form8k012908ex10-16.htm


    
      

      

    


    PROPERTY
      OPTION AGREEMENT

    


    THIS
      AGREEMENT made and entered into as of the 14th day of July, 2006

    


    BETWEEN:           James
      Sorrell, an individual having a mailing address at

    P.O.
      Box 4566, Fort Smith, Arkansas,
      72914

    


    (Herein
      called the “Optionor”)

    


    OF
      THE FIRST PART

    


    
      	
              AND:

            	
              American
                Goldrush Corp., a company having an office at 708-1155 West Pender
                Street,
                Vancouver, B.C., V6E 2P4 

            


    

    


    


    
      	
               

            	
              (Herein
                called the “Optionee”) 

            


    

    


    
      	
               

            	
              OF
                THE SECOND PART 

            


    

    


    WHEREAS
      the Optionor has represented that he is the sole recorded and beneficial owner
      of the 39 unpatented Federal mining claims located in the Oro Blanco Mining
      District of Santa Cruz County, Arizona covering approximately 640 acres (the
      “Property) described in Schedule “A” attached hereto;

    


    AND
      WHEREAS the Optionor now wishes to grant to the Optionee the exclusive right
      and
      option to acquire an undivided 100% right, title and interest in the Property
      on
      the terms and conditions hereinafter set forth;

    


    NOW
      THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises,
      the
      mutual covenants herein set forth and the sum of One Dollar ($1.00) of lawful
      money of United States currency now paid by the Optionee to the Optionor (the
      receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually
      covenant and agree as follows:

    


    
      	
              1.

            	
              Definitions
                

            


    

    


    
      	
               

            	
               The
                following words, phrases and expressions shall have the following
                meanings: 

            


    

    


    (a)           
      “After Acquired Properties” means any and all mineral interests staked,located,
      granted or acquired by or on behalf of either of the parties heretoduring the
      currency of this Agreement which are located, in the whole orin part, within
      the
      Area of Interest;

    


    
      	
               

            	
              (b)

            	
              “Area
                of Interest” shall be any mining lands wholly or partly located within
                five miles of the Property, as the Property boundary exists as at
                the date
                of this Agreement; 

            


    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (c)

            	
              “Expenditures”
                includes all direct or indirect expenses [net of government incentives
                and
                not including payments to the Optionor pursuant to section 4, paragraphs
                (a), (b)(ii), (c)(ii), (d)(ii), (e)(i), (f)(i), and (g)(i) hereof]
                of or
                incidental to Mining Operations. An Affidavit of Expenditures from
                the
                Controller or other financial officer of the Optionee, together with
                a
                statement of Expenditures in reasonable detail shall be prima facie
                evidence of such Expenditures; the parties hereto agree that Property
                payments and Property expenditures are separate payments as outlined
                in
                paragraph 4; 

            


    

    


    
      	
               

            	
              (d)

            	
              “Facilities”
                means all mines and plants, including without limitation, all pits,
                shafts, adits, haulageways, raises and other underground workings,
                and all
                buildings, plants, facilities and other structures, fixtures and
                improvements, and all other property, whether fixed or moveable,
                as the
                same may exist at any time in, or on the Property and relating to
                the
                operator of the Property as a mine or outside the Property if for
                the
                exclusive benefit of the Property only;


            


    

    


    
      	
               

            	
              (e)

            	
              “Force
                Majeure” means an event beyond the reasonable control of the Optionee that
                prevents or delays it from conducting the activities contemplated
                by this
                Agreement other than the making of payments referred to in Section
                4
                herein. Such events shall include but not be limited to acts of God,
                war,
                insurrection, action of governmental agencies reflecting an instability
                in
                government procedures, or delay in permitting unacceptable to both
                Optionor and Optionee; 

            


    

    


    
      	
               

            	
              (f)

            	
              “Mineral
                Products” means the commercial end products derived from operating the
                Property as a mine: 

            


    

    


    
      	
               

            	
              (g)

