Exhibit
10.7




 




 






	
The undersigned
hereby affirms that there is no Social Security number contained in
this document

	
 


	
 

	
 


	
RECORDING REQUESTED
BY:

HIGH TEST HAY, LLC

HC 76 Box 36006

Tonopah, NV 89049

	
 


	
 

	
 


	
AFTER
RECORDATION RETURN TO:

HIGH TEST HAY, LLC

Attn: Mark Dowers

HC 76 Box 36006

Tonopah, NV 89049

	
 


	
 

SPACE ABOVE THIS
LINE FOR RECORDER’S USE






 

 

 

 

 

OPTION AND LEASE OF WATER
RIGHTS

 

By

 

HIGH TEST HAY,
LLC

of Tonopah, NV

 

and

 

Star Gold Corp.

of Coeur d’Alene, ID

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement

 



 






 





 

OPTION AND LEASE OF WATER
RIGHTS

 


	
1.

	
Background

	
1


	
2.

	
HIGH TEST HAY, LLC’s Obligations

	
1


	
3.

	
Lease Term

	
2


	
4.

	
Rental

	
3


	
5.

	
Beneficial Use

	
4


	
6.

	
Liability and Indemnity

	
5


	
7.

	
Default

	
5


	
8.

	
Miscellaneous Provisions

	
6


	
 

	
8.1

	
Notices

	
6


	
 

	
8.2

	
Sharing of Documents

	
6


	
 

	
8.3

	
Inspection of Facilities

	
6


	
 

	
8.4

	
Applicable Law

	
6


	
 

	
8.5

	
Waiver

	
6


	
 

	
8.6

	
Taxes

	
6


	
 

	
8.7

	
Entire Agreement

	
7


	
 

	
8.8

	
Captions

	
7


	
 

	
8.9

	
Expenses of Enforcement

	
7


	
 

	
8.10

	
Pronouns

	
7


	
 

	
 

	
 

 

 

 

 

 

 

 

 

 

 

 

 

	
 






Water Rights Option
and Lease Agreement



 






 





 

OPTION AND LEASE OF WATER
RIGHTS

 

For good and
valuable consideration, HIGH TEST HAY, LLC of Tonopah, Nevada and
Star Gold Corp. (STAR GOLD) of Coeur d’Alene, Idaho hereby
make this Option and Lease of Water Rights (the
“Agreement”) as of this 21st day of August,
2017 (“Effective Date”).

 


	
 Background






 

1.1 HIGH TEST HAY,
LLC is the owner with regard to certain water rights (the
“Water Rights”) listed on the annexed Exhibit A. STAR
GOLD desires to lease these Water Rights for purpose of mining and
milling use. The total amount of water subject to this Option and
Lease of Water Rights is 222 acres at a duty of 4.0 acre-feet/acre,
or 888.00 acre feet per annum. HIGH TEST HAY, LLC has appropriated
the water which is the basis of the Water Rights by means of
underground sources which are located at the Nevada State Engineer
(State Engineer) approved points of diversion.

 

1.2 HIGH TEST HAY,
LLC, owns 816 acres of Water Rights for a Total Combined Duty of
3,264 acre-feet, under Nevada Division of Water Resources Permit
Numbers 77989, 77994, 77997, 77998, 77999, 78001, 81634, 82515,
82516, 84400, 84427, and 84428 for irrigation use. Currently HIGH
TEST HAY, LLC, has approximately 600 acres of irrigable land under
production. STAR GOLD seeks approval of the State Engineer to grant
change applications which modify the Place of Use, Point of
Diversion, and Manor of Use of a portion of the water right permits
specified above for Mining and Milling use.

 

1.3 HIGH TEST HAY,
LLC desires to assure itself that the Water Rights will be
beneficially used for the life of the within lease in accordance
with the terms of this lease.

