes as hazardous under RCRA, we may be required to expend additional amounts on the handling of such wastes and to make significant expenditures to construct hazardous waste disposal facilities. In addition, if any of these wastes causes contamination in or damage to the environment at a mining facility, such facility may be designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). Under CERCLA, any owner or operator of a Superfund site since the time of its contamination may be held liable and may be forced to undertake extensive remedial cleanup action or to pay for the government’s cleanup efforts. Such owner or operator may also be liable to governmental entities for the cost of damages to natural resources, which may be substantial. Additional regulations or requirements are also imposed under the federal Clean Water Act (“CWA”). The Company considers the current proposed federal legislation relating to climate change and its potential enactment may have future impacts to the Company’s operations in the United States.

  

In addition, there are numerous legislative and regulatory proposals related to climate change, including legislation pending in the U.S. Congress to require reductions in greenhouse gas emissions. The Company has reviewed and considered current federal legislation relating to climate change and does not believe it to have a material effect on its operations, however, additional regulation or requirements under any of these laws and regulations could have a materially adverse effect upon the Company and its results of operations.

  

Compliance with CERCLA, the CWA and state environmental laws could entail significant costs, which could have a material adverse effect on our operations.

  

In the context of environmental permits, including the approval of reclamation plans, we must comply with standards and regulations which entail significant costs and can entail significant delays. Such costs and delays could have a dramatic impact on our operations. There is no assurance that



15



future changes in environmental regulation, if any, will not adversely affect our operations. We intend to fully comply with all applicable environmental regulations.


We are required to obtain government permits to begin new operations. The acquisition of such permits can be materially impacted by third party litigation seeking to prevent the issuance of such permits. The costs and delays associated with such approvals could affect our operations, reduce our revenues, and negatively affect our business as a whole.

  

Mining companies are required to seek governmental permits for the commencement of new operations. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings. The duration and success of permitting efforts are contingent on many factors that are out of our control. The governmental approval process may increase costs and cause delays depending on the nature of the activity to be permitted, and could cause us to not proceed with the development of a mine. Accordingly, this approval process could harm our results of operations.

  

Any of our future acquisitions may result in significant risks, which may adversely affect our business.

  

An important element of our business strategy is the opportunistic acquisition of gold mines, properties and businesses or interests therein. While it is our practice to engage independent mining consultants to assist in evaluating and making acquisitions, any mining properties or interests therein we may acquire may not be developed profitably or, if profitable when acquired, that profitability might not be sustained. In connection with any future acquisitions, we may incur indebtedness or issue equity securities, resulting in increased interest expense, or dilution of the percentage ownership of existing shareholders. We cannot predict the impact of future acquisitions on the price of our business or our common stock. Unprofitable acquisitions, or additional indebtedness or issuances of securities in connection with such acquisitions, may impact the price of our common stock and negatively affect our results of operations.

  

We are continuously considering possible acquisitions of additional mining properties or interests therein that are located in other countries, and could be exposed to significant risks associated with any such acquisitions.

  

In the ordinary course of our business, we are continuously considering the possible acquisition of additional significant mining properties or interests therein that may be located in countries other than those in which we now have interests. Consequently, in addition to the risks inherent in the valuation and acquisition of such mining properties, as well as the subsequent development, operation or ownership thereof, we could be subject to additional risks in such countries as a result of governmental policies, economic instability, currency value fluctuations and other risks associated with the development, operation or ownership of mining properties or interests therein. Such risks could adversely affect our results of operations.


Our ability to find and acquire new mineral properties is uncertain. Accordingly, our prospects are uncertain for the future growth of our business.

  

Because mines have limited lives based on proven and probable ore reserves, we may seek to replace and expand our future ore reserves, if any. Identifying promising mining properties is difficult and speculative. Furthermore, we encounter strong competition from other mining companies in



16



connection with the acquisition of properties producing or capable of producing gold.  Many of these companies have greater financial resources than we do. Consequently, we may be unable to replace and expand future ore reserves through the acquisition of new mining properties or interests therein on terms we consider acceptable. As a result, our future revenues from the sale of gold, if any, may decline, resulting in lower income and reduced growth.


Risks Related to This Spin-Off and Our Stock



Future issuances of our common stock could dilute current shareholders and adversely affect the market if it develops.


We have the authority to issue up to 100,000,000 shares of common stock and 25,000,000 shares of preferred stock and to issue options and warrants to purchase shares of our common stock, without shareholder approval.  In addition, we could issue large blocks of our common stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval, which would not only result in further dilution to investors in this offering but could also depress the market value of our common stock, if a public trading market develops.


We may issue preferred stock that would have rights that are preferential to the rights of our common stock that could discourage potentially beneficial transactions to our common stockholders.


An issuance of shares of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over our common stock and could, upon conversion or otherwise, have all of the rights of our common stock.  Our Board of Directors' authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve.  The issuance of preferred stock could impair the voting, dividend and liquidation rights of common stockholders without their approval.


There is currently no market for our common shares, and shareholders may be unable to sell their shares for an indefinite period of time.


There is presently no market for our common shares.  There is no assurance that a liquid market for our common shares will ever develop in the United States or elsewhere, or that if such a market does develop that it will continue.  Accordingly, common shares of our Company received in the spin-off may have to be held indefinitely.


Over-the-counter stocks are subject to risks of high volatility and price fluctuation.


We have not applied to have our shares listed on any stock exchange or on the NASDAQ Capital Market, and we do not plan to do so in the foreseeable future.  As a result, if a trading market does develop for our common stock, of which there is no assurance, it is likely that our shares will trade on the over-the-counter (“OTC”) market.  The OTC market for securities has experienced extreme price and volume fluctuations during certain periods.  These broad market fluctuations and other factors, such as new product developments and trends in our Company's industry and the investment markets generally, as well as economic conditions and quarterly variations in our results of



17



operations, may adversely affect the market price of our common stock and make it more difficult for investors in this offering to sell their shares.


Trading in our securities will in all likelihood be conducted on an electronic bulletin board established for securities that do not meet NASDAQ listing requirements.  As a result, investors will find it substantially more difficult to dispose of our securities.  Investors may also find it difficult to obtain accurate information and quotations as to the price of, our common stock.  


Our stock price may be volatile and as a result, shareholders could lose all or part of their investment. The value of our shares could decline due to the impact of any of the following factors upon the market price of our common stock:


·

failure to meet production goals or operating budget;

·

decline in demand for our common stock;

·

operating results failing to meet the expectations of securities analysts or investors in any quarter;

·

downward revisions in securities analysts' estimates or changes in general market conditions;

·

investor perception of our Company's industry or prospects; and

·

general economic trends.


In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile.  These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock.


Outstanding shares that are eligible for future sale could adversely impact a public trading market for our common stock, if a public trading market develops.


All of the shares of common stock that will be distributed under this prospectus will be free-trading shares.  In addition, in the future, we may offer and sell shares without registration under the Securities Act. All of such shares will be "restricted securities" as defined by Rule 144 ("Rule 144") under the Securities Act and cannot be resold without registration except in reliance on Rule 144 or another applicable exemption from registration.  Under Rule 144, after we have been a reporting company for at least 90 days, a non-affiliate of the Company can sell restricted shares held for at least six months, subject only to the restriction that the Company has made available public information as required by Rule 144.  Affiliates of the Company can sell restricted securities after six months, subject to compliance with the volume limitation, manner of sale, Form 144 filing and current public information requirements.  No shares of our common stock are currently eligible for resale under Rule 144.  


No prediction can be made as to the effect, if any, that future sales of restricted shares of common stock, or the availability of such common stock for sale, will have on the market price of the common stock prevailing from time to time. Sales of substantial amounts of such common stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of the common stock.




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If a public trading market for our shares develops, owners of our common stock will be subject to the “penny stock” rules.  


Since our shares are not listed on a national stock exchange or quoted on the Nasdaq Market within the United States, if a public trading market develops, of which there can be no assurance, trading in our shares on the OTC market will be subject, to the extent the market price for our shares is less than $5.00 per share, to a number of regulations known as the "penny stock rules".  The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide the customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to make a special written determination that the penny stock is a suitable investment for the investor and receive the investor’s written agreement to the transaction.  To the extent these requirements may be applicable they will reduce the level of trading activity in the secondary market for our shares and may severely and adversely affect the ability of broker-dealers to sell our shares, if a publicly traded market develops.


We do not expect to pay cash dividends in the foreseeable future.  Any return on investment may be limited to the value of our stock.


We have never paid any cash dividends on any shares of our capital stock, and we do not anticipate that we will pay any dividends in the foreseeable future.  Our current business plan is to retain any future earnings to finance the expansion of our business.  Any future determination to pay cash dividends will be at the discretion of our Board of Directors, and will be dependent upon our financial condition, results of operations, capital requirements and other factors as our board of directors may deem relevant at that time.  If we do not pay cash dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates.


Changes in the corporate and securities laws and regulations are likely to increase our costs.

      

The Sarbanes-Oxley Act of 2002 (SOX), which became law in July 2002, has required changes in some of our corporate governance, securities disclosure and compliance practices. In response to the requirements of SOX, the SEC and major stock exchanges have promulgated new rules and listing standards covering a variety of subjects. Compliance with these new rules and listing standards are likely to increase our general and administrative costs, and we expect these to continue to increase in the future. In particular, we will be required to include the management and auditor reports on internal control as part of our annual report for the year ending December 31, 2011 pursuant to Section 404 of SOX. We are in the process of evaluating our internal control systems in order (i) to allow management to report on our internal controls, as required by these laws, rules and regulations, (ii) to provide reasonable assurance that our public disclosure will be accurate and complete, and (iii) to comply with the other provisions of Section 404 of SOX.  We cannot be certain as to the timing of the completion of our evaluation, testing and remediation actions or the impact these may have on our operations.  Furthermore, there is no precedent available by which to measure compliance adequacy.  If we are not able to implement the requirements relating to internal controls and all other provisions of Section 404 in a timely fashion or achieve adequate compliance with these requirements or other requirements of SOX, we might become subject to sanctions or investigation by regulatory authorities such as the SEC or FINRA. Any such action may materially adversely affect our reputation, financial condition and the value of our securities, including our common stock. We expect that SOX and these other laws, rules and regulations will increase legal and financial



19



compliance costs and will make our corporate governance activities more difficult, time-consuming and costly. We also expect that these new requirements will make it more difficult and expensive for us to obtain director and officer liability insurance.


 If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.

 

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide financial reports or prevent fraud, our business reputation and operating results could be harmed. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.


No broker or dealer has committed to create or maintain a market in our stock.


We have no agreement with any broker or dealer to act as a marketmaker for our securities and there is no assurance that we will be successful in obtaining any marketmakers.  Thus, no broker or dealer will have an incentive to make a market for our stock.  The lack of a marketmaker for our securities could adversely influence the market for and price of our securities, as well as your ability to dispose of, or to obtain accurate information about, and/or quotations as to the price of, our securities.


Nevada law and our by-laws protect our directors from certain types of lawsuits.


Nevada law provides that our directors will not be liable to us or our stockholders for monetary damages for all but certain types of conduct as directors.  Our by-laws require us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law.  The exculpation provisions may have the effect of preventing stockholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances.  The indemnification provisions may require us to use our assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.  



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 The Spin-Off and Plan of Distribution


Distributing Company

Athena Silver Corporation

  

Shares To Be Distributed:

Approximately 3,000,000 shares of our common stock, $0.001 par value.  The shares to be distributed in the spin-off will represent slightly less than 10% of our total common shares outstanding.

  

Distribution Ratio

One (1) of our common shares for every ten (10) common shares of Athena owned of record on December 31, 2010.  No cash distributions will be paid and fractional shares will be rounded to the nearest whole.

  

No Payment Required

No holder of Athena common shares will be required to make any payment, exchange any shares or to take any other action in order to receive our common shares.

  

Record Date

The record date for Athena's distribution of our shares is December 31, 2010.  Since the record date, the Athena common shares have been trading "ex dividend," meaning that persons who have bought their common shares after the record date are not entitled to participate in the distribution.

  

Prospectus Mailing Date

_________________, 2011 .  We have mailed this prospectus to you on or about this date.  

  

Distribution Date

The distribution date will be a date within ten (10) days following the prospectus mailing date designated above.  If you hold your Athena common shares in a brokerage account, your shares of our common stock will be credited to that account.  If you hold Athena shares in a certificated form, a certificate representing your shares of our common stock will be mailed to you; the mailing process is expected to take about thirty (30) days.  

  

Distribution Agent

The distribution agent for the spin-off will be Corporate Stock Transfer, Inc., Denver, Colorado.

  



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Listing and Trading

   of Our Shares

There is currently no public market for our shares.  We do not expect a market for our common shares to develop until after the distribution date.  Our shares will not qualify for trading on any national or regional stock exchange or on the Nasdaq Stock Market.  We will attempt to have one or more broker/dealers agree to serve as marketmakers and quote our shares on the over-the-counter market on the OTC Electronic Bulletin Board maintained by the NASD.  However, we have no present agreement, arrangement or understanding with any broker/dealer to serve as a marketmaker for our common shares.  If a public trading market develops for our common shares, of which there can be no assurance, we cannot ensure that an active trading market will be available to you.  Many factors will influence the market price of our shares, including the depth and liquidity of the market which develops investor perception of our business and growth prospects and general market conditions.  

  


Background and Reasons for the Spin-Off


In March 2010, Athena acquired a mineral lease through its wholly-owned subsidiary Athena Minerals, Inc., covering twenty (20) patented mining claims located in San Bernardino County, California.  The mining claims are known as the Langtry Project and based on historical resource data is primarily a silver prospect (“Langtry”).


Management of Athena decided that there existed additional opportunities to diversify into gold prospects, particularly given the increases in mineral commodity prices over the past 18 months.  Management identified the Nevada Properties as a potential gold play, but recognized that Athena did not have the capital and resources to explore both the Langtry Project and the Nevada Properties. As a result, the decision was made to capitalize a new company, Magellan, to take advantage of the Nevada claims, with the principals of Athena, individually, providing a majority of the initial capital.  Magellan was capitalized with an aggregate of $82,500 through the sale of 33 million shares, or $.0025 per share.  John Gibbs, a principal Athena shareholder, purchased 20 million shares for $50,000, John Power, a principal Athena shareholder as well as Athena’s President, CEO and director, purchased 10 million shares for $25,000, and Athena purchased 3 million shares for $7,500. Athena acquired its shares of Magellan with the view and intent to undertake the spin-off of those shares to its shareholders in the manner described in this prospectus.



Goals of the Spin-Off


The formation and organization of Magellan was designed to provide an additional opportunity to the Athena shareholders under circumstances where Athena lacked the working capital needed to take advantage of the opportunity to acquire the Nevada interests in the patented and unpatented mining claims.  Athena would not have had the funds to acquire the Nevada interests and undertake exploration activities while at the same time exploring and developing the Langtry Project.  By allowing Athena to acquire a minority interest in Magellan, the Athena shareholders have been provided with an opportunity to diversify their equity currency in both a silver prospect and gold prospects without having the primary responsibility to capitalize both activities.



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Mechanics of Completing the Spin-Off


Within ten (10) days following the date that the SEC declares effective the registration statement that includes this prospectus, we will deliver to the distribution agent, Corporate Stock Transfer, Inc., 3,000,000 shares of our common stock to be distributed to the Athena shareholders as of December 31, 2010, pro rata.  


If you hold your Athena common shares in a brokerage account, your shares of our common stock will be credited to that account.  If you hold your Athena common shares in certificated form, a certificate representing shares of our common stock will be mailed to you by the distribution agent.  The mailing process is expected to take about thirty (30) days.  


No cash distributions will be paid.  Fractional shares of our common stock issuable in accordance with the distribution will be rounded to the nearest whole.


No holder of common shares of Athena is required to make any payment or exchange any shares in order to receive our common shares in the spin-off distribution.



Capitalization


The following table sets forth our capitalization as of March 31, 2011.  This section should be read in conjunction with the consolidated financial statements and related notes contained elsewhere in this prospectus.

     

Long-term debt:

 

$

 

Stockholders' Equity:

   
 

Preferred Stock, $.001 par value,

   
 

25,000,000 shares authorized; no

shares issued and outstanding

  

 

Common Stock, $.001 par value,

   
  

100,000,000 shares authorized; 33,000,000 shares outstanding but not issued

   
    

33,000 

 

Additional paid-in capital

 

49,500 

 

Accumulated (deficit) – exploration stage

 

(35,260)

 

Stockholders’ equity

$

47,240 





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Market For Common Equity And Related Stockholder Matters


Market Information


There currently exists no public trading market for our securities.  We do not intend to develop a public trading market until our offering has terminated.  There can be no assurance that a public trading market will develop at that time or be sustained in the future.  Without an active public trading market, you may not be able to liquidate your investment without considerable delay, if at all.  If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations.  Factors we discuss in this prospectus, including the many risks associated with an investment in us, may have a significant impact on the market price of our common stock.  Also, because of the relatively low price of our common stock, many brokerage firms may not effect transactions in our common stock.


Upon completion of this offering, we intend to apply to have our common stock quoted on the OTC Bulletin Board.  No trading symbol has yet been assigned.


Rules Governing Low-Price Stocks that May Affect Our Shareholders' Ability to Resell Shares of Our Common Stock


Quotations on the OTC/BB reflect inter-dealer prices, without retail mark-up, markdown or commission and may not reflect actual transactions.  Our common stock may be subject to certain rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in "penny stocks".  Penny stocks generally are securities with a price of less than $5.00, other than securities registered on certain national exchanges or quoted on the Nasdaq system, provided that the exchange or system provides current price and volume information with respect to transaction in such securities.  The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.


The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to make a special suitability determination for the purchaser to receive the purchaser’s written consent to the transaction prior to sale, to deliver standardized risk disclosure documents prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock.  In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.


Holders


As of the date of this prospectus, we have three shareholders of record of the Company’s common stock.




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Rule 144 Shares


As of the date of this prospectus, we have no shares of common stock issued and outstanding that are available for resale by our shareholders to the public under Rule 144 of the Securities Act.  However, in the future, we may issue shares without registration under the Securities Act in reliance upon exemptions from the registration requirements of the Securities Act, in which event those shares would be deemed “restricted securities” and may, in the future, become eligible for resale under Rule 144.


Effective February 15, 2008, the SEC amended Rule 144 as part of its efforts to facilitate public and private capital-raising and ease disclosure requirements, particularly for smaller companies but also for large public companies.  Under Rule 144, as amended, a non-affiliate of an issuer is eligible to resell restricted securities after they have been owned for six months without regard to the former rules related to manner of sale, volume limitations and the requirement to file a Form 144 with the SEC.  After a non-affiliate has owned restricted securities for one year, the amended Rule 144 eliminates the requirement that the issuer have current public information available.  


Under the amended Rule 144, affiliates of an issuer may resell restricted securities after the applicable six month holding period but continue to be subject to the current public information, volume limitation, manner of sale and Form 144 filing requirements.  However, the manner of sale has been amended to permit resales through “risk list principal transactions”, as well as “broker’s transactions”.  The revised Rule 144 also eliminates the manner of sale requirements for resale of debt securities by affiliates and increases the volume limitations for resales of debt securities by affiliates to an amount not to exceed 10% of a particular tranche that such debt securities were issued under in any three-month period.


Dividends


As of the filing of this prospectus, we have not paid any dividends to our shareholders.  There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future. Nevada Revised Statutes, however, prohibits us from declaring dividends where, after giving effect to the distribution of the dividend, we would not be able to pay our debts as they become due in the usual course of business; or if our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.


Transfer Agent


The transfer agent and registrar for our common and preferred stock is Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430, Denver, CO 80209.




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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


In this Prospectus we use the terms “Magellan,” “we,” “our,” and “us” to refer to Magellan Gold Corporation.


The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Prospectus. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.


Forward-Looking Statements


Some of the information presented in this prospectus constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, statements that include terms such as “may,” “will,” “intend,” “anticipate,” “estimate,” “expect,” “continue,” “believe,” “plan,” or the like, as well as all statements that are not historical facts.  Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations.  Although we believe our expectations are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially from expectations.


All forward-looking statements speak only as of the date on which they are made.  We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.


Overview


We were incorporated on September 28, 2010 in Nevada. We are an exploration stage company and our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable.


We have only recently begun operations and we rely upon the sale of our securities to fund our operations as we have not generated any revenue.

Our primary focus during the next twelve months will be to acquire, explore, and if warranted and feasible, permit and develop our mineral properties.  


Results of Operations


The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Prospectus.  




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Results of Operations for the three months ended March 31, 2011


Operating expenses


During the three months ended March 31, 2011, our total expenses were $26,354. Operating expenses included professional fees, comprised of legal, accounting and audit fees, totaling $18,804, management fees to John C. Power, our President and Director, totaling $7,500 and other general and administrative costs of $50.


Net Loss


Our net loss for the three months ended March 31, 2011 was $26,354.


Results of Operations for the period from inception (September 28, 2010) to December 31, 2010


Operating expenses


During the period from September 28, 2010 (our inception through December 31, 2010, our total expenses were $34,759. General and administrative expenses included professional fees, comprised of legal fees, totaling $5,418, licenses and filing fees of $1,775 and other general and administration costs of $1,212. Exploration expenses totaled $501 during this period.


Net Loss


Our net loss for the period from September 28, 2010 through December 31, 2010 was $8,906.


Liquidity and Capital Resources:


We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.


Our primary priority will be to retain our reporting status with the SEC which means that we will first ensure that we have sufficient capital to cover our legal and accounting expenses. Once these costs are accounted for, in accordance with how much financing we are able to secure, we will focus on exploration and development of our mineral properties. We will likely not expend funds on the

remainder of our planned activities unless we have the required capital.


As of and three months ended March 31, 2011


As of March 31, 2011, we had $10,632 in cash and $2,173 in working capital. During the three months ended March, 31, 2011, we experienced a $31,542 net decrease in cash.

Net cash used in operating activities was $25,606 and we used $5,846 in investing activities comprised of $5,000 to acquire an option to explore and lease claims in Washoe County, Nevada, and $846 in other mineral properties acquisition costs. During the three months ended March 31, 2011 we made short-term advances to Athena Silver Corporation, a company under common control, and John C. Power, our CEO and Director. These loans were repaid during the same period and we do not anticipate further loans to related parties in the future.



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As of and period from inception (September 28, 2010) to December 31, 2010


As of December 31, 2010, we had $41,814 in cash and $34,373 in working capital. During the period from September 28, 2010 (our inception) through December 31, 2010, we experienced a $10,362 net increase in cash.


Net cash used in operating activities was $1,465comprised of our net loss of $8,906 offset by an increase in accounts payable of $7,441.


Cash used in investing activities was $39,221 comprised of mining lease and mining claims acquisition costs applicable to our Secret Canyon Claims ($33,722), Randall Claims ($1,798) and Pony Express Claims ($3,701).


Net cash provided by financing activities was $82,500. On December 20, 2010, we issued 33,000,000 common shares at $.0025 for total consideration of $82,500. Total consideration consisted of cash of $64,020 and repayment of advances from related parties of $18,480. Cash advances from related parties totaled $18,480, net, during the period.


Off Balance Sheet Arrangements


We do not have and have never had any off-balance sheet arrangements.


Inflation


The effect of inflation on our revenues and operating results has not been significant.


Critical Accounting Policies


The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the amounts reported in our financial statements. Note 2 - Summary of Significant Accounting Policies to our financial statements from the period September 28, 2010 (inception) through December 31, 2010, describes our significant accounting policies used in the preparation of our financial statements. The accounting positions described below are significantly affected by critical accounting estimates.