            	
              “Mining
                Operations” includes: 

            


    

    


    
      	
               

            	
              (i)

            	
              Every
                kind of work done on or with respect to the Property by or under
                the
                direction of the Optionee during the Option Period or pursuant to
                an
                approved Work Program; and 

            


    

    



    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (ii)

            	
              Without
                limiting the generality of the foregoing, including all work capable
                of
                receiving assessment credits pursuant to the laws, rules, and regulations
                of the state of Arizona and the work of assessment, geophysical,
                geochemical and geological surveys, studies and mapping, investigating,
                drilling, designing, examining equipping, improving, surveying, shaft
                sinking, raising, cross-cutting and drifting, searching for, digging,
                trucking, sampling, working and procuring minerals, ores and metals,
                in
                surveying and bringing any mineral claims to lease or patent, in
                doing all
                other work usually considered to be prospecting, exploration, development,
                a feasibility study, mining work, milling concentration, beneficiation
                or
                ores and concentrates, as well as the separation and extraction of
                Mineral
                Products and all reclamation, restoration and permitting activities;
                

            


    

     

    
      	
               

            	
              (h)

            	
              “Net
                Smelter Royalty” means that Net Smelter Royalty as defined in Schedule “B”
                attached hereto (“NSR”); 

            


    

    


    
      	
               

            	
              (i)

            	
              “Option”
                means the option granted by the Optionor to the Optionee to acquire,
                subject to the NSR reserved to the Optionor, an undivided 100% right,
                title and interest in and to the Property as more particularly set
                forth
                in Section 4; 

            


    

    


    
      	
               

            	
              (j)

            	
              “Option
                Period” means the period from the date hereof to the date at which the
                Optionee has performed its obligations to acquire its 100% interest
                in the
                Property as set out in Section 4 hereof;


            


    

    


    
      	
               

            	
              (k)

            	
              “Property”
                means the Arizona state land described in Schedule “A”;
                

            


    

    


    
      	
               

            	
              (l)

            	
              “Work
                Program” means a program of work reasonably acceptable to both parties in
                respect of a particular Property, contained in a written document
                setting
                out in reasonable detail; 

            


    

    


    
      	
               

            	
              (i)

            	
              An
                outline of the Mining Operations proposed to be undertaken and conducted
                on the Property, specifically stating the period of time during which
                the
                work contemplated by the proposed program is to be done and performed
                

            


    

    


    
      	
               

            	
              (ii)

            	
              The
                estimated cost of such Mining Operations including a proposed budget
                providing for estimated monthly cash requirements in advance and
                giving
                reasonable details; and 

            


    

    


    
      	
               

            	
              (iii)

            	
              The
                identity and credentials of the person or persons undertaking the
                Mining
                Operations so proposed if not the Optionor, then a person reasonably
                acceptable to both parties hereto. 

            


    

    



    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    
      	
              2.

            	
              Headings
                

            


    

    


    
      	
               

            	
              Any
                heading, caption or index hereto shall not be used in any way in
                construing or interpreting any provision hereof.
                

            


    

    


    
      	
              3.

            	
              Singular,
                Plural 

            


    

    


    Whenever
      the singular or masculine or
      neuter is used in this Agreement, the same shall be construed as meaning plural
      or feminine or body politic or corporate or vice versa, as the context so
      requires.

    


    
      	
              4.

            	
              Option
                

            


    

    


    
      	
               

            	
              The
                Optionor hereby grants to the Optionee the sole and exclusive right
                and
                option (the “Option”) to earn a 100% interest in the Property exercisable
                as follows: 

            


    

    


    
      	
              (a)

            	
              The
                Optionee paying the sum of USD $35,000 to the Optionor by way of
                cash;
                

            


    

    


    
      	
              (b)

            	
              On
                or before May 31st,
                2007 

            


    

    


    (i)           
      The Optionee incurring Expenditures of USD $75,000 on the Property;

    


    (ii)           
      The Optionee paying USD $50,000 to the Optionor;

