EXHIBIT 10.1

AGENCY AGREEMENT

March 30, 2007

Paramount Gold Mining Corp.

Suite 110

346 Waverley Street

Ottawa, Ontario

K2P 0W5

Attention:

Christopher Crupi, President & Chief Executive Officer

Dear Sirs/Mesdames:

Re:

Private Placement of Units

Blackmont Capital Inc., Canaccord Capital Corporation, Haywood Securities Inc.,
and Raymond James Ltd. (collectively the “Agents” and individually an “Agent”)
understand that:

(a)

Paramount Gold Mining Corp. (the “Corporation”) is authorized to issue, among
other things, 100,000,000 Common Shares (as hereinafter defined);

(b)

as at March 30, 2007, 36,023,982 Common Shares were outstanding as fully paid
and non-assessable shares and an aggregate of 2,863,750 Common Shares were
reserved for issue pursuant to outstanding options, warrants, share incentive
plans, convertible and exchangeable securities and other rights to acquire
Common Shares;

(c)

the Corporation is prepared to issue and sell up to 9,525,000 units of the
Corporation (collectively the “Offered Securities” or “Units” and individually
an “Offered Security” or “Unit”), each Unit comprised of one Common Share and
one-half of one warrant (each whole warrant a “Warrant”), each Warrant being
exercisable to acquire one Common Share at an exercise price of $2.90 per Common
Share for a period of 24 months after the Closing Date (as hereinafter defined)
at a price of $2.10 per Offered Security for maximum aggregate gross proceeds of
$20,002,500 on the terms and subject to the conditions contained hereinafter;

(d)

the Corporation has granted to the Agents an option, which may be exercised at
any time during the 30 day period commencing on the Closing Date (the
“Over-allotment Option”), to increase the size of the offering described above
in paragraph (c) by up to an additional 1,428,750 Units; and

(e)

the Purchasers (as hereinafter defined), Agents and other holders (including
subsequent transferees) of the Units (and any holders of Registrable Securities
(as hereinafter defined) will be entitled to the benefit of the registration
rights agreement, to be dated as of the Closing Date (the “Registration Rights
Agreement”), among the Corporation and the Agents, in the form attached hereto
as Exhibit A.

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Based upon the understanding of the Agents set out above and upon the terms and
subject to the conditions contained hereinafter, upon the acceptance hereof by
the Corporation, the Corporation hereby appoints the Agents to act as the sole
and exclusive agent of the Corporation to solicit, on a best efforts basis,
offers to purchase the Offered Securities, and the Agents hereby agree to act as
such agents.  It is understood and agreed that the Agents are under no
obligation to purchase any of the Offered Securities, although any of them may
subscribe for and purchase Offered Securities if they so desire.

The terms and conditions of this Agreement are as follows:

1.

Definitions, Interpretation and Schedules

(a)

Definitions:  Whenever used in this Agreement:

(i)

“1933 Act” means the United States Securities Act of 1933, as amended;

(ii)

“1934 Act” means the United States Securities Exchange Act of 1934, as amended;

(iii)

“Agents” means Blackmont Capital Inc., Canaccord Capital Corporation, Haywood
Securities Inc., and Raymond James Ltd. and their respective U.S. Affiliates
collectively;

(iv)

“Agreement” means the agreement resulting from the acceptance by the Corporation
of the offer made by the Agents herein, including the schedules attached hereto,
as amended or supplemented from time to time;

(v)

“Ancillary Documents” means all agreements, indentures, certificates (including
the Warrant Certificates and the Broker Warrant Certificate) and documents
executed and delivered, or to be executed and delivered, by the Corporation in
connection with the transactions contemplated by this Agreement or the
Subscription Agreements and includes the Subscription Agreements and the
Registration Rights Agreement;

(vi)

“Auditor” means Cinnamon Jang Willoughby & Company, Chartered Accountants, the
auditor of the Corporation;

(vii)

“Broker Shares” means the Common Shares which may be issued on the exercise of
the Broker Warrant;

(viii)

“Broker Warrant Certificates” means the certificates representing the Broker
Warrants;

(ix)

“Broker Warrants” means the non-transferable broker warrants issued to the
Agents, each Broker Warrant will entitle the holder to acquire one Common Share
at any time commencing on the Closing Date and prior to 5:00 p.m. (Toronto time)
on the date which is 24 months after the Closing Date at an exercise price of
$2.10 per Common Share;

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(x)

“Business Day” means a day which is not a Saturday, Sunday or a statutory or
civic holiday in the City of Toronto, Province of Ontario;

(xi)

“Closing” means the purchase and sale of the Offered Securities subscribed for
by the Purchasers pursuant to the Subscription Agreements;

(xii)

“Closing Date” means March 30, 2007 or such other date as the Corporation and
the Agents may mutually agree upon in writing;

(xiii)

“Closing Time” means 11:00 a.m. (Toronto time) on the Closing Date or such other
time on the Closing Date as the Corporation and the Agents may mutually agree
upon in writing;

(xiv)

“Common Shares” means the shares of common stock, par value $0.001 per share,
which the Corporation is authorized to issue as constituted on the date hereof;

(xv)

“Corporate Finance Fee” means the (i) $69,777, and (ii) 33,227 Broker Warrants,
payable and issuable, as the case may be, by the Corporation to the Agents for
services rendered in connection with the Offering;

(xvi)

“Corporation” means Paramount Gold Mining Corp., a corporation existing under
the laws of the State of Delaware and includes any successor corporation
thereto;

(xvii)

“Directed Selling Efforts” means “directed selling efforts” as defined in
Regulation S;

(xviii)

“Final Prospectus” means the (final) non-offering prospectus of the Corporation
to be filed in the Province of Ontario for the purpose of becoming a reporting
issue in such province;

(xix)

“General Solicitation or General Advertising” means “general solicitation or
general advertising” as used in Rule 502(c) of Regulation D;

(xx)

“Information” means all information regarding the Corporation that is, or
becomes, publicly available together with all information prepared by the
Corporation and provided to the Agents or to potential purchasers of the Offered
Securities, if any, and includes, but is not limited to, all material change
reports, press releases and financial statements of the Corporation;

(xxi)

“Lead Agent” means Blackmont Capital Inc.;

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(xxii)

“Offered Securities” means up to 9,525,000 Units, together with any Units sold
pursuant to the Over-allotment Option, to be issued and sold at the Purchase
Price under the Offering;

(xxiii)

“Offering” means the offering for sale by the Corporation on a private placement
basis of the Offered Securities;

(xxiv)

“Offering Jurisdictions” means the Provinces of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario and Nova Scotia, the United States and the
states and territories thereof and such other provinces and territories of
Canada and other jurisdictions as may be mutually agreed upon by the Agents and
the Corporation where the Offered Securities are offered to prospective
purchasers or those provinces, territories or other jurisdictions where
Purchasers reside, as the context permits or requires;

(xxv)

“Ontario Act” means the Securities Act (Ontario) and the regulations thereunder,
together with the instruments, policies, rules, orders, codes, notices and
interpretation notes of the Ontario Securities Commission, as amended,
supplemented or replaced from time to time;

(xxvi)

“Over-allotment Option” has the meaning ascribed to such term on the first page
of this Agreement;

(xxvii)

“Person” means an individual, a firm, a corporation, a syndicate, a partnership,
a trust, an association, an unincorporated organization, a joint venture, an
investment club, a government or an agency or political subdivision thereof and
every other form of legal or business entity of any nature or kind whatsoever;

(xxviii)

“Preliminary Prospectus” means the preliminary non-offering prospectus of the
Corporation to be filed in the Province of Ontario for the purpose of becoming a
reporting issue in such province;

(xxix)

“Public Record” means the Corporation’s annual report on Form 10-KSB for the
year ended June 30, 2006, as amended, the quarterly reports filed on Form 10-QSB
for the quarters ended September 30, 2006, and December 31, 2006 as amended, and
the current reports filed on Form 8-K since June 30, 2006;

(xxx)

“Purchase Price” means the price to be paid by the Purchasers for each Offered
Security under the Offering, being $2.10 per Offered Security;

(xxxi)

“Purchasers” means the purchasers of the Offered Securities collectively;

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(xxxii)

“Registrable Securities” means the Common Shares comprising part of the Units
and the Warrant Shares underlying the Warrants and the Common Shares and
Warrants comprising the Units underlying the Compensation Options;

(xxxiii)

“Registration Rights Agreement” shall have the meaning ascribed to such term on
the face page of this Agreement;

(xxxiv)

“Registration Statement” has the meaning ascribed to such term in subsection
9(a)(iii) of this Agreement;

(xxxv)

“Regulation D” means Regulation D under the 1933 Act;

(xxxvi)

“Regulation S” means Regulation S under the 1933 Act;

(xxxvii)

“Rule 144” means Rule 144 under the 1933 Act;

(xxxviii)

“Rule 144A” means Rule 144A under the 1933 Act;

(xxxix)

“SEC” means the United States Securities and Exchange Commission;

(xl)

“Securities Commissions” means the securities regulatory authorities of the
Offering Jurisdictions collectively, as the case may be;

(xli)

“Securities Laws” means the securities legislation and regulations of, and the
instruments, policies, rules, orders, codes, notices and interpretation notes of
the securities regulatory authorities of, the applicable jurisdiction or
jurisdictions collectively (including those of the United States);

(xlii)

“State” means any one of the 50 states of the United States of America or the
District of Columbia;

(xliii)

“Stock Exchange” means the TSX Venture Exchange;

(xliv)

“Subject Shares” means the Unit Shares, the Warrant Shares and the Broker Shares
collectively;

(xlv)

“Subscription Agreements” means the subscription agreement to be entered into
between the Corporation and each of the Purchasers with respect to the purchase
of the Offered Securities collectively;

(xlvi)

“Subsidiaries” means Paramount Gold de Mexico S.A. de C.V., a corporation
existing under the laws of Mexico, and Compania Minera Paramount S.A.C., a
corporation incorporated under the laws of Peru collectively;

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(xlvii)

“Supplementary Material” means, collectively, any amendment to the Preliminary
Prospectus, the Final Prospectus, the Registration Statement, or any amended or
supplemental prospectus or ancillary material required to be filed with any of
the Securities Commissions or the SEC pursuant to Securities Laws;

(xlviii)

“Transfer Agent” means Manhattan Transfer Registrar Company, the registrar and
transfer agent for the Common Shares;

(xlix)

“United States” means the “United States” as defined in Regulation S;

(l)

“Units” means the units of the Corporation being offered for sale by the Agents
under the Offering, each Unit being comprised of one Unit Share and one-half of
one Warrant;

(li)

“Unit Shares” means the Common Shares comprising part of the Units;

(lii)

“U.S. Affiliate” means the United States broker-dealer affiliate of the Agents;

(liii)

“U.S. Institutional Accredited Investor” means an “accredited investor” as
defined in Rules 501(a)(1), (2), (3) and (7) of Regulation D;

(liv)

“U.S. Person” means a “U.S. person” as defined in Regulation S;

(lv)

“Warrant Certificates” means the certificates representing the Warrants;

(lvi)

“Warrant Shares” means the Common Shares which may be issued upon the exercise
of the Warrants; and

(lvii)

“Warrants” means the warrants of the Corporation, one-half of one Warrant
comprising part of each Unit, with each whole Warrant to entitle the holder
thereof to acquire one Warrant Share at any time commencing on the Closing Date
and prior to 5:00 p.m. (Toronto time) on the date which is 24 months after the
Closing Date at an exercise price of $2.90 per Warrant Share.

(b)

Other Defined Terms:  Whenever used in this Agreement, the words and terms
“affiliate”, “associate”, “material fact”, “material change”,
“misrepresentation”, “senior officer” and “subsidiary” shall have the meaning
given to such word or term in the Ontario Act unless specifically provided
otherwise herein.

(c)

Plural and Gender:  Whenever used in this Agreement, words importing the
singular number only shall include the plural and vice versa and words importing
the masculine gender shall include the feminine gender and neuter.

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(d)

Currency:  All references to monetary amounts in this Agreement are to lawful
money of the United States.