 

1.4 STAR GOLD
desires to assure itself that the Water Rights can be beneficially
used for its mining and milling purposes

 

1.5 STAR GOLD
desire to lease the Water Rights from HIGH TEST HAY, LLC and the
parties are willing to lease the Water Rights under the terms of
this Agreement.

 


	
 HIGH TEST HAY, LLC’s
Obligations






 

HIGH TEST HAY, LLC
agrees to the following:

 

2.1 To support STAR
GOLD’S activities by filing applications for permits to
change the point(s) of diversion, place of use, and and/or manner
of use of the Water Rights as necessary to allow STAR GOLD to fully
utilize the Water Rights for any lawful purpose during the term of
this Agreement, at no cost to HIGH TEST HAY, LLC. STAR GOLD shall
furnish HIGH TEST HAY, LLC with information regarding the point(s)
of diversion, place(s) of use of the Water Rights as necessary for
the Water Rights to be used by STAR GOLD for its
purposes.

 

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 1






 





 

2.2 HIGH TEST HAY,
LLC, or an agent of its choosing, will be fully responsible for all
aspects of water rights management of the approved permits to
change the point(s) of diversion, place of use, and manner of use
of the Water Rights as necessary to allow STAR GOLD to fully
utilize the Water Rights for any lawful purpose during the term of
this Agreement, at no cost to HIGH TEST HAY, LLC. This includes all
State Engineer requirements, but not limited to filing change
applications, proof of completion, proof of beneficial use,
extensions of time, pumping data submissions, associated
engineering consulting fees, and monitoring requirements. HIGH TEST
HAY, LLC will be reimbursed by STAR GOLD for the on-going
management of the Water Rights. HIGH TEST HAY, LLC agrees to use
Turnipseed Engineering, LTD, or other experienced Nevada water
rights firms for the work who will charge customary
rates.

 

2.3 HIGH TEST HAY,
LLC will not be responsible for any costs associated with
transferring water rights for use by STAR GOLD. HIGH TEST HAY, LLC
will be responsible for the costs associated with transferring the
water rights back to use by HIGH TEST HAY, LLC after the
termination of this lease.

 

2.4 HIGH TEST HAY,
LLC will coordinate with STAR GOLD and allow it to fully review and
approve, using reasonable judgement, any and all documentation
required to be submitted to the State Engineer for all aspects of
water rights management for permits to change the point(s) of
diversion, place of use, and manner of use of the Water
Rights.

 


	
3.

	
 Lease Term






 

3.1 The initial
term of this lease is for ten (10) years commencing on the date
from which the first ore is placed on the leach pad.

 

3.2 STAR GOLD is
hereby granted two (2) options, each for extending the lease for an
additional ten-year (10) term (for the avoidance of doubt, this
Agreement grants STAR GOLD the ability to lease the Water Rights
for up to a total of thirty (30) consecutive years). Each option to
extend the lease shall be exercised by written notice to HIGH TEST
HAY, LLC given by STAR GOLD not more than twenty-four (24) months
and not less than twelve (12) months prior to the end of the then
current term.

 

3.3 Should STAR
GOLD fail to notify HIGH TEST HAY, LLC of STAR GOLD’S intent
to exercise an option of extending the lease for an additional ten
(10) year term pursuant to the terms or conditions outlined in
Section 3.2, this lease shall expire at the end of the then current
term. All rights to the appropriation of the water which are the
subject matter of this lease then will revert to HIGH TEST HAY,
LLC.

 

3.4 STAR GOLD may
cancel this lease if the State Engineer denies permits to change
the point(s) of diversion, place of use, and manner of use of the
Water Rights, or if mine operating permits are not obtained within
three (3) years from the Effective Date of this lease
agreement.

 

3.5 STAR GOLD may
terminate this lease upon one hundred (180) days’ written
notice to HIGH TEST HAY, LLC. In the event Star Gold terminates
this lease pursuant to this Section 3.5, Star Gold shall
nevertheless be obligated to pay, according to the terms of this
lease, all rental payments until the earlier of twelve (12) months
following the notice of termination or until any of the water
leased hereby is utilized or re-leased by HIGH TEST HAY,
LLC.