    


    
      	
              (c)

            	
              On
                or before May 31st, 2008 

            


    

    


    (i)           
      Optionee incurring Expenditures of USD $300,000 on the Property in addition
      to
      the expenditures referred to in clause (b)(i);

    


    (ii)           
      The Optionee paying USD $100,000 to the Optionor;

    


    
      	
              (d)

            	
              On
                or before May 31st, 2009 

            


    

    


    
      	
               

            	
              (i)

            	
              The
                Optionee incurring Expenditures of USD $300,000 on the Property in
                addition to the expenditures referred to in clauses
                

            


    

    
      	
               

            	
              (b)(i)
                and (c)(i) hereof; and 

            


    

    


    
      	
               

            	
              (ii)

            	
              The
                Optionee paying USD $125,000 to the Optionor;


            


    

    


    
      	
              (e)

            	
              On
                or before May 31st, 2010 

            


    

    


    
      	
               

            	
              (i)

            	
              The
                Optionee paying USD $150,000 to the Optionor; and
                

            


    

    



    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    (f)           
      On or before May 31st,
      2011

    


    (i)           
      The Optionee paying USD $200,000 to the Optionor; and

    


    (g)           
      On or before May 31st,
      2012

    


    (i)           
      The Optionee paying USD $200,000 to the Optionor.

    


    Following
      which the Optionee shall be deemed to have exercised the Option (the “Exercise
      Date”) and shall be entitled to an undivided 100% right, title and interest in
      and to the Property with the full right and authority to equip the Property
      for
      production and operate the Property as a mine subject to the rights of the
      Optionor to receive the NSR.

    


    The
      Optionee has the one time right exercisable for 90 days following completion
      of
      a bankable feasibility study to buy the Optionor’s NSR for USD $500,000 per 1%
      increment (i.e. an amount equal to USD $1,000,000 for the Optionor’s entire 2%
      NSR interest). The Optionee may purchase either none, one-half, or all of the
      Optionor’s 2% NSR interest.  The right to purchase the said NSR
      interest shall be exercised by the Optionee providing the Optionor with notice
      of the purchase accompanied by payment in the amount of USD $500,000 per each
      1%
      purchased.

    


    The
      Optionor and Optionee understand and confirm that all Expenditures incurred
      in a
      particular period, including any excess in the amount of Expenditures required
      to be incurred to maintain the Option during such period, shall be carried
      over
      and included in the aggregate amount of Expenditures for the subsequent
      period.

    


    Notwithstanding
      paragraphs (b)(i), (c)(i), and (d)(i) if the Optionee has not incurred the
      requisite Expenditures to maintain its option in good standing prior to May
      31st
      of any given year, the Optionee may pay to the Optionor within 60 days following
      the expiry of such period, the amount of the deficiency and such amount shall
      thereupon be deemed to have been Expenditures incurred by the Optionee during
      such period.

    


    
      	
              (f)

            	
              The
                Optionor agrees that the Optionee can engage anyone of its choosing
                as the
                primary contractor for all exploration activities undertaken on the
                Property; 

            


    

    


    
      	
              (g)

            	
              Company
                assumes future carrying costs (annual claim filing fees) of the property
                estimated at USD $4,900 per year thereafter. This figure applies
                to the
                property at its current size. Any fees paid to the government for
                recording assessment work shall not constitute exploration expenditures.
                

            


    

    


    
      	
              (h)

            	
              All
                figures are United States Funds. 

            


    

    


    
      	
              (i)

            	
              The
                doing of any act or the incurrence of any cash payments by the Optionee
                shall not obligate the Optionee to do any further acts or make any
                further
                payments 

            


    

    



    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    5.           
      Transfer of Title

    


    Upon
      Optionee’s completion of all
      requirements to earn a 100 percent interest in the Property, the Optionor will
      deliver or cause to be delivered to the Optionee’s solicitors a duly executed
      transfer of Property in favor of the Optionee (the “Optionee Transfer”). The
      Optionee shall be entitled to record the Optionee transfer with the appropriate
      government offices to effect transfer of legal title of the Property into its
      own name upon the full and complete exercise of the Option by the
      Optionee.  In the event the Optionee Transfer is recorded, the
      Optionor shall be entitled to record notice of its NSR interest.