We believe that the significant estimates, assumptions and judgments when accounting for items and matters such as capitalized mining rights, asset valuations, recoverability of assets, asset impairments, taxes, and other provisions are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.


Mining Rights


We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, the direct costs to acquire or lease mining rights are initially capitalized as tangible assets. Mining rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease properties.



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If we establish proven and probable reserves for a property and we determined that a mineral property can be economically developed, mining rights will be amortized over the estimated useful life of the property following the commencement of production or expensed if we determine that the mineral property has no future economic value or if the property is sold or abandoned.


Considerable judgment is used when determining if a mineral property can be economically developed, estimating reserves, establishing useful lives and amortization methods, establishing commercial production, determining the fair value of non-cash consideration for mining rights and identifying our direct costs to acquire or lease mining rights.


Valuation of Long-lived Assets


Long-lived assets, including mining rights, are subject to an impairment test if there is an indicator of impairment. The carrying value and ultimate realization of these assets is dependent upon our estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, long-lived assets may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows and other fair value measurements.


Exploration Costs   


We expense mineral exploration costs as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, our costs incurred to further delineate and develop a mine are considered pre-commercial production costs and will be included in our balance sheets.


Income Taxes


We assess the recoverability of our net deferred tax assets and the need for a valuation allowance on a periodic basis. Our assessment includes a number of factors, including historical results and taxable income projection. The ultimate realization of deferred income tax assets is dependent on the generation of taxable income during the periods in which those temporary differences are deductible.



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The Business


DEFINITIONS

  

The following sets forth definitions of certain important mining terms used in this report.

  

“Ag” is the abbreviation for silver.

  

“Au” is the abbreviation for gold.

  

“Backfill” is primarily waste sand or rock used to support the roof or walls after removal of ore from a stope.

  

“By-Product” is a secondary metal or mineral product recovered in the milling process such, as gold.

  

        “Concentrate” is a very fine powder-like product containing the valuable metal from which most of the waste material in the ore has been eliminated.


“Contained Ounces” represents ounces in the ground before reduction of ounces not able to be recovered by applicable metallurgical process.

  

“Cut-off Grade” is the minimum metal at which an ore body can be economically mined; used in the calculation of reserves in a given deposit.

  

“Cyanidation” is a method of extracting gold or silver by dissolving it in a weak solution of sodium or potassium cyanide.

  

“Development” is work carried out for the purpose of accessing a mineral deposit. In an underground mine that includes shaft sinking, crosscutting, drifting and raising. In an open pit mine, development includes the removal of over burden.

  

“Dilution” is an estimate of the amount of waste or low-grade mineralized rock which will be mined with the ore as part of normal mining practices in extracting an ore body.

  

“Doré” is unrefined gold and silver bullion bars which contain gold, silver and minor amounts of impurities which will be further refined to almost pure metal.

  

“Drilling”

  

Core: with a hollow bit with a diamond cutting rim to produce a cylindrical core that is used for geological study and assays used in mineral exploration.

  

In-fill: is any method of drilling intervals between existing holes, used to provide greater geological detail and to help establish reserve estimates.

  

“Exploration” is prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.

    



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Gold” is a metallic element with minimum fineness of 999 parts per 1000 parts pure gold.


“Grade” is the amount of metal in each ton of ore, expressed as troy ounces per ton or grams per tonne for precious metals.

  

“Heap Leach Pad” is a large impermeable foundation or pad used as a base for ore during heap leaching.

  

“Heap Leaching Process” is a process of extracting gold and silver by placing broken ore on an impermeable pad and applying a diluted cyanide solution that dissolves a portion of the contained gold and silver, which are then recovered in metallurgical processes.

  

“Hectare” is a metric unit of area equal to 10,000 square meters (2.471 acres).

  

“Mill” is a processing facility where ore is finely ground and thereafter undergoes physical or chemical treatments to extract the valuable metals.

  

“Mill-Lead Grades” are metal content of mined ore going into a mill for processing.

  

“Mineralized Material” is gold and/or silver bearing material that has been physically delineated by one or more of a number of methods, including drilling, underground work, surface trenching and other types of sampling. This material has been found to contain a sufficient amount of mineralization of an average grade of metal or metals to have economic potential that warrants further exploration evaluation. While this material is not currently or may never be classified as ore reserves, it is reported as mineralized material only if the potential exists for reclassification into the reserves category. This material cannot be classified in the reserves category until final technical, economic and legal factors have been determined. Under the United States Securities and Exchange Commission’s (“SEC”) standards, a mineral deposit does not qualify as a reserve unless it can be economically and legally extracted at the time of reserve determination and it constitutes a proven or probable reserve (as defined below). In accordance with Securities of Exchange Commission guidelines, mineralized material reported in the Company’s reports filed with the SEC no longer includes inferred mineral resources.

  

“Mining Rate” tons of ore mined per day or even specified time period.


        “Open Pit” is a mine where the minerals are mined entirely from the surface.

  

“Operating Cash Costs Per Ounce” are cash costs per ounce minus production taxes and royalties.

  

“Ore” is rock, generally containing metallic or non-metallic minerals, which can be mined and processed at a profit.

  

“Ore Body” is a sufficiently large amount of ore that can be mined economically.

  

“Ore Reserve” is the part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.

  



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“Probable Reserve” is a part of a mineralized deposit which can be extracted or produced economically and legally at the time of the reserve determination. The quantity and grade and/or quality of a probable reserve is computed from information similar to that used for a proven reserve, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. Mining dilution, where appropriate, has been factored into the estimation of probable reserves.

  

“Proven Reserve” is a portion of a mineral deposit which can be extracted or produced economically and legally at the time of the reserve determination. The quantity of a proven reserve is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and the sites for inspections, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of a proven reserve is well-established. Mining dilution, where appropriate, has been factored into the estimation of proven reserves.

  

“Reclamation” is the process by which lands disturbed as a result of mining activity are modified to support beneficial land use. Reclamation activity may include the removal of buildings, equipment, machinery and other physical remnants of mining, closure of tailings, leach pads and other features, and contouring, covering and re-vegetation of waste rock and other disturbed areas.

  

“Recovery Rate” is a term used in process metallurgy to indicate the proportion of valuable material physically recovered in the processing of ore. It is generally stated as a percentage of material recovered compared to the material originally present.

  

“Refining” is the final stage of metal production in which impurities are removed from the molten metal.

  

“Run-of-mine Ore” is mined ore which has not been subjected to any pretreatment, such as washing, sorting or crushing prior to processing.

  

“Silver” is a metallic element with minimum fineness of 995 parts per 1000 parts pure silver.

  

“Stripping Ratio” is the ratio of the number of tons of waste material to the number of tons of ore extracted at an open-pit mine.

  

“Tailings” is the material that remains after all economically and technically recovered precious metals have been removed from the ore during processing.

  

“Ton” means a short ton which is equivalent to 2,000 pounds, unless otherwise specified.

  

“Total costs” are the sum of cash costs and non-cash costs.










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INTRODUCTION


About Our Company


Magellan Gold Corporation was formed and organized effective September 28, 2010 under the laws of the State of Nevada.  We are an exploration stage company and our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable. We were formed and organized by Athena Silver Corporation (“Athena”) a Delaware corporation, and by two of the control persons and principal shareholders of Athena.  Athena is engaged in the exploration of minerals at its principal project known as the Langtry Project located in San Bernardino County, California.


Our Properties


We have three principal mineral interests that we intend to engage in exploration and, if commercially recoverable deposits are found, mineral development activities.  To date, we have only begun planning preliminary exploration work.  Our properties are located in:


Washoe County, Nevada


Secret Canyon Claims:  


We have a ten (10) year mining lease to explore, develop and conduct mining operations on 70 (seventy)  unpatented lode mining claims located in Washoe County, Nevada.


Cowles Option and Mining Lease:  We have entered into an option and mining lease for the Gypsy, Morningstar extension, Carter, Denver, Whitehill #2, Whitehill, Morningstar, Gold Queen and Granite Mining Claims whereby we obtained the option, and possible subsequent lease and purchase, of the above-referenced Claims.  


Churchill County, Nevada


Randall Claims:  we have a ten (10) year mining lease to explore, develop and conduct mining operations on ten (10) unpatented lode mining claims located in Churchill County, Nevada.


Pony Express Claims:  we have filed two unpatented lode mining claims giving us the right to explore, develop and conduct mining operations on these claims located in Churchill County, Nevada.


Except for the Cowles Option, our mineral rights consist of leases covering "unpatented" mining claims created and maintained in accordance with the U.S. General Mining Law of 1872, which we refer to in this prospectus as the General Mining Law. Unpatented mining claims are unique U.S. property interests, and are generally considered to be subject to greater title risk than other real property interests because the validity of unpatented mining claims is often uncertain. This uncertainty arises, in part, out of the complex federal and state laws and regulations that supplement the General Mining Law. Also, unpatented mining claims and related rights, including rights to use the surface, are subject to possible challenges by third parties or contests by the federal government. The validity of an unpatented mining claim, in terms of both its location and its maintenance, is



33



dependent on strict compliance with a complex body of federal and state statutory and decisional law. In addition, there are few public records that definitively control the issues of validity and ownership of unpatented mining claims. We have not filed a patent application for any of our unpatented mining claims that are located on federal public lands in the United States and, under possible future legislation to change the General Mining Law, patents may be difficult to obtain.


Our Formation


We were formed and organized in September 2010 to acquire leases covering the Secret Canyon Claims, Randall Claims and Pony Express Claims (collectively our “Claims” or our “Properties”).  Effective September 2010, we issued an aggregate of 33 million shares of common stock to our founders in consideration of $.0025 per share:  30 million shares were issued to our two principal shareholders, John C. Power and John Gibbs, and 3 million shares were issued to Athena. The majority of the shares issued to Athena shall be distributed, in the nature of a spin-off of such shares to the shareholders of Athena, pro rata.  Most of the common stock acquired by Athena is being distributed to the Athena shareholders as of a Record Date of December 31, 2010.  Athena has agreed to pay for the distribution of our common stock to the Athena shareholders. 

  

Our principal executive offices are currently located at P.O. Box 114, 60 Sea Walk Drive, The Sea Ranch, CA 95497.  Our telephone number is (707) 884-3766, and our internet website is under development.


SUMMARY PROVISIONS OF MINERAL LEASES AND AGREEMENTS


SECRET CANYON UNPATENTED CLAIMS


On September 28, 2010, we entered into a Mining Lease which granted us a 10 year lease giving us the right to explore, develop and conduct mining operations on 70 unpatented lode mining claims situated in Washoe County, Nevada.


The following is a summary of the material provisions of the Secret Canyon Claims Lease:


·

The Lease commenced September 28, 2010, and has a term of 10 years.

·

In October 2010 we paid the lessor a $15,730 cash advance minimum royalty as consideration for the first year of the lease.

·

Advance minimum royalties are due on the first anniversary of the lease and each year thereafter as follows:

o

$20,000 is due on September 28, 2011;

o

$30,000 is due on September 28, 2012;

o

$40,000 is due on September 28, 2013; and

o

$50,000 is due on September 28, 2014 and on September 28th each year thereafter during the term of the lease.

·

During the term of the lease, the lessor will receive a production royalty of three percent of net smelter returns.

·

The production royalty is applicable to an area of interest extending one mile beyond the exterior boundaries of the lease.

·

We have the option to purchase up to two points (i.e. two percent) of the production royalty for $1.5 million per point.



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·

The lessor will receive no production royalties until all advance royalty payments have been recaptured.

·

We are obligated to pay annual federal and state claim maintenance fees and taxes levied on any improvements we place on the property during the term of the lease.

·

We are responsible for any reclamation costs applicable to areas disturbed during our exploration, development and mining activities.

·

We have the right to terminate the lease at any time upon 30 days written notice.

·

We have the right to extend the lease term for an additional 10 years.


SECRET CANYON PATENTED CLAIMS: COWLES OPTION


On March 15, 2011, we entered into an Option and Mining Lease with the owners of certain

patented lode mining claims located in Washoe County, Nevada.  The claims consist of the Gypsy, Morningstar Extension, Crater, Denver, Whitehill #2, Whitehill, Morningstar, Gold Queen and Granite Mining Claims (collectively the “Cowles Claims”).


The Option Period consists of two terms of six months each, and requires a $5,000 for the first six month Option Period and an additional $10,000 for the second six month Option Period.  The first $5,000 was paid on signing the Option and Lease.  During the Option Periods, we have the right to undertake preliminary exploration drilling and assay analysis, and have an affirmative obligation to expend at least $25,000 during each six month Option Period on exploration activities.


We have the right to exercise the option to lease the Cowles Claims at any time within the Option Period, which terminates March 15, 2012.  To exercise the option, we must pay the first lease payment of $35,000.  The pertinent terms of the lease can be summarized as follows:


·

Lease payment of $40,000 is due for the second lease year;

·

Lease payment of $65,000 is due for the third lease year;

·

Lease payment of $120,000 is due for the fourth and each subsequent lease year.

·

Lease term is ten (10) years, with an option to extend for an additional ten (10) years.

·

Production royalties payable to the owner equal to 4% gross smelter return on minerals sold.

·

Once total of all lease payments and production royalty payments equal $5.0 million, the owner will quitclaim title to the Cowles Claims, and all future lease and royalty payments will cease.


RANDALL CLAIMS


On October 2, 2010 we were assigned a Mining Lease (the “Randall Claims Lease”) from John C. Power our President and Director, which granted us the remaining term of a 10 year lease executed on August 18, 2010, giving us the right to explore, develop and conduct mining operations on ten (10)  unpatented lode mining claims situated in Churchill County, Nevada.  Mr. Power had acquired the Randall Claims Lease with the intention of assigning to Magellan after its formation.




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The following is a summary of the material provisions of the Randall Claims Lease:


·

The Lease commenced August 18, 2010, and has a term of 10 years expiring August 17, 2020.

·

Advance minimum royalties are due on the first anniversary of the lease and each year thereafter as follows:

o

$10,000 is due on August 18, 2011;

o

$20,000 is due on August 18, 2012;

o

$30,000 is due on August 18, 2013;

o

$40,000 is due on August 18, 2014; and

o

$50,000 is due on August 18, 2015 and on August 18th each year thereafter during the term of the lease.


·

During the term of the lease, the lessor will receive a production royalty of three percent of net smelter returns.

·

The production royalty is applicable to an area of interest extending one mile beyond the exterior boundaries of the lease.

·

We have the option to purchase up to two points (i.e. two percent) of the production royalty for $1.5 million per point.

·

The lessor will receive no production royalties until all advance royalty payments have been recaptured.

·

We are obligated to expend at least $10,000 of exploration costs applicable to the property during the first year of the lease. In the event that we spend less than $10,000, we are obligated to pay the lessor the difference between $10,000 and the actual amount we spent. Such amount, if any is due on September 18, 2011.

·

In all subsequent years of the lease term we are obligated to expend an amount equal to that year’s annual advance minimum royalty in exploration, development, mining or mineral processing costs. The excess of expenditures in one year can be carried forward to meet subsequent years obligations.

·

We are obligated to pay annual federal and state claim maintenance fees and taxes levied on any improvements we place on the property during the term of the lease.

·

We are responsible for any reclamation costs applicable to areas disturbed during our exploration, development and mining activities.

·

We have the right to terminate the lease at any time upon 30 days written notice.

·

We have the right to extend the lease term for an additional 10 years.


PONY EXPRESS CLAIMS.


On November 18, 2010 we staked two unpatented lode mining claims (the “Pony Express Claims”) giving us the right to explore, develop and conduct mining operations on these claims located in Churchill County, Nevada.   As we staked the claims ourselves, there is no mineral lease governing our rights to explore the Pony Express Claims.  


Unpatented Mining Claims:  The Mining Law of 1872


Our exploration, development and mining rights cover unpatented mining claims covering federal lands in Nevada.  In addition to the terms of the leases covering the Secret and Randall Claims, all of our Properties are held under and subject to the federal Mining Law of 1872.



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Location of mining claims under the Mining Law of 1872, 30 U.S.C. §§ 22-42, is a self-initiation system under which a person physically stakes an unpatented mining claim on public land that is open to location, posts a location notice and monuments the boundaries of the claim in compliance with federal laws and regulations and with state location laws, and files notice of that location in the county records and with the Bureau of Land Management (BLM). Mining claims can be located on land as to which the surface was patented into private ownership under the Stockraising Homestead Act of 1916, 43 U.S.C. §299, but the mining claimant cannot injure, damage or destroy the surface owner's permanent improvements and must pay for damage to crops caused by prospecting. Discovery of a valuable mineral deposit, as defined under federal law, is essential to the validity of an unpatented mining claim and is required on each mining claim individually. The location is made as a lode claim for mineral deposits found as veins or rock in place, or as a placer claim for other deposits. While the maximum size and shape of lode claims and placer claims are established by statute, there are no limits on the number of claims one person may locate or own. The Mining Law also contains provision for acquiring five-acre claims of non-mineral land for millsite purposes. A mining operation typically is comprised of many mining claims.


The holder of a valid unpatented mining claim has possessory title to the land covered thereby, which gives the claimant exclusive possession of the surface for mining purposes and the right to mine and remove minerals from the claim. Legal title to land encompassed by an unpatented mining claim remains in the United States, and the government can contest the validity of a mining claim. The Mining Law requires the performance of annual assessment work for each claim, and subsequent to enactment of the Federal Land Policy and Management Act of 1976, 43 U.S.C. §1201 et seq. , mining claims are invalidated if evidence of assessment work is not timely filed with BLM. However, in 1993 Congress enacted a provision requiring payment of $140 per year claim maintenance fee in lieu of performing assessment work, subject to an exception for small miners having less than ten claims. No royalty is paid to the United States with respect to minerals mined and sold from a mining claim.  In addition, in Nevada, holders of unpatented mining claims are required to pay the county recorder of the county in which the claim is situated an annual fee of $8.50 per claim.


The Mining Law of 1872 provides a procedure for a qualified claimant to obtain a mineral patent   (i.e., fee simple title to the mining claim) under certain conditions. It has become much more difficult in recent years to obtain a patent. Beginning in 1994, Congress imposed a funding moratorium on the processing of mineral patent applications which had not reached a designated stage in the patent process at the time the moratorium went into effect. Additionally, Congress has considered several bills in recent years to repeal the Mining Law or to amend it to provide for the payment of royalties to the United States and to eliminate or substantially limit the patent provisions of the law.


Mining claims are conveyed by deed, or leased by the claimant to the company seeking to develop the property. Such a deed or lease (or memorandum of it) needs to be recorded in the real property records of the county where the property is located, and evidence of such transfer needs to be filed with BLM. It is not unusual for the grantor or lessor to reserve a royalty, which as to precious metals often is expressed as a percentage of net smelter returns.





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Patented Mining Claims

Patented mining claims, such as the Cowles Claims, are mining claims on federal lands that are held in fee simple by the owner.  No maintenance fees or royalties are payable to the BLM; however lease payments and royalties are payable under the operative leases.


HISTORY AND GEOLOGY OF OUR PROPERTIES


Secret Canyon Project


Both the Secret Canyon unpatented BLM Claims held under lease and the patented Claims held under the Cowles Option are located in the North Olinghouse Mining District and comprise our Secret Canyon Project area.  The Claims are located approximately 30 miles northeast of Reno, Nevada and 5 miles south of Pyramid Lake on the east flank of the Pah Rah Range, and extend from Secret Canyon on the south to Big Mouth Canyon on the north.   The 70 unpatented BLM claims total approximately 1300 acres.  The nine patented Claims are surrounded by our unpatented BLM claims and comprise approximately180 acres.


Geology


The Property is situated in the Pyramid Lake structural basin which possesses strong mineralization potential.  The basin marks the intersection of two large tectonic features, the Walker Lane and the Mendocino Oroclinal fold.  Several mining districts and abundant current and paleo hydrothermal activity are present within the basin.  


The Walker Lane feature is a linear north-northwest trending depression extending some 800 km (500 miles) north from the Garlock Fault-Las Vegas area to south-central Oregon. Within the Walker Lane feature are Walker, Goose, and Pyramid Lakes. This trough is part of the Walker Lane Fault Zone, a major tectonic system that includes Owens and Death Valleys and several prominent faults, and is the site of many contemporary earthquakes. Located at the juncture of two contrasting tectonic styles, the Sierra Nevada and the Basin and Range, the Walker Lane region is deforming in a complex way by both extensional and transcurrent (sliding) fault movements


The Walker Lane shear zone straddles the border between Nevada and California and has a long history of exploration and mining, dating back to the discovery of the famous Comstock Lode in the late 1850s. The Walker Lane zone is notable for its numerous occurrences of volcanic-hosted epithermal gold and silver deposits.  The project area covers sheared and brecciated silciclastic rocks of the Triassic Excelsior Formation intruded by a porphyryitic quartz-monzonite of Laramide age.  The mineralized zone is mostly hosted within a graben of calcareous sandstone with quartz veins.


Precious metals in the central Olinghouse District are thought to be related to the large Comstock epithermal system.   Old workings on our claims are reported to have produced small shipments of Gold and Silver.   There are also occurrences of lead, copper and tungsten in the Olinghouse District.






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History


The Olinghouse District was first prospected in 1860, locations were made in Fort Defiance Canyon in 1864, and the Green Mountain Mines at Olinghouse were located in 1874.  Prior to 1900, placer deposits situated in several ravines tributary to Olinghouse Canyon were extensively worked by Wadsworth Nevada residents. The period between 1901 and 1903 witnessed the greatest activity in lode mining in the district, with three mills running most of the time.  In 1906, a railroad was constructed between Olinghouse and Wadsworth, connecting the camp with a 50-stamp mill located on the Truckee River; the mill ran for only three months and the operation failed due to lack of ore.  The railroad was dismantled in 1909 and operations at Olinghouse ceased and the mines were turned over to lessees.  Only intermittent mining activity occurred at Olinghouse until 1986 when Western Goldfields Co. secured land in the eastern part of the district and conducted a limited drilling program.  Encouraging gold mineralization was encountered in the drilling but, unable to expand their land position, the company ceased its program.  Phelps Dodge Corporation began work in 1991 and, by 1993, had developed a substantial gold resource in the central part of the old district.  Alta Gold Company acquired Phelps Dodge’s interest (the “Olinghouse Mine”) in 1994.  


Prior to the Alta’s  acquisition of the Olinghouse Mine  Phelps  Dodge  Mining  Company  drilled  57  reverse circulation  drill holes (approximately 34,695  feet)  and  seven core holes (approximately 6,507 feet).  During Alta's  due diligence  program prior to acquiring the Olinghouse Mine and subsequently thereafter, Alta drilled (1) 30 reverse circulation  drill holes  (approximately  10,265 feet)  in  1994;  (2)  124  reverse circulation drill holes (approximately 52,327 feet) in 1995;  (3) 396  reverse circulation drill holes (approximately 187,420 feet) and  six  core holes (approximately 1,181 feet) in 1996;  (4)  72 reverse  circulation drill holes (approximately 25,495  feet)  in1997; and (5) five reverse circulation drill holes (approximately3,000 feet) in 1998.


The Olinghouse Mine had proven and probable reserves as of December 31, 1998 of 9,165,000 tons of ore at an average grade of 0.051 ounces per ton gold, containing 466,800 ounces of gold.


Alta placed the Olinghouse Mine into production in September 1998 and remained in production until August 1999.  


In April of 1999, Alta filed a voluntary petition to reorganize under Chapter 11of the Bankruptcy Code to facilitate the reorganization of the company's business and the restructuring of its long-term debt and other liabilities.  