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 2






 





 

3.6 STAR GOLD may
assign its right, title and interest in and to this lease in
conjunction with a Change in Control transaction. Change in Control
means; (i) the acquisition of the Company by another entity by
means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or
consolidation or equity transfer, but excluding any such
transaction effected primarily for the purpose of changing the
domicile of the Company), unless the Company’s equity holders
of record immediately prior to such transaction or series of
related transactions hold, immediately after such transaction or
series of related transactions, at least 50% of the voting power of
the surviving or acquiring entity (provided that the sale by the
Company of its securities for the purposes of raising additional
funds shall not constitute a Change of Control hereunder); or (ii)
a sale of all or substantially all of the assets of the
Company.

 

3.7 STAR GOLD shall
pay costs incurred in applying for and obtaining approval of any
permits it needs to utilize the water leased under this Agreement,
including without loss of generality any permits from the State
Engineer for transferring the Water Rights to STAR GOLD’S
project location. These separate costs incurred are to be paid
within thirty (30) days of receipt of invoices for such costs by
STAR GOLD and are not included as part of the rents for lease of
Water Rights.

 

3.8 It is expected
that temporary change applications are to be filed with the State
Engineer’s Office annually to change the point(s) of
diversion, place of use, and manner of use of Water Rights as
necessary to allow STAR GOLD to fully utilize the Water Rights for
any lawful purpose during the term of this Agreement. Permanent
change applications will not be filed, unless written authorization
is provided by HIGH TEST HAY, LLC, as the resulting permit will
remove the consumptive use portion of the water right.

 

3.9 If applications
to change the point(s) of diversion, place of use, and manner of
use of Water Rights are protested, STAR GOLD is solely responsible
for addressing and/or litigating said protests. STAR GOLD may
litigate the protests but is not obligated to do so.

 

3.10 Water Rights
and any change applications of Water Rights will remain in HIGH
TEST HAY, LLC’s name for the duration of this
lease.

 

3.11 A copy of this
Agreement will be filed at the State Engineer’s Office for
its records.

 


	
4.

	
 Rental






 

4.1 STAR GOLD shall
pay HIGH TEST HAY, LLC for Water Rights at the rate of $190.00 per
acre-foot per annum, as adjusted. This amounts to an obligation of
$168,720.00 per year
($42,180.00 per quarter), as adjusted, as rental for the Water
Rights. One-quarter of the annual rent shall be paid on the first
day of each quarter (January 1st, April 1st, July 1st, and October
1st), without grace, to HIGH TEST HAY, LLC, LLC, HC 76 Box 36006,
Tonopah, NV 89049. Changes to Payment Address shall be provided to
STAR GOLD in writing by HIGH TEST HAY, LLC, no less than thirty
(30) days prior to the next scheduled payment. The first quarterly
lease payment will commence from and be paid within 10 days of
the date of the first ore being placed on the leach pad. This first
payment will be prorated according to the number of days left in
the quarter, but not more than $42,180.00. All future payments will
be made on the quarterly schedule in the amounts listed above. The
last payment of the ten-year term will be $42,180.00 minus (-) the
prorated first payment amount.

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 3






 





 

4.2 STAR GOLD shall
pay $25,000.00 to HIGH TEST HAY, LLC on the Effective Date for a
three (3) year option to commence the lease. This option money is
not refundable. If mine operating permits are not obtained within
three (3) years from the Effective Date of this Agreement, Star
Gold at its sole discretion, may continue the option and lease
annually with an additional $25,000 payment each year for up to
three (3) additional years. Each of these additional $25,000.00
payments, if made, are not refundable.

