EXHIBIT 10.13

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE REDACTED PORTIONS OF THE
EXHIBIT TO THIS AGREEMENT. THE REDACTIONS ARE INDICATED WITH THREE ASTERISKS
(“***”). A COMPLETE VERSION OF THIS AGREEMENT AND EXHIBIT HAS BEEN FILED WITH
THE U.S. SECURITIES AND EXCHANGE COMMISSION.

 

Thompson Creek Metals Company Inc.

26 W. Dry Creek, Suite 810

Littleton, Co.   80120

 

July 15, 2010

 

Royal Gold, Inc.

1660 Wynkoop St.

Denver, CO 80202

 

Re:                             Milligan Project Gold Streaming

 

Gentlemen:

 

This letter confirms our agreement regarding the terms and conditions under
which Royal Gold, Inc. (“Royal Gold”) will purchase Refined Gold from Terrane
Metals Corp. (“Terrane”) or an Affiliate of Thompson Creek who holds a direct
interest in the Milligan Property (the “Milligan Sub”) pursuant to a form of
Purchase and Sale Agreement between Royal Gold, a wholly owned subsidiary of
Royal Gold to be identified after the date hereof (“Royal Gold Sub”), Milligan
Sub and Thompson Creek Metals Company Inc. (“Thompson Creek”) that is attached
hereto as Exhibit 1 (the “Gold Purchase Agreement”).  Each of Royal Gold and
Thompson Creek are referred to herein as a “Party,” and collectively, the
“Parties”.  All capitalized terms used in this letter not otherwise defined
herein are defined in Exhibit 1.  Thompson Creek has agreed to acquire Terrane
by means of an agreement to implement a Plan of Arrangement under law of British
Columbia, Canada (the “Acquisition Agreement”) pursuant to which Thompson Creek
will acquire all of the outstanding common stock of Terrane (the
“Acquisition”).  Upon satisfaction of the conditions set forth in this letter
agreement, the Parties hereby agree to enter into the Gold Purchase Agreement
under which Royal Gold Sub will purchase, and Milligan Sub will sell, Refined
Gold.

 

In consideration of the mutual promises, representations, warranties, covenants,
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties mutually agree as follows:

 

1.                                       Gold Purchase Agreement.  At the
Closing (as defined in Section 4), each of Royal Gold and Thompson Creek shall,
and each shall cause Royal Gold Sub and Milligan Sub, respectively, to:

 

(a)                                  enter into the Gold Purchase Agreement
substantially in the form attached as Exhibit 1 hereto; and

 

(b)                                 execute, deliver and perform the agreements,
documents, acts and undertakings to be completed on or before the Effective Date
pursuant to the Gold Purchase Agreement, including, without limitation:
(i) payment of the Initial Deposit upon execution of the Gold Purchase
Agreement, and (ii) execute and deliver any intercreditor agreements as may be
required pursuant to Section 8.6(a) of the Gold Purchase Agreement.

 

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2.                                       Representations and Warranties.

 

2.1                               Royal Gold.  Royal Gold, acknowledging that
Thompson Creek is entering into this letter agreement in reliance thereon,
hereby makes the representations and warranties set forth on Schedule 1 hereto,
with respect to Royal Gold.

 

2.2                               Thompson Creek.  Thompson Creek, acknowledging
that Royal Gold is entering into this letter agreement in reliance thereon,
hereby makes the representations and warranties set forth on Schedule 2 hereto.

 

2.3                               Terrane.  Based on the actual knowledge of the
Chief Executive Officer, Chief Financial Officer and Chief Operating Officer on
the date of this Agreement, Thompson Creek knows of no reason why it would need
to qualify, or would not be able to deliver, the representations and warranties
of Milligan Sub contained in Schedule A-1 of the Gold Purchase Agreement.