There is very little information on the history of mining activity in the portion of the northern Olinghouse district that includes the Secret Canyon Project area.  The northern Pah Rah Range may have been included in the Pyramid District prior to the formation of the White Horse (Olinghouse) District, and prospecting in the Big Mouth Canyon area dates back to 1860 when prospectors noticed prominent ledge outcroppings, and the district was organized in 1866.  Patent records, however, show that claims now included in the Bay State-Morning Star Group were not staked until the period of 1905 to 1914.  During the 1980’s, two companies undertook exploration projects in the area:  Dennison Mines (U.S.) Inc. and Bristlecone Mining Co. explored the Secret Canyon unpatented Claim group in Big Mouth Canyon between 1981 and about 1988.  During this period of exploration, a total of 7 exploration drill holes were completed in the project area.


A few small shipments of gold-silver ore were made from the Big Mouth Canyon area, but there is no official record of this or any other production from within our Secret Canyon Claim area.



39





Randall Claims and Pony Express Claims


Location


Both our Randall Claims and Pony Express Claims are located in the Sands Spring Mining District in Churchill County, Nevada.  


The Sand Springs Mining District is located in the Sand Springs Range about 30 miles east of Fallon, Nevada.  The historic gold-silver mines in the district are located within a one mile-square area just south of U.S. Highway 50 at Summit Pass. The District includes several small tungsten mines on both the northern and southern ends of the Sand Springs Range and small precious metals prospects on the west side of the Range both north and south of Highway 50.


Previously, C3 Resources, Inc., (“C3”) a privately-held mineral exploration company held a block of seventy-eight (78) unpatented claims that comprised the Randall Claims.   In 2009, C3 was acquired by publicly-traded Aurelio Resource Corporation (“Aurelio”).   Aurelio did not renew these claims.   RS Gold, LLC, retained 10 of these 78 claims believed to hold the most potential and in September 2010, we leased these 10 unpatented claims from RS Gold.


In November 2010, Magellan located, staked and filed with the BLM the Pony Express #1 Claim and the Pony Express #10 Claim comprising approximately 40 acres.


History


Gold-silver veins of the Dan Tucker-Summit King mines at Summit Pass were first prospected in 1905 by C. W. Kinney, but very little work was done until 1912 when a 100 foot shaft was sunk. The first production came in 1919 when lessors shipped three car-loads of ore to the Selby smelter. A small amalgamation mill was built in 1927 and approximately 1,000 tons of gold-silver ore were treated. Work and minor production continued until 1939 when the Bralorne Mining Company acquired a lease on the best properties and organized the summit King Mines, Ltd. Major development followed and a 50 ton per day cyanide plant was constructed at the site of the Dan Tucker mine and placed into operation early in 1940. Thereafter, the annual production steadily increased before operations were shut down during the war years (1942-1946). Operations resumed in 1948 and continued until 1951 when mining ceased because of a lack of ore. Total production of the Dan Tucker mine amounted to 20,895 ounces of gold and 1,262,655 ounces of silver with the major production occurring between 1940-1941 and 1948-1951. There has been no reported production since 1951 but the area continues to be actively prospected by small and large operators.


Our Randall Claims are located west of the historical gold-silver producing properties in the district.   Our Pony Express Claims are located on the east side of the historical gold-silver producing properties.  Pony Express #1 is adjacent to the Summit King patented claim.




40



Recorded production from the Sand Springs Mining District (from Willden and Speed, 1974, p. 80; compiled largely from U.S. Bureau of Mines Minerals Yearbook for years listed).


Year

Gold

(kilograms)

Silver

(kilograms)

Ore Mined

(metric tons)

Value*

1923

  

20

$1,020

1924-1929

**

   

1930

**

**

910

 

1931-1934

**

   

1935

0.3

4

10

460

1936

**

**

  

1937

0.7

54

130

2,140

1938

5.1

193

200

9,700

1939

6.5

325

300

14,400

1940

153.4

9,168

18,790

382,260

1941

179.3

9,283

18,770

424,040

1942-1947

**

   

1948

82.0

5,113

10,680

241,100

1949

113.4

5,434

16,520

285,775

1950

75.0

6,227

16,510

265,590

1951

34.1

3,469

8,500

139,335

1952-1965

**

   

TOTALS

649.8

39,270

91,340

$1,755,820


* Based on gold and silver prices at time of production.

** No recorded production or not disclosed.


Plan of Exploration


We intend to conduct initial exploration on our Secret Canyon and Randall Claims during the summer and fall of 2011.  We have not allocated any funds for exploration on our Pony Express Claims.   Our 2011 plan of exploration is contingent upon securing additional loans or equity funding.

    

Secret Canyon Claims


Our primary focus will be on the patented and unpatented claims that comprise our Secret Canyon Claims; we do not have a work commitment to maintain our lease on the BLM unpatented claims.  We do have a $25,000 work commitment on the patented claims under our lease/option for the patented claims.


We have allocated $70,000 as a budget for this program, which will involve hiring an independent geologist to evaluate our Claims, review historical data available through the Nevada Bureau of Mines Archives and recommend a work program through a Phase 1 drilling program.   Initially, we believe our Phase 1 drilling program would focus on the patented claims under lease/option.   The anticipated program costs for the further exploration and maintenance of our Secret Canyon Claims for 2011 are broken down as follows:




41





Secret Canyon Exploration & Maintenance

Cost ($)

Independent Geologist Technical Report – Work Program

15,000

Permitting & Access for Future Drill Program – Work Program

10,000

Lease Renewal – Unpatented Claims – September 2011

20,000

Option Renewal – Patented Claims – September 2011

10,000

BLM, Nevada & Washoe County Maintenance Fees – August 2011

15,000

Total

70,000


Randall Claims


We intend to conduct a geological survey program on the Randall Claims consisting of a ground magnetic survey together with interpretation of the geophysical data by an independent geophysics consultant.   We intend to complete this program by August 2011.    Our goal is to evaluate this data before our lease renewal on August 18, 2011.   Under the terms of our lease, we have a $10,000 work commitment and we believe this geophysical survey will allow us to meet the terms of our work commitment under this lease.  


Should we decide to renew this lease, we are obligated to pay $10,000 by August 18, 2011 and renew the leases with the BLM, State and local authorities estimated at $2,500.


 

Randall Claims Exploration & Maintenance                                     Cost ($)

Geophysical Survey Program

$10,000

Lease Renewal

 10,000

BLM Renewal Fees

2,500

Total

$22,500




GOLD PRICES

  

The Company’s operating results are substantially dependent upon the world market prices of gold. The Company has no control over gold prices, which can fluctuate widely. The volatility of such prices is illustrated by the following table, which sets forth the high and low prices of gold (as reported by www.kitco.com) per ounce during the periods indicated:

  

 

Year Ended December 31,

 

2010

2009

2008

 

HIGH

LOW

HIGH

LOW

HIGH

LOW

GOLD

$1,421.00

$1,058.00

$1,212.50

$810.00

$1,011.25

$712.50


These historical prices are not indicative of future gold prices. 


MARKETING

  

All of our mining operations, if successful, will produce gold in doré form or a concentrate that contains gold.



42



  

The Company plans to market its refined metal and doré to credit worthy bullion trading houses, market makers and members of the London Bullion Market Association, industrial companies and sound financial institutions. The refined metals are sold to end users for use in electronic circuitry, jewelry, and the pharmaceutical and technology industries. Generally, the loss of a single bullion trading counterparty would not adversely affect the Company due to the liquidity of the markets and the availability of alternative trading counterparties.

  

The Company plans to refine and market its precious metals doré and concentrates using a geographically diverse group of third party smelters and refiners. The loss of any one smelting and refining client may have a material adverse effect if alternate smelters and refiners are not available. The Company believes there is sufficient global capacity available to address the loss of any one smelter.

  


HEDGING ACTIVITES

  

The Company’s strategy is to provide shareholders with leverage to changes in gold prices by selling gold production at market prices. The Company may sell gold from its mines both pursuant to forward contracts and at spot prices prevailing at the time of sale. The Company may also enter into derivative contracts to protect the selling price for certain anticipated gold production and to manage risks associated with commodities and foreign currencies.


  GOVERNMENT REGULATION

  

General

  

The Company’s activities are and will be subject to extensive federal, state and local laws governing the protection of the environment, prospecting, development, production, taxes, labor standards, occupational health, mine safety, toxic substances and other matters. The costs associated with compliance with such regulatory requirements are substantial and possible future legislation and regulations could cause additional expense, capital expenditures, restrictions and delays in the development and continued operation of the Company’s properties, the extent of which cannot be predicted. In the context of environmental permitting, including the approval of reclamation plans, the Company must comply with known standards and regulations which may entail significant costs and delays. Although the Company is committed to environmental responsibility and believes it is in substantial compliance with applicable laws and regulations, amendments to current laws and regulations, more stringent implementation of these laws and regulations through judicial review or administrative action or the adoption of new laws could have a materially adverse effect upon the Company and its results of operations.


  Federal Environmental Laws

  

Certain mining wastes from extraction and beneficiation of ores are currently exempt from the extensive set of Environmental Protection Agency (“EPA”) regulations governing hazardous waste, although such wastes may be subject to regulation under state law as a solid or hazardous waste. The EPA has worked on a program to regulate these mining wastes pursuant to its solid waste management authority under the Resource Conservation and Recovery Act (“RCRA”). Certain ore processing and other wastes are currently regulated as hazardous wastes by the EPA under RCRA. If



43



the Company’s mine wastes were treated as hazardous waste or such wastes resulted in operations being designated as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) for cleanup, material expenditures would be required for the construction of additional waste disposal facilities or for other remediation expenditures. Under CERCLA, any present owner or operator of a Superfund site or an owner or operator at the time of its contamination generally may be held liable and may be forced to undertake remedial cleanup action or to pay for the government’s cleanup efforts. Such owner or operator may also be liable to governmental entities for the cost of damages to natural resources, which may be substantial. Additional regulations or requirements may also be imposed upon the Company’s tailings and waste disposal in Alaska under the Federal Clean Water Act (“CWA”) and state law counterparts. The Company has reviewed and considered current federal legislation relating to climate change and does not believe it to have a material effect on its operations. Additional regulation or requirements under any of these laws and regulations could have a materially adverse effect upon the Company and its results of operations.



EMPLOYEES AND CONSULTANTS


We have only one part-time employee, our President John Power, who devotes approximately 25% of his time and attention to the business of the Company.  We have agreed to pay Mr. Power $2,500 per month for his services.


We rely heavily on the services of consulting engineers and geologists.  To date, we have utilized the services of Parkinson Geologic Services to locate and stake the Pony Express claims. Both of our primary exploration prospects were generated by RS Gold, LLC an unaffiliated Nevada entity.




44





Management


Directors, executive officers and key employees


Name:

Age:

Position:

 

John C. Power

 

48

 

President, Secretary and Director


John C. Power, age 48, has been an officer and director of the Company since its inception in September 2010.  He has also served as President from December 2005 to December 2007 and from January 2009 to the present and as Secretary since January, 2007 of Athena Silver Corporation.   From March 2008 to February 2010, Mr. Power has served as a director of Reserve Energy Corporation, a small private oil and gas exploration and production company.  From September 2008 to the present, Mr. Power has served as an officer and director of Hungry Hunter, Inc. a California based restaurant enterprise.  He was President (since September 1992) and Director (since September 1989) of Redwood MicroCap Fund, Inc., a registered closed-end investment company regulated under the Investment Company Act of 1940, until March 2005.  Since March 2005, Mr. Power has served as vice-president of Alta California Broadcasting and Four Rivers Broadcasting. He is Co-Managing Member of Wyoming Resorts, LLC, which owns and operates an historic hotel in Thermopolis, Wyoming, (since June 1997), Managing Member of Montana Resorts, LLC, which is a holding company for Yellowstone Gateway Resorts, LLC, (from May 2002), Managing Member of Yellowstone Gateway Resorts, LLC, which owned and operated the Gallatin Gateway Inn, (from May 2002) and was co-Managing Member of Napa Canyon, LLC, which owns undeveloped real estate in Napa, California, (since September 2001).  On November 16, 2004, Yellowstone Gateway Resorts, LLC filed a voluntary petition in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in response to an adverse arbitration award in favor of a former employee.  Yellowstone Gateway Resorts, LLC was successfully reorganized under Chapter 11.   He served as Director of Redwood Energy, Ltd. from 1994 to 2004, President and Director of Redwood Broadcasting, Inc. from December 1994 to June 1998, President and Director of Power Surge, Inc., which was involved in radio broadcasting from December 1996 to June 1998.  He also serves as President of Power Curve, Inc., a private investment company, (since 1986), Managing Member of Sea Ranch Lodge and Village, LLC, which owned and operated the Sea Ranch Lodge in Sonoma County, California, (since December 1997), Managing Member of Best of Sea Ranch, LLC, which owns a 50% interest in Sea Ranch Escapes which is involved in home rentals at the Sea Ranch (since December 2004) and co-Managing Member of Napa Partners, LLC, which is a real estate holding company (since November 1999).  He also served as Managing Member of Sea Ranch California, LLC from December 1997 to June 2004.  Mr. Power attended Occidental College and University of California at Davis.  



Involvement in certain legal proceedings


During the last five (5) years no director or officer of the Company has:


 

a.

had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

   



45





 

b.

been convicted in a criminal proceeding or subject to a pending criminal proceeding;

   
 

c.

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

   
 

d.

been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.


Our executive officers are elected annually at the annual meeting of our Board of Directors held after each annual meeting of shareholders.  Our directors are elected annually at the annual meeting of our shareholders.  Each director and executive officer will hold office until his successor is duly elected and qualified, until his resignation or until he shall be removed in the manner provided by our by-laws.


We currently do not have standing audit, compensation or nominating committees of the Board of Directors.  We plan to form audit, compensation and nominating committees when it is necessary to do so to comply with federal securities laws or to meet listing requirements of a stock exchange or the Nasdaq Capital Market.


No family relationships exist among our directors.  Additionally, there do not exist any arrangements or understandings between any director and any other person pursuant to which any director was elected as such.


Director compensation


Our sole director, Mr. Power, receives no compensation for his services as director.



Executive compensation


The following table sets forth all plan and non-plan compensation paid by to our President for the year ended December 31, 2010:


 

SUMMARY COMPENSATION TABLE

Name

and

Principal

Position




Year



Salary

($)




Bonus



Stock

Awards



Options

Awards


Non equity

Incentive Plan

Compensation

Nonqualified

Deferred

Compensation

Earnings



All Other

Compensation




Total

John C. Power

2010

0

0

0

0

0

0

0

0




46



Our President, John C. Power, is our only executive officer.  Magellan has entered into a one year consulting agreement with Mr. Power at the rate of $30,000 per year for his part-time service as President of the Company. Mr. Power devotes approximately 25% of his time and attention to the business of the Company.


No executive officer will receive perquisites or other personal benefits which, in the aggregate exceed the lesser of $50,000 or 10% of the total of annual salary and bonus paid during the most recently-completed fiscal year.


Magellan had no outstanding equity awards at its fiscal year ending December 31, 2010.


Employment agreements


We do not have any written employment agreements other than the above-referenced consulting agreement with any of our executive officers or key employees; nor do we have or maintain key man life insurance on any of our employees.


Equity Incentive Plan


We have not adopted any stock option, equity or other incentive equity plan and have no immediate plans to do so.


Indemnification For Securities Act Liabilities


Limitation On Directors' Liability


       Our certificate of incorporation limits the liability of a director for monetary damages for his conduct as a director, except for:


 

*

Any breach of the duty of loyalty to us or our stockholders,

   
 

*

Acts or omissions not in good faith or that involved intentional misconduct or a knowing   

violation of law,

   
 

*

Dividends or other distributions of corporate assets from which the director derives an

improper personal benefit.

   
 

*

Liability under federal securities law


The effect of these provisions is to eliminate our right and the right of our stockholders (through stockholder's derivative suits on our behalf) to recover monetary damages against a director for breach of his fiduciary duty of care as a director, except for the acts described above.  These provisions do not limit or eliminate our right or the right of a stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director's duty of care.  


Our certificate of incorporation also provides that we shall indemnify, to the full extent permitted by Nevada Revised Statutes, any of our directors, officers, employees or agents who are made, or threatened to be made, a party to a proceeding by reason of the fact that he or she is or was one of our directors, officers, employees or agents.  The indemnification is against judgments, penalties, fines,



47



settlements, and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met.  Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons in accordance with these provisions, or otherwise, we have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act of 1933 is against public policy as expressed in the Securities Act and is, therefore, unenforceable.


Certain Relationships and Related Transactions


Founders’ Stock


Effective September 28, 2010, the Company issued an aggregate of 33,000,000 shares of common stock for cash consideration of $0.0025 per share, or a total of $82,500.  The shares were issued without registration under the Securities Act to the following investors:


John Gibbs

  20,000,00

 
 

John Power

10,000,000

  

 

Athena Silver Corporation

3,000,000

 
    




48



Security Ownership of Management and Principal Stockholders


The following table sets forth information with respect to beneficial ownership of our common stock by:


 

*

each person who beneficially owns more than 5% of the common stock;

 

*

each of our executive officers named in the Management section;

 

*

each of our Directors; and

 

*

all executive officers and Directors as a group.  


The table sets forth our stock ownership as of May 16, 2011, assuming the completion of the spin-off of our shares to the Athena shareholders.  Each person has sole voting and investment power with respect to the shares shown, except as noted.  


   

Amount and Nature of Beneficial Ownership

    
     




Name and Address

of Beneficial Owner

Number of  Shares Owned Before Spin-Off





Percent(1)



Number of  Shares Owned After Spin-Off

 





Percent(1)

      

John Gibbs

20,000,000

60.61

21,104,700(2)

 

63.95

P O Box 849;

16 E Street SW

Ardmore, OK  73402

     
      

John C. Power

P.O. Box 114

10,000,000

30.30

10,460,550

 

31.70

60 Sea Walk Drive

The Sea Ranch, CA  95497

     
      

Athena Silver Corporation

2010A Harbison Drive # 312

Vacaville, CA  95687

3,000,000

9.09

60,8503

 

nil


_______________________


(1)  Shares and percentages beneficially owned are based upon 33,000,000 shares outstanding on March 15, 2011.


(2)  Includes 46,650 shares of Athena owned by TriPower Resources, Inc., of which John D. Gibbs is President and controlling shareholder and includes 5,000 shares owned of Athena by Redwood MicroCap Fund, Inc., of which John D. Gibbs is President and controlling shareholder.


(3)  Actual number may vary due to rounding undertaken in the distribution




49






Federal Income Tax Considerations


General


The following discusses U.S. federal income tax consequences of the spin-off transactions to Athena stockholders who hold Athena common stock as a capital asset.  The discussion which follows is based on the Internal Revenue Code, Treasury Regulations issued under the Internal Revenue Code, and judicial and administrative interpretations of the Code, all as in effect as of the date of this Prospectus, all of which are subject to change at any time, possibly with retroactive effect. This summary is not intended as a complete description of all tax consequences of the spin-off, and in particular may not address U.S. federal income tax considerations applicable to Athena stockholders who are subject to special treatment under U.S. federal income tax law.  Stockholders subject to special treatment include, for example:


 

*

foreign persons (for income tax purposes, a non-U.S. person is a person who is not a citizen or a resident of the United States, or an alien individual who is a lawful permanent resident of the United States, or meets the substantial presence residency test under the federal income tax laws, or a corporation, partnership or other entity that is not organized in or under the laws of the United States or any state thereof or the District of Columbia),

   
 

*

financial institutions,

   
 

*

dealers in securities,

   
 

*

traders in securities who elect to apply a market-to-market method of accounting,

   
 

*

insurance companies,

   
 

*

tax-exempt entities,

   
 

*

holders who acquire their shares pursuant to the exercise of employee stock options or other compensatory rights, and

   
 

*

holders who hold Athena common stock as part of a hedge, straddle, conversion or constructive sale.


Further, no information is provided in this Prospectus with respect to the tax consequences of the spin-off under applicable foreign or state or local laws.  


Athena stockholders are urged to consult with their tax advisors regarding the tax consequences of the spin-off to them, as applicable, including the effects of U.S. federal, state, local, foreign and other tax laws.


We have not requested and do not intend to request a ruling from the Internal Revenue Service or an



50



opinion of tax counsel that the distribution will qualify as a tax-free spin-off under U.S. tax laws.  This is because under Section 355 of the Internal Revenue Code, one of the requirements under the U.S. tax laws for the transaction to constitute a tax-free spin-off is that Athena would need to, as the distributing corporation, be engaged immediately after the distribution in the active conduct of a trade or business that has been actively conducted throughout the five year period immediately preceding the date of distribution.   As this is not the case, we believe that the distribution will not qualify as a tax-free distribution.


Based upon the assumption that the spin-off fails to qualify as a tax-free distribution under Section 355 of the Code, then each Athena stockholder receiving our shares of common stock in the spin-off generally would be treated as if such stockholder received a taxable distribution in an amount equal to the fair market value of our common stock when received.  This would result in:


 

*

a dividend to the extent paid out of Athena current and accumulated earnings and profits at the end of the year in which the spin-off occurs; then

   
 

*

a reduction in your basis in Athena common stock to the extent that the fair market value of our common stock received in the spin-off exceeds your share of the dividend portion of the distribution referenced above; and then

   
 

*

gain from the sale or exchange of Athena common stock to the extent the amount received exceeds the sum of the portion taxed as a dividend and the portion treated as a reduction in basis.

   
 

*

each shareholder's basis in our common stock will be equal to the fair market value of such stock at the time of the spin-off.  If a public trading market for our common stock develops, we believe that the fair market value of the shares will be equal to the public trading price of the shares on the distribution date.  However, if a public trading market for our shares does not exist on the distribution date, other criteria will be used to determine fair market value, including such factors as recent transactions in our shares, our net book value and other recognized criteria of value.  


Following completion of the distribution, information with respect to the allocation of tax basis among Athena and our common stock will be made available to the holders of Athena common stock.


The distribution of our common shares in the spin-off will be treated by Athena in the same manner as any other distribution of cash or property that Athena may make.  Athena will recognize gain from the distribution of our common shares equal to the excess, if any, of the fair market value of our common shares that Athena distributes, over Athena’s tax basis in those shares.




51



Back-up Withholding Requirements


U.S. information reporting requirements and back-up withholding may apply with respect to dividends paid on and the proceeds from the taxable sale, exchange or other disposition of our common stock unless the stockholder:


 

*

is a corporation or comes within certain other exempt categories and, when required, demonstrates these facts; or

   
 

*

provides a correct taxpayer identification number, certifies that there has been no loss of exemption from back-up withholding and otherwise complies with applicable requirements of the back-up withholding rules.


A stockholder who does not supply Athena with his, her or its correct taxpayer identification number may be subject to penalties imposed by the I.R.S.  Any amount withheld under these rules will be creditable against the stockholder's federal income tax liability.  Stockholders should consult their tax advisors as to their qualification for exemption from back-up withholding and the procedure for obtaining such exemption.  If information reporting requirements apply to the stockholder, the amount of dividends paid with respect to the stockholder's shares will be reported annually to the I.R.S. and to the stockholder.


Federal Securities Laws Consequences


Magellan’s common stock distributed to Athena stockholders in the spin-off will be freely transferable under the Securities Act, except for securities received by persons who may be deemed to be affiliates of Magellan under Securities Act rules.  Persons who may be deemed to be affiliates of Magellan after the spin-off generally include individuals or entities that control, are controlled by or are under common control with Magellan, such as our directors and executive officers.  Persons who are affiliates of Athena generally will be permitted to sell their shares of Athena common stock received in the spin-off only pursuant to Rule 144 under the Securities Act. However, because the shares received in the spin-off are not restricted securities, the holding period requirement of Rule 144 will not apply.  As a result, Magellan common stock received by Athena affiliates pursuant to the spin-off may be sold if certain provisions of Rule 144 under the Securities Act are complied with.