 

4.3 If the lease is
renewed at the end of the initial ten (10) year period, the
Consumer Price Index (CPI) for the previous 10 years will be
analyzed and used to calculate a new lease cost for the next 10
years. If the lease is renewed at the end of the second ten (10)
year period, the Consumer Price Index (CPI) for the second 10-year
period will be analyzed and used to calculate a new lease cost for
the final 10 years

 

4.4 If the Water
Rights are reduced due to any regulatory reason, the adjusted or
unadjusted annual rent shall be reduced in proportion to the
reduction of the Water Rights effective on the date of the
reduction.

 

4.5 STAR GOLD shall
have the right to terminate this Agreement by written notice to
HIGH TEST HAY, LLC, if at any time during the term of this
Agreement, STAR GOLD is prevented from using the Water Rights
obtained hereunder because of judicial orders, court decrees or
local, state or federal laws, rules or regulations now or
hereinafter in effect.

 


	
5.

	
 Beneficial Use






 

5.1 STAR GOLD shall
make every effort to beneficially use all of the leased Water
Rights to keep them in good standing. Until full beneficial use is
made, STAR GOLD shall provide required information to HIGH TEST
HAY, LLC which shall file necessary applications for extension of
time.

 

5.2 STAR GOLD must
provide monthly pumping volume data and well level data of all
leased Water Rights (or change applications of leased Water Rights)
to HIGH TEST HAY, LLC on a regular basis, or as requested by HIGH
TEST HAY, LLC. HIGH TEST HAY, LLC, or an agent of its choosing,
will then analyze this data prior to any submission of data to the
State Engineer’s Office.

 

5.3 HIGH TEST HAY,
LLC shall, pursuant to the terms and conditions of this Agreement,
be allowed to continue utilizing all water rights for irrigation
until that date which is six (6) months after the date STAR GOLD
gives HIGH TEST HAY, LLC written notice that STAR GOLD needs to
begin drawing upon the 888 acre-feet for its own use and purposes
(the “Irrigation Termination Date”). The use, by HIGH
TEST HAY, LLC, of these 888 acre-feet of Water Rights shall not
affect the rental charges listed in Section 4.1 of this Agreement.
From the Effective Date until the Irrigation Termination Date, HIGH
TEST HAY, LLC shall make full beneficial use of the of the
remaining water rights and shall not do or perform any act which
could jeopardize the use of those 888 acre-feet of water rights
leased by STAR GOLD.

 

5.4 If STAR GOLD
fails to place all 888.00 acre-feet annum of Water Rights to full
beneficial use, and it has determined that it will never place all
888.00 acre-feet annum of Water Rights to full beneficial use, then
HIGH TEST HAY, LLC has the right to withhold the unused portions of
the said 888.00 acre-feet per annum of Water Rights in the
following years temporary change applications and use said unused
portions as it desires. If STAR GOLD fails to place all 888.00
acre-feet annum of Water Rights to beneficial use, this failure
does not change the rental charges listed in Section 4.1 of this
Agreement for the Water Rights which are put to beneficial
use.

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 4






 





 


	
6.

	
 Liability and
Indemnity






 

6.1 STAR GOLD
hereby indemnifies HIGH TEST HAY, LLC, its officers, employees,
servants, agents, subsidiaries or affiliates and agrees to hold
them harmless against all claims, demands, damages, personal
injury, illness, death, property damage or loss incurred by any
person, animal, fish, plant or geological or meteorological feature
as a result of or in connection with STAR GOLD’S use of the
Water Rights.

 

6.2 STAR GOLD shall
comply with all laws and regulations, whether of federal, state or
local jurisdictions, applicable to the subject matter of this
Agreement. STAR GOLD shall have sole responsibility to dispose of
water it produces hereunder. STAR GOLD is solely responsible for
all environmental and any other regulatory requirements regarding
the use of Water Rights under this lease.