 

3.                                       Pre-Closing Covenants.

 

3.1                               Consummation of the Acquisition.  Subject to
the terms and conditions of this letter agreement and the Acquisition Agreement,
Thompson Creek will use its commercially reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable, subject to Applicable Laws, promptly to consummate the
Acquisition and related transactions contemplated by the Acquisition Agreement
provided that nothing herein restricts the ability of Thompson Creek to rely on
any and all conditions in its favor under the Acquisition Agreement in its sole
discretion.  During the period commencing on the date hereof and ending on the
Closing, Thompson Creek shall confer in good faith on a regular basis with Royal
Gold regarding matters related to the Acquisition and the general status of
Thompson Creek’s evaluation of the operations of Terrane, including the Milligan
Project and the Milligan Properties and including prompt written notice of any
change in the amount or form of consideration Thompson Creek proposes to pay in
connection with the Acquisition.

 

3.2                               Access to Information.  Prior to the Closing,
Royal Gold shall be entitled, through its officers, employees and
representatives (including its legal advisors and accountants) to make and
continue such investigation of the properties, businesses and operations and
books and records of Thompson Creek and Terrane.  Any such investigation and
examination shall be conducted during regular business hours with reasonable
cooperation among the parties.  No investigation pursuant to this Section 3.2
shall affect any representation or warranty in this letter agreement of any
Party or any condition to the obligations of the Parties hereunder.

 

3.3                               Updates.  Prior to the Closing:

 

(a)                                  Prior to Closing, Thompson Creek shall
promptly disclose its knowledge of the following to Royal Gold: (i) the
occurrence, or failure to occur, of any event that the occurrence or failure of
which has caused or could reasonably be expected to result in Thompson Creek’s
failure to satisfy any condition specified herein; (ii) any failure of Thompson
Creek to comply with or satisfy in any material respect any covenant,

 

2

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condition or agreement to be complied with or satisfied prior to Closing by
Thompson Creek hereunder; (iii) any fact, condition, occurrence or change, that,
to the knowledge of Thompson Creek, has had or could reasonably be expected to
have or result in a material adverse effect on the Milligan Project, Terrane or
Thompson Creek; (iv) any written notice or other communication from any
Governmental Authority in connection with the transactions contemplated hereby;
and (v) any litigation, legal action, arbitration, proceeding, mediation,
demand, claim or investigation (collectively, “Legal Proceedings”) commenced or,
to the knowledge of Thompson Creek, threatened against, relating to or involving
or otherwise affecting Thompson Creek or Terrane that relate to the consummation
of the Acquisition or the transactions contemplated hereby.

 

(b)                                 Prior to Closing, Royal Gold shall promptly
disclose its knowledge of the following to Thompson Creek: (i) the occurrence,
or failure to occur, of any event that the occurrence or failure of which has
caused or could reasonably be expected to result in Royal Gold’s failure to
satisfy any condition specified herein; (ii) any failure of Royal Gold to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied prior to Closing; (iii) any fact, condition,
occurrence or change, that, to the knowledge of Royal Gold, has had or could
reasonably be expected to have or result in a material adverse effect on Royal
Gold. (iv) any written notice or other communication from any Governmental
Authority in connection with the transactions contemplated hereby; and (v) any
Legal Proceedings commenced or, to the knowledge of Royal Gold, threatened
against, relating to or involving or otherwise affecting Royal Gold or Terrane
that relate to the consummation of the Acquisition or the transactions
contemplated hereby.