52



Description of Securities


We are authorized to issue up to 100,000,000 shares of $0.001 par value common stock and 25,000,000 shares of $0.001 par value preferred stock.  As of May 16, 2011, 33,000,000 shares of common stock and no shares of preferred stock were issued and outstanding.  Before the spin-off, we had a total of three stockholders of record.  Following the spin-off, we believe that there will be approximately 80 stockholders of record, based upon the number of record holders of Athena’s common shares as of the record date.  All of our common shares distributed in the spin-off will be duly authorized, fully paid and nonassessable.  


Common Stock


Our authorized common stock consists of 100,000,000 shares of common stock


Each holder of common stock is entitled to one vote for each share held of record.  There is no right to cumulative voting of shares for the election of directors.  The shares of common stock are not entitled to pre-emptive rights and are not subject to redemption or assessment.  Each share of common stock is entitled to share ratably in distributions to stockholders and to receive ratably such dividends as may be declared by our Board of Directors out of funds legally available therefor.  Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive, pro-rata, our assets which are legally available for distribution to stockholders.  The issued and outstanding shares of common stock are validly issued, fully paid and non-assessable.


Preferred Stock


We are authorized to issue up to 25,000,000 shares of $0.001 par value preferred stock.  Our preferred stock can be issued in one or more series as may be determined from time-to-time by our Board of Directors.  In establishing a series our Board of Directors shall give to it a distinctive designation so as to distinguish it from the shares of all other series and classes, shall fix the number of shares in such series, and the preferences, rights and restrictions thereof.  All shares of any one series shall be alike in every particular.  Our Board of Directors has the authority, without stockholder approval, to fix the rights, preferences, privileges and restrictions of any series of preferred stock including, without limitation:  


 

*

The rate of distribution,

 

*

The price at and the terms and conditions on which shares shall be redeemed,

 

*

The amount payable upon shares for distributions of any kind,

 

*

sinking fund provisions for the redemption of shares,

 

*

the terms and conditions on which shares may be converted if the shares of any series are issued with the privilege of conversion, and

 

*

voting rights except as limited by law.


Although we currently do not have any plans to issue shares of preferred stock or to designate any series of preferred stock, there can be no assurance that we will not do so in the future.  As a result, we could authorize the issuance of a series of preferred stock which would grant to holders preferred rights to our assets upon liquidation, the right to receive dividend coupons before dividends would be declared to common stockholders, and the right to the redemption of such shares, together with a premium, prior to the redemption to common stock.  Our common stockholders have no redemption



53



rights.  In addition, our Board could issue large blocks of voting stock to fend off unwanted tender offers or hostile takeovers without further stockholder approval.


Anti-takeover Effects of Certain Provisions of Our Certificate of Incorporation and Nevada Law …

We are subject to Chapter 78 of the Nevada Revised Statutes, an anti-takeover law.  In general, Chapter 78 prohibits a publicly held Nevada corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the "business combination" or the transaction in which the person became an "interested stockholder" is approved in a prescribed manner.  Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder.  Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 10% or more of the corporation's voting stock.  The existence of this provision would be expected to have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging takeover attempts that might result in a premium over the market price for the shares of common stock held by stockholders.


Transfer Agent, Warrant Agent and Registrar


The transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc., 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado  80209.


Reports to Stockholders


We intend to furnish annual reports to stockholders which will include audited financial statements reported on by our independent certified public accountants.  In addition, we will issue unaudited quarterly or other interim reports to stockholders as we deem appropriate.


Legal Matters


The validity of the issuance of the shares we are offering will be passed upon for us by Clifford L. Neuman, P.C, Boulder, Colorado.  


Experts


The financial statements of Magellan Corporation, as of December 31, 2010 included herein and elsewhere in the Registration Statement have been audited by Malone & Bailey, PC, independent certified public accountants, to the extent set forth in their report appearing herein and elsewhere in the Registration Statement.  Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in auditing and accounting.




54



Where You Can Find More Information


You may read and copy any document we file at the Commission's Public Reference Rooms in Washington, D.C.  Please call the Commission at 1-800-SEC-0330 for further information on the Public Reference Rooms.  You can also obtain copies of our Commission filings by going to the Commission's website at http://www.sec.gov.


We have filed with the Commission a Registration Statement on Form S-1 to register the shares of our common stock to be distributed in the Spin-Off.  This prospectus is part of that Registration Statement and, as permitted by the Commission's rules, does not contain all of the information set forth in the Registration Statement.  For further information about us or our common stock, you may refer to the Registration Statement and to the exhibits filed as part of the Registration Statement.


We are not currently subject to the informational filing requirements of the Exchange Act.  However, as a result of this offering, we will become subject to these requirements and will file periodic reports, including annual reports containing audited financial statements, reports containing unaudited interim financial statements, quarterly and special reports, proxy statements and other information with the Commission.  We will provide without charge to each person who receives this prospectus copies of our reports and other information which we file with the Commission.  Your request for this information should be directed to our President, John C. Power at our corporate office.  You can also review this information at the public reference rooms of the Commission and on the Commission's website as described above.





55
















MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)





FINANCIAL STATEMENTS











F-1






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEETS


        
  

March 31, 2011

 

December 31, 2010

 
  

(unaudited)

    

ASSETS

       

Current assets:

       

Cash and cash equivalents

 

$

10,362

 

$

41,814

 
        

Mining rights

  

45,067

  

39,221

 

Total assets

 

$

55,429

 

$

81,035

 
        

LIABILITIES AND SHAREHOLDERS’ DEFICIT

       

Current liabilities:

       

Accounts payable

 

$

8,189

 

$

7,441

 
        

Commitments and contingencies

       
        

Shareholders’ equity:

       

Preferred shares, $.001 par value,  25,000,000 shares authorized; no shares issued and outstanding

  

  

–   

 

Common shares, $.001 par value, 100,000,000 shares authorized; 33,000,000 shares outstanding but not issued

  

33,000

  

33,000

 

Additional paid-in capital

  

49,500

  

49,500

 

Accumulated deficit - exploration stage

  

(35,260

)

 

(8,906

)

Total shareholders’ equity

  

47,240

  

73,594

 

  Total liabilities and shareholders’ equity

 

$

55,429

 

$

81,035

 
        











The accompanying notes are an integral part of these unaudited financial statements.



F-2






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS

(Unaudited)


        
  

Three Months Ended March 31, 2011

 

From Inception (September 28, 2010) through

March 31, 2011

 
        

Operating expenses:

       

Professional fees

 

$

18,804

 

$

24,221

 

Management fees

  

7,500

  

7,500

 

Licenses and filing fees

  

  

1,775

 

Other general and administrative expenses

  

50

  

1,263

 

Total general and administrative expenses

  

26,354

  

34,759

 
        

Exploration expenses

  

  

501

 

Total operating expenses

  

26,354

  

35,260

 
        

Net loss

 

$

(26,354

)

$

(35,260

)

        

Basic and diluted net loss per share

 

$

(0.00

)

   
        

Weighted average common shares outstanding – basic and diluted

  

33,000,000

    
        











The accompanying notes are an integral part of these unaudited financial statements.




F-3






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS

(Unaudited)


        
  

Three Months Ended March 31, 2011

 

From Inception (September 28, 2010) through

March 31, 2011

 

Cash flows from operating activities:

       

Net loss

 

$

(26,354

)

$

(35,260

)

Changes in operating assets and liabilities:

       

Increase  in accounts payable

  

748

  

8,189

 

Net cash used in operating activities

  

(25,606

)

 

(27,071

)

        

Cash flows from investing activities:

       

Short-term advances – related parties

  

(16,000

)

 

(16,000

)

Repayments of short-term advances – related parties

  

16,000

  

16,000

 

Acquisition of mining rights

  

(5,846

)

 

(45,067

)

Net cash used in investing activities

  

(5,846

)

 

(45,067

)

        

Cash flows from financing activities:

       

Borrowings from short-term debt – related parties

  

  

45,478

 

Repayments of short-term debt – related parties

  

  

(26,998

)

Proceeds from issuance of common shares

  

  

64,020

 

Net cash provided by financing activities

  

  

82,500

 
        

Net (decrease) increase in cash

  

(31,452

)

 

10,362

 

Cash and cash equivalents, beginning of period

  

41,814

  

 

Cash and cash equivalents, end of period

 

$

10,362

 

$

10,362

 
        

Supplemental schedule of cash flow information:

       

   Cash paid for interest

 

$

 

$

 

   Cash paid for income taxes

 

$

 

$

 
        

Supplemental disclosure of non-cash financing activities:

       

  Common shares issued for short-term debt – related parties

 

$

 

$

64,020

 
        



The accompanying notes are an integral part of these unaudited financial statement



F-4






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)


We use the terms “Magellan,” “we,” “our,” and “us” to refer to Magellan Gold Corporation.


Note 1 – Nature and Continuance of Operations


We were incorporated on September 28, 2010 in Nevada. We are an exploration stage company and our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable.


We have only recently begun operations and we rely upon the sale of our securities to fund our operations as we have not generated any revenue. We have a “going concern” uncertainty as of the date of our most recent financial statements.


Going Concern


Our financial statements have been prepared on a going concern basis which assumes that we will be able to meet our obligations and continue our operations during the next twelve months. Asset realization values may be significantly different from carrying values as shown on our financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern. At March 31, 2011, we had not yet achieved profitable operations and we have accumulated losses of $35,260 since our inception. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We may also seek to obtain short-term loans from officers, directors or significant shareholders. There are no current arrangements in place for equity funding or short-term loans.


Note 2 – Summary of Significant Accounting Policies


Interim Reporting


Our financial statements and related notes thereto contain unaudited information as of and for the three months ended March 31, 2011.  In the opinion of management, our financial statements include all the adjustments necessary, principally of a normal and recurring nature, to fairly present our financial position, results of operations and cash flows for the interim period presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Operating results and cash flows for the three month period ended March 31, 2011 are not necessarily indicative of the operating results or cash flows expected for the full year.  The condensed consolidated financial information as of March 31, 2011 should be read in conjunction



F-5





with the financial statements for the period ended December 31, 2010 contained elsewhere in this Form S-1.


Recently Adopted Accounting Standards


We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flows.


Note 3 – Mining Rights


As of March 31, 2011 and December 31, 2010, our mining rights consist of the following:

  

March 31,2011

 

December 31, 2010

       
       

Secret Canyon Claims

 

$

39,190

 

$

33,722

Randall Claims

  

1,798

  

1,798

Pony Express Claims

  

4,079

  

3,701

Total Mining Rights

 

$

45,067

 

$

39,221


Secret Canyon Claims


On March 15, 2011, we purchased a six month Option to explore a group of nine claims in Washoe County, Nevada, include as part of our Secret Canyon Claims, along with the right to renew the Option for an additional six months. The Option also granted us the right to enter into a Mining Lease during the Option period.


The following is a summary of the material provisions of the Option:

·

The Option commenced March 15, 2011, and has a term of six months for a payment of $5,000 and a work commitment of $25,000.

·

The Option can be extended for an additional six months for a payment of $10,000 and an additional work commitment of $25,000.

·

During the Option term we have the right to enter into a 10 year Mining Lease.

·

Lease payments are due in advance on the date the Option to lease is exercised and on the second anniversary of the Lease and each year thereafter as follows:

o

$35,000 is due on the date the Option to Lease is exercised;

o

$40,000 is due on the second anniversary of the Lease;

o

$65,000 is due on the third anniversary of the Lease;

o

$120,000 is due on the fourth anniversary of the Lease and each year thereafter during the term of the Lease.

·

During the term of the Lease, the lessor will receive a production royalty of four percent of gross smelter returns (“GSR”).



F-6





·

In the event that GSR payments plus Lease and Option payments total $5,000,000, the lessor shall convey the mining claims to us.

·

We are responsible for any reclamation costs applicable to areas disturbed during our exploration, development and mining activities.

·

We have the right to terminate the Lease at any time.

·

We have the right to extend the Lease term for an additional 10 years.


On September 28, 2010, we entered into a mining lease (the “Secret Canyon Claims Lease”) which granted us a 10 year lease giving us the right to explore, develop and conduct mining operations on a group of unpatented lode mining claims, include as part of our Secret Canyon Claims, situated in Washoe County, Nevada. Under the terms of the lease, the lessor will receive a production royalty of up to three percent of net smelter returns. The lease requires us to make annual advance minimum royalty payments to the lessor ranging from $20,000 to $50,000 per year over the life of the lease. We have the right to extend the lease term for an additional 10 years.


Randall Claims


On October 2, 2010, we were assigned a mining lease from John C. Power our President and Director, which granted us the remaining term of a 10 year lease executed on August 18, 2010, giving us the right to explore, develop and conduct mining operations on a group of unpatented lode mining claims  (the “Randall Claims”) situated in Churchill County, Nevada. Under the terms of the lease, the lessor will receive a production royalty of up to three percent of net smelter returns. The lease requires us to make annual advance minimum royalty payments to the lessor ranging from $10,000 to $50,000 per year over the life of the lease. We have the right to extend the lease term for an additional 10 years.


Pony Express Claims


On November 18, 2010, we filed two unpatented lode mining claims (the “Pony Express Claims”) giving us the right to explore, develop and conduct mining operations on these claims located in Churchill County, Nevada.


Note 4 – Related Party Transactions


During the three month period ended March 31, 2011, we made non-interest bearing advances to related parties and received repayments as follows:

  

Loans

 

Repayments

       
       

Athena Silver Corporation

 

$

10,000

 

$

10,000

John C. Power

  

6,000

  

6,000

  

$

16,000

 

$

16,000


Athena Silver Corporation is a company under common control. Our President and Director, John C. Power, is also a director and CEO of Athena. Athena and Magellan are both exploration stage companies involved in the business of acquisition and exploration of mineral resources. The existence of common ownership and common management could result in significantly different



F-7





operating results or financial position from those that could have resulted had Magellan and Athena been autonomous.


On January 1, 2011 we entered into a month-to-month management agreement with Mr. Power requiring a monthly payment, in advance, of $2,500 as consideration for the day-to-day management of Magellan. During the three months ended March 31, 2011, we incurred and paid $7,500 of management fees to Mr. Power.



F-8






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

TABLE OF CONTENTS


 

 

 

 

 

Report of Independent Registered Public Accounting Firm

F-10

 

 

Balance Sheet

F-11

 

 

Statement of Operations

F-12

 

 

Statement of Shareholders’ Equity

F-13

 

 

Statement of Cash Flows

F-14

 

 

Notes to Financial Statements

F-15




F-9






 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors of

Magellan Gold Corporation (An Exploration Stage Company)

Carson City, Nevada 89701

 

We have audited the accompanying balance sheets of Magellan Gold Corporation (An Exploration Stage Company) (the “Company”) as of December 31, 2010, and the related statements of operations, stockholders’ deficit and cash flows for the period from September 28, 2010 (inception) through December 31, 2010.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010, and the results of its operations and its cash flows for the period from September 28, 2010 (inception) through December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated significant revenue and has a working capital deficit. These conditions raise significant doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 


/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

March 11, 2011




F-10





MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEET



 

December 31, 2010

ASSETS

   

Current assets:

   

Cash and cash equivalents

$

41,814

 
    

Mining rights

 

39,221

 

Total assets

$

81,035

 
    

LIABILITIES AND SHAREHOLDERS’ DEFICIT

   

Current liabilities:

   

Accounts payable

$

7,441

 
    

Commitments and contingencies

   
    

Shareholders’ equity:

   

Preferred shares, $.001 par value,  25,000,000 shares authorized; no shares issued and outstanding

 

–   

 

Common shares, $.001 par value, 100,000,000 shares authorized; 33,000,000 shares outstanding but not issued

 

33,000

 

Additional paid-in capital

 

49,500

 

Accumulated deficit - exploration stage

 

(8,906

)

Total shareholders’ equity

 

73,594

 

Total liabilities and shareholders’ equity

$

81,035

 


















The accompanying notes are an integral part of these financial statements.





F-11







MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF OPERATIONS



 

From Inception (September 28, 2010) through

December 31, 2010

    

Operating expenses:

   

Legal fees

$

5,418

 

Licenses and filing fees

 

1,775

 

Other general and administrative expenses

 

1,212

 

Total general and administrative expenses

 

8,405

 
    

Exploration expenses

 

501

 

Total operating expenses

 

8,906

 
    

Net loss

$

(8,906

)

    

Basic and diluted net loss per share

$

(0.00

)

    

Weighted average common shares outstanding – basic and diluted

 

33,000,000

 
    






















The accompanying notes are an integral part of these financial statements.



F-12







MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF SHAREHOLDERS’ EQUITY

For the period from September 28, 2010 (Date of Inception) to December 31, 2010



  

Common Shares

  

Additional Paid in Capital

  

Accumulated Deficit

  

Stockholders’ Equity

 
  

Shares

  

Amount

       
                 

Balance, September 28, 2010

   

$

 

$

 

$

  

$

 

Issuance of common shares at $0.0025 per share for  short term debt – related parties, December 2010

 

7,391,840

  

7,392

  

11,088

      

18,480

 

Issuance of common shares at $0.0025 per share for cash, December 2010

 

25,608,160

  

25,608

  

38,412

      

64,020

 

Net loss

          

(8,906

)

  

(8,906

)

Balance, December 31, 2010

 

33,000,000

 

$

33,000

 

$

49,500

 

$

(8,906

)

 

$

73,594

 
                 






















The accompanying notes are an integral part of these financial statements.




F-13






MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF CASH FLOWS


 

Period from September 28, 2010 through

December 31, 2010

Cash flows from operating activities:

   

Net loss

$

(8,906

)

Changes in operating assets and liabilities:

   

Increase  in accounts payable

 

7,441

 

Net cash used in operating activities

 

(1,465

)

    

Cash flows from investing activities:

   

Acquisition of mining rights

 

(39,221

)

Net cash used in investing activities

 

(39,221

)

    

Cash flows from financing activities:

   

Borrowings from short-term debt – related parties

 

45,478

 

Repayments of short-term debt – related parties

 

(26,998

)

Proceeds from issuance of common shares

 

64,020

 

Net cash provided by financing activities

 

82,500

 
    

Net increase in cash

 

41,814

 

Cash and cash equivalents, beginning of period

 

 

Cash and cash equivalents, end of period

$

41,814

 
    

Supplemental schedule of cash flow information:

   

   Cash paid for interest

$

 

   Cash paid for income taxes

$

 
    

Supplemental disclosure of non-cash financing activities:

   

Common shares issued for short-term debt – related parties

$

18,480

 
    













The accompanying notes are an integral part of these financial statements.




F-14







MAGELLAN GOLD CORPORATION

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS



We use the terms “Magellan,” “we,” “our,” and “us” to refer to Magellan Gold Corporation.


Note 1 – Nature and Continuance of Operations


We were incorporated on September 28, 2010 under the laws of the State of Nevada. We are an exploration stage company and our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether the properties to which we have mining rights contain mineral reserves that are economically recoverable.


We have only recently begun operations and we rely upon the sale of our securities to fund our operations as we have not generated any revenue. We have a “going concern” uncertainty as of the date of our most recent financial statements.


Our financial statements have been prepared on a going concern basis which assumes that we will be able to meet our obligations and continue our operations during the next fiscal year. Asset realization values may be significantly different from carrying values as shown on our financial statements and do not give effect to adjustments that would be necessary to the carrying values of assets and liabilities should we be unable to continue as a going concern. At December 31, 2010, we had not yet achieved profitable operations and we have accumulated losses of $8,906 since our inception. We expect to incur further losses in the development of our business, all of which casts substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to generate future profits and/or to obtain the necessary financing to meet our obligations arising from normal business operations when they come due. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We may also seek to obtain short-term loans from officers, directors or significant shareholders. There are no current arrangements in place for equity funding or short-term loans.


Note 2 – Summary of Significant Accounting Policies


Use of estimates


The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the period presented. We make our estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.




F-15





Exploration Stage Company


We are an exploration stage company and accordingly, all losses accumulated since inception have been considered as part of our exploration stage activities.



Fair Value of Financial instruments


We value our financial assets and liabilities using fair value measurements. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amount of cash and cash equivalents and accounts payable approximates fair value because of the short-term nature of these financial instruments.


Cash and Cash Equivalents


We consider all amounts on deposit with financial institutions and highly liquid investments with an original maturity of three months or less to be cash equivalents.


Concentrations of Credit Risk


Our financial instruments which potentially subject us to credit risk are our cash and cash equivalents. We maintain our cash and cash equivalents at reputable financial institutions and currently, we are not exposed to significant credit risk.


Mining Rights


We have determined that our mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, our direct costs to acquire or lease mining rights are initially capitalized as tangible assets. Mining rights include costs associated with: leasing or acquiring patented and unpatented mining claims; leasing mining rights including lease signature bonuses, lease rental payments and advance minimum royalty payments; and options to purchase or lease properties.


If we establish proven and probable reserves for a mineral property and establish that the mineral property can be economically developed, mining rights will be amortized over the estimated useful life of the property following the commencement of production or expensed if it is determined that the mineral property has no future economic value or if the property is sold or abandoned. For mining rights in which proven and probable reserves have not yet been established, we assess the carrying values for impairment at the end of each reporting period and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.


The net carrying value of our mining rights represents the fair value at the time the mining rights were acquired less accumulated amortization and any impairment losses. Proven and probable reserves have not been established for mining rights as of December 31, 2010. No impairment loss was recognized during the period from September 28, 2010 (our inception) through December 31, 2010 and mining rights are net of $0 of impairment losses as of December 31, 2010.


Impairment of long-lived assets


We evaluate the recoverability of the net carrying value of our mining rights whenever significant events or changes in circumstances occur that indicate the carrying amount may not be recoverable by



F-16





comparing the carrying values to the estimated future undiscounted cash flows or other fair value measures. If that evaluation indicates that an impairment has occurred, a loss on impairment would be recognized to the extent the carrying amount exceeds the discounted cash flows or fair values of the asset, whichever is more readily determinable.


Exploration Costs    


Mineral exploration costs are expensed as incurred. When it has been determined that it is economically feasible to extract minerals and the permitting process has been initiated, exploration costs incurred to further delineate and develop the property are considered pre-commercial production costs and will be capitalized and included as mine development costs in our balance sheets.


Basic and Diluted Net Loss Per Share


Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period from September 28, 2010 (our inception) through December 31, 2010.    The calculation of diluted net loss per common share adds the weighted-average number of potential common shares outstanding to the weighted-average common shares outstanding, as calculated for basic net loss per share, except for instances in which there is a net loss. During the period from September 28, 2010 (our inception) through December 31, 2010, here were no potential common shares outstanding.


Income Taxes


We recognize deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts at which they are carried in the financial statements and the effect of net operating losses based upon the enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. 


New Accounting Standards

From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our financial statements upon adoption.

Recently Adopted Accounting Standards


We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.





F-17





Note 3 – Mining Rights


As of December 31, 2010 our mining rights consist of the following:


Secret Canyon Claims

$

33,722

 

Randall Claims

 

  1,798

 

Pony Express Claims

 

  3,701

 

    

   Total mining rights

$

39,221

 


On September 28, 2010, we entered into a Mining Lease (the “Secret Canyon Claims Lease”) which granted us a 10 year lease giving us the right to explore, develop and conduct mining operations on a group of unpatented lode mining claims situated in Washoe County, Nevada.


The following is a summary of the material provisions of the Secret Canyon Claims Lease:


·

The Lease commenced September 28, 2010, and has a term of 10 years.

·

In 2010 we paid the lessor a $15,730 cash advance minimum royalty and incurred $15,849 of additional advance minimum royalty costs for total consideration of $31,579 for the first year of the lease.