 

6.3 HIGH TEST HAY,
LLC hereby indemnifies STAR GOLD, its officers, employees,
servants, agents, subsidiaries or affiliates and agrees to hold
them harmless against all claims, damages, personal injury,
illness, death, property damage or losses of any kind incurred by
any person, animal, fish, plant or geological or meteorological
feature as a result of or in connection with HIGH TEST HAY,
LLC’s use of the 600 acres of water rights for irrigation
and/or any losses of any kind as a result of loss of use of the
Water Rights, or any of them by virtue of HIGH TEST HAY,
LLC’s failure to make timely filings with the State Engineer
as required herein.

 


	
7.

	
 Default






 

In the event STAR
GOLD defaults in the payment of money required hereunder and does
not cure said default within 20 days after written notice, in
addition to any other remedies provided by law, HIGH TEST HAY, LLC
may retake possession of the water, and apply the water to other
uses at its discretion. Such retaking possession of the water and
application of the water to other uses shall not terminate this
lease, and the rental reserved hereunder shall continue to fall due
from month to month until the end of the lease, and the rental
hereunder shall only be reduced by the amount that remains after
cash revenues obtained by HIGH TEST HAY, LLC from the use or
leasing of the Water Rights have been applied to attorney fees,
costs of repossession, costs of proceeding before the State
Engineer to reestablish beneficial uses of the water, costs
incurred under this Agreement, and costs of equipment, labor and
engineering needed to apply the water to beneficial
use.

 

 

 

 

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 5






 





 


	
8.

	
 Miscellaneous
Provisions






 


	
 

	
8.1

	
 Notices.






 

All notices and
other communications required or permitted hereunder shall be in
writing and shall be deemed to have been properly given when
delivered in person to the person to whom the notice is directed or
three days after deposit in the United States mail, certified mail,
return receipt requested (addressee only), first-class postage
prepaid, postmarked no later than three days prior to the effective
day of the notice, or by telegram, cable, or acknowledged telefax,
charges prepaid, to the party addressed (or to such other address
or attention as the party to be given such notice may designate by
notice to the other party in the manner herein prescribed) as
follows:

 

If to HIGH TEST
HAY, LLC:

Mark Dowers

HC 76 Box 36006

Tonopah, NV 89049

 

If to STAR
GOLD:

Lindsay Gorrill, Chairman

Star Gold Corporation

611 East Sherman Avenue

Coeur d’Alene, ID 83814

 


	
 

	
8.2

	
 Sharing of
Documents.






 

HIGH TEST HAY, LLC
shall furnish STAR GOLD, and STAR GOLD shall furnish HIGH TEST HAY,
LLC with copies of all papers it submits to the State Engineer or
any other tribunal with respect to the Water Rights at the same
time it serves the papers upon parties to a proceeding or files
them, whichever is earlier.

 


	
 

	
8.3

	
 Inspection of
Facilities.






 

HIGH TEST HAY, LLC
or an agent of its choosing may upon reasonable notice inspect the
facilities of STAR GOLD for use in management of Water
Rights.

 


	
 

	
8.4

	
 Applicable Law.






 

This Agreement
shall be construed under the laws of the state of Nevada. Except as
otherwise provided herein, all remedies at law, in equity, by
statute, or otherwise shall be cumulative and may be enforced
concurrently therewith or from time to time and the election of
anyone or more shall not constitute a waiver of the right to pursue
other available remedies.

 


	
 

	
8.5

	
 Waiver.






 

Forbearance in
enforcing any remedy granted by this Agreement shall not be deemed
a waiver thereof nor shall it be the basis of an inference that a
party hereto has waived any provision hereof or that a party has
waived a remedy available at law or in equity. No consent by any
party to any departure from here shall be effective unless in
writing, and then only to the extent stated in such writing. No
notice in any particular circumstance shall entitle a party to
notice in the same or similar circumstance unless notice is
required hereunder.

 


	
 

	
8.6

	
 Taxes.






 

STAR GOLD shall pay
all taxes imposed upon the Water Rights during the term
hereof.