(e)

Schedules:  The following schedules are attached to this Agreement and are
deemed to be a part of and incorporated in this Agreement:

Schedule

Title

A

Officers’ Certificate

2.

The Offered Securities

(a)

Offered Securities:  The Offered Securities are up to 9,525,000 Units, each Unit
comprised of one Common Share and one-half of one Warrant.

(b)

The Warrants:  The terms and conditions, and the material attributes and
characteristics, of the Warrants shall be satisfactory to the Corporation and
the Agents and consistent with the provisions of this Agreement.  Such terms and
conditions, and material attributes and characteristics, will be contained in
the Warrant Certificates which will contain, among other things, anti-dilution
provisions and provisions for the appropriate adjustment in the class and number
of Warrant Shares or other securities to be received on the exercise of Warrants
upon the occurrence of certain events, including any subdivision, consolidation
or reclassification of the Common Shares or any payment of dividends or the
amalgamation of, or other reorganization involving, the Corporation.  Subject to
adjustment in accordance with the provisions of the Warrant Certificates, each
whole Warrant shall entitle the holder thereof to purchase one Warrant Share at
any time commencing on the Closing Date and prior to 5:00 p.m. (Toronto time) on
the date which is 24 months after the Closing Date at an exercise price of $2.90
per Warrant Share.

3.

The Offering

(a)

Sale on Exempt Basis:  The Agents will use the best efforts thereof to arrange
for Purchasers in the Offering Jurisdictions.  The Agents shall offer for sale
on behalf of the Corporation the Offered Securities in the Offering
Jurisdictions in compliance with the Securities Laws of the Offering
Jurisdictions and only to such Persons and in such manner so that, pursuant to
the provisions of the Securities Laws of the Offering Jurisdictions, no
prospectus, registration statement or offering memorandum or other similar
document need be filed with, or delivered to, any Securities Commission in any
Offering Jurisdiction in connection therewith.  The Agents shall offer the Units
for sale on behalf of the Corporation in the United States only through
Blackmont Capital Corp., the U.S. broker dealer affiliate of the Lead Agent,
pursuant to an exemption from the registration requirements of the 1933 Act, in
compliance with applicable state Securities Laws.

(b)

Agency Group:  The Corporation agrees that, subject to the consent of the
Corporation, such consent not to be unreasonably withheld, the Agents have the
right to invite one or more investment dealers to form an agency group to
participate in the soliciting of offers to purchase the Offered Securities.  The
Agents shall have the exclusive right to control all compensation arrangements
between the members of the agency group.  The Corporation grants all of the
rights and benefits of this Agreement to any investment dealer who is a member
of any agency group formed by the Agents and appoints the Lead Agent as trustee
of such rights and benefits for all such investment dealers, and the Lead

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Agent hereby accepts such trust and agrees to hold such rights and benefits for
and on behalf of all such investment dealers.  The Agents shall ensure that any
investment dealer who is a member of any agency group formed by the Agents
pursuant to the provisions of this subsection 3(b) or with whom the Agents have
a contractual relationship with respect to the Offering, if any, agrees with the
Agents to comply with the covenants and obligations given by the Agents herein.

(c)

Covenants of the Agents:  Each of the Agents covenants with the Corporation that
(i) it will comply with the Securities Laws of the Offering Jurisdictions in
which it solicits or procures subscriptions for Offered Securities in connection
with the Offering, (ii) it will not solicit or procure subscriptions for Offered
Securities so as to require the registration thereof or the filing of a
prospectus with respect thereto under the laws of any jurisdiction, and (iii) it
will obtain from each Purchaser an executed subscription agreement in a form
acceptable to the Corporation and the Agents, acting reasonably.  Each of the
Agents represents and warrants that it is, and, to the best of its knowledge,
each member of any agency group formed by the Agents is, qualified to so act in
the Offering Jurisdictions in which such member solicits or procures
subscriptions for the Offered Securities.

(d)

Filings:  The Corporation undertakes to file or cause to be filed all forms and
undertakings required to be filed by the Corporation in connection with the
Offering so that the distribution of the Offered Securities may lawfully occur
in the Offering Jurisdictions without the necessity of filing a prospectus or an
offering memorandum in Canada and the Agents undertake to use the commercially
reasonable efforts thereof to cause the Purchasers of the Offered Securities to
complete (and it shall be a condition of closing in favour of the Corporation
that the Purchasers complete and deliver to the Corporation) any forms and
undertakings required by the Securities Laws of the Offering Jurisdictions.  All
fees payable in connection with such filings shall be at the expense of the
Corporation.

(e)

No Offering Memorandum:  Neither the Corporation nor the Agents shall (i)
provide to prospective purchasers of Offered Securities any document or other
material that would constitute an offering memorandum within the meaning of the
Securities Laws of the Offering Jurisdictions or (ii) engage in any form of
General Solicitation or General Advertising in connection with the offer and
sale of the Offered Securities, including but not limited to, causing the sale
of the Offered Securities to be advertised in any newspaper, magazine, printed
public media, printed media or similar medium of general and regular paid
circulation, broadcast over radio, television or telecommunications, including
electronic display or the Internet, or otherwise, or conduct any seminar or
meeting relating to any offer and sale of the Offered Securities whose attendees
have been invited by a General Solicitation or General Advertising.

4.

Due Diligence

The Corporation shall allow the Agents to conduct all due diligence
investigations, including meeting with senior management of the Corporation and
the Auditor, as the Agents shall consider appropriate in connection with the
Offering.

5.

Deliveries By Closing Time

(a)

Deliveries:  By the Closing Time:

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(i)

all actions required to be taken by or on behalf of the Corporation including,
without limitation, the passing of all required resolutions of the directors,
including committees of the directors, and shareholders of the Corporation,
shall have occurred in order to complete the transactions contemplated by this
Agreement and the Subscription Agreements, including, without limitation, to
 issue the Offered Securities, to create and issue the Warrants and the Broker
Warrants and to reserve for issue and conditionally issue the Warrant Shares and
the Broker Shares, and a certified copy of all such resolutions shall have been
delivered by the Corporation to the Agents;

(ii)

the Corporation shall have delivered or caused to be delivered to the Agents

A.

a favourable legal opinion of counsel to the Corporation, Gowling Lafleur
Henderson LLP, who may rely on opinions of local counsel acceptable to the
Agents, addressed to, among others, the Agents and the Purchasers,

B.

a favourable legal opinion of U.S. counsel to the Corporation addressed to,
among others, the Agents and the Purchasers with respect to, among other things,
the issue of the Unit Shares and the Warrants and the exercise of the Warrants
and such other matters as the Agents may reasonably require,

C.

a favourable legal opinion of Lizárraga, Robles, Tapia y Cabrera S.C. counsel to
the Corporation with respect to title to the San Miguel Groupings property of
the Corporation located in the state of Chihuahua, Mexico and with respect to
certain corporate matters of Paramount Gold Mexico S.A. de C.V., addressed to,
among others, the Agents and the Purchasers,

D.

a certificate dated the Closing Date signed by an appropriate officer of the
Corporation and addressed to, among others, the Agents and the Purchasers with
respect to the articles and by-laws of the Corporation, the resolutions of the
directors and shareholders, if any, of the Corporation and any other corporate
action taken relating to this Agreement and the Ancillary Documents and with
respect to such other matters as the Agents may reasonably request and including
specimen signatures of the signing officers of the Corporation,

E.

a certificate dated the Closing Date addressed to, among others, the Agents and
the Purchasers signed by the chief executive officer and the chief financial
officer of the Corporation or any two other senior officers of the Corporation
acceptable to the Agents substantially in the form of the certificate attached
hereto as schedule A,

F.

a Subscription Agreement from each Purchaser accepted by the Corporation,

G.

definitive certificates representing the Offered Securities registered in the
names of the Purchasers or in such other name or names as the Purchasers or the
Agents may direct,

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H.

definitive certificates representing the Broker Warrants registered in the name
of the Agents or in such other name or names as the Agents may direct, and

I.

such further documents as may be contemplated by this Agreement or as the Agents
may reasonably require,

all in form and substance satisfactory to the Agents;

(iii)

the Corporation shall have delivered or cause to be delivered payment of the
amount payable by the Corporation to the Agents by certified cheque or bank
draft, including (i) the commission payable by the Corporation to the Agents as
provided in section 7 of this Agreement against delivery from the Agents to the
Corporation of a receipt for the payment of such commission, (ii) the expenses
(excluding legal expenses) payable by the Corporation to the Agents as provided
in section 15 of this Agreement against delivery from the Agents to the
Corporation of a receipt for the payment of such expenses, and (iii) the legal
expenses payable by the Corporation to counsel for the Agents as provided in
section 15 of this Agreement against delivery from such legal counsel to the
Corporation of a receipt for the payment of such legal expenses; and

(iv)

the Agents shall have delivered or cause to be delivered to the Corporation

A.

payment of the aggregate Purchase Price for the Units purchased by the
Purchasers of Units net of (i) the commission payable by the Corporation to the
Agents as provided in section 7 of this Agreement and (ii) the expenses payable
by the Corporation to the Agents as provided in section 15 of this Agreement by
cheque or bank draft payable to the Corporation against delivery from the
Corporation to the Agents of a receipt for the aggregate net Purchase Price for
such Units, and

B.

such further documents as may be contemplated by this Agreement or as the
Corporation may reasonably require,

all in form and substance satisfactory to the Corporation.

6.

Closing

(a)

Closing:  The Closing shall be completed at the offices of counsel for the
Corporation at the Closing Time on the Closing Date.

(b)

Conditions of Closing:  The following are conditions precedent to the obligation
of the Agents to complete the Closing and of the Purchasers to purchase the
Offered Securities, which conditions the Corporation hereby covenants and agrees
to use the best efforts thereof to fulfill within the time set out herein
therefor, and which conditions may be waived in writing in whole or in part by
the Agents:

(i)

the Corporation shall have received all necessary approvals and consents,
including all necessary regulatory approvals and consents required for the
completion of the transaction contemplated by this Agreement, all in a form
satisfactory to the Agents;

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(ii)

receipt by the Agents of the documents set forth in section 5 of this Agreement
to be delivered to the Agents;

(iii)

the representations and warranties of the Corporation contained herein being
true and correct as of the Closing Time with the same force and effect as if
made at and as of the Closing Time after giving effect to the transactions
contemplated hereby;

(iv)

the Corporation having complied with all covenants, and satisfied all terms and
conditions, contained herein to be complied with and satisfied by the
Corporation at or prior to the Closing Time; and

(v)

the Agents not having previously terminated the obligations thereof pursuant to
this Agreement.

7.

Fee

(a)

Commission:  In consideration of the agreement of the Agents to act as agents of
the Corporation in respect of the Offering, and in consideration of the services
performed and to be performed by the Agents in connection therewith, including,
without limitation:

(i)

acting as agents of the Corporation to solicit, on a best efforts basis, offers
to purchase the Offered Securities;

(ii)

participating in the preparation of the form of the Subscription Agreements and
certain of the Ancillary Documents; and

(iii)

advising the Corporation with respect to the private placement of the Offered
Securities;

the Corporation shall pay to the Agents or as the Agents may otherwise direct at
the Closing Time against receipt of payment of the purchase price for the
Offered Securities, a fee of 6% of the aggregate Purchase Price for the Offered
Securities.

(b)

Taxes:  The Corporation and the Agents acknowledge and agree that if a separate
fee would have been charged to the Corporation for the services described in
clause 7(a)(i) above, such separate fee would represent more than 50% of the fee
payable to the Agents, and the Corporation hereby further acknowledges and
agrees that the Agents will rely on the foregoing statement in not charging
federal goods and services tax on such fee and that the Corporation will
forthwith pay to the Agents any such tax and any applicable interest and
penalties for which the Agents are subsequently assessed by the Canadian Revenue
Agency.

(c)

Broker Warrants:  In addition to the commission payable to the Agents pursuant
to subsection 7(a) hereof, as additional consideration for the services
performed and to be performed by the Agents hereunder, the Corporation shall
issue to the Agents, or as the Agents may otherwise direct, at the Closing Time
 Broker Warrants which entitle the holders thereof to acquire in the aggregate
Common Shares equal in number to 6% of the number of Offered Securities sold, in
form and substance satisfactory to the Agents.