     

    6.           
      Mining Operations during Option

    


    The
      Optionee has the exclusive right to
      determine what Expenditures and Mining Operations it will perform and when
      they
      will be performed.  Upon the completion of any technical reports,
      copies of all reports along with copies of all available data relating to
      exploration activities undertaken by the Opionee shall be provided to the
      Optionor on a timely basis.

    


    During
      the currency of this Agreement,
      the Optionee, its servants, agents and workmen and any persons duly authorized
      by the Optionee, shall have the right of access to and from and to enter upon
      and take possession of and prospect, explore and develop the Property in such
      manner as the Optionee in its sole discretion may deem advisable and shall
      have
      the right to remove and ship therefrom ores, minerals, metals, or other products
      recovered in any manner therefrom.

    


    7.           
      Assignment

    


    During
      the Option Term, both parties
      shall have the right to sell, transfer, assign, mortgage, or pledge its interest
      in this Agreement or its right or interest in the Property. It will be a
      condition of any assignment under this Agreement that such assignee shall agree
      in writing to be bound by the terms of this Agreement applicable to the
      assignor.  In the event the Optionee completes all obligations to
      acquire a 100% interest in the Property the Optionor will have the right to
      transfer, assign or sell the NSR on the open market.

     

    



    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    8.           
      Termination

    


    This
      Agreement shall forthwith
      terminate in circumstances where:

    


    
      	
               

            	
              (a)

            	
              The
                Optionee shall fail to comply with any of its obligations hereunder,
                subject to Force Majeure, and within 30 days of receipt by the Optionee
                of
                written notice from the Optionor of such default, the Optionee has
                not:
                

            


    

    


    
      	
               

            	
              (i)

            	
              Cured
                such default, or commenced proceedings to cure such default and prosecuted
                same to completion without undue delay; or


            


    

    


    
      	
               

            	
              (ii)

            	
              Given
                the Optionor notice that it denies that such default has occurred.
                

            


    

    


    In
      the
      event that the Optionee gives notice that it denies that a default has occurred,
      the Optionee shall not be deemed to be in default until the matter shall have
      been determined finally through such means of dispute resolution as such matter
      has been subjected to by either party; or

    


    
      	
               

            	
              (b)

            	
              The
                Optionee gives 30 days written notice of termination to the Optionor,
                which it shall be at liberty to do at any time after the execution
                of this
                Agreement with the exception that the Optionee shall not terminate
                the
                agreement within 90 days prior to August 31 of any given year. If
                and when
                the Optionee elects to terminate this Agreement, or terminate one
                of the
                projects comprising the Property, at such time the Property or the
                specific project will be returned to the Optionor.
                

            


    

    


    Upon
      the
      termination of this Agreement under this Section 8, the Optionee shall cease
      to
      be liable to the Optionor in debt, damages, annual rental fees, or
      otherwise.  Upon termination of this Agreement under this Section 8,
      the Optionee shall vacate the Property within a reasonable time after such
      termination, but shall have the right of access to the Property for a period
      of
      six months thereafter for the purpose of removing its chattels, machinery,
      equipment and fixtures.  Upon termination of this Agreement, the
      Optionee shall ensure that copies of all data, results and reports are provided
      to the Optionor.