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 6






 





 


	
 

	
8.7

	
 Entire Agreement.






 

This Agreement
merges all previous negotiations between the parties hereto,
supersedes all prior discussions and correspondence between the
parties, and constitutes the entire Agreement and understanding
between the parties with respect to the subject matter of this
Agreement. No alteration, modification, or change of this Agreement
shall be valid except by a written instrument executed by the
parties.

 


	
 

	
8.8

	
 Captions.






 

The captions of
this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this
Agreement.

 


	
 

	
8.9

	
 Expenses of
Enforcement.






 

If any party starts
an action to enforce any provision of this Agreement or for damages
by reason of an alleged breach hereof, the court shall award the
prevailing party judgment for all costs and expenses, including
reasonable attorney’s fees and costs, incurred in connection
with such action, to be paid by the other party
hereto.

 


	
 

	
8.10

	
 Pronouns.






 

In this Agreement,
the singular shall include the plural, the plural the singular, and
the use of any gender shall include all genders.

 

[signature page to
follow]



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement



 7






 





 

[signature page to
Star Gold Corp.-High Test Hay, LLC Water Rights
Agreement]

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement to be effective
once both parties have signed and delivered signed copies to one
another.

 


	
 

	
Star Gold Corp. of
Coeur d’Alene, ID


	
 

	
 

	
 


	
 

	
By 

	



	
 

	
Name Kelly J.
Stopher

Title
Chief Financial Officer


	
 

	
Date

	
           9/25/2017


	
 

	
 

	
 


	
 

	
HIGH TEST HAY, LLC
of Tonopah, NV


	
 

	
 

	
 


	
 

	
By 

	



	
 

	
Name  Mark
Dowers



	
 

	
Title

	
Member


	
 

	
Date

	
       9/13/2017


	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

	
 

	
 






Water Rights Option
and Lease Agreement



 8






 





 


	
STATE OF
WASHINGTON

	
)


	
 

	
: ss.


	
COUNTY OF
SPOKANE

	
)


	
 

	
 






On this 25 day of
September, 2017, personally appeared before me Kelly J. Stopher,
personally known to me to be the authorized representative of STAR
GOLD CORP. of Coeur d’Alene, ID, who acknowledged to me that
he signed the foregoing instrument as Authorized Agent for said
Corporation for the purposes stated herein.

 


	


	


 



NOTARY
PUBLIC

Residing at: Spokane




 


	
My Commission
Expires:


	
            4/3/2020






 

 

 


	
STATE OF
NEVADA

	
)


	
 

	
: ss.


	
COUNTY OF
NYE

	
)


	
 

	
 






On this
13th day
of September, 2017, personally appeared before me Mark Dowers,
personally known to me to be the authorized representative of HIGH
TEST HAY, LLC, LLC of Tonopah, NV, who acknowledged to me that he
signed the foregoing instrument as Authorized Agent for said LLC,
that the seal impressed on the within instrument is the seal of
said LLC, and the said Mark Dowers acknowledged to me that said LLC
executed the same.

 


	
 

	



	
 

	
NOTARY PUBLIC

Residing at: Tonopah, NV






 


	
My Commission
Expires:


	
            12/7/2018






 



 

Water Rights Option
and Lease Agreement



 9






 





 

EXHIBIT A

 

Water Rights of
HIGH TEST HAY, LLC to be leased by STAR GOLD

 

HIGH TEST HAY, LLC
is the current owner of the following Underground water rights
located in the State of Nevada in Nevada Hydrographic Area No. 149
- Stone Cabin Valley, and plans on leasing them to Star Gold
Corporation per the terms of this Agreement:

 

Nevada Water Right
Permits:

 

Permit 77999
– 768 AFA

Portion of Permit 82515 - 120 AFA

 

TOTAL = 888.00
AFA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water Rights Option
and Lease Agreement




 A-1