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(d)

Corporate Finance Fee:  In addition to the commission payable pursuant to the
subsection 7(a) hereof and the Broker Warrants issuable pursuant to subsection
7(c) hereof, the Corporation shall pay the Corporate Finance Fee to the Agents,
or as the Agents may otherwise direct, at the Closing Time.

(e)

Division of Commission, Broker Warrants and Corporate Finance Fee:
 Notwithstanding which of the Agents has actually sold the Offered Securities,
the commission payable to the Agents pursuant to subsection 7(a) hereof and the
Broker Warrants to be issued to the Agents pursuant to subsection 7(c) and 7(d)
hereof shall be divided between the Agents as to 50% thereof to Blackmont
Capital Inc., as to 20% thereof to Canaccord Capital Corporation, as to 20%
thereof to Haywood Securities Inc. and as to 10% thereof to Raymond James Ltd.

8.

Representations and Warranties

The Corporation hereby represents and warrants to the Agents and the Purchasers,
and acknowledges that the Agents and the Purchasers are relying upon each of
such representations and warranties in completing the Closing, as follows:

(a)

Incorporation and Organization:  The Corporation and each Subsidiary is a valid
and subsisting corporation under the laws of its governing jurisdiction and has
all requisite corporate power and authority to carry on its business as now
conducted or proposed to be conducted and to own or lease and operate the
property and assets thereof and the Corporation has all requisite corporate
power and authority to enter into, execute and deliver this Agreement and the
Ancillary Documents and to carry out the obligations thereof hereunder and
thereunder.

(b)

Extra-provincial Registration:  The Corporation and each Subsidiary is
 licensed, registered or qualified in all jurisdictions where the character of
the property or assets thereof owned or leased or the nature of the activities
conducted by it make licensing, registration or qualification necessary and is
carrying on the business thereof in compliance with all applicable laws, rules
and regulations of each such jurisdiction.

(c)

Authorized Capital:  The Corporation is authorized to issue, among other things,
100,000,000 Common Shares, of which, as of March 30, 2007, 36,023,982 Common
Shares were issued and outstanding as fully paid and non-assessable shares.

(d)

Listing:  The Common Shares are, and at the time of issue of the Offered
Securities will be, quoted for trading on the NA&D over-the-counter bulletin
board market under the symbol “PGDP” and no order ceasing or suspending trading
in any securities of the Corporation or the trading of any of the Corporation’s
issued securities is currently outstanding and no proceedings for such purpose
are, to the knowledge of the Corporation, pending or threatened.  Except as
disclosed to the Agents, the Corporation has not issued, or agreed to issue, any
Common Shares or any securities exchangeable or exercisable for, or convertible
into, Common Shares at an effective price per Common Share which is less than
the Purchase Price during the 30 day period immediately preceding the date
hereof.

(e)

Certain Securities Law Matters:

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(i)

none of the transactions contemplated by this Agreement including, without
limitation, the use of the proceeds from the sale of the Units will violate or
result in a violation of Section 7 of the 1934 Act, or any regulation
promulgated thereunder, including, without limitation, Regulations G, T, U, and
X of the Board of Governors of the Federal Reserve System;

(ii)

there is and has been no failure on the part of the Corporation or any of the
Corporation’s directors or officers, in their capacities as such, to comply in
all material respects with any applicable provision of the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated in connection therewith,
including Section 402 related to loans and Sections 302 and 906 related to
certifications;

(iii)

prior to the date hereof, neither the Corporation nor any of its affiliates has
taken any action which is designed to or which has constituted or which might
have been expected to cause or result in stabilization or manipulation of the
price of any security of the Corporation in connection with the offering of the
Units;

(iv)

the Corporation is subject to Section 13 or 15(d) of the 1934 Act;

(v)

other than the notification filing on Form D required to be filed with the SEC
15 days after the Closing Date (and a Form 45-106F1 within 10 days after the
Closing Date), all filings required to be made by the Corporation and the
Subsidiaries pursuant to the Securities Laws and general corporate law
applicable to them have been made and such filings were true and accurate as at
the respective dates thereof and the Corporation has not filed any confidential
material change reports;

(vi)

the Corporation is not, and after giving effect to the offering and sale of the
Units, will not be an “investment company”, or an entity “controlled” by an
“investment company”, as such terms are defined in the Investment Company Act;

(vii)

assuming compliance with the terms of the Subscription Agreement, and this
Agreement, neither the Corporation nor any person acting on its behalf has
offered or sold the Units (or any securities issuable on conversion thereof) by
means of any general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act or, with respect to Units (or any such
securities) sold outside the United States to non-U.S. persons (as defined in
Rule 902 under the 1933 Act), by means of any Directed Selling Efforts and the
Corporation, any affiliate of the Corporation and any person acting on its or
their behalf has complied with and will implement the offering restriction
requirements of Rule 902 under the 1933 Act;

(viii)

the Corporation and each of the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management’s general or
specific authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with U.S. GAAP and to maintain
accountability for assets; (C) access to assets is permitted only in accordance
with management’s general or specific authorization; and (D) the

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recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Since June 30, 2006, there has been (1) no material weakness in the
Corporation’s internal control over financial reporting (whether or not
remediated) and (2) no change in the Corporation’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Corporation’s internal controls over financial reporting;

(ix)

The principal executive officer and principal financial officer of the
Corporation have made all certifications required by the Sarbanes-Oxley Act of
2002 and any related rules and regulations promulgated thereunder by the SEC,
and the statements contained in all such certifications were complete and
correct in all material respects as of the respective dates made. Neither the
Corporation nor any of its officers has received notice from the SEC questioning
or challenging the accuracy, completeness, content, form or manner of filing or
submission of such certifications.

(f)

Rights to Acquire Securities:  No Person has any agreement, option, right or
privilege (whether pre-emptive, contractual or otherwise) capable of becoming an
agreement for the purchase, acquisition, subscription for or issue of any of the
unissued shares or other securities of the Corporation, except, as at March 30,
2007, for an aggregate of 2,863,750 Common Shares were reserved for issue
pursuant to outstanding options, warrants, share incentive plans, convertible,
exercisable and exchangeable securities and other rights to acquire Common
Shares.

(g)

Rights Plan:  The directors of the Corporation have not adopted a shareholder
rights plan or a similar plan and the Corporation is not party to what is
commonly referred to as a shareholder rights plan agreement.

(h)

No Pre-emptive Rights:  The issue of the Offered Securities will not be subject
to any pre-emptive right or other contractual right to purchase securities
granted by the Corporation or to which the Corporation is subject.

(i)

Offered Securities:  The execution of this Agreement and the Subscription
Agreement and the issue by the Corporation to the Purchasers of the Offered
Securities will be exempt from the registration and prospectus requirements of
the Securities Laws of the Offering Jurisdictions and the United States.

(j)

Subsidiaries:  The Subsidiaries are the only subsidiaries of the Corporation.

(k)

Capital of Subsidiaries:  All of the outstanding shares of the Subsidiaries are
issued and outstanding as fully paid and non-assessable shares and are legally
and beneficially owned by the Corporation and no Person has any agreement,
option, right or privilege (whether pre-emptive, contractual or otherwise)
capable of becoming an agreement for the purchase, acquisition, subscription for
or issue of any of the unissued shares or other securities of any of the
Subsidiaries or for the purchase or acquisition of any of the outstanding shares
or other securities of any of the Subsidiaries.

(l)

Issue of Offered Securities:  All necessary corporate action has been taken to
authorize the issue and sale of, and the delivery of certificates representing,
the Offered Securities and, upon payment of the requisite consideration
therefor, the Unit Shares will be validly

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issued as fully paid and non-assessable shares, and the Warrants will be validly
issued and, upon the issue thereof, the Warrant Shares will be validly issued as
fully paid and non-assessable shares.

(m)

Consents, Approvals and Conflicts:  None of the offering and sale of the Offered
Securities, the execution and delivery of this Agreement or the Ancillary
Documents, the compliance by the Corporation with the provisions of this
Agreement and the Ancillary Documents or the consummation of the transactions
contemplated herein and therein including, without limitation, the issue of the
Offered Securities to the Purchasers for the consideration and upon the terms
and conditions as set forth herein and the issue of the Warrant Shares for the
consideration and upon the terms and conditions set forth in the Warrant
Certificates, do or will (i) require the consent, approval, or authorization,
order or agreement of, or registration or qualification with, any governmental
agency, body or authority, court, stock exchange, securities regulatory
authority or other Person, except (A) such as have been obtained, or (B) such as
may be required under the Securities Laws of the Offering Jurisdictions and will
be obtained by the Closing Date, or (ii) conflict with or result in any breach
or violation of any of the provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which the Corporation or any Subsidiary is a party or by which any of them or
any of the properties or assets thereof is bound, or the articles or by-laws or
any other constating document of the Corporation or any Subsidiary or any
resolution passed by the directors (or any committee thereof) or shareholders of
the Corporation or any Subsidiary, or any statute or any judgment, decree,
order, rule, policy or regulation of any court, governmental authority,
arbitrator, stock exchange or securities regulatory authority applicable to the
Corporation or any Subsidiary or any of the properties or assets thereof which
could have a material adverse effect on the condition (financial or otherwise),
business, properties or results of operations of the Corporation or any
Subsidiary.

(n)

Authority and Authorization:  The Corporation has full corporate power and
authority to enter into this Agreement and the Ancillary Documents and to do all
acts and things and execute and deliver all documents as are required hereunder
and thereunder to be done, observed, performed or executed and delivered by it
in accordance with the terms hereof and thereof and the Corporation has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the Ancillary Documents and to observe and
perform the provisions of this Agreement and the Ancillary Documents in
accordance with the provisions hereof and thereof including, without limitation,
the issue of the Offered Securities to the Purchasers for the consideration and
upon the terms and conditions set forth herein and the issue of the Warrant
Shares for the consideration and upon the terms and conditions set forth in the
Warrant Certificates.

(o)

Validity and Enforceability:  Each of this Agreement and the Subscription
Agreements has been authorized, executed and delivered by the Corporation and
constitutes a valid and legally binding obligation of the Corporation
enforceable against the Corporation in accordance with the terms thereof and
upon being executed and delivered the Warrant Certificates will constitute valid
and legally binding obligations of the Corporation enforceable against the
Corporation in accordance with the terms thereof.

(p)

Broker Warrants:  

(i)

The Corporation has all requisite corporate power and authority to issue the
Broker Warrants and to enter into, execute and deliver and to carry out the

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obligations thereof under the Broker Warrant Certificates.  All necessary
corporate action has been taken by the Corporation to authorize the issue of the
Broker Warrants in accordance with the terms and conditions hereof and, when
issued, the Broker Warrants will be validly issued and to authorize the
creation, execution, delivery and performance of the Broker Warrant Certificates
and to observe and perform the provisions of the Broker Warrant Certificates in
accordance with the provisions thereof including, without limitation, the issue
of the Broker Shares for the consideration and upon the terms and conditions set
forth in the Broker Warrant Certificates.  

(ii)

The Broker Warrant Certificates constitute a valid and legally binding
obligation of the Corporation enforceable against the Corporation in accordance
with the terms thereof.  None of the issue of the Broker Warrants, the execution
and delivery of the Broker Warrant Certificates, the compliance by the
Corporation with the provisions of the Broker Warrant Certificates or the
consummation of the transactions contemplated therein including, without
limitation, the issue of the Broker Shares for the consideration and upon the
terms and conditions set forth in the Broker Warrant Certificates, do or will
(i) require the consent, approval, or authorization, order or agreement of, or
registration or qualification with, any governmental agency, body or authority,
court, stock exchange, securities regulatory authority or other Person, except
(A) such as have been obtained, or (B) such as may be required under the
Securities Laws of the Offering Jurisdictions and will be obtained by the
Closing Date, or (ii) conflict with or result in any breach or violation of any
of the provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Corporation
is a party or by which it or any of the properties or assets thereof is bound,
or the articles or by-laws of the Corporation or any resolution passed by the
directors (or any committee thereof) or shareholders of the Corporation, or any
statute or any judgment, decree, order, rule, policy or regulation of any court,
governmental authority, any arbitrator, stock exchange or securities regulatory
authority applicable to the Corporation or any of the properties or assets
thereof which could have a material adverse effect on the condition (financial
or otherwise), business, properties or results of operations of the Corporation.