    



    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    9.           
      Representations, Optionies, and Covenants of the Optionor

    


    The
      Optionor represents, Options and
      covenants to and with the Optionee as follows:

    


    (a)           
      The Optionor is an individual residing in the United States;

    


    
      	
               

            	
              (b)

            	
              The
                Optionor has full power and authority to carry on his business and
                to
                enter into this Agreement and any agreement or instrument referred
                to or
                contemplated by this Agreement; 

            


    

    


    
      	
               

            	
              (c)

            	
              Neither
                the execution and delivery of this Agreement, nor any of the agreements
                referred to herein or contemplated hereby, nor the consummation of
                the
                transactions hereby contemplated hereby, nor the consummation of
                the
                transactions hereby contemplated conflict with, result in the breach
                of or
                accelerate the performance required by, any agreement to which it
                is a
                party; 

            


    

    


    
      	
               

            	
              (d)

            	
              The
                execution and delivery of this Agreement and the agreements contemplated
                hereby will not violate or result in the breach of the laws of any
                jurisdiction applicable or pertaining thereto or of its constating
                documents; 

            


    

    


    
      	
               

            	
              (e)

            	
              The
                Agreement constitutes a legal, valid and binding obligation of the
                Optionor; 

            


    

    


    
      	
               

            	
              (f)

            	
              The
                Property is accurately described in Schedule “A”, is in good standing
                under the laws of the jurisdiction in which it is located and is
                free and
                clear of all liens, charges and encumbrances;


            


    

    


    
      	
               

            	
              (g)

            	
              The
                Optionor is the sole recorded and beneficial owner of the Property
                and has
                the exclusive right to enter into this Agreement and all necessary
                authority to transfer its interest in the Property in accordance
                with the
                terms of this Agreement; 

            


    

    


    
      	
               

            	
              (h)

            	
              No
                Person, firm or corporation has any proprietary or possessory interest
                in
                the Property other than the Optionor, and no person, firm or corporation
                is entitled to any royalty or other payment in the nature of rent
                or
                royalty on any minerals, ores, metals or concentrates or any other
                such
                products removed from the Property other than the government of the
                state
                of Arizona pursuant to statute; notwithstanding any Federal or State
                royalties or net proceeds tax derived from mining operations.
                

            


    

    



    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              (i)

            	
              Upon
                request by the Optionee, and at the sole cost of the Optionee, the
                Optionor shall deliver or cause to be delivered to the Optionee copies
                of
                all available maps and other documents and data in its possession
                respecting the Property. Nothing will be withheld, hidden, or kept
                from
                the Optionee, whether the data or information is held or not by the
                Optionor; and 

            


    

    


    
      	
               

            	
              (j)

            	
              Subject
                to performance by the Optionee of its obligations under Section 4,
                during
                the Option Period, the Optionor will keep the Property in good standing,
                free and clear of all liens, charges and encumbrances, will carry
                out all
                Mining Operations on the Property in a miner-like fashion if the
                Optionee
                elects to use the mining expertise and consulting services of the
                Optionor, will obtain all necessary licenses and permits as shall
                be
                necessary and will file all applicable work up to the legal limits
                as
                assessment work under the laws of the state of Arizona.
                

            


    

    


    10.           
      Representations, Optionies and Covenants of the Optionee

    


    The
      Optionee represents, Options and covenants to and with the Optionor
      that:

    


    
      	
               

            	
              (a)

            	
              The
                Optionee is a company duly organized validly existing and in good
                standing
                under the laws of Canada; 

            


    

    


    
      	
               

            	
              (b)

            	
              The
                Optionee has full power and authority to carry on its business and
                to
                enter into this Agreement and any agreement or instrument referred
                to or
                contemplated by this Agreement; 

            


    

    


    
      	
               

            	
              (c)

            	
              Neither
                the execution and delivery of this Agreement, nor any of the agreements
                referred to herein or contemplated hereby, nor the consummation of
                the
                transactions hereby contemplated conflict with, result in the breach
                of or
                accelerate the performance required by, any agreement to which it
                is a
                party; 

            


    

    


    
      	
               

            	
              (d)

            	
              The
                execution and delivery of this Agreement and the agreements contemplated
                hereby will not violate or result in the breach of the laws of any
                jurisdiction applicable or pertaining thereto or of its constating
                documents; and 

            


    

    


    
      	
               

            	
              (e)

            	
              This
                Agreement constitutes a legal, valid and binding obligation of the
                Optionee. 