 

3.4                               Exclusivity.  Immediately after the execution
of this letter agreement by Thompson Creek and Royal Gold and continuing through
Closing or the earlier termination of this letter agreement:

 

(a)                                  Thompson Creek shall, and shall cause its
Representatives to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any action
that would constitute an Alternative Gold Financing Transaction and shall notify
each such party that Thompson Creek and its Representatives no longer seek or
request the making of any Alternative Gold Financing Transaction, and withdraws
any consent theretofore given to the making of a Alternative Gold Financing
Transaction.  Neither Thompson Creek nor its Representatives shall directly or
indirectly, solicit, initiate or conduct any discussions or negotiations with,
or provide any information to or otherwise cooperate in any other way with, or
facilitate or encourage any effort to attempt to, or enter into any agreement or
understanding with, any Person or group of Persons regarding any Alternative
Gold Financing Transaction.  Thompson Creek shall promptly (and in any event
within two days) notify Royal Gold of the receipt by Thompson Creek or any of
its Representatives of any inquiries, or proposals or requests for information
concerning an Alternative Gold Financing Transaction and shall provide Royal
Gold with a copy of all written materials relating to such inquiries, proposals
or requests.  An “Alternative Gold Financing Transaction” means a transaction
between Thompson Creek or any of its Affiliates and any Person (including
Terrane and its affiliates), other than Royal Gold, relating to the purchase and
sale of gold from any

 

3

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portion of the Milligan Property, including without limitation: (i) a gold
royalty on production from the Milligan Property, (ii) an amount of gold based
on production from any portion of the Milligan Property; or (iii) any
participating interest in gold based on production from any portion of the
Milligan Property (including granting any interest in a gold royalty stream), or
any transaction having a similar economic effect, but excluding any (i) gold
spot sales, (ii) gold forward sales or options or other gold sales or gold loans
to a financial institution or bullion bank or (iii) internal transfers among
Thompson Creek and its Affiliates,.  A “Person” includes an individual,
corporation, body corporate, limited or general partnership, joint stock
company, limited liability corporation, joint venture, association, company,
trust, bank, trust company, Governmental Authority or any other type of
organization, whether or not a legal entity.  “Representatives” means, as to any
Person, such Person’s affiliates and its or their directors, officers,
employees, agents, advisors or other representatives (including, without
limitation, financial advisors, financing sources, counsel and accountants); and

 

(b)                                 Royal Gold shall, and shall cause its
Representatives to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any action
that would constitute an Alternative Royal Gold Financing and shall notify each
such party that Royal Gold and its Representatives no longer seek or request the
making of any Alternative Royal Gold Financing and withdraws any consent
theretofore given to the making of an Alternative Royal Gold Financing.  Neither
Royal Gold nor its Representatives shall directly or indirectly, solicit,
initiate or conduct any discussions or negotiations with, or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort to attempt to, or enter into any agreement or understanding
with, any Person or group of Persons regarding any Alternative Royal Gold
Financing.  Royal Gold shall promptly (and in any event within two days) notify
Thompson Creek of the receipt by Royal Gold or any of its Representatives of any
inquiries, or proposals or requests for information concerning an Alternative
Royal Gold Financing and shall provide Thompson Creek with a copy of all written
materials relating to such inquiries, proposals or requests.  An “Alternative
Royal Gold Financing” means a transaction between Royal Gold and its Affiliates
and any Person (including Terrane and its Affiliates), other than Thompson
Creek, relating to the purchase and sale of gold from any portion of the
Milligan Property, including without limitation: (i) a gold royalty on
production from the Milligan Property, (ii) an amount of gold based on
production from any portion of the Milligan Property; or (iii) any participating
interest in gold based on production from any portion of the Milligan Property
(including granting any interest in a gold royalty stream), or any transaction
having a similar economic effect, in each case related to an Alternative Terrane
Transaction, but excluding any (i) gold spot sales, (ii) gold forward sales or
options or other gold sales or gold loans to a financial institution or bullion
bank, (iii) internal transfers among Vendor and its Affiliates,.  An
“Alternative Terrane Transaction” means any of the following transactions
between Terrane or any of its Affiliates and any Person, other than Thompson
Creek and its Affiliates: (i) the acquisition or purchase of any capital stock
or other voting security, any security convertible into or exercisable or
exchangeable for any capital stock or other voting security of Terrane or any of
its subsidiaries or all or a substantial portion of the assets of Terrane or any
of its

 

4

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subsidiaries, including without limitation any interest in a gold royalty
stream; (ii) a merger, recapitalization, reorganization, joint venture or other
business combination involving Terrane or any of its subsidiaries; or (iii) any
other extraordinary business transaction involving or otherwise relating to
Terrane or any of its subsidiaries.