(iii)

None of the issue of the Broker Warrants or the Broker Shares will be subject to
any pre-emptive right or other contractual right to purchase securities granted
by the Corporation or to which the Corporation is subject.  

(iv)

The issue by the Corporation to the Agents of the Broker Warrants will be exempt
from the registration and prospectus requirements of the Securities Laws of the
Province of Ontario.  

(q)

Public Disclosure:  Each of the documents in the Public Record which contains
any of the Information is, as of the date thereof, in compliance in all material
respects with applicable Securities Laws and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and such documents
collectively constitute full, true and plain disclosure of all material facts
relating to the Corporation and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to

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make the statements therein, in light of the circumstances under which they were
made, not misleading, as of the date hereof.  There is no fact known to the
Corporation which the Corporation has not publicly disclosed which materially
adversely affects, or so far as the Corporation can reasonably foresee, will
materially adversely affect, the assets, liabilities (contingent or otherwise),
capital, affairs, business, prospects, operations or condition (financial or
otherwise) of the Corporation or the ability of the Corporation to perform its
obligations under this Agreement or the Ancillary Documents or which would
otherwise be material to any Person intending to make an equity investment in
the Corporation.

(r)

Timely Disclosure:  The Corporation is in compliance with all timely disclosure
obligations under the 1933 Act and the 1934 Act and, without limiting the
generality of the foregoing, there has not occurred any material adverse change
in the assets, liabilities (contingent or otherwise), capital, affairs,
business, prospects, operations or condition (financial or otherwise) of the
Corporation or any Subsidiary which has not been publicly disclosed and none of
the documents filed by or on behalf of the Corporation pursuant to applicable
Securities Laws contain a misrepresentation (as such term is used in the 1934
Act or defined in the Securities Act (Ontario)) at the date of the filing
thereof.

(s)

Accounting Controls:  The Corporation maintains a system of internal accounting
controls sufficient to provide reasonable assurance that:  (i) transactions are
completed in accordance with the general or a specific authorization of
management of the Corporation; (ii) transactions are recorded as necessary to
permit the preparation of consolidated financial statements for the Corporation
in conformity with Canadian generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets of the Corporation and the
Subsidiaries is permitted only in accordance with the general or a specific
authorization of management of the Corporation; and (iv) the recorded
accountability for assets of the Corporation and the Subsidiaries is compared
with the existing assets of the Corporation and the Subsidiaries at reasonable
intervals and appropriate action is taken with respect to any differences
therein.

(t)

No Cease Trade Order:  No order preventing, ceasing or suspending trading in any
securities of the Corporation or prohibiting the issue and sale of securities by
the Corporation has been issued and no proceedings for either of such purposes
have been instituted or, to the best of the knowledge of the Corporation, are
pending, contemplated or threatened.

(u)

Auditors:

(i)

the auditors who audited the consolidated financial statements of the
Corporation and the Subsidiaries for the year ended June 30, 2006 and 2005 and
who provided their audit report thereon are independent public accountants as
required under the 1933 Act and the 1934 Act; and

(ii)

the Corporation’s auditors have not provided any material comments or
recommendations to the Corporation regarding its accounting policies, internal
control systems or other accounting or financial practices.

(v)

Financial Statements:  The audited consolidated financial statements of the
Corporation for the year ended June 30, 2006, together with the auditors’ report
thereon and the notes thereto, and the unaudited interim consolidated financial
statements of the Corporation

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for the period ended December 31, 2006 and the notes thereto, have been prepared
in accordance with United States generally accepted accounting principles
applied on a basis consistent with prior periods (except as disclosed in such
consolidated financial statements), are substantially correct in every
particular and present fairly the financial condition and position of the
Corporation on a consolidated basis as at the dates thereof and such
consolidated financial statements contain no direct or implied statement of a
material fact which is untrue on the date of such consolidated financial
statements and do not omit to state any material fact which is required by
United States generally accepted accounting principles or by applicable law to
be stated or reflected therein or which is necessary to make the statements
contained therein not misleading.  All disclosures in the Public Record
regarding “non-GAAP financial measures” (as such term is defined by the rules
and regulations of the SEC) comply with Regulation G, to the extent applicable.

(w)

Changes in Financial Position:  Since December 31, 2006, none of:

(i)

the Corporation or any Subsidiary has paid or declared any dividend or incurred
any material capital expenditure or made any commitment therefore;

(ii)

the Corporation or any Subsidiary has incurred any obligation or liability,
direct or indirect, contingent or otherwise, except in the ordinary course of
business and which is not, and which in the aggregate are not, material; and

(iii)

the Corporation or any Subsidiary has entered into any material transaction;

except in each case as disclosed in the Information.

(x)

Insolvency:  Neither the Corporation nor any of the Subsidiaries has committed
an act of bankruptcy or sought protection from the creditors thereof before any
court or pursuant to any legislation, proposed a compromise or arrangement to
the creditors thereof generally, taken any proceeding with respect to a
compromise or arrangement, taken any proceeding to be declared bankrupt or wound
up, taken any proceeding to have a receiver appointed of any of the assets
thereof, had any Person holding any encumbrance, lien, charge, hypothec, pledge,
mortgage, title retention agreement or other security interest or receiver take
possession of any of the property thereof, had an execution or distress become
enforceable or levied upon any portion of the property thereof or had any
petition for a receiving order in bankruptcy filed against it.

(y)

No Contemplated Changes:  Except as disclosed in the Information, none of the
Corporation or any Subsidiary has approved, is contemplating, has entered into
any agreement in respect of, or has any knowledge of:

(i)

the purchase of any property or assets or any interest therein or the sale,
transfer or other disposition of any property or assets or any interest therein
currently owned, directly or indirectly, by the Corporation or any Subsidiary
whether by asset sale, transfer of shares or otherwise;

(ii)

the change of control (by sale or transfer of shares or sale of all or
substantially all of the property and assets of the Corporation or any
Subsidiary or otherwise) of the Corporation or any Subsidiary; or

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(iii)

a proposed or planned disposition of shares by any shareholder who owns,
directly or indirectly, 10% or more of the outstanding shares of the Corporation
or any Subsidiary.

(z)

Insurance:  The assets of the Corporation and of each Subsidiary and the
business and operations thereof are insured against loss or damage with
responsible insurers on a basis consistent with insurance obtained by reasonably
prudent participants in a comparable business in comparable circumstances, such
coverage is in full force and effect and the Corporation and each Subsidiary has
not failed to promptly give any notice or present any material claim thereunder.

(aa)

Taxes and Tax Returns:  The Corporation and each Subsidiary has filed in a
timely manner all necessary tax returns and notices and has paid all applicable
taxes of whatsoever nature for all tax years prior to the date hereof to the
extent that such taxes have become due or have been alleged to be due and none
of the Corporation or any Subsidiary is aware of any tax deficiencies or
interest or penalties accrued or accruing, or alleged to be accrued or accruing,
thereon where, in any of the above cases, it might reasonably be expected to
result in any material adverse change in the condition (financial or otherwise),
or in the earnings, business, affairs or prospects of the Corporation or any
Subsidiary and there are no agreements, waivers or other arrangements providing
for an extension of time with respect to the filing of any tax return by any of
them or the payment of any material tax, governmental charge, penalty, interest
or fine against any of them.  There are no material actions, suits, proceedings,
investigations or claims now threatened or pending against the Corporation or
any Subsidiary which could result in a material liability in respect of taxes,
charges or levies of any governmental authority, penalties, interest, fines,
assessments or reassessments or any matters under discussion with any
governmental authority relating to taxes, governmental charges, penalties,
interest, fines, assessments or reassessments asserted by any such authority and
the Corporation and each Subsidiary has withheld (where applicable) from each
payment to each of the present and former officers, directors, employees and
consultants thereof the amount of all taxes and other amounts, including, but
not limited to, income tax and other deductions, required to be withheld
therefrom, and has paid the same or will pay the same when due to the proper tax
or other receiving authority within the time required under applicable tax
legislation.

(bb)

Compliance with Laws, Licenses and Permits:  The Corporation and each Subsidiary
has conducted and is conducting the business thereof in compliance in all
material respects with all applicable laws, rules, regulations, tariffs, orders
and directives of each jurisdiction in which it carries on business and
possesses all material approvals, consents, certificates, registrations,
authorizations, permits and licenses issued by the appropriate provincial,
state, municipal, federal or other regulatory agency or body necessary to carry
on the business currently carried on, or contemplated to be carried on, by it,
is in compliance in all material respects with the terms and conditions of all
such approvals, consents, certificates, authorizations, permits and licenses and
with all laws, regulations, tariffs, rules, orders and directives material to
the operations thereof, and none of the Corporation or any Subsidiary has
received any notice of the modification, revocation or cancellation of, or any
intention to modify, revoke or cancel or any proceeding relating to the
modification, revocation or cancellation of any such approval, consent,
certificate, authorization, permit or license which, singly or in the aggregate,
if the subject of an unfavourable decision, order, ruling or finding, would
materially adversely affect the conduct of the business or operations of, or the
assets, liabilities (contingent or

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otherwise), condition (financial or otherwise) or prospects of, the Corporation
or any Subsidiary.

(cc)

Agreements and Actions:  Neither the Corporation nor any Subsidiary is in
violation of any material term of the articles or by-laws or any constating
document thereof.  Neither the Corporation nor any Subsidiary is in violation of
any term or provision of any agreement, indenture or other instrument applicable
to it which would, or could, result in any material adverse effect on the
business, condition (financial or otherwise), capital, affairs or operations of
the Corporation or any Subsidiary, neither the Corporation nor any Subsidiary is
in default in the payment of any obligation owed which is now due and there is
no action, suit, proceeding or investigation commenced, pending or, to the
knowledge of the Corporation after due inquiry, threatened which, either in any
case or in the aggregate, might result in any material adverse effect on the
business, condition (financial or otherwise), capital, affairs, prospects or
operations of the Corporation or any Subsidiary or in any of the material
properties or assets thereof or in any material liability on the part of the
Corporation or any Subsidiary or which places, or could place, in question the
validity or enforceability of this Agreement, the Ancillary Documents or any
document or instrument delivered, or to be delivered, by the Corporation
pursuant hereto or thereto.

(dd)

Owner of Property:  The Corporation and the Subsidiaries are the absolute legal
and beneficial owner of, and have good and marketable title to, all of the
material property or assets thereof as described in the Information, free of all
mortgages, liens, charges, pledges, security interests, encumbrances, claims or
demands whatsoever, other than those described in the Information, and no other
property rights are necessary for the conduct of the business of the Corporation
or any Subsidiary as currently conducted or contemplated to be conducted, none
of the Corporation or any Subsidiary knows of any claim or the basis for any
claim that might or could adversely affect the right thereof to use, transfer or
otherwise exploit such property rights and, except as disclosed in the
Information, none of the Corporation or any Subsidiary has any responsibility or
obligation to pay any commission, royalty, licence fee or similar payment to any
Person with respect to the property rights thereof.

(ee)

Mineral Rights:  The Corporation and the Subsidiaries hold either freehold
title, mining leases, mining claims or participating interests or other
conventional property, proprietary or contractual interests or rights,
recognized in the jurisdiction in which a particular property is located, in
respect of the ore bodies and minerals located in properties in which the
Corporation and the Subsidiaries have an interest as described in the
Information under valid, subsisting and enforceable title documents or other
recognized and enforceable agreements or instruments, sufficient to permit the
Corporation or applicable Subsidiary to explore the minerals relating thereto,
all such property, leases or claims and all property, leases or claims in which
the Corporation or any Subsidiary has an interest or right have been validly
located and recorded in accordance with all applicable laws and are valid and
subsisting, the Corporation and the Subsidiaries have all necessary surface
rights, access rights and other necessary rights and interests relating to the
properties in which the Corporation and the Subsidiaries have an interest as
described in the Information granting the Corporation or applicable Subsidiary
the right and ability to explore for minerals, ore and metals for development
purposes as are appropriate in view of the rights and interest therein of the
Corporation or applicable Subsidiary, with only such exceptions as do not
materially interfere with the use made by the Corporation or applicable
Subsidiary of the rights or interests so held and each of the

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proprietary interests or rights and each of the documents, agreements and
instruments and obligations relating thereto referred to above is currently in
good standing in the name of the Corporation or a Subsidiary.