·

Advance minimum royalties are due on the first anniversary of the lease and each year thereafter as follows:

o

$20,000 is due on September 28, 2011;

o

$30,000 is due on September 28, 2012;

o

$40,000 is due on September 28, 2013; and

o

$50,000 is due on September 28, 2014 and on September 28th each year thereafter during the term of the lease.

·

During the term of the lease, the lessor will receive a production royalty of three percent of net smelter returns.

·

The production royalty is applicable to an area of interest extending one mile beyond the exterior boundaries of the lease.

·

We have the option to purchase up to two points (i.e. two percent) of the production royalty for $1.5 million per point.

·

The lessor will receive no production royalties until all advance royalty payments have been recaptured.

·

We are obligated to pay annual federal and state claim maintenance fees and taxes levied on any improvements we place on the property during the term of the lease.

·

We are responsible for any reclamation costs applicable to areas disturbed during our exploration, development and mining activities.

·

We have the right to terminate the lease at any time upon 30 days written notice.

·

We have the right to extend the lease term for an additional 10 years.


On October 2, 2010 we were assigned a Mining Lease (the “Randall Claims Lease”) from John C. Power our President and Director, which granted us the remaining term of a 10 year lease executed on August 18, 2010, giving us the right to explore, develop and conduct mining operations on a group of unpatented lode mining claims situated in Churchill County, Nevada.




F-18





The following is a summary of the material provisions of the Randall Claims Lease:


·

The Lease commenced August 18, 2010, and has a term of 10 years expiring August 17, 2020.

·

Advance minimum royalties are due on the first anniversary of the lease and each year thereafter as follows:

o

$10,000 is due on August 18, 2011;

o

$20,000 is due on August 18, 2012;

o

$30,000 is due on August 18, 2013;

o

$40,000 is due on August 18, 2014; and

o

$50,000 is due on August 18, 2015 and on August 18th each year thereafter during the term of the lease.

·

During the term of the lease, the lessor will receive a production royalty of three percent of net smelter returns.

·

The production royalty is applicable to an area of interest extending one mile beyond the exterior boundaries of the lease.

·

We have the option to purchase up to two points (i.e. two percent) of the production royalty for $1.5 million per point.

·

The lessor will receive no production royalties until all advance royalty payments have been recaptured.

·

We are obligated to expend at least $10,000 of exploration costs applicable to the property during the first year of the lease. In the event that we spend less than $10,000, we are obligated to pay the lessor the difference between $10,000 and the actual amount we spent. Such amount, if any is due on September 18, 2011.

·

In all subsequent years of the lease term we are obligated to expend an amount equal to that year’s annual advance minimum royalty in exploration, development, mining or mineral processing costs. The excess of expenditures in one year can be carried forward to meet subsequent years obligations.

·

We are obligated to pay annual federal and state claim maintenance fees and taxes levied on any improvements we place on the property during the term of the lease.

·

We are responsible for any reclamation costs applicable to areas disturbed during our exploration, development and mining activities.

·

We have the right to terminate the lease at any time upon 30 days written notice.

·

We have the right to extend the lease term for an additional 10 years.


On November 18, 2010 we filed two unpatented lode mining claims (the “Pony Express Claims”) giving us the right to explore, develop and conduct mining operations on these claims located in Churchill County, Nevada.


Note 4 – Shareholders’ Equity


On December 20, 2010, we issued 33,000,000 common shares at $.0025 for total consideration of $82,500. Total consideration consisted of cash of $64,020 and repayment of advances from related parties of $18,480. The shares have not yet been issued.


At December 31, 2010 there were no options or warrants outstanding.






F-19







Note 5 – Related Party Transactions


During the period from September 28, 2010 (our inception) through December 31, 2010, we borrowed and repaid non-interest bearing advances from/ to related parties as follows:


   

Borrowings

   

Repayments

 

 

 

 

 

 

 

 

 

 

Athena Silver Corporation

 

$

26,380

 

 

$

26,380

 

John D. Gibbs

 

 

15,730

 

 

 

15,730

 

John C. Power

 

 

3,368

 

 

 

3,368

 

         

 

 

$

45,478

 

 

$

45,478

 


Athena Silver Corporation (“Athena”) is a company under common control. Our President and Director, John C. Power, is also a director and CEO of Athena Silver Corporation and John D. Gibbs is a significant investor in both Athena and Magellan. Athena and Magellan are both exploration stage companies involved in the business of acquisition and exploration of mineral resources. The existence of common ownership and common management could result in significantly different operating results or financial position from those that could have resulted had Athena and Magellan been autonomous.


Repayments of advances from Athena included the issuance of 1,000,000 common shares with a fair value of $0.0025 per share for outstanding advances totaling $2,500 on December 30, 2010


Repayments of advances from John D. Gibbs included the issuance of 6,291,840 common shares with a fair value of $0.0025 per share for outstanding advances totaling $15,730 on December 20, 2010.


Repayments of advances from John C. Power included the issuance of 100,000 common shares with a fair value of $0.0025 per share for outstanding advances totaling $250 on December 30, 2010.


On October 21, 2010, John C. Power assigned the Randall Claims Lease to us, without consideration, as further described in Note 3 “Mining Rights.”


Note 6 – Income Taxes


As of December 31, 2010, the cumulative tax effect at the expected rate of significant items comprising our net deferred tax amount is as follows:

 

Net operating loss carryforward

 

$

3,117

 

Less: Valuation allowance

 

 

  (3,117  

)

 

 

 

 

 

Deferred tax asset, net of allowance

 

$

 



Our provision for income taxes for the period September 28, 2010 (our inception) through December 31, 2010 differs from the result which would be obtained by applying the statutory income tax rate of 35% to income before income taxes because we recorded a valuation allowance in the amount of the change in the deferred tax asset for the period.



F-20






Our net operating loss carry forwards of $3,117 expire in 2030.


Note 8 - Subsequent Event


On January 1, 2011 we entered into a month-to-month management agreement with John C. Power requiring a monthly payment, in advance, of $2,500 as consideration for the day to day management of Magellan.



F-21









You should rely only on the information contained in this document or that we have referred you to.  We have not authorized anyone to provide you with information that is different.  This prospectus is not an offer to sell common stock and is not soliciting an offer to buy common stock in any state where the offer or sale is not permitted.


Magellan Corporation


Spin-Off of 3,000,000 Shares of Common Stock by Athena Silver Corporation


___________, 2011




   

Until ___________, 2011 (90 days after the date of this prospectus), all dealers effecting transactions in the shares offered by this prospectus - whether or not participating in the offering - may be required to deliver a copy of this prospectus.  Dealers may also be required to deliver a copy of this prospectus when acting as underwriters and for their unsold allotments or subscriptions.

 

Page

 
  

Prospectus Summary

2

 

Questions and Answers

4

 

Summary Financial Data

5

 

Forward-Looking Statements

6

 

Risk Factors

8

 

Spin-Off and Plan of Distribution

21

 

Capitalization

23

 

Certain Market Information

24

PROSPECTUS

Management Discussion

26

 

Business

30

 

Management

45

___________, 2011

Principal Stockholders

49

 

Federal Income Tax Considerations

50

 

Description of Securities

53

 

Legal Matters

54

 

Experts

54

 

Available Information

55

 

Financial Statements

F-1

 




56






PART II


INFORMATION NOT REQUIRED IN PROSPECTUS


Item 24.    Indemnification of Directors and Officers.


Nevada Revised Statutes provide that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.


Nevada Revised Statutes also provide that to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.

 

Our Articles of Incorporation authorize our company to indemnify our directors and officers to the fullest extent permitted under Nevada Revised Statutes.  Our bylaws set forth the procedures that must be followed in order for directors and officers to receive indemnity payments from us.

 

Item 25.    Other Expenses of Issuance and Distribution.


The estimated expenses of the offering, all of which are to be borne by the Company, are as follows:


 

SEC Filing Fee

$     100

 
 

Printing Expenses

1,000

 
 

Accounting Fees and Expenses

10,000

 
 

Legal Fees and Expenses

25,000

 
 

Blue Sky Fees and Expenses

1,000

 
 

Registrar and Transfer Agent Fee

2,500

 
 

Miscellaneous

       1,000

 
 

Total

$40,600

 


Item 26.    Recent Sales of Unregistered Securities.


1.

On December 20, 2010, we issued an aggregate of 33 million shares of common stock to three investors in consideration of $0.0025 per share.  The shares were issued without registration under the Securities Act of 1933, as amended, in reliance upon the exemption set forth in Section



57






4(2) thereof.  The shares, which were taken for investment purposes, were restricted securities and the certificates bore the customary restrictive legend under Rule 144.  There were no commissions or fees paid in connection with the transaction.  The proceeds of the sale were used to acquire the mineral interests and pay for this registration statement, including the audited financial statements included herein.


Item 27.     Exhibits


       a.    The following Exhibits are filed as part of this Registration Statement pursuant to Item 601 of Regulation S-K:


 

Ex. No.

Title

*

3.1

Certificate of Incorporation filed September 28, 2010

*

3.2

Bylaws

*

4.1

Specimen Common Stock Certificate

*

10.1

Cowles’ Option and Mining Lease

*

10.2

Mining Lease – Randall Claims

*

10.3

Assignment of Randall Mining Lease Agreement

*

10.4

Mining Lease – Secret Claims

*

10.5

Consulting Agreement

*

5.0

Opinion of Clifford L. Neuman, P.C.

*

23.1

Consent of Clifford L. Neuman, P.C. (included in Exhibit 5.0)

*

23.2

Consent of Malone & Bailey, PC


*    filed herewith.


Item 28.    Undertakings


       The undersigned Registrant hereby undertakes:

(1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

(i)  Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act");

(ii)  Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of the securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement, and

(iii) Include any additional or changed material information on the plan of distribution.



58






(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)   Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii)  Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii)  The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv)  Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

(2) The small business issuer hereby undertakes to provide to the underwriters, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(3)  Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

(4)  In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.



59






(5)  The undersigned registrant hereby undertakes that:

 

(i)  For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 4249b)(1) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

 

(ii) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.




60






SIGNATURES


In accordance with the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this Registration Statement to be signed on its behalf by the undersigned, in the city of Gualala, state of California, on the 17th day of May, 2011.


 

Magellan Gold Corporation

 

a Nevada corporation

  
 

By:   _/s/ John C. Power       

 

      John C. Power, President and Director


  POWER OF ATTORNEY


       Each of the undersigned officers and directors of Magellan Gold Corporation hereby constitutes and appoints John C. Power, President and Director of the Company, his true and lawful attorney-in-fact and agent, for him and in his name, place and stead, in any and all capacities, to sign his name to any and all amendments to this Registration Statement on Form S-1, including post-effective amendments and other related documents, and to cause the same to be filed with the Securities and Exchange Commission, granting unto said attorneys, or either of them individually, full power and authority to do and perform any act and thing necessary and proper to be done in the premises, as fully to all intents and purposes as the undersigned could do if personally present, and the undersigned for himself hereby ratifies and confirms all that said attorneys shall lawfully do or cause to be done by virtue hereof.


       In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities with Magellan Gold Corporation and on the dates indicated.


Signature

Title

Date

   
   

__/s/ John C. Power ______ _

John C. Power

President, Secretary and Director

May 17,  2011

   
   
   
   
   
   




61



ARTICLES OF INCORPORATION

OF

MAGELLAN GOLD CORPORATION



ARTICLE I


NAME


The name of the Corporation is Magellan Gold Corporation


ARTICLE II


TERM OF EXISTENCE


    

The Corporation shall exist in perpetuity, from and after the date of filing these Articles of Incorporation with the Secretary of State of the State of Nevada, unless sooner dissolved or disincorporated according to law.


ARTICLE III


OBJECT, PURPOSES AND POWERS


    

Section 1.  General Objects and Purposes.  To engage in any lawful activity as may from time to time be authorized by the Corporation's Board of Directors, which is not prohibited by law or by these Articles of Incorporation.  To undertake such other activities as the Board of Directors may deem reasonable or necessary in the furtherance of the general or specific purposes and powers of the Corporation.


    

Section 2.  General Powers.  Further, the Corporation shall have and may exercise all the rights, powers and privileges now or hereafter conferred upon Corporations organized under the laws of the State of Nevada and in addition may do everything necessary, suitable, proper for, or incident to, the accomplishment of any of these corporate purposes.


ARTICLE IV


CAPITAL STOCK


    

Section 1.  The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred  million (100,000,000) shares of common stock having a par value of $.001 each, and twenty-five million (25,000,000) shares of preferred stock having a par value of $.001 each.  All or any part of the capital stock may be issued by the Corporation from time to time and for such consideration and on such terms as may be determined and fixed by the Board of Directors, without action of the stockholders, as provided by law, unless the Board of Directors deems it advisable to obtain the advice of the stockholders.  Said stock may be issued for money, property, services or other lawful considerations, and when issued shall be issued as fully paid and non-assessable.  The private property of stock holders shall not be liable for Corporation debts.





Section 2.  The preferences and relative participating optional or other special rights and qualifications, limitations or restrictions of the common stock of the Corporation are as follows:


    

(a)

Dividends.  Dividends may be paid upon the common stock, as and when declared by the Board of Directors, out of funds of the Corporation legally available therefor.


    

(b)

Payment on Liquidation.  Upon any liquidation, dissolution and termination of the Corporation, and after payment or setting aside of any amount sufficient to provide for payment in full of all debts and liabilities of, and other claims against the Corporation, the assets shall be distributed pro rata to the holders of the common stock.


    

(c)

Voting Rights.  At any meeting of the stockholders of the Corporation each holder of Common Stock shall be entitled to one vote for each share outstanding in the name of such holder on the books of the Corporation on the date fixed for determination of voting rights.


(d)

Majority Vote.  The stockholders, by vote or concurrence of a majority of the outstanding shares of the Corporation entitled to vote on the subject matter, may take any action which would otherwise require a two-thirds (2/3) vote under the General Corporation Law of the State of Nevada.


    

(e)

Cumulative Voting.  Cumulative voting shall not be allowed in the election of directors or for any other purpose.


    

(f)

Preemptive Rights.  Unless otherwise determined by the Board of Directors, no stockholder of the Corporation shall have preemptive rights to subscribe for any additional shares of stock, or for other securities of any class, or for rights, warrants or options to purchase stock for the scrip, or for securities of any kind convertible into stock or carrying stock purchase warrants or privileges.


    

(g)

Restrictions on Sale or Disposition.  All lawful restrictions on the sale or other disposition of shares may be placed upon all or a portion or portions of the certificates evidencing the Corporation's shares.


Section 3.  The preferred stock of the Corporation shall be issued in one or more series as may be determined from time to time by the Board of Directors.  In establishing a series the Board of Directors shall give to it a distinctive designation so as to distinguish it from the shares of all other series and classes, shall fix the number of shares in such series, and the preferences, rights and restrictions thereof.  All shares of any one series shall be alike in every particular.  All series shall be alike except that there may be variation as to the following:  () the rate of distribution, () the price at and the terms and conditions on which shares shall be redeemed, () the amount payable upon shares for distributions of any kind, () sinking fund provisions for the redemption of shares, and () the terms and conditions on which shares may be converted if the shares of any series are issued with the privilege of conversion, and () voting rights except as limited by law.


ARTICLE V


REGISTERED OFFICE AND AGENT


    

The address of the initial registered office of the Corporation in the State of Nevada is 202 South Minnesota Street, Carson City, NV  89703.  The name of the initial registered agent at such address is Capitol Corporate Services, Inc.


ARTICLE VI


DIRECTORS


    

Section 1.  The business and affairs of this Corporation and the management thereof shall be vested in a Board of Directors consisting of at least one (1) but not more than ten (10) members. Directors need not be stockholders of the Corporation. The persons, together with their addresses, who shall act as Directors for the first year of existence of this Corporation and until their successors shall be duly elected and qualified will be:


John C. Power

P.O. Box 114 (60 Sea Walk Dr.)

The Sea Ranch, CA 95497



    

Section 2.  The number of directors may be increased or decreased from time to time, within the limits stated above, by action of the majority of the whole Board of Directors.


Section 3.  The election of directors need not be by written ballot.


Section 4.  The Board of Directors shall have the power to adopt, amend or repeal the By-Laws of the Corporation.





ARTICLE VII


INDEMNIFICATION AND LIABILITY OF DIRECTORS


 

Section 1.  The Corporation shall indemnify to the fullest extent authorized or permitted by law (as now or hereafter in effect) any person made, or threatened to be made, a defendant or witness to any action, suit or proceeding (whether civil or criminal or otherwise) by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation or by reason of the fact that such director or officer, at the request of the Corporation, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan or enterprise, in any capacity.  Nothing contained herein shall affect any rights to indemnification to which employees other than directors and officers may be entitled by law.  No amendment or repeal of this Section 1 of Article VII shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omissions occurring prior to such amendment or repeal.


Section 2.  No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such a director as a director.  Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to NRS 78.747, or (iv) for any transaction from which such director derived an improper personal benefit.  No amendment to or repeal of this Section 2 of Article VII shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.


Section 3.  In furtherance and not in limitation of the powers conferred by statute:


(a)

the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify against such liability under the provisions of law; and


(b)

the Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the fullest extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere.





ARTICLE VIII°


INCORPORATORS


    

The name and address of the incorporator is:


Clifford L. Neuman, Esq.

Clifford L. Neuman, P.C.

Temple-Bowron House

1507 Pine Street

Boulder, Colorado  80302


The powers of the incorporator shall terminate upon the filing of these Articles of Incorporation.



    

IN WITNESS WHEREOF, I, the undersigned, being the Incorporator hereinabove named, hereby acknowledge that the foregoing Articles of Incorporation is my act and deed, and do hereby further certify that the facts hereinabove stated are truly set forth, and accordingly I have hereunto set my hand this 28th day of September, 2010.




/s/ Clifford L. Neuman

Clifford L. Neuman




BY-LAWS OF


MAGELLAN GOLD CORPORATION




ARTICLE I


Section 1.  The following paragraphs contain provisions for the regulation and management of Magellan Gold Corporation, a Nevada corporation.


Section 2.  In the event that there is a conflict between a provision of these By-Laws and a mandatory provision of the Articles of Incorporation of this corporation, then said mandatory provision of the Articles of Incorporation of this corporation shall control.


ARTICLE II


Place of Business


Section 1.  The registered office of the corporation shall be 202 South Minnesota Street, Carson City, NV  89703.  This designation shall be without prejudice to the power and right of the corporation to conduct and transact any of its affairs or business in other cities, states, territories, countries, or places.


Section 2.  The registered agent of the corporation in the State of Nevada shall be Capitol Services, Inc.


Section 3.  The registered office and registered agent of the corporation may be changed from time to time in the manner prescribed by law without amending these By-Laws.


ARTICLE III


Officers


Section 1.  Number.  The officers of this corporation shall consist of a President, a Secretary, a Treasurer, and such other officers, including one or more Vice Presidents, and, if desired, a Chief Executive Officer and Chief Financial Officer, as may be appointed in accordance with the provisions of Section 3 of this Article.  One person may hold any two of said offices, but no such officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law or by these By-Laws or by a resolution of the Board of Directors to be executed, acknowledged or verified by any two or more officers.


Section 2.  Election, Term of Office and Qualifications. The officers of this corporation shall be chosen annually by the Board of Directors.  Each officer, except such officer as may be appointed in accordance with the provisions of Section 3 of this Article, shall hold his office until his successors shall have been removed in the manner hereinafter provided.


Section 3.  Subordinate Officers.  The Board of Directors may appoint such other officers to hold office for such period, have such authority and perform such duties as the Board of Directors



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may from time to time determine.  The Board of Directors may delegate to any officer the power to appoint any such subordinate officers.


Section 4.  Removal.  Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  Such removal shall be by vote of a majority of the whole Board of Directors at a regular meeting or a special meeting of the Board of Directors called for this purpose.


Section 5.  Resignations.  Any officer may resign at any time by giving written notice to the Board of Directors or to the President or Secretary of the corporation.  Any such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.


Section 6.  Chief Executive Officer.  The Chief Executive Officer shall be the principal executive officer of the corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the corporation.  He shall preside at all meetings of the shareholders and all meetings of the Board of Directors; and shall have general supervision over the affairs of the corporation and over the other officers.


Section 7.  President.  The President shall be the chief operating officer of the corporation.  The President shall perform all duties incident to the office of the President; shall sign all stock certificates and written contracts of the corporation; and shall perform all such other duties as are assigned to him from time to time by resolution of the Board of Directors or the Chief Executive Officer.


Section 8.  Vice President.  In the absence of the President or in the event of his death, inability or refusal to act, the Vice President shall perform the duties of the President, and when so acting, shall have all the powers of, and be subject to, all of the restrictions upon the President.  The Vice President shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors.


Section 9.  Secretary.  The secretary shall be sworn to the faithful discharge of his duty.  He shall:


a.

Keep the minutes of the meetings of the shareholders and of the Board of Directors in books provided for that purpose;


b.

See that all notices are duly given in accordance with the provisions of these By-Laws or as required by law;


c.

Be custodian of the records and of the seal of the corporation and see that such seal is affixed to all stock certificates prior to their issue and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these By-Laws.


d.

Have charge of the stock books of the corporation and keep or cause to be kept the stock and transfer books in such manner as to show at any time the amount of the



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stock of the corporation issued and outstanding, the manner in which and the time when such stock was paid for, the names, alphabetically arranged, and the addresses of the holders of record; and exhibit during the usual business hours of the corporation to any director, upon application, the original or duplicate stock ledger;


e.

Sign with the President, or a Vice President, certificates of stock of the corporation;


f.

See that the books, reports, statements, certificates, and all other documents and records of the corporation required by law are properly kept and filed;


g.

In general, perform all duties incident to the office of Secretary and such other duties as, from time to time, may be assigned to him by the Board of Directors or by the President.


Section 10.  Treasurer.  The Treasurer shall:


a.

Have charge and custody of, and be responsible for, all funds and securities of the corporation;


b.

From time to time render a statement of the condition of the finances of the corporation at the request of the Board of Directors;


c.

Receive and give receipt for monies due and payable to the corporation from any source whatsoever;


d.

In general, perform all duties incident to the office of Treasurer, and such other duties as from time to time may be assigned to him by the Board of Directors or by the President.


Section 11.  Salaries.  Salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the corporation.


ARTICLE IV


Directors


Section 1.  General Powers.  The business and affairs of this corporation and the management thereof shall be vested in a Board of Directors consisting of not less than one (1) nor more than ten (10) members.


Section 2.  Number and qualification.  The number of directors of this corporation shall be not less than one (1) and not more than ten (10). The number of directors may be increased or decreased from time to time within the limits stated above by the action of the majority or the whole Board of Directors.  Otherwise, the number of directors may be increased or decreased by amendment of these By-Laws.  Directors shall be elected for a term of one (1) year and shall serve until the election and qualification of their successors, unless they sooner resign.  At the first annual meeting of the stockholders and at each annual meeting thereafter, the stockholders shall so elect



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directors to hold office until the next succeeding annual meeting.  The directors need not be residents of the State of Nevada or stockholders of the corporation.


Section 3.  Executive Committee.  The Board of Directors by resolution passed by a majority of the whole Board may designate two or more of their number to constitute an executive committee, which shall have and exercise, subject to limitations, if any, as may be prescribed herein or by resolution of the Board of Directors, the powers of the Board of Directors and the management of the business and affairs of the corporation; provided such executive committee shall act only at such times as the Board of Directors is not in session and in no event to the exclusion of the Board of Directors at any time to act as a Board upon any business of the corporation.