            


    

    



    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    11.           
      Indemnity and Survival of Representation

    


    The
      representation and Optionies
      hereinbefore set out are conditions on which the parties have relied in entering
      into this Agreement and shall survive the acquisition of any interest in the
      Property by the Optionee and each of the parties will indemnify and save the
      other harmless from all loss, damage, costs, actions and suits arising out
      of or
      in connection with any breach of any representation, Option, covenant, agreement
      or condition made by them and contained in this Agreement.

    


    The
      Optionor agrees to indemnify and
      save harmless the Optionee from any liability to which it may be subject arising
      from any Mining Operations carried out by the Optionor or at its direction
      on
      the Property. The Optionee agrees to indemnify and save harmless the Optionor
      from any liability to which it may be subject arising from any Mining Operations
      carried out by the Optionee or at its direction on the Property.

    


    The
      Optionor agrees to indemnify and
      save harmless the Optionee from any liability arising form any and every kind
      of
      work done on or with respect to the Property prior to the signing of this
      Agreement (the “Prior Operations”). Without limiting the generality of the
      foregoing, Prior Operations includes all work capable of receiving assessment
      credits pursuant to the state of Arizona and the work of assessment,
      geophysical, geochemical and geological surveys, studies and mapping,
      investigating, drilling, designing, examining equipping, improving, surveying,
      shaft sinking, raising, cross-cutting and drifting, searching for, digging,
      trucking, sampling, working and procuring minerals, ores and metals, in
      surveying and bringing any mineral claims to lease or patent, in doing all
      other
      work usually considered to be prospecting, exploration, development, a
      feasibility study, mining work, milling, concentration, beneficiation of ores
      and concentrates, as well as the separation and extraction of Mineral Products
      and all reclamation, restoration and permitting activities.

    


    12.           
      Confidentiality    

    


    The
      parties hereto agree to hold in
      confidence all information obtained in confidence in respect of the Property
      or
      otherwise in connection with this Agreement other than in circumstances where
      a
      party has an obligation to disclose such information in accordance with
      applicable securities legislation, in which case such disclosure shall only
      be
      made after consultation with the other party.

    



    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    13.           
      Notice

     

    All
      notices, consents, demands and
      requests (in this Section 13 called the “Communication”) required or permitted
      to be given under this Agreement shall be in writing and may be delivered
      personally sent by telegram, by telex or telecopier or other electronic means
      or
      may be forwarded by first class prepaid registered mail to the parties at their
      addresses first above written. Any Communication delivered personally or sent
      by
      telegram, telex or telecopier or other electronic means including email shall
      be
      deemed to have been given and received on the second business day next following
      the date of sending. Any Communication mailed as aforesaid shall be deemed
      to
      have been given and received on the fifth business day following the date it
      is
      posted, addressed to the parties at their addresses first above written or
      to
      such other address or addresses as either party may from time to time specify
      by
      notice to the other; provided, however, that if there shall be a mail strike,
      slowdown or other labour dispute which might effect delivery of the
      Communication by mail, then the Communication shall be effective only if
      actually delivered. For purposes of this agreement and as a definition of
      address the Optionor’s email shall be defined as margarita729@yahoo.com. The
      Optionee’s email shall be defined as scottpraill@shaw.ca and the Optionee’s
      telecopier number is 604-844-7840. Notice will be provided to each party should
      their respective email address change.

    


    14.           
      Further Assurances

    


    Each
      of the parties to this Agreement
      shall from time to time and at all times do all such further acts and execute
      and deliver all further deeds and documents as shall be reasonably required
      in
      order to fully perform and carry out the terms of this Agreement

    


    15.           
      Entire Agreement

    


    The
      parties hereto acknowledge that
      they have expressed herein the entire understanding and obligation of this
      Agreement and it is expressly understood and agreed that no implied covenant,
      condition, term or reservation, shall be read into this Agreement relating
      to or
      concerning any matter or operation provided for herein

    


    16.           
      Proper Law and Arbitration

    


    This
      Agreement will be governed by and construed in accordance with the laws of
      the
      Arizona and the United States. The parties hereto hereby irrevocably attorn
      to
      the jurisdiction of the Courts of Arizona. All disputes arising out of or in
      connection with this Agreement, or in respect of any defined legal relationship
      associated therewith or derived therefrom, shall be referred to and finally
      resolved by a sole arbitrator by arbitration under the rules of
      Arizona.