(ff)

Property Agreements:  Any and all of the agreements and other documents and
instruments pursuant to which the Corporation or any Subsidiary holds the
property and assets thereof (including any interest in, or right to earn an
interest in, any property) are valid and subsisting agreements, documents or
instruments in full force and effect, enforceable in accordance with terms
thereof, none of the Corporation or any Subsidiary is in default of any of the
material provisions of any such agreements, documents or instruments nor has any
such default been alleged, and such properties and assets are in good standing
under the applicable statutes and regulations of the jurisdictions in which they
are situated, all leases, licences and claims pursuant to which the Corporation
or any Subsidiary derive the interests thereof in such property and assets are
in good standing and there has been no material default under any such lease,
licence or claim and all taxes required to be paid with respect to such
properties and assets to the date hereof have been paid.  None of the properties
(or any interest in, or right to earn an interest in, any property) of the
Corporation or any Subsidiary is subject to any right of first refusal or
purchase or acquisition right which is not disclosed in the Information.

(gg)

No Defaults:  None of the Corporation or any Subsidiary is in default of any
material term, covenant or condition under or in respect of any judgment, order,
agreement or instrument to which it is a party or to which it or any of the
property or assets thereof are or may be subject, and no event has occurred and
is continuing, and no circumstance exists which has not been waived, which
constitutes a default in respect of any commitment, agreement, document or other
instrument to which the Corporation or any Subsidiary is a party or by which it
is otherwise bound entitling any other party thereto to accelerate the maturity
of any amount owing thereunder or which could have a material adverse effect
upon the condition (financial or otherwise), capital, property, assets,
operations or business of the Corporation or any Subsidiary.

(hh)

Compliance with Employment Laws:  Except as disclosed in the Information, the
Corporation and each Subsidiary is in compliance with all laws and regulations
respecting employment and employment practices, terms and conditions of
employment, pay equity and wages, except where such non-compliance would not
constitute an adverse material fact concerning the Corporation or any Subsidiary
or result in an adverse material change to the Corporation or any Subsidiary,
and has not and is not engaged in any unfair labour practice, there is no labour
strike, dispute, slowdown, stoppage, complaint or grievance pending or, to the
best of the knowledge of the Corporation after due inquiry, threatened against
the Corporation or any Subsidiary, no union representation question exists
respecting the employees of the Corporation or any Subsidiary and no collective
bargaining agreement is in place or currently being negotiated by the
Corporation or any Subsidiary, neither the Corporation nor any Subsidiary has
received any notice of any unresolved matter and there are no outstanding orders
under any employment or human rights legislation in any jurisdiction in which
the Corporation or any Subsidiary carries on business or has employees, no
employee has any agreement as to the length of notice required to terminate his
or her employment with the Corporation or any Subsidiary in excess of twelve
months or equivalent compensation and all benefit and pension plans of the
Corporation or any Subsidiary are funded in accordance with applicable laws and
no past service funding liability exist thereunder.

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(ii)

Employee Plans:  Each material plan for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or termination
pay, insurance, medical, hospital, dental, vision care, drug, sick leave,
disability, salary continuation, legal benefits, unemployment benefits,
vacation, pension, incentive or otherwise contributed to, or required to be
contributed to, by the Corporation or any Subsidiary for the benefit of any
current or former officer, director, employee or consultant of the Corporation
has been maintained in material compliance with the terms thereof and with the
requirements prescribed by any and all statutes, orders, rules, policies and
regulations that are applicable to any such plan.

(jj)

Accruals:  All material accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, federal or provincial pension plan
premiums, accrued wages, salaries and commissions and payments for any plan for
any officer, director, employee or consultant of the Corporation or any
Subsidiary have been accurately reflected in the books and records of the
Corporation.

(kk)

Work Stoppage:  There has not been, and there is not currently, any labour
trouble which is adversely effecting or could adversely effect, in a material
manner, the conduct of the business of the Corporation or any Subsidiary.

(ll)

Environmental Compliance:  Except as disclosed in the Information, the
Corporation and the Subsidiaries:

(i)

and the property, assets and operations thereof comply in all material respects
with all applicable Environmental Laws (which term means and includes, without
limitation, any and all applicable international, federal, provincial, state,
municipal or local laws, statutes, regulations, treaties, orders, judgments,
decrees, ordinances, official directives and all authorizations relating to the
environment, occupational health and safety, or any Environmental Activity
(which term means and includes, without limitation, any past, present or future
activity, event or circumstance in respect of a Contaminant (which term means
and includes, without limitation, any pollutants, dangerous substances, liquid
wastes, hazardous wastes, hazardous materials, hazardous substances or
contaminants or any other matter including any of the foregoing, as defined or
described as such pursuant to any Environmental Law), including, without
limitation, the storage, use, holding, collection, purchase, accumulation,
assessment, generation, manufacture, construction, processing, treatment,
stabilization, disposition, handling or transportation thereof, or the release,
escape, leaching, dispersal or migration thereof into the natural environment,
including the movement through or in the air, soil, surface water or
groundwater));

(ii)

do not have any knowledge of, and have not received any notice of, any material
claim, judicial or administrative proceeding, pending or threatened against, or
which may affect, either the Corporation or any Subsidiary or any of the
property, assets or operations thereof, relating to, or alleging any violation
of any Environmental Laws, the Corporation is not aware of any facts which could
give rise to any such claim or judicial or administrative proceeding and neither
the Corporation nor any Subsidiary nor any of the property, assets or operations
thereof is the subject of any investigation, evaluation, audit or review by any
Governmental Authority (which term means and includes, without limitation, any
national, federal government, province, state, municipality or other political

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subdivision of any of the foregoing, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing) to determine
whether any violation of any Environmental Laws has occurred or is occurring or
whether any remedial action is needed in connection with a release of any
Contaminant into the environment, except for compliance investigations conducted
in the normal course by any Governmental Authority;

(iii)

have not given or filed any notice under any federal, state, provincial or local
law with respect to any Environmental Activity, the Corporation and the
Subsidiaries do not have any liability (whether contingent or otherwise) in
connection with any Environmental Activity and the Corporation is not aware of
any notice being given under any federal, state, provincial or local law or of
any liability (whether contingent or otherwise) with respect to any
Environmental Activity relating to or affecting the Corporation or any
Subsidiary or the property, assets, business or operations thereof;

(iv)

do not store any hazardous or toxic waste or substance on the property thereof
and have not disposed of any hazardous or toxic waste, in each case in a manner
contrary to any Environmental Laws, and there are no Contaminants on any of the
premises at which the Corporation or any Subsidiary carries on business, in each
case other than in compliance with Environmental Laws; and

(v)

are not subject to any contingent or other liability relating to the restoration
or rehabilitation of land, water or any other part of the environment or
non-compliance with Environmental Law.

(mm)

No Litigation:  There are no actions, suits, proceedings, inquiries or
investigations existing, pending or, to the knowledge of the Corporation after
due inquiry, threatened against or which adversely affect the Corporation or any
Subsidiary or to which any of the property or assets thereof is subject, at law
or equity, or before or by any court, federal, provincial, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which may in any way materially adversely
affect the condition (financial or otherwise), capital, property, assets,
operations or business of the Corporation or any Subsidiary or the ability of
any of them to perform the obligations thereof and none of the Corporation or
any Subsidiary is subject to any judgment, order, writ, injunction, decree,
award, rule, policy or regulation of any Governmental Authority, which, either
separately or in the aggregate, may result in a material adverse effect on the
condition (financial or otherwise), capital, property, assets, operations or
business of the Corporation or any Subsidiary or the ability of the Corporation
to perform its obligations under this Agreement or the Ancillary Documents.

(nn)

Intellectual Property:  The Corporation or a Subsidiary owns or possesses
adequate enforceable rights to use all trademarks, copyrights and trade secrets
used or proposed to be used in the conduct of the business thereof and, to the
knowledge of the Corporation, after due inquiry, neither the Corporation nor any
Subsidiary is infringing upon the rights of any other Person with respect to any
such trademarks, copyrights or trade secrets and no other Person has infringed
any such trademarks, copyrights or trade secrets.

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(oo)

Non-Arm’s Length Transactions:  Except as disclosed in the Information, neither
the Corporation nor any Subsidiary owes any amount to, nor has the Corporation
or any Subsidiary any present loans to, or borrowed any amount from or is
otherwise indebted to, any officer, director, employee or securityholder of any
of them or any Person not dealing at “arm’s length” (as such term is defined in
the Income Tax Act (Canada)) with any of them except for usual employee
reimbursements and compensation paid in the ordinary and normal course of the
business of the Corporation or Subsidiary.  Except usual employee or consulting
arrangements made in the ordinary and normal course of business, neither the
Corporation nor any Subsidiary is a party to any contract, agreement or
understanding with any officer, director, employee or securityholder of any of
them or any other Person not dealing at arm’s length with the Corporation and
the Subsidiaries.  No officer, director or employee of the Corporation or any
Subsidiary and no Person which is an affiliate or associate of any of the
foregoing Persons, owns, directly or indirectly, any interest (except for shares
representing less than 5% of the outstanding shares of any class or series of
any publicly traded company) in, or is an officer, director, employee or
consultant of, any Person which is, or is engaged in, a business competitive
with the business of the Corporation or any Subsidiary which could materially
adversely impact on the ability to properly perform the services to be performed
by such Person for the Corporation or any Subsidiary.  No officer, director,
employee or securityholder of the Corporation or any Subsidiary has any cause of
action or other claim whatsoever against, or owes any amount to, the Corporation
or any Subsidiary except for claims in the ordinary and normal course of the
business of the Corporation or any Subsidiary such as for accrued vacation pay
or other amounts or matters which would not be material to the Corporation.

(pp)

Material Contracts:  The only material contracts to which the Corporation or any
Subsidiary is a party or by which any of them are bound are:

(i)

Option Agreement dated August 3, 2005 in respect of the San Miguel Groupings
properties between the Corporation and Tara Gold Resource Corp.,

(ii)

Exploration Agreement dated July 17, 2006 between the Corporation, Victor Manuel
Gomez Fregoso and Isidro Hernandez Pompa with respect to the La Blanca property,
and

(iii)

Andean Gold Alliance Agreement dated May 10, 2006 between the Corporation and
Teck Cominco Limited;  

and all such contracts are valid and subsisting agreements in full force and
effect unamended and there exists no material default or event, occurrence,
condition or act which, with the giving of notice, the lapse of time or the
happening of any event or condition, would become a material default thereunder
by any party thereto.

(qq)

Website:  The website of the Corporation, if any, does not contain material
information with respect to the Corporation which is incomplete, incorrect or
omits to state a fact so as to render such information misleading, or any news
release which has not been disseminated on a news wire service and all
information contained on any of such websites in respect of the Offering
complies with the Securities Laws of the Offering Jurisdictions including, but
not limited to, restrictions on promotional material disseminated before and
during the Offering.

--------------------------------------------------------------------------------

(rr)

Minute Books:  The minute books of the Corporation, all of which have been or
will be made available to the Agents or counsel to the Agents, are complete and
accurate in all material respects.

9.

Covenants of the Corporation

(a)

Consents and Approvals:  Immediately following the acceptance by the Corporation
hereof, the Corporation covenants and agrees with the Agents and the Purchasers
that the Corporation will:

(i)

obtain, to the extent not already obtained, the necessary regulatory consents
from the Securities Commissions of the Offering Jurisdictions for the Offering
on such terms as are mutually acceptable to the Agents and the Corporation,
acting reasonably;

(ii)

use its best efforts to obtain a receipt for the Final Prospectus within 180
days of Closing Date.