Section 4.  Vacancy.  Any director may resign at any time by giving written notice to the President or to the Secretary of the corporation.  Such resignation shall take effect at the time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.  Any vacancy occurring in the Board of Directors maybe filled by the affirmative majority vote of the whole Board of Directors.  A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office.  A director chosen to fill a position resulting from a vacancy or an increase in the number of directors shall hold office until the next annual meeting of stockholders.


Section 5.  Removal.  Any director may be removed from office, either with or without cause, at any time, and another person may be elected to his place, to serve for the remainder of his term, at any special meeting of shareholders called for that purpose, by a majority of all of the shares of stock outstanding and entitled to vote.  In case any vacancy so created shall not be filled by the shareholders at such meeting, such vacancy may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum.


Section 6.  Meetings.  The regular meeting of the Board of Directors shall be held immediately following the annual shareholder's meeting.  The Board of Directors shall meet at such other time or times as they may from time to time determine.


Section 7.  Special Meetings.  Special meetings of the Board of Directors may be called by or at the request of the President or any two directors.  The person or persons authorized to call special meetings of the Board of Directors may fix the place for holding any special meeting of the Board of Directors called by them.


Section 8.  Place of Meetings.  The Board of Directors may hold its meetings at such place or places within or without the State of Nevada as the Board may from time to time determine, or, with respect to its meetings, as shall be specified or fixed in respective notices or waivers of notice of such meetings.


Section 9.  Special Meetings:  Notice.  Special meetings of the Board of Directors shall be held whenever called by the President or by two of the directors.  Notice of the time and place of holding said special meeting of the Board of Directors shall be given to each director by either (i) registered mail, return receipt requested, deposited in the mail at least ten (10) days prior to the date of said special meeting, or (ii) guaranteed overnight delivery by a nationally-used courier service at least three (3) days prior to the date of said special meeting, or (iii) by telex or facsimile copy sent at least forty-eight (48) hours prior to the time and date of such special meeting.  Attendance of a director at such special meeting shall constitute a waiver of notice of such special meeting, except



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where a director attends the meeting for the express purpose of objecting to the transacting of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular meeting or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.


Section 10.  Presence of Meetings.  Members of the Board, or of any committee thereof, may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear one another.  Participation in a meeting pursuant to this Section 10 shall constitute presence in person at such meeting.


Section 11.  Quorum and Manner of Acting.  A majority of the members of the Board of Directors shall form a quorum for the transaction of business at any regular or special meeting of the Board of Directors.  The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.  If the vote of a lesser number is required for a specific act by the Articles of Incorporation, or by another provision of these By-Laws, then that lesser number shall govern.  In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum be had.


Section 12.  Compensation.  By resolution of the Board of Directors, the directors may be paid their expenses, if any, for attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director.  No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.


Section 13.  Election of Officers.  At the first meeting of the Board of Directors after the annual election, the President, Vice President, and Secretary and Treasurer shall be elected to serve for the ensuing year and until the election of their respective successors, and an executive committee may be elected. Election shall be by ballot, and the majority of the votes cast shall be necessary to elect.  Any vacancies that occur may be filled by the Board of Directors for the unexpired term.  An officer may be removed at any time by the majority vote of the directors present at any regular or special meeting of said Board of Directors at which a quorum is present.  The Board of Directors shall have the power to fill officer vacancies, create new officer positions, and adjust salaries of officers as said Board from time to time shall deem necessary, all in accordance with the Articles of Incorporation.


Section 14.  Reporting.  At each annual stockholder's meeting, the directors shall submit a statement of business done during the preceding year, together with a report of the general financial condition of the corporation, and of the condition of its tangible property.


ARTICLE V


Books and Records


Section 1.  The corporation shall keep either within or without the State of Nevada, complete books and records of account and shall keep minutes of the proceedings of its stock holders and the Board of Directors.




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Section 2.  The corporation shall keep at its registered office or principal place of business, a record of its stock holders, giving the names and addresses of all of the stock holders and the number and class of the shares held by each.


Section 3.  The books, records of account, financial statements and other documents of the corporation shall be available to such persons who have been designated by law as having a right thereto, and said books, records of account, financial statements and documents shall be made available to such persons in the manner and in accordance with the procedures established by law.


ARTICLE VI


Stock


Section 1.  Authorization.  The authorized shares of stock of the corporation shall be as provided by the Articles of Incorporation.  


Section 2.  Certificate of Shares.  The shares of stock of the corporation shall be represented by certificates signed by the Chief Executive Officer, President or the Vice President and the Secretary or an assistant Secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof.  The signatures of the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimile if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation.  In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue.


Section 3.  Issuance of Certificates.  Each certificate representing shares shall state upon the face of same that the corporation is organized under the laws of the State of Nevada, the name of the person to whom the certificate is issued, the number and class of shares, and the designation of the series, if any, which such certificate represents.  No certificate shall be issued for any shares until such shares are fully paid and when issued shall bear the notation that the certificate is issued as a fully paid and non-assessable certificate of stock.


Section 4.  Transfer of Shares.  Transfer of shares of the corporation shall be made only on the stock transfer books of the corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation, and on surrender for cancellation of the certificate for such shares.  Upon surrender to the corporation or to a transfer agent of the corporation of a certificate of stock duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate.  Every such transfer of shares shall be entered on the stock book of the corporation which shall be kept at its principal office, or by its registrar duly appointed.


Section 5.  Transfer Agent.  The secretary of the corporation shall act as transfer agent of the certificates representing the shares of the corporation.  The Secretary shall maintain a stock transfer book, the stubs in which shall set forth, among other things, the names and addresses of the holders of all issued shares of the corporation, the number of shares held by each, the certificate numbers representing such shares, the date of issue of the certificates representing such shares, and whether or



6



not such shares originate from original issue or from transfer.  The names and addresses of the shareholders as they appear on the stubs of the stock transfer book shall be conclusive evidence as to who are the shareholders of record and as such entitled to receive notice of the meetings of shareholders; to vote at such meetings; to examine the list of the shareholders entitled to vote at meetings; to receive dividends; and to own, enjoy and exercise any other property rights deriving from such shares against the corporation.  Each shareholder shall be responsible for notifying the secretary in writing of any change in his name or address and failure so to do will relieve the corporation, its directors, officers and agents, from liability for failure to direct notices or other documents, or to pay over or transfer dividends or other property or rights, to a name and address other than the name and address appearing on the stub of the stock transfer book.


The Board of Directors may at its discretion, appoint instead of the secretary of the corporation, one or more transfer agents, registrars and agents outside the corporation for making payment upon any class of stock, bond, debenture, or other security of the corporation.  Such agents and registrars may be located either within or outside the State of Nevada.  They shall have such rights and duties and shall be entitled to such compensation as may be agreed.


Section 6.  Fractional Shares.  The corporation may, but shall not be obliged to, issue a certificate for a fractional share, and by action by its Board of Directors, may issue in lieu thereof scrip in register or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregated to a full share.  The rights and obligations of persons holding said fractional shares or scrip shall be as are contained in any applicable provision of these By-Laws, Articles of Incorporation, or laws of the State of Nevada.


Section 7.  Treasury Shares.  Treasury shares of stock shall be held by the corporation subject to the disposal of the Board of Directors and shall neither vote nor participate in dividends.


Section 8.  Lien.  The corporation shall have a first lien on all shares of its stock and upon all dividends declared upon same for any indebtedness of the respective holders thereof of the corporation.


Section 9.  Lost Certificates.  In cases of loss or destruction of a certificate of stock, no new certificates shall be issued in lieu thereof except upon satisfactory proof to the Board of Directors of such loss or destruction, and, at the election of a majority of the Board of Directors, upon giving satisfactory security by bond or otherwise, against loss to the corporation. Any such new certificate shall be plainly marked "Duplicate" on its face.


Section 10.  Consideration and Payment for Shares.  Shares having a par value shall be issued for such consideration, expressed in dollars but not less than the par value thereof, as shall be fixed from time to time by the Board of Directors. Shares without par value shall be issued for such consideration expressed in dollars as shall be fixed from time to time by the Board of Directors.  Treasury shares shall be disposed of for such consideration expressed in dollars as may be fixed from time to time by the Board of Directors.  Such consideration may consist, in whole or in part, of money, other property, tangible or intangible, or labor or services actually performed for the corporation, but neither promissory notes nor future services shall constitute payment or part payment for shares.



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ARTICLE VII


Shareholders


Section 1.  Annual Meeting.  The regular annual meeting of the shareholders of the corporation shall be held at a time and place to be designated by the President, Vice President, or the Board of Directors, provided, however, that whenever such day shall fall upon a Sunday or a legal holiday, the meeting shall be held on the next succeeding business day.  At the regular annual meeting of the shareholders, the directors for the ensuing year shall be elected.  The officers of the corporation shall present their annual reports and the Secretary shall have on file for inspection and reference, an authentic list of the stockholders, giving the amount of stock held by each as shown by the stock books of the corporation ten (10) days before the annual meeting.


Section 2.  Special Meeting.  Special meetings of the shareholders may be called at any time by the President, any member of the Board of Directors, or by the holders of not less than ten (10%) percent of all of the shares entitled to vote at said special meeting.  The Board of Directors may designate any place as the place for any annual meeting or for any special meeting called by the Board of Directors.  If a special meeting shall be called otherwise than by the Board of Directors, the place of meeting shall be the principal office of the corporation.


Section 3.  Notice of Meetings.  Written or printed notice stating the place, day and hour of the meeting, and in case of special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally, or by mail, by or at the discretion of the President, the Secretary, or the director or the person calling the meeting, to each stockholder of record entitled to vote at such meeting, except that if the authorized capital stock is to be increased, at least thirty (30) days notice shall be given.  If mailed, such notice shall be deemed to be delivered when deposited in the U.S. Mails and addressed to the stockholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid.


Section 4.  Closing Transfer Books.  For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shares for any other purpose, the Board of Directors may provide that the stock transfer books shall be closed for any stated period not exceeding fifty (50) days.  If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of such shareholders, such date in any case to be not more than fifty (50) days and in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, or shareholders entitled to receive payment of a dividend, the day on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders.  When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such a determination shall apply to any adjournment thereof.  The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least ten (10) days before each meeting of shareholders, a complete list of shareholders entitled to vote at any such meeting, or any



8



adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list for a period of ten (10) days prior to such meeting, shall be kept on file at the principal office of the corporation. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders.


Section 5.  Election of Directors.  At each annual meeting of the shareholders of the corporation, the directors shall be elected who shall serve until their successors are duly elected and qualified, unless they sooner resign.  Election of directors shall be by such of the shareholders as attend the annual meeting, either in person or by proxy, provided that if a quorum is not represented, said meeting may be adjourned by the shareholders present for a period not exceeding sixty (60) days at any one adjournment.  At each election of directors, cumulative voting shall not be allowed.


Section 6.  Quorum.  One-third (1/3) of the outstanding stock exclusive of treasury stock, shall be necessary to constitute a quorum at meetings of the shareholders.  If a quorum is present at any meeting, except for the election of directors which shall be by a plurality vote, a matter shall be approved if it receives more votes in favor than opposed.  In the absence of a quorum, those present may adjourn the meeting from day to day but not exceeding sixty (60) days.


Section 7.  Proxies.  Any shareholder entitled to vote may be represented at any regular or special meeting of the shareholders by a duly executed proxy.


ARTICLE VIII


Waiver of Notice


Section 1.  Directors and Officers.  Unless otherwise provided by law, whenever any notice is required to be given to any director or officer of the corporation under the provisions of these By-Laws or under the provisions of the Articles of Incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.


Section 2.  Shareholders.  No notice of the time, place or purpose of any annual, regular, or special meeting of the shareholders need be given if all shareholders of record on the date said meeting is held waive such notice in writing either before or after the regular, or special meeting of the shareholders, such meeting shall be deemed to have been legally and duly called, noticed, held, and conducted.


ARTICLE IX


Action Without a Meeting


Section 1.  Any action required by the laws of the State of Nevada, the Articles of Incorporation, or by these By-Laws, to be taken at a meeting of the directors or stockholders of this corporation, or any action which may be taken at a meeting of the directors or stockholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all the directors or stockholders entitled to vote with respect to the subject matter thereof.  Such consent shall have the same force and effect as a unanimous vote of the directors or stockholders, and may be



9



stated as such in any Articles or documents filed with the Secretary of State under the law of the State of Nevada.


ARTICLE X


Contract, Loans, Checks and Deposits


Section 1.  Contracts.  The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.


Section 2.  Loans.  No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors.  Such authority may be general or confined to specific instances.


Section 3.  Checks, Drafts, Etc.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.


Section 4.  Deposits.  All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select.


ARTICLE XI


Execution of Instruments


Section 1.  Execution of Instruments.  The President shall have power to execute on behalf and in the name of the corporation any deed, contract, bond, debenture, note or other obligations or evidences or indebtedness, or proxy, or other instrument requiring the signature of an officer of the corporation, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.  Unless so authorized, no officer, agent or employee shall have any power or authority to bind the corporation in any way, to pledge its credit or to render it liable pecuniarily for any purpose or in any amount.


Section 2.  Checks and Endorsements.  All checks and drafts upon the funds to the credit of the corporation in any of its depositories shall be signed by such of its officers or agents as shall from time to time be determined by resolution of the Board of Directors which may provide for the use of facsimile signatures under specified conditions, and all notes, bills receivable, trade acceptances, drafts, and other evidences of indebtedness payable to the corporation shall, for the purposes of deposit, discount or collection, be endorsed by such officers or agents of the corporation or in such manner as shall from time to time be determined by resolution of the Board of Directors.




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ARTICLE XII


Loans to Directors and Officers


Loans to employees or officers of the corporation, guarantees of their obligations or other similar assistance to these employees or officers (except those employees or officers who are directors of the corporation), shall be contracted on behalf of the corporation only upon the specific authorization of the Board of Directors of the corporation and only if made in compliance with applicable federal and state law, including, without limitation, the Sarbanes-Oxley Act of 2002.  Unless otherwise provided in the Articles of Incorporation, loans to directors, guarantees of their obligations, or other similar assistance to the directors shall be contracted on behalf of the corporation only upon the specific authorization of the Board of Directors and the affirmative vote of the holders of two-thirds (2/3) of the outstanding shares of the corporation which are entitled to vote for directors.  No such loans or guarantees shall be secured by the shares of this corporation.


ARTICLE XIII


Miscellaneous


Section 1.  Corporate Seal.  The Board of Directors may provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation, the state of incorporation, and the words "Corporate Seal".


Section 2.  Fiscal Year.  The fiscal year of the corporation shall be as established by the Board of Directors.


Section 3.  Amendments.  Subject to repeal or change by action of the shareholders, the Board of Directors shall have the power to alter, amend, or repeal the by-laws of the corporation and to make and adopt new by-laws at any regular meeting of the Board or at any special meeting called for that purpose.


Section 4.  Dividends.  The Board of Directors may, from time to time, declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and its Articles of Incorporation.


ADOPTED BY THE BOARD OF DIRECTORS this 11 day of September, 2010.


DIRECTORS:



/s/ John C. Power

John C. Power







11




Incorporated Under the Laws of The State of Nevada








NUMBER _______________

SHARES ___________


MAGELLAN GOLD CORPORATION

The Corporation is authorized to issue 100,000,000 Common Shares -- Par Value $.001 each and 25,000,000 Preferred Shares – Par Value $.001 each.



This Certifies That _                    (NAME)______________________ is the owner of _____________(letter amount)__

fully paid and non-assessable Shares of the above Corporation transferable only on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.


In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and to be sealed with the Seal of the Corporation.










___________________________________

___________________________________

Secretary

President





OPTION AND MINING LEASE


THIS OPTION AND MINING LEASE entered in this 15th day of March, 2011, between the Cowles Trust as to an undivided 5/8ths interest, Virginia Vierra as to an undivided 1/8th interest, Dorothy Farnandez as to an undivided 1/8th interest, and Edward Comer as to an undivided 1/8th interest (collectively referred to as "Owners"), and Magellan Gold Corporation (hereinafter "Magellan").


RECITALS


A.   Owners are the owner of certain patented lode Mining Claims located within Section 17, 20 and 21, Township 22 N, R 23 East, being the Gypsy, Morningstar extension, Crater, Denver, Whitehill, #2, Whitehill, Morningstar, Gold Queen and Granite Mining Claims.   A schedule of such claims is attached hereto as Exhibit A. (hereinafter Mining Claims).


B. Magellan is desirous of entering into this Option and Mining Lease (hereinafter Agreement) for the option, and possible subsequent lease and purchase, of the above referenced Mining Claims.


NOW, THEREFORE, in consideration of the mutual undertaking of the parties hereto, they do agree as follows:


1. Option. Owners do hereby grant to Magellan the exclusive option to enter upon the Mining Claims, as well as the right to acquire the Mining Claims upon the terms and conditions set forth herein.  The initial term of this option shall be six (6) months, commencing on the day following the formal execution of this agreement.


(a)

The payment to be made by Magellan to Owners shall be Five Thousand ($5,000.00), due upon execution of this Agreement.

(b)

The term of the second option period, which shall extend for an additional six (6) month period after the initial six (6) month option period may be obtained for an additional payment of Ten Thousand ($10,000) dollars. Notice of exercise of the second option period shall be given to owner in accordance with paragraph 19.


2. Upon exercise of the Option and Mining Lease, which shall occur prior to one year from date hereof, in accordance with paragraph 19, payments due Owners from Magellan shall be as follows:

(a)

The sum of Thirty Five Thousand ($35,000.00) upon exercise of Option
and Mining Lease, being one year or less from date hereof.

(b)

The sum of Forty Thousand ($40,000.00) for the third year of this Option and Mining Lease.

(c)

The sum Sixty Five Thousand ($65,000.00) for the fourth year of this Option and Mining Lease.

(d)

The sum of One Hundred Twenty Thousand ($120,000.00) for the fifth and subsequent years of this Option and Mining Lease.









3. Duties of Magellan. During the option period, Magellan shall be entitled to inspect the Mining Claims, remove samples and conduct exploration mineral drilling. A reasonable volume of ore may be removed for mineral testing purposes. Mining shall not take place until such time as the option is exercised in accordance with paragraph 2.


4. Duties of Owners During Option. Owner agrees to pay all real property taxes, and maintain the existing liability insurance on fire Mining Claims, if any. If there is no existing liability insurance, owners will not be required to purchase such insurance.


5.  Work Commitment During Option. and Warranties. During the Option periods, each being six (6) months in duration, Magellan shall have a work commitment of at least $25,000 for each six month option period, for a total of at least $50,000. It is expressly understood that Magellan shall utilize that sum of money for mineral exploration and geology work, metallurgy work, and on-site field work, all to be performed on the Mining Claims. Overhead and office expenses shall not be included therein. The Owner hereby warrants that the title to the patented Mining Claims set forth on Exhibit A is free of any and all liens, encumbrances or past-due taxes. Owner further agrees to defend, if necessary, title to such Mining Claims. Cowles hereby grants to the extent it has the legal right to do, access to the Mining Claims to Magellan.


6.  Warranties of Magellan. Magellan represents that it is a corporation, in good standing, and is qualified to transact business in Nevada. Magellan further warrants that it has obtained applicable Board of Director, and shareholder approval to enter into this Agreement.


7.  Delivery of Noninterpreted Data. Promptly upon the parties entering into this Agreement, Owners shall deliver any and all non-interpreted geological data, accounts, and other records pertaining to the Mining Claims set forth on Exhibit A.


8.  Exercise of Option to Lease. Magellan shall, should it choose to exercise the option to Lease, advise, in writing, via facsimile or email, to Robert Cowles prior to termination of the option period (paragraph 1). Such notification shall indicate whether Magellan desires to enter into the Mineral Lease Agreement, as set forth below in paragraph 19.


9.  Minerals Lease Term. The initial term of this lease shall, should Magellan exercise the option to lease, be for ten (10) years commencing on the date that Magellan exercises its option to lease. Magellan shall have the right to extend this Agreement for an additional period of ten (10) years provided it gives sixty (60) days notice thereof in accordance with paragraph 18.


10.  Lease Payment. Lease payments shall be paid, yearly in advance as set forth in paragraph 1. Payments shall be sent to the address set forth in paragraph 19; or, if the parties so agree, electronic transfer may be made.






11.  Productien Royalties. In the event that Magellan places the Mining Properties into production, then gross smelter return .("GSR") payments shall be paid to Owners by Magellan in the amount of four percent (4%).  GSR shall be defined as that sum for any minerals sold, in U.S. dollars, received by Magellan from the smelter, refinery, or ultimate purchaser.


In no event however shall minimum payments be less than that set forth in paragraph 1.


12.   Purchase of Claims. In the event that GSR payments, plus rental payments as set forth in paragraphs 1 and 2 above reach the sum of $5 million, then Owners shall convey, via quit claim deed, the Mining Claims to Magellan. In that event, the lease shall be terminated, no party shall have an obligation to the other, except for Magellan requirement to reclaim the Mining Claims in accordance with the then existing reclamation laws.


13 Permits Compliance with Applicable Law. It is expressly understood that, prior to any surface disturbance of any kind, Magellan shall obtain all applicable federal, state and local permits necessary to carry out its intended ruining.  Operation and Reclamation bonds as required by State and Federal Agencies shall be obtained and maintained by Magellan prior to actual mining period.  Insurance, in the minimum sum of $2,000,000, shall be obtained by Magellan, naming Owners as co-insured.  It is expressly understood that Magellan hereby holds Owners harmless for any acts, or failure to act, or causes of action for any injury or damages caused by Magellan within the Mining Claims.


14.  Removal of Equipment.   At any time during the existence of this option/mineral, lease, Magellan shall have the right to terminate this Agreement,  provided all payments are duly paid, with no deficiency owed. Magellan shall have 6 months from notice of termination to remove any and all equipment, buildings and structures, less any concrete foundations.


15.

Confidentiality. The parties to this agreement shall. hold this agreement in strict confidence, divulging it to no parties whatsoever, except agents and employees who have a need to know. This document shall not be recorded with the Washoe County Recorder's Office, or with any governmental agency. Rather, the parties agree to execute, and file with the Washoe County Recorder, a Memorandum of Agreement.


16.  Right of Inspection. Owner shall have the right, at all reasonable times and places, to inspect the physical operation of Owner, as well as the books and records to verify the payment of NSR.


17.  Insurance-Bonding Requirements. Any and all bonding requirements, required by federal, state or local agencies, shall be paid by Magellan.









18.  Reclamation. A bond of suitable sum shall be in full force and effect, which will recover the cost of reclamation of the Mining Claims after mining has ceased.


19.  Notices. If notices are to be sent, the names and addresses of the parties are as follows:


(a) If to Owner:

Robert Cowles 1553 Foster Dr. Reno, NV 89509


(b)

If to Magellan:

John Power

P.O. Box 114

The Sea Ranch, CA 95497


20. Indemnity. Magellan does hereby agree to indemnify Owners for any and all liability, causes of action, or damages caused by any activities of Magellan, its agents, servants or employees.


21. Default. In the event that either party is in default, or claim default, the party asserting such default shall send written notice, via certified mail, to the other party, in accordance with paragraph 17. Any and all claims for default shall first be negotiated and then submitted to binding arbitration. This does not include default based upon failure to pay rental payments or Gross Smelter Returns. The parties, if the dispute cannot be resolved, submit the matter to arbitration, in accordance with Nevada law. The arbitrator so selected shall be a Nevada resident, with at least ten (10) years experience in the field of hard rock mining.


22.   Binding Effect and Choice of Law. This agreement shall be binding upon the heirs, successors and heirs of the parties hereto. Any and all disputes shall be resolved in accordance with Nevada law.