    


    17.           
      Enurement

    


    This
      Agreement will ensure to the
      benefit of and be binding upon the parties hereto and their respective
      successors and permitted assigns.

    



    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    18.           
      After Acquired Properties

    


    
      	
               

            	
              (i)

            	
              Any
                and all rights, titles, interests and estates acquired by either
                party
                within five miles from the existing perimeter of the Property boundaries
                during the term of this Agreement shall become part of the Property
                subject to this Agreement, and all lands within any such rights,
                titles,
                interests and estates shall become part of the Property subject to
                this
                Agreement, without any additional consideration, as if such rights,
                titles, interests and estates were originally subject hereto, except
                that
                no such right, title, interest or estate shall cause the Area of
                Interest
                to be expanded. The acquiring party shall notify the other party
                of such
                acquisition within 10 days after such acquisition.  The
                other party shall then have 60 days after delivery of such notice in
                which to notify the acquiring party that the other party, in its
                sole
                discretion, elects not to have such right, title, interest or estate
                become subject to this Agreement.  Any costs incurred by the
                Optionor in staking, locating, recording or otherwise acquiring any
“After
                Acquired Properties” will be deemed to be Mining Operations for which the
                Optionor will be entitled to reimbursements as part of the Expenditures
                payable by the Optionee hereunder. 

            


    

    


    
      	
               

            	
              (ii)

            	
              Any
                additional claims agreed by the Optionee to be staked by the Optionor
                within five miles from the existing perimeter of the Property boundaries
                shall form party of this Agreement. The Optionee will reimburse the
                Optionor for the costs of staking the additional claims, unless the
                Optionee does not elect to have the additional claims subject to
                this
                Agreement. 

            


    

    


    19.           
      Default

    


    Notwithstanding
      anything in this
      Agreement to the contrary if any party (a “Defaulting Party”) is in default of
      any requirement herein set forth the party affected by such default shall give
      written notice to the Defaulting Party specifying the default and the Defaulting
      Party shall not lose any rights under this Agreement, unless thirty (30) days
      after the giving of notice of default by the affected party the Defaulting
      Party
      has failed to take reasonable steps to cure the default by the appropriate
      performance and if the Defaulting Party fails within such period to take
      reasonable steps to cure any such default, the affected party shall be entitled
      to seek any remedy it may have on account of such default including, without
      limiting, termination of this Agreement.

    


    20.           
      Payment

    


    All
      references to monies herein shall
      be in United States currency unless otherwise specified. The Optionee shall
      make
      payments for the Expenditures incurred by the Optionor no later than 15 days
      after the receipt of invoices delivered by the Optionee to do any acts or make
      any payments hereunder, and any act or payment or payments as shall be made
      hereunder shall not be construed as obligating the Optionee to do any further
      act or make any further payment or payments.


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    21.           
      Supersedes Previous Agreements

    


    This
      Agreement supersedes and replaces
      all previous oral or written agreements, memoranda, correspondence or other
      communications between the parties hereto relating to the subject matter
      hereof.

    


    IN
      WITNESS WHEREOF the Parties
      hereto have duly executed this Agreement effective as of the 14th day of July,
      2006

    


    


    James
      Sorrell

    


    


    


    Per:__/s/_________________________

    James
      Sorrell

    


    


    


    American
      Goldrush Corp.