(iii)

use its best efforts to file a resale registration statement (the “Registration
Statement”) and use its best efforts to have such registration statement
declared effective by the SEC within 180 days of Closing Date to register the
resale of the Unit Shares, the Warrant Shares and the Broker Shares.

(iv)

the Corporation shall not take any action which would be reasonably expected to
result in the delisting or suspension of its Common Shares on the
over-the-counter bulletin board system or from any other securities exchange,
market or trading or quotation facility on which its Common Shares become listed
or quoted (including the Toronto Stock Exchange or the TSX Venture Exchange) and
the Corporation shall comply, in all material respects, with the rules and
regulations thereof;

(v)

if the Corporation does not satisfy the obligations thereof set out in
subsections 9(ii) and 9(iii) hereof, and both the Final Prospectus and the
Registration Statement are not declared effective on or before the date which is
180 days after the Closing Date, the Corporation shall pay each subscriber a
cash amount equal to 1% per month of the total subscription amount paid by each
subscriber to a maximum of 12%, on a pro-rata basis, payable quarterly, until
the earlier of the effective date of both the Final Prospectus and the
Registration Statement or 12 months following the 181st day subsequent to the
Closing Date.  Notwithstanding anything herein to the contrary, to the extent
that the registration of any or all of the Unit Shares, Warrant Shares and
Broker Shares (collectively, the “Registrable Securities”) by the Corporation on
a registration statement is prohibited (the “Non-Registered Shares”) as a result
of rules, regulations, positions or releases issued or actions taken by the U.S.
Securities and Exchange Commission (“SEC”) pursuant to its authority with
respect to Rule 415 under the 1933 Act and the Corporation has registered at
such time the maximum number of Registrable Securities permissible upon
consultation with the SEC, then the liquidated damages described in this
paragraph (b)(v) shall not be applicable to such Non-Registered Shares; and

--------------------------------------------------------------------------------

(vi)

make all necessary filings to obtain all other necessary regulatory and other
consents and approvals required in connection with the transactions contemplated
by this Agreement.

(b)

General:  The Corporation hereby covenants and agrees with the Agents and the
Purchasers that the Corporation will:

(i)

fulfill all legal requirements to permit the creation, issue, offering and sale
of the Offered Securities, the creation and issue of the Broker Warrants and the
issue of the Warrant Shares and the Broker Shares as contemplated in this
Agreement including, without limitation, compliance with the Securities Laws of
the Offering Jurisdictions to enable the Offered Securities to be offered for
sale and sold to the Purchasers and the Broker Warrants to be issued to the
Agents without the necessity of filing a prospectus in the Offering
Jurisdictions;

(ii)

the Corporation shall deliver to the Agents a copy of all press releases made
and material change reports and other documents filed with any regulatory
authority forthwith upon such press release being made or material change report
or other document being filed until 30 days after the Closing Date;

(iii)

execute and file with the Securities Commission all forms, notices and
certificates required to be filed pursuant to the Securities Laws in the time
required by the applicable Securities Laws, including, not later than 15 days
after the Closing Date, file five copies of a notice on Form D under the 1933
Act (one of which will be manually signed by a person duly authorized by the
Corporation); to otherwise comply with the requirements of Rule 503 under the
1933 Act; and to furnish promptly to the Agents evidence of each such required
timely filing (including a copy thereof);

(iv)

not to be or become, at any time prior to the expiration of five years after the
Closing Time, an open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is required to
be registered under Section 8 of the Investment Company Act;

(v)

comply with 1933 Act so as to permit the completion of the distribution of the
Unit Shares, Warrants and Warrant Shares contemplated hereby. At any time when
the Corporation is not subject to Section 13 or 15(d) of the 1934 Act, for the
benefit of holders from time to time of Unit Shares, Warrants and Warrant
Shares, to furnish at its expense, upon request, to holders of such securities
and prospective purchasers of any such securities information satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the 1933 Act;

(vi)

furnish to the holders of the Unit Shares and Warrants, as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders’ equity and cash flows of the Corporation
and its consolidated subsidiaries certified by independent public accountants),
which requirement will be satisfied by making publicly available the
Corporation’s Annual Report on Form 10-KSB or 10-K (or any applicable successor
thereto under the 1934 Act), and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending March 31, 2007), consolidated summary financial information of
the Corporation

--------------------------------------------------------------------------------

and its subsidiaries for such quarter in reasonable detail, which requirement
will be satisfied by making publicly available the Corporation’s Quarterly
Report on Form 10-QSB or 10-Q (or any applicable successor thereto under the
1934 Act);

(vii)

the Registration Statement and the Prospectus and any amendments or supplements
thereto will not and the Public Record do not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Corporation by the Agents or their counsel;

(viii)

the Corporation will timely file such reports pursuant to the Exchange Act as
are necessary in order to make generally available to its securityholders as
soon as practicable an earnings statement for the purposes of, and to provide
the Agents the benefits contemplated by, the last paragraph of Section 11(a) of
the 1933 Act;

(ix)

the Corporation shall use its best efforts to list the Common Shares on the
Toronto Stock Exchange or the TSX Venture Exchange within 10 days after the MRRS
receipt is obtained to the Final Prospectus; and

(x)

forthwith after the Closing Date, file such documents as may be required under
the Securities Laws of the Offering Jurisdictions relating to the offering of
the Offered Securities which, without limiting the generality of the foregoing,
shall include a Form 45-106F1 as prescribed under National Instrument 45-106,
Prospectus and Registration Exemptions of the Canadian Securities
Administrators.

(c)

Issues of Further Securities:  The Corporation agrees not to sell directly or
indirectly any Shares, or securities convertible or exchangeable into Common
Shares of the Corporation during the distribution of the Offering or for a
period of 180 days subsequent to the Closing Date, without the prior written
consent of the Lead Agent, which consent shall not be unreasonably withheld or
delayed.  The Agents acknowledge and consent to the Corporation completing a
non-brokered offering of Units concurrently with the Offering.  The Corporation
agrees that it will not issue or agree to issue any securities of the
Corporation, other than issuances: (i) under existing director or employee stock
option, bonus or purchase plans, or under such director or employee stock option
plans or bonuses granted subsequently in accordance with applicable regulatory
approval; or (ii) as a result of the exercise of currently outstanding share
purchase warrants or options; (iii) in connection with agreements with any third
party in existence as of the date hereof; or (iv) in connection with a bona fide
acquisition by the Corporation (other than a direct or indirect acquisition,
whether by way of one or more transactions, of an entity all or substantially
all of the assets of which are cash, marketable securities or financial in
nature or an acquisition that is structured primarily to defeat the intent of
this provision), without the written agreement of the Agents, such agreement not
to be unreasonably withheld.

(d)

Use of Proceeds:  The Corporation will use the net proceeds of the Offered
Securities sold under the Offering to develop the mineral projects of the
Corporation located in Mexico and South America.

--------------------------------------------------------------------------------

10.

Covenants and Acknowledgements of the Agents

The Agents hereby represent, warrant and covenant to the Corporation, and
acknowledge that the Corporation is relying upon such representations and
warranties, that:

(i)

in respect of the offer and sale of the Units, the Agents will comply with all
Securities Laws of the jurisdictions in which it offers Units;

(ii)

the Agents and their representatives have not engaged in or authorized, and will
not engage in or authorize, any form of general solicitation or general
advertising in connection with or in respect of the Units in any newspaper,
magazine, printed media of general and regular paid circulation or any similar
medium, or broadcast over radio or television or otherwise or conducted any
seminar or meeting concerning the offer or sale of the Units whose attendees
have been invited by any general solicitation or general advertising;

(iii)

each of the Agents is an “accredited investor” as such term is defined in
National Instrument 45-106 - Prospectus and Registration Exemptions; and

(iv)

neither the Agents, their affiliates nor any persons acting on their behalf, has
engaged or will engage in any hedging transaction with respect to any of the
Unit Shares or Warrants during the Distribution Compliance Period except in
compliance with the 1933 Act. For the purposes of this provision, “Distribution
Compliance Period” means a one year period that begins on the Closing Date,
except that all offers and sales by the Agents, a dealer, or other person that
participates in the distribution of the Units pursuant to a contractual
arrangement, of an unsold allotment or subscription of Units shall be deemed to
be made during the Distribution Compliance Period.

11.

Prospectus and Registration Statement Matters

(i)

The Corporation will cause the Final Prospectus and any other related documents
required to be filed in connection with such Final Prospectus to be prepared and
filed in accordance with the Securities Laws of at least one jurisdiction listed
in Appendix B of National Instrument 45-102 – Resale of Securities and shall use
its best efforts to obtain a receipt of the applicable securities regulator in
connection with such Final Prospectus, within 180 days after the Closing Date,
in each case in form and substance satisfactory to the Agents acting reasonably;

(ii)

The Corporation will file the Registration Statement and use its best efforts to
have such registration statement declared effective by the SEC within 180 days
after the Closing Date to register the resale of the Unit Shares and the Warrant
Shares;

(iii)

The Preliminary Prospectus, the Final Prospectus, and any Supplementary Material
will contain the disclosure required by all requirements of the Securities Laws
of the applicable Offering Jurisdiction;

(iv)

The Registration Statement (and each amendment or supplement thereto), will
contain the disclosure required by all requirements of the Securities Laws of
the United States;

--------------------------------------------------------------------------------

(v)

The Corporation recognizes that it is fundamental to the Purchasers that the
Final Prospectus be filed in Canada and a receipt is obtained for such Final
Prospectus, the Unit Shares and Warrants be registered for resale in the United
States under the Registration Statement so that the Unit Shares and Warrant
Shares will be tradable in such Offering Jurisdiction without the necessity of
the holder thereof filing a prospectus or effecting the trade in a manner which
falls within one of the various private placement exemptions or exemptions from
registration under applicable securities legislation or subject to any statutory
or regulatory hold periods or trade restrictions in such Offering Jurisdiction
(provided such trade is not a “control distribution” as defined by the
applicable Securities Laws, or an “affiliate” as defined in Rule 144). The
Corporation acknowledges that it is for this reason that the Corporation has
agreed to use its best efforts to ensure that the Preliminary Prospectus and
Final Prospectus are to be filed with the Securities Commissions in at least one
jurisdiction listed in Appendix B of National Instrument 45-102 – Resale of
Securities and receipts are to be obtained therefor and the Registration
Statement is to be filed with the SEC in the United States within the time
periods contemplated by this Agreement; and

(vi)

The Corporation agrees that if it does not file and obtain a receipt for the
Final Prospectus pursuant to section 11(i)and the Registration Statement
pursuant to section 11(ii)  is not declared effective within 180 days of the
Closing, the Corporation shall from 180 days after the Closing pay to each
subscriber 1% of the total subscription amount paid by each Purchaser per month
to a maximum of 12%, on a pro rata basis, payable quarterly.

12.

Delivery of Prospectuses

The Corporation shall deliver or cause to be delivered to the Agents and the
Agents’ counsel the documents set out below at the respective times indicated:

(i)

contemporaneously, as nearly as practicable, with the filing (i) with the
Ontario Securities Commission of the Preliminary Prospectus or the Final
Prospectus, copies of the Preliminary Prospectus or the Final Prospectus signed
as required by applicable Securities Laws, and (ii) with the SEC of the
Registration Statement copies of the Registration Statement signed as required
by applicable Securities Laws; and

(ii)

as soon as they are available, copies of any supplementary material required to
be filed under any of the Securities Laws in Canada and the United States,
signed as required by applicable Securities Laws and including copies of any
documents or information incorporated by reference therein which have not been
previously delivered to the Agents.

13.