23.  Right to Co-mingle. It is expressly understood that Magellan shall have, should it put the Mining Claims into production, the right to co-mingle ores from other mining properties. Any and all such co-mingling shall be performed in strict compliance with acceptable mining standards, with assays made on all properties involved in co-mining prior to any co-mingling of ores. The parties shall agree to the process of co-mingling ores, and the calculations thereof prior to start of actual mineral ore processing.


24.

Entire Agreement. This Agreement embodies the entire understanding of the parties, and there are no other agreements whether oral or written, except those set forth herein.








COWLES TRUST


By:  /s/ Virginia Vierra


/s/ Robert Cowles


/s/ Edward Comer


/s/ Dorothy Farnandez



MAGELLAN GOLD CORPORATION


By:  /s/ John Power








MINING LEASE
(RANDALL CLAIMS)

THIS MINING LEASE (RANDALL CLAIMS) (the "Agreement") is made this 18th day of August, 2010 by and between RS GOLD, LLC, a Nevada limited liability company ("Owner"); and JOHN C. POWER, a married man dealing with his separate property ("Lessee").

RECITALS

A. Owner owns and possesses the "Randall" group of unpatented lode mining claims situated in Churchill County, Nevada. The claims are more particularly described on Exhibit A attached hereto.

These claims, together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and remove the same, and all water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto, shall be referred to collectively as the "Property."

The parties now desire to enter into an agreement giving Lessee the exclusive right to explore, develop, and mine the Property.

THEREFORE, the parties have agreed as follows:

SECTION ONE

Lease Term and Royalties

1.1 Term of Lease. Owner hereby leases the Property to Lessee for an initial term of ten (10) years. Lessee may extend the Lease for an additional ten (10) years, provided that Lessee is not in default under this Agreement. The Lease shall be extended


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for so long thereafter as there are (a) mining or processing of materials from the Property, or (b) reclamation and closure activities on the Property. The Effective Date of this Agreement will be August 18, 2010 and all rights and obligations shall be calculated on the basis of that date.


1.2 Advance Minimum Royalty Payments. Until production is achieved from the property, Lessee shall pay the following advance minimum royalties to Owner.

a.

Lessee shall not be required to make an advance royalty payment to Owner during the first year of this Agreement, but Lessee agrees to complete the first year work commitment described in Section 1.4 below.

b.

Commencing on the first anniversary of the Agreement, Lessee shall make the following advance minimum royalty payments to Owner:

Anniversary of Agreement

Annual Advance Royalty Payment

 
 

1

$10,000.00

2

$20,000.00

3

$30,000.00

4

$40,000.00

5 and all years thereafter

$50,000.00

The term "advance minimum royalty" shall mean that Owner will receive no production royalties (Section 1.3 below) until Lessee has recaptured all advance royalty payments previously made to Owner under this Agreement. Payments made to Owner in any given lease year in which production occurs shall not be less than the advance minimum royalty payable in that year, had no production occurred. After recapture, Lessee shall pay production royalties in excess of the annual advance minimum royalties paid to Owner.


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1.3 Production Royalties. Upon commencing production of valuable minerals from the Property, Lessee shall pay Owner a royalty on production equal to three percent (3%) of net smelter returns. The term "net smelter returns" shall mean the gross value of ores or concentrates shipped to a smelter or other processor (as reported on the smelter settlement sheet) less the following expenses actually incurred and borne by Lessee:

a.

Sales, use, gross receipts, severance, and other taxes, if any, payable with respect to severance, production, removal, sale or disposition of the minerals from the Property, but excluding any taxes on net income;

b.

Charges and costs, if any, for transportation from the mine or mill to places where the minerals are smelted, refined and/or sold; and

c.

Charges, costs (including assaying and sampling costs specifically related to smelting and/or refining), and all penalties, if any, for smelting and/or refining.

In the event smelting or refining are carried out in facilities owned or controlled, in whole or in part, by Lessee, charges, costs and penalties for such operations shall mean the amount Lessee would have incurred if such operations were carried out at facilities not owned or controlled by Lessee then offering comparable services for comparable products on prevailing terms.Payment of production royalties shall be made not later than thirty (30) days after receipt of payment from the smelter. All payments shall be accompanied by a statement explaining the manner to which the payment was calculated.


d. Option to Purchase Production Royalty. Lessee shall have the exclusive right and option to purchase up to two (2) "points" of Owner's royalty interest (a "Point" being defined as one percent of net smelter returns) for ONE MILLION FIVE HUNDRED THOUSAND DOLLARS



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($1,500,000.00) per Point. However, Owner's royalty may not be reduced below one percent (1%) of net smelter returns regardless of the price of gold. Lessee may exercise its option at any time by giving written notice thereof to Owner, and the parties shall exchange the purchase price and a deed conveying the royalty interest within thirty (30) days following Lessee's notice to Owner.

1.4 Work Obligation. During the first year of this Agreement, Lessee shall expend the sum of TEN THOUSAND DOLLARS ($10,000.00) on exploration of the Property. In the event that Lessee does not fulfill this expenditure requirement, Lessee shall pay Owner the difference between the required expenditure and Lessee's actual expenditure not later than September 18, 2011.

In all subsequent years of this Agreement, Lessee shall expend an amount equal to that year's annual advance royalty payment in exploration, development, mining, or mineral processing on the Property.


Any excess of expenditures in one year can be carried forward to subsequent years.

1.5 Delivery of Data. Upon execution of this Agreement Owner shall deliver to Lessee copies of all maps, deeds, and other documents in Owner's possession which pertain to the claim title and boundaries, prior workings, production history, and so forth.

SECTION TWO

Mining Operations

 2.1 Right to Explore, Develop and Mine. Upon execution of this Agreement, Lessee shall have the right to make geological investigations and surveys, to drill on the Property by any means, and to have all the rights and privileges incident to ownership of the Property, including without limitation the right to mine underground or on the surface, extract by leaching in place or any other means, remove, save, mill, concentrate, treat, and sell or otherwise dispose of ores, concentrates, mineral-bearing earth and rock and



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other products therefrom.

 2.2 Conduct of Work. Lessee shall perform its mining activities on the Prop­erty in accordance with good mining practice, shall comply with the applicable laws and regulations relating to the performance of mining operations on the Property, and shall comply with the applicable worker's compensation laws of the State of Nevada. Owner agrees to cooperate with Lessee's permitting efforts, including execution of any necessary documents.

 2.3 Liability and Insurance. During the term of the Agreement, Lessee shall indemnify and hold Owner harmless from any claims, demands, liabilities or liens arising out of Lessee's activities on the Property. To that end, Lessee shall immediately obtain and carry a policy of public liability insurance in the amount of $2,000,000.00 or more for personal injury and $500,000.00 for property damage, protecting Owner against any claims for injury to persons or damage to property resulting from Lessee's operations. Lessee shall provide Owner with a certificate of insurance evidencing such insurance.

2.4 Liens. Lessee shall keep the Property free and clear from any and all mechanics' or laborers' liens arising from labor performed on or material furnished to the Property at Lessee's request. However, a lien on the Property shall not constitute a default if Lessee, in good faith, disputes the validity of the claim, in which event the existence of the lien shall constitute a default thirty (30) days after the validity of the lien has been adjudicated adversely to Lessee (unless Lessee bonds the lien).

However, this provision shall not prevent Lessee from pledging this Agreement and the underlying property as security for its financing of exploration, development, and mining. Any secured party shall be subject to all of the terms and provisions of this Agreement.

2.5 Installation of Equipment. Lessee may install, maintain, replace, and remove during the term of this Agreement any and all mining machinery, equipment, tools, and facilities which it may desire to



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use in connection with its exploration, development, and mining activities on the Property. Upon termination of this Agreement for any reason, Lessee shall have a period of six (6) months following such termination during which it may remove all or part of the above items at its sole cost and expense. Owner may, at Owner's discretion, require Lessee to remove all of Lessee's equipment from the Property upon termination. Any equipment remaining on the Property after six (6) months shall become the property of Owner.

 2.6 Acquisition of Permits.. Lessee shall acquire all federal, state and county permits required for its operations. Lessee shall be responsible for reclamation of only those areas disturbed by Lessee's activities. In the event that Lessee is required to post a reclamation bond, the bond will revert to Lessee upon satisfactory completion of the reclamation program.

 2.7 Commingling of Ore. Lessee shall have the right to commingle ores from the Property with ores from other properties provided that Lessee weighs and samples Owners ores in accordance with sound mining and metallurgical practices and accounts for Owner's share of production.

 2.8 Drill Logs, Assays, and Maps.. Copies of all drill logs, exploration information, assays, maps, metallurgical studies, and other factual information shall be furnished by Lessee to Owner annually (within thirty (30) days) following the end of each contract year. Upon the expiration or termination of this Agreement, Lessee shall deliver copies of all data relating to the Property to Owner, which Lessee has not previously delivered to Owner, and Owner may, at Owner's cost, elect to take possession of all drill core cuttings, pulps, and other physical evidence of exploration.

SECTION THREE

Inspection by Owner.

 3.1 Inspection of Property. Owner, or Owner's authorized agents or representatives, shall be permitted to enter upon the Property on not less than two (2) days' advance notice and during Lessee's



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normal business hours for the purpose of inspection, but shall enter upon the Property at Owner's own risk and so as not to hinder unreasonably the operations of Lessee. Owner shall defend, indemnify, and hold Lessee harmless from any damages, claim, or demand by reason of injury to Owner or Owner's agents or representatives on the Property or the approaches thereto.

 3.2 Inspection of Accounts. Lessee agrees to keep accurate books of account reflecting the mining operations on the Property, and Owner on not less than two (2) days' advance notice shall have the right, either personally or through a qualified accountant of Owner's choice and at Owner's cost, to examine and inspect the books and records of Lessee pertaining to the mining, milling and shipping operations of Lessee.

SECTION FOUR

Taxes.

Lessee shall pay all taxes levied or assessed upon any improvements placed on the Property by Lessee. Upon termination of this Agreement for any reason, any tax obligations shall be apportioned between the parties on a calendar year basis for the remaining portion of the calendar year. However, Owner shall not be liable for taxes on any tools, equipment, machinery, facilities, or improvements placed upon the Property unless Lessee fails to remove them within the time provided by this Agreement.

SECTION FIVE

Maintenance of Claims

 5.1 Claim Maintenance. Lessee shall pay the federal claim maintenance fees required to maintain the Property in good standing, commencing with the 2010-2011 assessment year. Lessee shall



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provide evidence of payment to Owner by August 1 of each year. Lessee shall record an Affidavit and Notice of Intent to Hold in Churchill County by October 1 of each year and provide evidence of recording within ten (10) days. Lessee shall also pay the Nevada claim fee assessment by October 15, 2010 and any subsequent years in which the fee assessment is imposed on claim owners in Nevada. The assessment shall be based upon the maximum number of claims held by any one of the Owners. If Lessee terminates this Agreement within two (2) months of the applicable deadline, Lessee shall not be responsible for claim maintenance payments due in that calendar year or any succeeding annual assessment year.

 5.2 Assessment Work. If the requirement of annual assessment work is restored by Congress, Lessee shall be responsible for the performance and filing of assessment work unless this Agreement is terminated as hereinafter provided. In the event of termination within two (2) months of the applicable deadline for performance, Lessee shall be responsible for the performance and filing of assessment work for that year.

5.3 Relocation and Amendment. At any time during which this Agreement is in effect, Lessee may, with the express written consent of Owner but at its own expense, relocate, or amend any of the unpatented mining claims included in the Property, and such relocated, or amended claims shall be deemed to be covered by the provisions of this Agreement.

5.4 Mineral Leasing. In the event of repeal or substantial change in the Mining Law of 1872, Lessee shall have whatever rights may be afforded to Owner under the new laws, including (but not limited to) whatever preferred right Owner may have to a lease from a governmental agency, subject to the payment to Owner of the royalties prescribed in Section One.


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SECTION SIX

Termination and Default

 6.1 Termination. Lessee shall have the right to terminate this Agreement at its sole discretion at any time by giving thirty (30) days' advance written notice to Owner. Upon termination, Owner shall retain all payments previously made as liquidated damages and this Agreement shall cease and terminate. Lessee will provide Owner with all factual data, maps, assays, and reports pertaining to the Property. Lessee will also deliver a Quitclaim Deed to Owner.

 6.2 Default. If Lessee fails to perform its obligations under this Agreement, and in particular fails to make any payment due to Owner hereunder, Owner may declare Lessee in default by giving Lessee written notice of default which specifies the obligations which Lessee has failed to perform. If Lessee fails to remedy a default in payment within fifteen days (15) of receiving the notice of default, or if Lessee fails to remedy or commence to remedy any other default in performance within thirty (30) days of receiving the notice of default, Owner may terminate this Agreement and Lessee shall peaceably surrender possession of the Property to Owner. Notice of termination shall be in writing and served in accordance with this Agreement.


 6.3 Obligations Following Termination. In the event of voluntary or involun­tary termination, Lessee shall surrender possession of the Property to Owner and shall have no further liability or obligation under this Agreement except for its obligation (a) to pay any advance and production royalties then owed to Owner pursuant to Section One; (b) to pay the cost of removal of all equipment as stated in Section 2.5; (c) to fulfill its reclamation responsibility as stated in Section 2.6; (d) to pay its apportioned share of taxes, as provided for in Section Four; (e) to satisfy any accrued obligations or



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liabilities; and (f) to satisfy any other obligation imposed by this Agreement or by law.

SECTION SEVEN

Notices and Payments

 7.1 Notices. All notices to Lessee or Owner shall be in writing and shall be sent by Federal Express or other courier service, or by certified or registered mail, return receipt requested, to the addresses below. Notice of any change in address shall be given in the same manner:

TO OWNER:

RS Gold, LLC.

331 Fairgrounds Drive Spring Creek, Nevada 89815


TO LESSEE:

John C. Power P.O. Box 114

Sea Ranch, California 95497


7.2 Payments. All payments shall be in U.S. currency payable to Owner at the address above.



SECTION EIGHT


Assignment


Lessee may assign this Agreement at any time, in whole or in part, upon receiving the prior written consent of Owner, which consent shall not be unreasonably delayed or withheld. However, Lessee may assign the Agreement without consent to a limited liability company or corporation formed for the purpose of holding and exploring the Property.



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SECTION NINE


Warranty of Title


9.1 Warranty. Owner warrants and represents it is the owner of the unpatented mining claims described in Recital "A and all lode mineral rights within the boundary of these claims, subject to the paramount title of the United States (but excepting those portions that may overlap adjacent fee lands); that the claims are valid under the mining laws of the United States and the State of Nevada; that Owner has and will continue to have the right to commit the claims to this Agreement; and that Owner is not aware of any liens, encumbrances, claim disputes, legal actions or liabilities (including environ­mental liabilities) affecting the Property. However, Owner does not warrant the presence of a valuable mineral discovery on any of the claims comprising the Property.


 9.2 Examination of Title Documents. Promptly after execution of this Agree­ment, Owner shall deliver to Lessee copies of all certificates of location, maintenance fee receipts, and any other documents bearing upon Owner's title, interest, or ownership in the Property. Lessee may then undertake such further investigation of the title and status of the claims as Lessee shall deem necessary. If that investigation should reveal defects in the title, Owner agrees to proceed forthwith to cure said title defects to the satisfaction of Lessee; and in the event it should not do so, Lessee may cure such title defects and deduct the expense incurred, including reasonable attorney's fees, from any payment to be made hereunder. The deduction in each year may not exceed one-half of the advance minimum royalty payable to Owner.

 9.3 No Liability for Loss of Claims_ Lessee shall not be held liable for the loss of any claims by virtue of invalid location by Owner. Lessee shall not be held liable for the loss of any claims due to



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any act of governmental agencies, provided that Lessee has taken all reasonable and legal means to protect and maintain such claims.

SECTION TEN

Force Majeure


10.1 Suspension of Obligations. If Lessee is prevented by Force Majeure from timely performance of any of its obligations hereunder (specifically, those obligations set forth in Sections 1.4, 2.6, and 5.2), except the payment of money, the failure of performance shall be excused and the period for performance shall be extended for an additional period equal to the duration of Force Majeure. (Specifically, Lessee shall not be excused from making advance minimum royalty payments pursuant to Section 1.2; maintaining insurance coverage in accordance with Section 2.3; or maintaining the claims in accordance with Section 5.1.) Upon the occurrence and upon the termination of Force Majeure, Lessee shall promptly notify Owner in writing. Lessee shall use reasonable diligence to remedy Force Majeure, but shall not be required to contest the validity of any law or regulation or any action or inaction of civil or military authority.


10.2 Definition of Force Majeure_ "Force Majeure" means any cause beyond a party's reasonable control, including law or regulation; action or inaction of civil or military authority; inability to obtain any license, permit, or other authorization that may be required to conduct operations on or in connection with the Property, interference with mining operations by a developer of oil, gas, geothermal resources, or mineral materials on or under the Property; unusually severe weather; mining casualty; unavoidable mill shutdown; damage to or destruction of mine plant or facility; fire; explosion; flood; insurrection; riot; labor disputes; inability after diligent effort to obtain workmen or material,



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including drill rigs and qualified drillers; delay in transportation; and acts of God.

10.3 Economic Force Majeure. During the extended terra of this Agreement, Lessee shall have the right to suspend operations and hold the Property during periods of Economic Force Majeure. "Economic Force Majeure" shall mean periods during which the price of gold or other mineral commodities is too low to allow economic recovery and sale of ore from the Property. However, Lessee shall continue to pay advance royalties and maintain the Property during conditions of Economic Force Majeure.

SECTION ELEVEN

Miscellaneous Provisions

11.1 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective heirs, executors, administrators, successors, and assigns.

11.2 Applicable Law. The terms and provisions of this Agreement shall be interpreted in accordance with the laws of the State of Nevada.

11.3 Entire Agreement. This Agreement terminates and replaces all prior agreements, either written, oral or implied, between the parties hereto, and constitutes the entire agreement between the parties.

11.4 Recording Memorandum of Agreement. The parties hereto agree to exe­cute a Memorandum of this Agreement (short form) and record it in Churchill County, Nevada so as to give public notice, pursuant to the laws of the State of Nevada, of the existence of this Agreement.

11.5 Void or Invalid Provisions. If any term, provision, covenant or condition of this Agreement, or any application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all


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applications thereof not held invalid, void or unenforceable, shall continue in full force and effect and shall in no way be affected, impaired, or invalidated thereby.


11.6 Time of the Essence. Time is of the essence of this Agreement and each and every part thereof.

11.7 Confidentiality. All reports and data provided by Lessee to Owner shall be held in strictest confidence, and Owner shall not disclose such information without Lessee's prior written consent.

11.8 No Partnership. Nothing in this Agreement shall create a partnership between Owner and Lessee.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.


RS GOLD, LLC

A Nevada limited liability company


By:  /s/ Randall Stoeberl

Manager



/s/  John C. Power





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EXHIBIT A

Randall Claim Group, Churchill County, Nevada

Claim Name

BLM Number

Randall 18

948518

Randall 19

948519

Randall30-33

948529-948532

Randal 43-46

948541-948544

10 Claims

RS Gold/

Exhibit A to RS & Power Mining Lease (8-10)






ASSIGNMENT OF LEASE AGREEMENT


THIS ASSIGNMENT OF LEASE AGREEMENT (“Agreement”) is made and entered effective the 21st day of October, 2010, by and between JOHN POWER, individually (“Assignor”), and MAGELLAN GOLD CORPORATION, a Nevada Corporation (“Assignee”).


RECITALS


WHEREAS, Assignor and RS GOLD, LLC, a Nevada limited liability company (“Owner”) entered into that certain Mining Lease Agreement dated August 18, 2010 (the “Lease”) pursuant to which Owner granting Assignor the exclusive right to explore, develop and mine certain Property which is the subject of the Lease;  and,


WHEREAS, Assignor desires to assign all of his right, title and interest in the Lease to Assignee and Assignee desires to assume Assignor’s obligations under the Lease.

AGREEMENT


NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


1.  Assignment.  Effective as of the date hereof Assignor hereby assigns to Assignee all of its right, title and interest in and to the Lease, subject to all of the terms, covenants, conditions and provisions of the Lease.  


2.  Assumption.  From and after the date hereof, Assignee hereby assumes, covenants and agrees to keep and perform each and every obligation of Assignor under the Lease.  Assignee agrees to be bound by each and every provision of the Leases as if it had executed the same.


3.  Assignor’s Representations and Warranties.  Assignor represents and warrants to Assignee that:


(a)

the Lease is in full force and effect, unmodified except as provided in this Agreement;


(b)

Assignor’s interest in the Lease is free and clear of any liens, encumbrances or adverse interests of third parties;


(c)

Assignor possesses the requisite legal authority to assign his interest in the Lease as provided herein.






4.  Entire Agreement.  This Agreement embodies the entire understanding of the parties hereto and there are no other agreements or understandings written or oral in effect between the parties relating to the subject matter hereof unless expressly referred to by reference herein.  This Agreement may be amended or modified only by an instrument of equal formality signed by the parties or their duly authorized agents.


5.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado and each of the parties hereto submits to the non-exclusive jurisdiction of the courts of the State of Colorado in connection with any disputes arising out of this Agreement.


6.  Successors and Assigns.  This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of the heirs, administrators, successors and assigns of the parties.


7  Attorneys’ Fees.  In the event of a dispute arising under this Agreement, the prevailing party shall be entitled to recover all reasonable attorneys’ fees.


8.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  Facsimile signatures shall be deemed the same as originals.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written.



ASSIGNOR:

ASSIGNEE:


MAGELLAN GOLD CORPORATION



/s/ John C. Power

By:/s/ John C. Power

John C. Power, individually

John C. Power, its President




2






MINING LEASE
(SECRET CLAIMS)


THIS MINING LEASE (SECRET CLAIMS) (the "Agreement") is made this 28th day of September, 2010 by and between RS GOLD, LLC, a Nevada limited liability company ("Owner"); and MAGELLAN GOLD CORPORATION, a Nevada corporation ("Lessee").

RECITALS

A.

Owner owns and possesses the "Secret" group of unpatented lode mining claims situated in Washoe County, Nevada. The claims are more particularly described on Exhibit A attached hereto and shown on the map attached hereto as Exhibit B.

These claims, together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and remove the same, and all water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto, shall be referred to collectively as the "Property."

B.

The parties now desire to enter into an agreement giving Lessee the exclusive right to explore, develop, and mine the Property.

THEREFORE, the parties have agreed as follows:

SECTION ONE

Lease Term and Royalties

1.1 Term of Lease. Owner hereby leases the Property to Lessee for an initial term of ten (10) years. Lessee may extend the Lease for an additional ten (10) years, provided that


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Lessee is not in default under this Agreement. The Lease shall be extended for so long thereafter as there are (a) mining or processing of materials from the Property, or (b) reclamation and closure activities on the Property. The Effective Date of this Agreement will be September 28, 2010 and all rights and obligations shall be calculated on the basis of that date.


1.2 Advance Minimum Royalty Payments. Until production is achieved from the property, Lessee shall pay the following advance minimum royalties to Owner.

a.

Lessee shall pay Owner the sum of TWELVE THOUSAND DOLLARS ($12,000.00) by October 8, 2010.  Lessee also agrees to reimburse Owner for its claim staking costs in the amount of THREE THOUSAND SEVEN HUNDRED TWENTY-NINE DOLLARS AND SIXTY CENTS ($3,729.60), and Lessee agrees to pay all filing and recording fees required by the Nevada Bureau of Land Management and Washoe County for perfecting the Claims.

b.