    


    


    


    


    Per:___/s/________________________

    Andrew
      Gourlay, President

    


    


    


    


    


    


    


    



    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    SCHEDULE
      “A”

    


    LIST
      OF
      MARGARITA GOLD PROPERTY UNPATENTED CLAIMS

    


    Margarita
      Gold Property Claims, Oro Blanco Mining District, Santa Cruz County,
      Arizona,

     

    
      	
              
              

              CLAIM
                NAME

            	
              
              

              BLM
                SERIAL NUMBER

            
	 	 
	
              ORO
                1

            	
              348014

            
	
              ORO
                2

            	
              348015

            
	
              ORO
                3

            	
              348016

            
	
              ORO
                4

            	
              348017

            
	
              ORO
                5

            	
              348018

            
	
              ORO
                6

            	
              348019

            
	
              ORO
                7

            	
              348020

            
	
              ORO
                8

            	
              348021

            
	
              ORO
                9

            	
              348022

            
	
              ORO
                10

            	
              348023

            
	
              ORO
                11

            	
              348329

            
	
              ORO
                12

            	
              348330

            
	
              ORO
                13

            	
              348331

            
	
              ORO
                14

            	
              348332

            
	
              ORO
                15

            	
              348333

            
	
              ORO
                16

            	
              348334

            
	
              ORO
                17

            	
              356140

            
	
              ORO
                18

            	
              356141

            
	
              ORO
                19

            	
              356142

            
	
              ORO
                20

            	
              356143

            
	
              ORO
                21

            	
              356144

            
	
              ORO
                22

            	
              356145

            
	
              ORO
                23

            	
              356146

            
	
              ORO
                24

            	
              356147

            
	
              ORO
                25

            	
              356148

            
	
              ORO
                26

            	
              356149

            
	
              ORO
                27

            	
              356150

            
	
              ORO
                28

            	
              356151

            
	
              ORO
                29

            	
              356152

            
	
              ORO
                30

            	
              356153

            
	
              ORO
                31

            	
              356154

            
	
              ORO
                32

            	
              356155

            
	
              ORO
                33

            	
              356156

            
	
              ORO
                34

            	
              356157

            
	
              ORO
                35

            	
              356158

            
	
              ORO
                36

            	
              356159

            
	
              ORO
                37

            	
              356160

            
	
              ORO
                38

            	
              356161

            
	
              ORO
                39

            	
              356162

            


    

    



    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    


    SCHEDULE
      “B”

    


    “Net
      Smelter Return” shall mean the aggregate proceeds received by the Optionee from
      time to time from any smelter or other purchaser from the sale of any ores,
      concentrates, metals or any other material of commercial value produced by
      and
      from the Property after deducting from such proceeds the following charges
      only
      to the extent that they are not deducted by the smelter or other purchaser
      in
      computing the proceeds:

    


    
      	
              (a)

            	
              The
                cost of transportation of the ores, concentrates or metals from the
                Property to such smelter or other purchaser, including related insurance;
                

            


    

    (b)           
      Smelting and refining charges including penalties; and

    


    
      	
               

            	
              The
                Optionee shall reserve and pay to the Optionor a NSR equal to two
                (2%)
                percent 

            


    

    
      	
               

            	
              of
                Net Smelter Return. 

            


    

    


    Payment
      of NSR payable to the Optionor hereunder shall be made quarterly within thirty
      (30) days after the end of each calendar quarter during which the Optionee
      receives Net Smelter Returns in USD dollars or in kind bullion at the discretion
      of the Optionor. Within (60) days after the end of each calendar quarter for
      which the NSR for such year shall be audited by the Optionee and any adjustments
      in the payments of NSR to the Optionor shall be made forthwith after completion
      of the audit. All payments of NSR to the Optionor for a calendar year shall
      be
      deemed final and in full satisfaction of all obligations of the Optionee in
      respect thereof, if such payments or the calculations thereof are not disputed
      by the Optionor of the same audited statement. The Optionee shall maintain
      accurate records relevant to the determination of the NSR and the Optionor
      or
      its authorized agent, shall be permitted the right to examine such records
      at
      all reasonable times.

    


    


     

    15