Termination

(a)

Right of Termination:  The Agents shall be entitled, at the sole option thereof,
to terminate and cancel, without any liability on the part of the Agents, all of
the obligations thereof under this Agreement and the obligations of any Person
who has executed a Subscription Agreement, by notice in writing to that effect
delivered to the Corporation prior to or at the Closing Time if:

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(i)

the Agents are  not satisfied in the sole discretion thereof with the results of
the due diligence review and investigation of the Corporation conducted by the
Agents;

(ii)

there is in the sole opinion of the Agents a material change or change in a
material fact or new material fact or an undisclosed material fact or material
change which might be expected to have an adverse effect on the condition
(financial or otherwise), capital, property, assets, operations, business,
affairs, profitability or prospects of the Corporation or on the market price or
value of the Common Shares or any other securities of the Corporation or on the
marketability of the Offered Securities;

(iii)

there should develop, occur or come into effect any occurrence of national or
international consequence, or any action, law or regulation, inquiry or other
event, action or occurrence of any nature whatsoever which, in the sole opinion
of the Agents, seriously affects, or could seriously affect, the financial
markets, the condition (financial or otherwise), capital, property, assets,
operations, business, affairs, profitability or prospects of the Corporation or
the market price or value of the Common Shares or any other securities of the
Corporation or the marketability of the Offered Securities;

(iv)

the state of the financial markets is such that in the sole opinion of the
Agents it would be unprofitable to offer or continue to offer for sale the
Offered Securities;

(v)

any order or ruling is issued, or any inquiry, action, suit, proceeding or
investigation (whether formal or informal) is instituted or announced or
threatened in relation to the Corporation or any of the directors, officers or
principal shareholders of the Corporation (other than one based solely upon the
activities or alleged activities of the Agents) or any law or regulation is
promulgated or changed which prevents or restricts trading in or the
distribution of the Offered Securities, the Common Shares or any other
securities of the Corporation (other than one based solely upon the activities
or alleged activities of the Agents) or any law or regulation is promulgated or
changed which prevents or restricts trading in or the distribution of the
Offered Securities, the Common Shares or any other securities of the Corporation
(other than one based solely upon the activities or alleged activities of the
Agents) or any law or regulation is promulgated or changed which prevents or
restricts trading in or the distribution of the Offered Securities, the Common
Shares or any other securities of the Corporation;

(vi)

any order to cease or suspend trading in any securities of the Corporation is
made, threatened or announced by any securities regulatory authority; or

(vii)

the Corporation is in breach of any material term, condition, covenant or
agreement contained in this Agreement or in any Subscription Agreement or any
representation or warranty given by the Corporation in this Agreement or in any
Subscription Agreement is or becomes untrue, false or misleading.

(b)

Rights on Termination:  Any termination by the Agents pursuant to subsection
13(a) hereof shall be effected by notice in writing delivered by the Agents to
the Corporation at the address thereof as set out in section 17 hereof.  The
right of the Agents to so terminate

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the obligations thereof under this Agreement is in addition to such other
remedies as the Agents may have in respect of any default, act or failure to act
of the Corporation in respect of any of the matters contemplated by this
Agreement.  In the event of a termination by the Agents pursuant to subsection
13(a) hereof there shall be no further liability on the part of the Agents to
the Corporation or of the Corporation to the Agents except any liability which
may have arisen or may thereafter arise under either section 14 or 15 hereof.

14.

Indemnity and Contribution

(a)

Indemnity:  The Corporation hereby covenants and agrees to protect, indemnify
and save harmless the Agents and each investment dealer which is a member of any
agency group formed by the Agents in connection with the Offering, each of the
associates and affiliates of each of them and the respective directors,
officers, employees, shareholders, partners, advisors and agents of each of the
Agents and each investment dealer which is a member of any agency group formed
by the Agents in connection with the Offering and of each of the associates and
affiliates of each of them (in this section 14 each an “Indemnified Person” and
collectively the “Indemnified Persons”) from and against all losses (other than
a loss of profits), claims, damages, payments, liabilities, costs, fines,
penalties and expenses (including the amount paid in settlement of any claim,
action, suit or proceeding and the fees and expenses of counsel on a solicitor
and his own client basis incurred obtaining advice in respect of, or in
defending or settling, any such claim, action, suit or proceeding), joint or
several, of whatsoever nature or kind to which an Indemnified Person may become
subject or otherwise involved in any capacity under statute or common law or
otherwise caused or incurred by reason of or in any way arising, directly or
indirectly, from, by virtue of, or related to, enforcing the provisions of this
Agreement or any Subscription Agreement, or:

(i)

the Agents having acted as the agents of the Corporation in respect of the
Offering (other than by reason of the negligence, willful misconduct or bad
faith of the Agents);

(ii)

any statement or information contained in the Information which at the time and
in light of the circumstances under which it was made containing or being
alleged to contain a misrepresentation or being or being alleged to be untrue,
false or misleading;

(iii)

the omission or alleged omission to state in the Information any material fact
required to be stated therein or necessary to make any statement therein not
misleading in light of the circumstances under which it was made;

(iv)

any order made or inquiry, investigation or proceeding commenced or threatened
by any officer or official of any securities commission or authority or any
other competent authority, not based upon the activities or the alleged
activities of any of the Agents in connection with the Offering;

(v)

the non-compliance or alleged non-compliance by the Corporation with any of the
Securities Laws of the Offering Jurisdictions or any other applicable law in
connection with the transactions contemplated herein;

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(vi)

any negligence or willful misconduct by the Corporation relating to or connected
with the sale by the Corporation of the Offered Securities;

(vii)

any misrepresentation or alleged misrepresentation (except any made by the
Agents and for which the Agents did not rely on any information provided by the
Corporation or anyone acting on its behalf) relating to the Offering or the
Offered Securities, whether oral or written and whether made during and in
connection with the Offering or in respect of the trading of the Offered
Securities in the secondary market after the completion of the Offering, where
such misrepresentation or alleged misrepresentation may give or gives rise to
any other liability under any statute in any jurisdiction which is in force on
the date of this Agreement or which comes into force after that date;

(viii)

any failure or alleged failure to make timely disclosure of material change by
the Corporation, whether such failure or alleged failure occurs during the
Offering or after the completion of the Offering, where such failure relates to
the Offering or the Offered Securities and may give or gives rise to any
liability under any statute in any jurisdiction which is in force on the date of
this Agreement or which comes into force after that date; or

(ix)

the breach of, or default under, any term, condition, covenant or agreement of
the Corporation made or contained herein or in any other document of the
Corporation delivered pursuant hereto or made by the Corporation in connection
with the sale of the Offered Securities or any representation or warranty of the
Corporation made or contained herein or in any other document of the Corporation
delivered pursuant hereto or in connection with the sale of the Offered
Securities being or being alleged to be untrue, false or misleading.

If any matter or thing contemplated by this section 14 shall be asserted against
any Indemnified Person in respect of which indemnification is or might
reasonably be considered to be provided hereunder, such Indemnified Person shall
notify the Corporation as soon as possible of the nature of such claim and the
Corporation shall be entitled, but not required, to assume the defence of any
action, suit or proceeding brought to enforce such claim; provided, however,
that the defence shall be through legal counsel reasonably acceptable to the
Indemnified Person and that no settlement may be made by the Corporation or the
Indemnified Person without the prior written consent of the other of them and
the Corporation shall not be liable for any settlement of any such claim unless
it has consented in writing to such settlement.

(b)

Counsel:  In any claim referred to in section 14 hereof, the Indemnified Person
shall have the right to retain separate legal counsel to act on behalf of such
Indemnified Person provided that the fees and disbursements of such separate
legal counsel shall be paid by the Indemnified Person unless:

(i)

the Corporation fails to assume the defence of such claim on behalf of the
Indemnified Person within ten days of receiving notice of such claim;

(ii)

the Corporation and the Indemnified Person shall have mutually agreed to the
retention of such separate legal counsel; or

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(iii)

the named parties to such claim (including any added, third or impleaded
parties) include both the Corporation and the Indemnified Person and the
Indemnified Person has been advised by legal counsel that representation of both
the Corporation and the Indemnified Person by the same legal counsel would be
inappropriate due to actual or potential differing interests between them;

in which event or events the fees and disbursements of such separate legal
counsel shall be paid by the Corporation, subject as hereinafter provided.
 Where more than one Indemnified Person is entitled to retain separate counsel
in the circumstances described in this subsection 14(b), all Indemnified Persons
shall be represented by one separate legal counsel and the fees and
disbursements of only one separate legal counsel for all Indemnified Persons
shall be paid by the Corporation, unless:

(i)

the Corporation and the Indemnified Persons have mutually agreed to the
retention of more than one legal counsel for the Indemnified Persons; or

(ii)

the Indemnified Persons have or any of them has been advised in writing by legal
counsel that representation of all of the Indemnified Persons by the same legal
counsel would be inappropriate due to actual or potential differing interests
between them.

(c)

Waiver of Right:  The Corporation hereby waives its right to recover
contribution from the Agents and the other Indemnified Persons with respect to
any liability of the Corporation by reason of or arising out of the indemnity
provided by the Corporation in this section 14; provided, however, that such
waiver shall not apply in respect of an Agent for any liability directly caused
or incurred by reason or arising out of any information or statements relating
solely to, and provided by, such Agent or any failure by such Agent in
connection with the Offering to provide to Purchasers any document which the
Corporation is required to provide to the Purchasers and which the Corporation
has provided or made available to the Agents to forward to the Purchasers.

(d)

Contribution:

(i)

In order to provide for just and equitable contribution in circumstances in
which the indemnity contained in this section 14 is, for any reason of policy or
otherwise, held to be unavailable to or unenforceable by, in whole or in part,
an Indemnified Person other than in accordance with the provisions of this
section 14, the Corporation shall contribute to the aggregate losses (other than
a loss of profit), claims, damages, payments, liabilities, costs, fines,
penalties and expenses (including the amount paid in settlement of any claim,
action, suit or proceeding and the fees and expenses of counsel on a solicitor
and his own client basis incurred obtaining advice in respect of, or in
defending or settling, any such claim, action, suit or proceeding) of the nature
contemplated by such indemnity incurred or paid by the Indemnified Person in
such proportion as is appropriate to reflect not only the relative benefits
received by the Corporation on the one hand and the Indemnified Person on the
other hand in connection with the Offering but also the relative fault of the
Corporation on the one hand and the Indemnified Person on the other hand in
connection with the matters, things and actions which resulted in such losses,
claims, damages, payments, liabilities, costs, fines, penalties or expenses as
well as any other relevant equitable considerations or, if such allocation is
not permitted by applicable law, in such proportion so that the

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Indemnified Person shall be responsible for the proportion represented by the
percentage that the Agent’s fee per Offered Security bears to the Purchase Price
and the Corporation shall be responsible for the balance, whether or not they
are a party to the same or separate claims; provided, however, that no Person
who has engaged in any dishonesty, fraud, fraudulent misrepresentation,
negligence or wilful default shall be entitled to contribution from any Person
who has not engaged in any dishonesty, fraud, fraudulent misrepresentation,
negligence or wilful default and further provided that in no event shall any
Agent be responsible for any amount in excess of the cash fee actually received
from the Corporation under this Agreement and retained by such Agent.  For
purposes of this subsection 14(d), relative fault shall be determined by
reference to, among other things, whether any untrue or alleged untrue statement
of a material fact or any omission or alleged omission to state a material fact
relates to information supplied by the Corporation on the one hand or the Agents
on the other hand and the relevant intent, knowledge, access to information and
opportunity to correct or prevent any such untrue statement or omission of the
Corporation and the Indemnified Person.

(ii)

In the event that the Corporation is held to be entitled to contribution from
the Agents under the provisions of any statute or law, the Corporation shall be
limited to such contribution in an amount not exceeding the lesser of:

A.

the portion of the amount of the loss or liability giving rise to such
contribution for which the particular Agent is responsible as determined in
accordance with subsection 14(d) above; and

B.

the amount of the cash fee actually received from the Corporation under this
Agreement and retained by such Agent.

(iii)

For purposes of this subsection 14(d), each party hereto shall give prompt
notice to the other parties hereto of any claim, action, suit or proceeding
threatened or commenced in respect of which a claim for contribution may be made
under this subsection 14(d).

(e)

Held in Trust:  To the extent that the indemnity contained in subsection 14(a)
hereof is given in favour of a Person who is not a party to this Agreement, the
Corporation hereby constitutes the Lead Agent as trustee for such Person for
such indemnity and the covenants given by Corporation to such Person in this
Agreement.  The Lead Agents hereby accepts such trust and hold such indemnity
and covenants for the benefit of such Persons.  The benefit of such indemnity
and covenants shall be held by the Lead Agents in trust for the Persons in
favour of whom such indemnities and covenants are given and may be enforced
directly by such Persons.

