Desert Hawk Gold has signed an agreement to explore and mine mineral resources owned by Clifton Mining and its subsidiary Woodman Mining Company in the US state of Utah.

Under the agreement, Desert Hawk has paid $250,000 in cash and will transfer 500,000 of its shares to Clifton Mining to operate the Kiewit and Cane Spring claims and other target sites in the Clifton mining district.

Desert Hawk will also pay sliding-scale net smelter royalties based on the price of the metals.

Clifton and its former partners invested about $10m over 15 years to identify precious metal resources in the district before Clifton completely acquired the Cane Spring and Kiewit claims in July 2009.

Clifton said environmental impact studies for the assets have been filed with relevant state and federal agencies.

Commercial production is expected to begin by the third quarter of 2010, according to Desert Hawk.