Commencing on the first anniversary of the Agreement, Lessee shall make the following advance minimum royalty payments to Owner:

Anniversary of Agreement

Annual Advance Royalty Payment

 
 

1

$20,000.00

2

$30,000.00

3

$40,000.00

4 and all years thereafter

$50,000.00

The term "advance minimum royalty" shall mean that Owner will receive no production royalties (Section 1.3 below) until Lessee has recaptured all advance royalty


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payments previously made to Owner under this Agreement. Payments made to Owner in any given lease year in which production occurs shall not be less than the advance minimum royalty payable in that year, had no production occurred. After recapture, Lessee shall pay production royalties in excess of the annual advance minimum royalties paid to Owner.


1.3  Production Royalties. Upon commencing production of valuable minerals from the Property, Lessee shall pay Owner a royalty on production equal to three percent (3%) of net smelter returns. The teen "net smelter returns" shall mean the gross value of ores or concentrates shipped to a smelter or other processor (as reported on the smelter settlement sheet) less the following expenses actually incurred and borne by Lessee:

a.

Sales, use, gross receipts, severance, and other taxes, if any, payable with respect to severance, production, removal, sale or disposition of the minerals from the Property, but excluding any taxes on net income;

b.

Charges and costs, if any, for transportation from the mine or mill to places where the minerals are smelted, refined and/or sold; and

c,

Charges, costs (including assaying and sampling costs specifically related to smelting and/or refining), and all penalties, if any, for smelting and/or refining.

In the event smelting or refining are carried out in facilities owned or controlled, in whole or in part, by Lessee, charges, costs and penalties for such operations shall mean the amount Lessee would have incurred if such operations were carried out at facilities not owned or controlled by Lessee then offering comparable services for comparable products


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on prevailing terms. Payment of production royalties shall be made not later than thirty (30) days after receipt of payment from the smelter. All payments shall be accompanied by a statement explaining the manner to which the payment was calculated.

d. Option to Purchase Production Royalty. Lessee shall have the exclusive right and option to purchase up to two (2) "points" of Owner's royalty interest (a "Point" being defined as one percent of net smelter returns) for ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) per Point. However, Owner's royalty may not be reduced below one percent (1%) of net smelter returns regardless of the price of gold. Lessee may exercise its option at any time by giving written notice thereof to Owner, and the parties shall exchange the purchase price and a deed conveying the royalty interest within thirty (30) days following Lessee's notice to Owner.

1.4 Area of Interest. The parties hereby establish an Area of Interest extending one (1) mile beyond the exterior boundaries of the Property. Any claims located by either party (including interior fractions) within the Area of Interest shall be subject to the terms of this Agreement.

1.5 Delivery of Data. Upon execution of this Agreement Owner shall deliver to Lessee copies of all maps, deeds, and other documents in Owner's possession which pertain to the claim title and boundaries, prior workings, production history, and so forth.



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SECTION TWO

Mining Operations

 2.1 Right to Explore, Develop and Mine. Upon execution of this Agreement, Lessee shall have the right to make geological investigations and surveys, to drill on the Property by any means, and to have all the rights and privileges incident to ownership of the Property, including without limitation the right to mine underground or on the surface, extract by leaching in place or any other means, remove, save, mill, concentrate, treat, and sell or otherwise dispose of ores, concentrates, mineral-bearing earth and rock and other products therefrom.

 2.2 Conduct of Work. Lessee shall perform its mining activities on the Prop­erty in accordance with good mining practice, shall comply with the applicable laws and regulations relating to the performance of mining operations on the Property, and shall comply with the applicable worker's compensation laws of the State of Nevada. Owner agrees to cooperate with Lessee's permitting efforts, including execution of any necessary documents.

 2.3 Liability and Insurance_ During the term of the Agreement, Lessee shall indemnify and hold Owner harmless from any claims, demands, liabilities or liens arising out of Lessee's activities on the Property. To that end, Lessee shall immediately obtain and carry a policy of public liability insurance in the amount of $2,000,000.00 or more for personal injury and $500,000.00 for property damage, protecting Owner against any



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claims for injury to persons or damage to property resulting from Lessee's operations. Lessee shall provide Owner with a certificate of insurance evidencing such insurance.

 2.4 Liens. Lessee shall keep the Property free and clear from any and all mechanics' or laborers' liens arising from labor performed on or material furnished to the Property at Lessee's request. However, a lien on the Property shall not constitute a default if Lessee, in good faith, disputes the validity of the claim, in which event the existence of the lien shall constitute a default thirty (30) days after the validity of the lien has been adjudicated adversely to Lessee (unless Lessee bonds the lien).

However, this provision shall not prevent Lessee from pledging this Agreement and the underlying property as security for its financing of exploration, development, and mining. Any secured party shall be subject to all of the terms and provisions of this Agreement.

 2.5 Installation of Equipment. Lessee may install, maintain, replace, and remove during the term of this Agreement any and all mining machinery, equipment, tools, and facilities which it may desire to use in connection with its exploration, development, and mining activities on the Property. Upon termination of this Agreement for any reason, Lessee shall have a period of six (6) months following such termination during which it may remove all or part of the above items at its sole cost and expense. Owner may, at Owner's discretion, require Lessee to remove all of Lessee's equipment from the Property upon termination. Any equipment remaining on the Property after six (6) months shall become the property of Owner.



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 2.6 Acquisition of Permits. Lessee shall acquire all federal, state and county permits required for its operations. Lessee shall be responsible for reclamation of only those areas disturbed by Lessee's activities. In the event that Lessee is required to post a reclamation bond, the bond will revert to Lessee upon satisfactory completion of the reclamation program.

 2.7 Commingling of Ore. Lessee shall have the right to commingle ores from the Property with ores from other properties provided that Lessee weighs and samples Owners ores in accordance with sound mining and metallurgical practices and accounts for Owner's share of production.

 2.8 Drill Logs, Assays, and Maps. Copies of all drill logs, exploration informa­tion, assays, maps, metallurgical studies, and other factual information shall be furnished by Lessee to Owner annually (within thirty (30) days) following the end of each contract year. Upon the expiration or termination of this Agreement, Lessee shall deliver copies of all data relating to the Property to Owner, which Lessee has not previously delivered to Owner, and Owner may, at Owner's cost, elect to take possession of all drill core cuttings, pulps, and other physical evidence of exploration.

SECTION THREE

Inspection by Owner

 3.1 Inspection of Property. Owner, or Owner's authorized agents or representatives, shall be permitted to enter upon the Property on not less than two (2) days' advance notice and during Lessee's normal business hours for the purpose of inspection,

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but shall enter upon the Property at Owner's own risk and so as not to hinder unreasonably the operations of Lessee. Owner shall defend, indemnify, and hold Lessee harmless from any damages, claim, or demand by reason of injury to Owner or Owner's agents or representatives on the Property or the approaches thereto.

 3.2 Inspection of Accounts. Lessee agrees to keep accurate books of account reflecting the mining operations on the Property, and Owner on not less than two (2) days' advance notice shall have the right, either personally or through a qualified accountant of Owner's choice and at Owner's cost, to examine and inspect the books and records of Lessee pertaining to the mining, milling and shipping operations of Lessee.

SECTION FOUR

Taxes

Lessee shall pay all taxes levied or assessed upon any improvements placed on the Property by Lessee. Upon termination of this Agreement for any reason, any tax obligations shall be apportioned between the parties on a calendar year basis for the remaining portion of the calendar year. However, Owner shall not be liable for taxes on any tools, equipment, machinery, facilities, or improvements placed upon the Property unless Lessee fails to remove them within the time provided by this Agreement.

SECTION FIVE

Maintenance of Claims

5.1

Claim Maintenance. Lessee shall pay the federal claim maintenance fees required to maintain the Property in good standing, commencing with the 2010-2011



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assessment year. Lessee shall provide evidence of payment to Owner by August 1 of each year. Lessee shall record an Affidavit and Notice of Intent to Hold in Washoe County by October 1 of each year and provide evidence of recording within ten (10) days. Lessee shall also pay the Nevada claim fee assessment, if any, for subsequent years in which the fee assessment is imposed on claim owners in Nevada. The assessment shall be based upon the maximum number of claims held by any one of the Owners. If Lessee terminates this Agreement within two (2) months of the applicable deadline, Lessee shall not be responsible for claim maintenance payments due in that calendar year or any succeeding annual assessment year.

5.2 Assessment Work. If the requirement of annual assessment work is restored by Congress, Lessee shall be responsible for the performance and filing of assessment work unless this Agreement is terminated as hereinafter provided. In the event of termination within two (2) months of the applicable deadline for performance, Lessee shall be responsible for the performance and filing of assessment work for that year.

5.3 Relocation and Amendment. At any time during which this Agreement is in effect, Lessee may, with the express written consent of Owner but at its own expense, relocate, or amend any of the unpatented mining claims included in the Property, and such relocated, or amended claims shall be deemed to be covered by the provisions of this Agreement.



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5.4  Mineral Leasing.  In the event of appeal or substantial change in the Mining Law of 1572, Lessee shall have whatever rights may be afforded to Owner under the new laws, including (but not limited to) whatever preferred right Owner may have to a lease from a governmental agency, subject to the payment to Owner of the royalties prescribed in Section One.

SECTION SIX

Termination and Default

 6.1 Termination. Lessee shall have the right to terminate this Agreement at its sole discretion at any time by giving thirty (30) days' advance written notice to Owner. Upon termination, Owner shall retain all payments previously made as liquidated damages and this Agreement shall cease and terminate. Lessee will provide Owner with all factual data, maps, assays, and reports pertaining to the Property. Lessee will also deliver a Quitclaim Deed to Owner.

 6.2 Default. If Lessee fails to perform its obligations under this Agreement, and in particular fails to make any payment due to Owner hereunder, Owner may declare Lessee in default by giving Lessee written notice of default which specifies the obligations which Lessee has failed to perform. If Lessee fails to remedy a default in payment within fifteen days (15) of receiving the notice of default, or if Lessee fails to remedy or commence to remedy any other default in performance within thirty (30) days of receiving the notice of default, Owner may terminate this Agreement and Lessee shall



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peaceably surrender possession of the Property to Owner. Notice of termination shall be in writing and served in accordance with this Agreement.


 6.3 Obligations Following Termination. In the event of voluntary or involun­tary termination, Lessee shall surrender possession of the Property to Owner and shall have no further liability or obligation under this Agreement except for its obligation (a) to pay any advance and production royalties then owed to Owner pursuant to Section One; (b) to pay the cost of removal of all equipment as stated in Section 2.5; (c) to fulfill its reclamation responsibility as stated in Section 2.6; (d) to pay its apportioned share of taxes, as provided for in Section Four; (e) to satisfy any accrued obligations or liabilities; and (f) to satisfy any other obligation imposed by this Agreement or by law.


SECTION SEVEN


Notices and Payments


 7.1 Notices. All notices to Lessee or Owner shall be in writing and shall be sent by Federal Express or other courier service, or by certified or registered mail, return receipt requested, to the addresses below. Notice of any change in address shall be given in the same manner:


TO OWNER:

RS Gold, LLC.

331 Fairgrounds Drive Spring Creek, Nevada 89815


TO LESSEE:

Magellan Gold Corporation P.O. Box 114

Sea Ranch, California 95497



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7.2 Payments. All payments shall be in U.S. currency payable to Owner at the address above.

SECTION EIGHT

Assignment

Lessee may assign this Agreement at any time, in whole or in part, upon receiving the prior written consent of Owner, which consent shall not be unreasonably delayed or withheld. However, Lessee may assign the Agreement without consent to a limited liability company or corporation formed for the purpose of holding and exploring the Property.

SECTION NINE

Warranty of Title

9.1 Warranty. Owner warrants and represents it is the owner of the unpatented mining claims described in Recital "A" and all lode mineral rights within the boundary of these claims, subject to the paramount title of the United States (but excepting those portions that may overlap adjacent fee lands); that the claims are valid under the mining laws of the United States and the State of Nevada; that Owner has and will continue to have the right to commit the claims to this Agreement; and that Owner is not aware of any liens, encumbrances, claim disputes, legal actions or liabilities (including environ­mental liabilities) affecting the Property. However, Owner does not warrant the presence of a valuable mineral discovery on any of the claims comprising the Property.



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 9.2 Examination of Title Documents. Promptly after execution of this Agree­ment, Owner shall deliver to Lessee copies of all certificates of location, maintenance fee receipts, and any other documents bearing upon Owner's title, interest, or ownership in the Property. Lessee may then undertake such further investigation of the title and status of the claims as Lessee shall deem necessary. If that investigation should reveal defects in the title, Owner agrees to proceed forthwith to cure said title defects to the satisfaction of Lessee; and in the event it should not do so, Lessee may cure such title defects and deduct the expense incurred, including reasonable attorney's fees, from any payment to be made hereunder. The deduction in each year may not exceed one-half of the advance minimum royalty payable to Owner.

 9.3 No Liability for Loss of Claims. Lessee shall not be held liable for the loss of any claims by virtue of invalid location by Owner. Lessee shall not be held liable for the loss of any claims due to any act of governmental agencies, provided that Lessee has taken all reasonable and legal means to protect and maintain such claims.

SECTION TEN

Force Majeure

10.1 Suspension of Obligations. If Lessee is prevented by Force Majeure from timely performance of any of its obligations hereunder (specifically, those obligations set forth in Sections 1.4, 2.6, and 5.2), except the payment of money, the failure of performance shall be excused and the period for performance shall be extended for an additional period equal to the duration of Force Majeure. (Specifically, Lessee shall not be excused from making


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advance minimum royalty payments pursuant to Section 1.2; maintaining insurance coverage in accordance with Section 2.3; or maintaining the claims in accordance with Section 5.1.) Upon the occurrence and upon the termination of Force Majeure, Lessee shall promptly notify Owner in writing. Lessee shall use reasonable diligence to remedy Force Majeure, but shall not be required to contest the validity of any law or regulation or any action or inaction of civil or military authority.


10.2 Definition of Force Majeure. "Force Majeure" means any cause beyond a party's reasonable control, including law or regulation; action or inaction of civil or military authority; inability to obtain any license, permit, or other authorization that may be required to conduct operations on or in connection with the Property, interference with mining operations by a developer of oil, gas, geothermal resources, or mineral materials on or under the Property; unusually severe weather; mining casualty; unavoidable mill shutdown; damage to or destruction of mine plant or facility; fire; explosion; flood; insurrection; riot; labor disputes; inability after diligent effort to obtain workmen or material, including drill rigs and qualified drillers; delay in transportation; and acts of God.

10.3 Economic Force Majeure. During the extended term of this Agreement, Lessee shall have the right to suspend operations and hold the Property during periods of Economic Force Majeure. "Economic Force Majeure" shall mean periods during which the price of gold or other mineral commodities is too low to allow economic recovery and


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sale of ore from the Property. However, Lessee shall continue to pay advance royalties and maintain the Property during conditions of Economic Force Majeure.

SECTION ELEVEN

Miscellaneous Provisions

11.1 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their respective heirs, executors, administrators, successors, and assigns.

11.2 Applicable Law. The terms and provisions of this Agreement shall be interpreted in accordance with the laws of the State of Nevada.

11.3 Entire Agreement. This Agreement terminates and replaces all prior agree­ments, either written, oral or implied, between the parties hereto, and constitutes the entire agreement between the parties.

11.4 Recording Memorandum of Agreement. The parties hereto agree to execute a Memorandum of this Agreement (short form) and record it in Washoe County, Nevada so as to give public notice, pursuant to the laws of the State of Nevada, of the existence of this Agreement.

11.5 Void or Invalid Provisions. If any term, provision, covenant or condition of this Agreement, or any application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all applications thereof not held invalid, void or unenforceable,


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shall continue in full force and effect and shall in no way be affected, impaired, or invalidated thereby.

11.6 Time of the Essence. Time is of the essence of this Agreement and each and every part thereof.

11.7 Confidentiality. All reports and data provided by Lessee to Owner shall be held in strictest confidence, and Owner shall not disclose such information without Lessee's prior written consent.

11.8 No Partnership. Nothing in this Agreement shall create a partnership between Owner and Lessee.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

RS GOLD, LLC

A Nevada limited liability company


By:  Randall Stoeberl

Manager


MAGELLAN GOLD CORPORATION

A Nevada corporation


By:  /s/  John C. Power

President





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EXHIBIT A
Secret Claim Group, Washoe County, Nevada


Claim Name

BLM Number


Secret 170


To be filed






CONSULTATION AGREEMENT



THIS CONSULTATION AGREEMENT is made and entered into as of the 11th day of January, 2011,  by and between MAGELLAN GOLD CORPORATION, a Nevada corporation (the "Company") and JOHN C. POWER ("Consultant").


SECTION 1.

RETAINER


The Company hereby retains Consultant, as an independent contractor, to act as an agent of the company, subject to the terms hereof.


SECTION 2.

TERM


This Agreement shall commence on the date above written and shall terminate on December 31, 2011.


SECTION 3.

AUTHORITY


3.1

Consultant shall use his best efforts to advise and consult with the agents and employees of the Company in connection with the daily operations.


SECTION 4.

COMPENSATION


4.1

As compensation for his services as described in Section 3 hereof, the Company agrees to pay Consultant a fee equal to $2,500 per month. The fee will be pro rated for any portion of a month during the term.


4.2

The Consultant shall pay all applicable taxes which are assessed against it as a result of its receipt of compensation under this Agreement, including, without limitation, all federal and state income taxes, and the Company shall not withhold any such taxes from the compensation paid to the Consultant.  Consultant agrees to indemnify and hold harmless the Company, together with its officers and directors, with respect to any such taxes or other assessments which may be due and payable as a result of the payment or receipt of compensation hereunder.


4.3   

During the term hereof, Consultant shall incur no out of pocket expenses or other charges in connection with the performance of services hereunder without the express written consent of the Company.  The Company agrees to reimburse Consultant for any out of pocket expenses incurred with Consultant with the prior written approval of the Company.  


SECTION 5.

INDEMNIFICATION


5.1

Consultant acknowledges and agrees that the scope of its authority hereunder shall be expressly defined and limited herein.  Consultant shall make no statement, warranty or representation which purports in any way to be on behalf of or binding upon the Company and hereby acknowledges that it lacks any authority whatsoever, either express, apparent or implied, to do so.  The Company




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shall not be bound by or liable for any statement, warranty or representation made by the Consultant to any third person or party and Consultant, for itself, its officers, directors, stockholders, agents and employees, hereby agrees to indemnify and hold harmless the Company for any liability which may arise or be claimed against the Company by virtue of Consultant's breach of this Agreement.


5.2

The Company agrees to indemnify and hold harmless Consultant from any liability which may arise against Consultant which is based upon any false or materially misleading statement of fact contained in any financial information or other document provided by the Company to the Consultant pursuant to this Agreement pertaining to the Company, its financial condition or operations.


5.3   Consultant shall indemnify and hold harmless the Company and each of its officers, directors, employees, representatives, agents (including its attorneys and advisers), sureties, guarantors and each person who controls the Company within the meaning of Section 15 of the Securities and Exchange Act of 1934, as amended, against any and all liabilities, claims and lawsuits, including any and all awards and/or judgments to which they may become subject under the Securities Act of 1933, as amended, or any other federal or state statute, or common law, or otherwise, insofar as said liabilities, claims and lawsuits (including awards and/or judgments), arise out of or are in connection with this Agreement, except to the extent such liabilities, claims and lawsuits are due primarily to the Company’s negligence or misconduct.  In addition, Consultant shall also indemnify and hold harmless the Company against any and all costs and expenses, including reasonable legal fees incurred and related to the foregoing.


SECTION 6.

CONFIDENTIALITY


Throughout the terms of this Agreement, Consultant agrees to respect and protect any trade secrets and other confidential information of Company, which of necessity, must be disclosed in connection with Consultant's services hereunder.  Consultant, agrees that he will not disclose to any person any confidential information received by Consultant from the Company or its officers, directors, agents or employees, in connection with the performance with Consultant’s services under this agreement.  Consultant agrees that its agents and employees and persons retained by Consultant who shall perform service for or on behalf of Consultant in connection with the services to be performed by Consultant hereunder shall be advised by Consultant of the foregoing confidentiality obligations and thereby be bound by the provisions hereof.  Conversely, Company recognizes that the information, including all introductions, referrals as well as the names of individuals and entities provided or disclosed by Consultant pursuant to this Agreement are the valuable assets and trade secrets of Consultant; and Company covenants and agrees that it will not use or disclose, nor permit others to use or disclose Consultant's confidential information and trade secrets as communicated to Company hereunder, except with the express written consent of Consultant.


SECTION 7.  ARBITRATION


The parties agree that all controversies which may arise between them concerning any transaction, the construction, performance or breach of this or any other agreement between them, whether entered into prior, on, or subsequent to the date hereof, or any other matter, including but not limited to, securities activity, investment advice or in any way related thereto, shall be determined by




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mandatory, binding and non-appealable arbitration in Boulder, Colorado in accordance with the rules of the American Arbitrator Association.  This shall inure to the benefit of and be binding upon the Company, its officers, directors, registered representatives, agents, independent contractors, employees, sureties, and any person acting on its behalf in relation to acting subject to this Agreement.  Any award rendered in arbitration may be enforced in any court of competent jurisdiction.


IN WITNESS WHEREOF, the parties have executed this Agreement as of the first above written.



COMPANY”:

MAGELLAN GOLD CORPORATION



By:/s/ John C. Power

John C. Power, its President



CONSULTANT”:



/s/ John C. Power

John C. Power, individually




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CLIFFORD L. NEUMAN, P.C.
Attorney at Law


TEMPLE-BOWRON HOUSE
1507 PINE STREET
BOULDER, COLORADO 80302

Telephone: (303) 449-2100
Facsimile: (303) 449-1045
E-mail: clneuman@neuman.com


May 17, 2011


Magellan Gold Corporation

P O Box 114, 60 Sea Walk Drive

The Sea Ranch, CA  95497



     Re:        Registration Statement on Form S-1


Sir or Madam:


       We have acted as legal counsel for Magellan Gold Corporation, a Nevada corporation (the "Company") in connection with the Company's Registration Statement on Form S-1 identified above (the "Registration Statement") filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the Prospectus included as a part of the Registration Statement (the "Prospectus"), relating to the distribution of approximately 3.0 million shares of Common Stock by the Company (the "Common Stock") to the shareholders of Athena Silver Corporation, a Delaware corporation.  The Common Stock will be distributed as in the manner set forth in the Registration Statement and Prospectus.  


       In connection with the following opinion, we have examined and have relied upon such documents, records, certificates, statements and instruments as we have deemed necessary and appropriate to render the opinion herein set forth.


       Based upon the foregoing, it is our opinion that the Shares, when distributed in a manner consistent with the description contained in The Spin-Off and Plan of Distribution included in the Prospectus will be legally issued, fully paid and nonassessable.


       In rendering this opinion we have considered the Nevada Revised Statutes, all applicable provisions of Nevada statutory law and reported judicial decisions interpreting those laws.  We assume no obligation to revise or supplement this opinion letter should the laws of such jurisdiction be changed after the date hereof by legislative action, judicial decision or otherwise.


       The undersigned hereby consents to the filing this opinion as Exhibit 5.0 to the Registration Statement on Form S-1 and to the use of its name in the Registration Statement.


 

Sincerely,

  
 

CLIFFORD L. NEUMAN, P.C.

  
 

/s/ Clifford L. Neuman

  
 

Clifford L. Neuman





Exhibit 23.1







INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM CONSENT



We consent to the use {incorporation by reference} in this Registration Statement of Magellan Gold Corporation, on Form S-1 of our report dated March 11, 2011.  We also consent to the reference to us under the heading “Experts” in this registration statement.

 


/s/ Malone Bailey, LLP

MaloneBailey, LLP

www.malone-bailey.com

Houston, Texas


May 17, 2011