15.

Expenses

Whether or not the purchase and sale of the Offered Securities shall be
completed as contemplated by this Agreement, all expenses of or incidental to
the issue, sale and delivery of the Offered Securities and of or incidental to
all matters in connection with the transaction herein set out shall be borne by
the Corporation including, without limitation, the reasonable fees and
disbursements of legal counsel for the Agents (to a maximum legal fee of
Cdn$80,000 exclusive of (i) applicable taxes, (ii) disbursements, and (iii) the
reasonable fees of counsel to the Agents in

--------------------------------------------------------------------------------

Mexico retained for the purpose of reviewing and confirming the title opinion
required to be delivered by the Corporation pursuant to clause 5(a)(ii)C hereof)
and the reasonable out-of-pocket expenses (including applicable taxes) of the
Agents.  

16.

Conditions

All of the terms and conditions contained in this Agreement to be satisfied by
the Corporation prior to the Closing Time shall be construed as conditions and
any breach or failure by the Corporation to comply with any of such terms and
conditions shall entitle the Agents to terminate the obligations thereof to
complete the Closing by written notice to that effect given by the Lead Agent to
the Corporation prior to the Closing Time.  It is understood and agreed that the
Agents may waive in whole or in part, or extend the time for compliance with,
any of such terms and conditions without prejudice to the rights thereof in
respect of any other such term and condition or any other or subsequent breach
or non-compliance; provided that to be binding on the Agents any such waiver or
extension must be in writing and signed by the Agents.  If the Agents shall
elect to terminate the obligations thereof to complete the Closing as aforesaid,
whether the reason for such termination is within or beyond the control of the
Corporation, the liability of the Corporation hereunder shall be limited to the
indemnity referred to in section 14 hereof, the right to contribution referred
to in section 14 hereof and the payment of expenses referred to in section 15
hereof.

17.

Notices

Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be personally delivered or sent by telecopier on a
Business Day to the following addresses:

(a)

in the case of the Corporation:

Paramount Gold Mining Corp.

Suite 110

346 Waverley

Ottawa, Ontario

K2P OW5

Attention:

Christopher Crupi

Telecopier:

613-248-4971

with a copy to:

Gowling Lafleur Henderson LLP

Suite 1600

100 King Street West

Toronto, Ontario

M5X 1G5

Attention:

Henry Harris

Telecopier:

416-862-7661

- and to -

--------------------------------------------------------------------------------

Jeffrey G. Klein

2600 North Military Trail

Suite 270

Boca Raton, FL  33431

Telecopier:

561-241-4943

(b)

in the case of the Agents:

Blackmont Capital Inc.

Suite 900

181 Bay Street

PO Box 779

Toronto, Ontario

M5J 2T3

Attention:

Rick Vernon

Telecopier:

416 864-9024

- and to -

Canaccord Capital Corporation

Suite 3000

161 Bay Street

PO Box 516

Toronto, Ontario

M5J 2T3

Attention:

Craig Warren

Telecopier:

416-869-3876

- and to –

Haywood Securities Inc.

Suite 2910

181 Bay Street

PO Box 779

Toronto, Ontario

M5J 2T3

Attention:

John Willett

Telecopier:

416-507-2350

- and to –

Raymond James Ltd.

Suite 5300

Scotia Plaza

40 King Street West

Toronto, Ontario

M5H 3Y2

--------------------------------------------------------------------------------

Attention:

David Greifenberger

Telecopier:

416-777-7114

with a copy to:

Fraser Milner Casgrain LLP

Barristers & Solicitors

Suite 3900

100 King Street West

1 First Canadian Place

Toronto, Ontario

M5X 1B2

Attention:

John Sabine

Telecopier:

416-863-4592

- and to –

Dorsey & Whitney LLP

Barristers & Solicitors

Suite 4310

161 Bay Street

Canada Trust Tower, BCE Place

Toronto, Ontario

M5J 2S1

Attention:

Gil Cornblum

Telecopier:

416-367-7371

Either the Corporation or either of the Agents may change its address for notice
by notice given in the manner aforesaid.  Any such notice or other communication
shall be in writing, and unless delivered to a responsible officer of the
addressee, shall be given by telecopier, and shall be deemed to have been given
on the day on which it was delivered or sent by telecopier.

18.

Miscellaneous

(a)

Governing Law:  This Agreement shall be governed by and be interpreted in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.  Any and all disputes arising under this Agency
Agreement, whether as to interpretation, performance or otherwise, shall be
subject to the exclusive jurisdiction of the courts of the Province of Ontario
and each of the parties hereto hereby irrevocably attorns to the jurisdiction of
the courts of such province.

(b)

Time of Essence:  Time shall be of the essence of this Agreement.

(c)

Survival:  All representations, warranties, covenants and agreements of the
Corporation herein contained or contained in any documents contemplated by, or
delivered pursuant to, this Agreement or in connection with the purchase and
sale of the Offered Securities

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shall survive the purchase and sale of the Offered Securities and the
termination of this Agreement and shall continue in full force and effect for
the benefit of the Agents and the Purchasers, regardless of any subsequent
disposition of Offered Securities, the Warrant Shares or the Broker Shares or
any investigation by or on behalf of the Agents with respect thereto.

(d)

Counterparts:  This Agreement may be executed by any one or more of the parties
to this Agreement by facsimile or in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement.

(e)

Entire Agreement:  This Agreement constitutes the entire agreement between the
Corporation and the Agents in connection with the issue and sale of the Offered
Securities by the Corporation and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written,
including, but not limited to, any engagement agreement or term sheet relating
to the Offering between the Corporation and the Agents.

(f)

Severability:  If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall be deemed not to affect or impair
the validity of any other provision of this Agreement and such void or
unenforceable provision shall be severed from this Agreement.

(g)

Language: The parties hereto acknowledge and confirm that they have requested
that this Agreement as well as all notices and other documents contemplated
hereby be drawn up in the English language.  Les parties aux présentes
reconnaissent et confirment qu’elles ont convenu que la présente convention
ainsi que tous les avis et documents qui s’y rattachent soient rédigés dans la
langue anglaise.

(h)

Authority of Lead Agent: All actions which must or may be taken by the Agents in
connection with this Agreement, including any agreement, waiver, order, notice
(other than a notice pursuant to section 13 or section 14 hereof), direction,
receipt or other action to be made, given or taken by the Agents hereunder may
be made, given or taken by the Lead Agent on behalf of the Agents and the
Corporation shall accept notification of any such actions from, and deliver the
certificates representing the Offered Securities to, or to the order of, the
Lead Agent.  The Lead Agent acknowledges that where practicable to do so it will
discuss any action to be taken by it hereunder with the other Agents prior to
taking such action, provided that the failure of the Lead Agent so to discuss
will not detract from the right of the Corporation to rely on the action of the
Lead Agent in accordance with the provisions of this subsection.

--------------------------------------------------------------------------------

Would you kindly confirm the agreement of the Corporation to the foregoing by
executing nine duplicate copies of this Agreement and thereafter returning nine
such executed copies to Blackmont Capital Inc.

Yours truly,

BLACKMONT CAPITAL INC.

 

CANACCORD CAPITAL CORPORATION

By:

/s/

 

By:

/s/

 

 

 

 

HAYWOOD SECURITIES INC.

 

RAYMOND JAMES LTD.

By:

/s/

 

By:

/s/

 

 

 

 

The undersigned hereby accepts and agrees to the foregoing as of the 30th day of
March, 2007.

PARAMOUNT GOLD MINING CORP.

By:

/s/ Chris Crupi

 

Chief Executive Officer

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Schedule A

Officers’ Certificate

TO:

BLACKMONT CAPITAL INC.

AND TO:

CANACCORD CAPITAL CORPORATION

AND TO:

HAYWOOD SECURITIES INC.

AND TO:

RAYMOND JAMES LTD.

AND TO:

FRASER MILNER CASGRAIN LLP

AND TO:

THE PURCHASERS OF UNITS OF PARAMOUNT GOLD MINING CORP.

CERTIFICATE

The undersigned, <>, <> of Paramount Gold Mining Corp. (the “Corporation”), and
<>, <> of the Corporation, hereby certify, for and on behalf of the Corporation
in their capacity as officers of the Corporation and not in their personal
capacity, after having made due inquiry, that the following facts, matters and
information are true and accurate and not misleading in any material respect:

1.

The facts, matters and information certified to herein are based on one or more
of knowledge and information available or provided to us and our honest belief
and all statements made in this certificate represent our reasonably held honest
belief as to the facts, matters, information and belief possessed by us.  We
have used our best efforts to become informed of and about the facts, matters
and information certified to herein and have sought the advice of counsel for
the Corporation on those matters certified to herein which involve matters of
laws and have relied upon such advice to the extent that those matters involve
matters of law.

2.

The Corporation has complied with all covenants and agreements contained in, and
has satisfied all of the terms and conditions of, the Agency Agreement to be
complied with and satisfied by the Corporation at or prior to the Closing Time.

3.

The representations and warranties of the Corporation contained in the Agency
Agreement are true and correct as of the Closing Time with the same force and
effect as if made at and as of the Closing Time after giving effect to the
transactions contemplated thereby.

4.

Since December 31, 2006, except as disclosed in the Information, there has been
no material adverse change (whether actual, anticipated, proposed, prospective
or threatened) in the financial condition, assets, liabilities (contingent or
otherwise), business, affairs, operations or prospects of the Corporation or any
of the Subsidiaries or in the capital of the Corporation.

5.

No transaction of a nature material to the Corporation or any of the
Subsidiaries has been entered into by the Corporation or any of the
Subsidiaries, except as disclosed in the Information.

6.

There are no contingent liabilities affecting the Corporation or any of the
Subsidiaries which are material to the Corporation or any of the Subsidiaries.

7.

No order, ruling or determination having the effect of ceasing or suspending the
sale or ceasing, suspending or restricting trading in the Offered Securities,
the Common Shares or any other securities of the Corporation has been issued or
made by any stock exchange, securities commission or other regulatory authority
and is continuing in effect and no proceedings, investigations or enquiries for
such purpose have been instituted or are pending, or are

--------------------------------------------------------------------------------

contemplated or threatened under any of the Securities Laws of the Offering
Jurisdictions or by any stock exchange, securities commission or other
regulatory authority.

8.

There are no actions, suits, proceedings or enquiries pending or, to the best of
their knowledge, threatened against or affecting the Corporation or any of the
Subsidiaries or to which any property or assets of the Corporation or any of the
Subsidiaries is subject, at law or in equity, or before or by any federal,
provincial, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which may, in any
way, materially and adversely affect the Corporation or any of the Subsidiaries.

9.

No failure or default on the part of the Corporation or any of the Subsidiaries
exists under any law or regulation applicable to the Corporation or any of the
Subsidiaries or under any licence, permit, contract, agreement or other
instrument to which the Corporation or any of the Subsidiaries is a party or by
which the Corporation or any of the Subsidiaries is bound, which may in any way
materially and adversely affect the Corporation or any of the Subsidiaries and
the execution, delivery and performance of the Agency Agreement and the
performance by the Corporation of its obligations thereunder will not result in
any such default.

10.

This certificate is being made and delivered pursuant to subparagraph 5(a)(ii)E
of the agency agreement dated March <>, 2007 between the Corporation and the
Agents (the “Agency Agreement”) and we acknowledge that the addressees hereof
will be relying on this certificate.

Unless otherwise defined herein, all words and terms with the initial letter or
letters thereof capitalized in this certificate and not defined herein but
defined in the Agency Agreement shall have the meanings given to such
capitalized words and terms in the Agency Agreement.  The undersigned
acknowledge that they are familiar with the definitions given to the capitalized
words and terms in the Agency Agreement and such definitions are hereby
incorporated by reference.

IN WITNESS WHEREOF the undersigned have executed this certificate as of the
_____ day of __________________, 2007.

 

<>, the <> of

Paramount Gold Mining Corp.

 

<>, the <> of

Paramount Gold Mining Corp.