 

3.5                               Expenses of Royal Gold. In the event Thompson
Creek receives any topping fee, break fee or expense reimbursement or similar
payment from Terrane or its Affiliates in connection with the Acquisition
Agreement or its termination, Thompson Creek shall reimburse Royal Gold for all
of its expenses incurred in connection with the transactions contemplated by
this letter agreement, including internal expenses related to Royal Gold staff
and expenses related to external advisors, consultants, and counsel, to an
aggregate maximum of US$1 million.

 

3.6                               Distribution of Initial Deposit.  Prior to
Closing, the Parties agree to use good faith efforts to establish a procedure
for payment of the Initial Deposit at the Closing that facilitates the timely
distribution of those funds in support of the obligations of Thompson Creek
under the Acquisition, provided that such procedures do not impose any loss of
interest or imposition of any expenses upon a Party hereto apart from nominal
administrative expenses.

 

4.                                       Closing.  The closing of the
transactions contemplated hereby (the “Closing”) shall occur at 1900 — 355
Burrard Street, Vancouver, British Columbia on the same date and time as the
closing of the Acquisition pursuant to the Acquisition Agreement, provided that
(i) Thompson Creek agrees to provide no less than 48 hours advance written
notice to Royal Gold of such closing date, and (ii) all conditions to the
obligations of Royal Gold and Thompson Creek hereunder are satisfied or waived
in writing by the Party benefitting from such conditions.

 

4.1                               Mutual Conditions.  The respective obligations
of each Party to consummate the transactions contemplated by this letter
agreement are subject to the fulfillment at or prior to the Closing of each of
the following conditions:

 

(a)                                  There shall be no effective injunction,
writ or preliminary restraining order or any order of any nature issued by a
Governmental Authority of competent jurisdiction to the effect that the
transactions contemplated hereby may not be consummated as herein provided.

 

(b)                                 All material Approvals of a Governmental
Authority required in connection with the execution and delivery of this
Agreement and the performance of the obligations hereunder shall have been made
or obtained, without any limitation, restriction or condition.

 

4.2                               Conditions to the Obligations of Royal Gold. 
The obligations of Royal Gold to consummate the transactions contemplated by
this letter agreement are subject to the fulfillment at or prior to the Closing
of each of the following additional conditions:

 

(a)                                  The representations and warranties of
Thompson Creek contained herein, that are qualified as to materiality or words
of similar import shall be true and correct in all respects, and those not so
qualified shall be true and correct in all material respects, in each case when
made and on and as of the Closing as though made on

 

5

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and as of the Closing (except for representations and warranties made as of a
specified date, which shall be true and correct as of the specified date).

 

(b)                                 Thompson Creek shall have performed or
complied with, in all material respects, all covenants, agreements and
conditions contained herein required to be performed or complied with by it
prior to or at the time of the Closing.

 

(c)                                  No fact, event, occurrence or circumstance
shall have occurred that, individually or in aggregate, with or without the
passage of time, has had or is reasonably likely to result in a material adverse
effect on Thompson Creek that would materially impair or prevent Thompson
Creek’s ability to close the Acquisition or develop the Milligan Project or a
material adverse effect on the Milligan Project (in each case without regard to
effects from changes in metal prices or industry wide events that do not have a
disproportionate effect).

 

(d)                                 Thompson Creek shall have consummated, or
shall simultaneously with the execution of the Gold Purchase Agreement
consummate, the Acquisition of Terrane pursuant to the terms of Acquisition
Agreement.

 

4.3                               Conditions to the Obligations of Thompson
Creek.  The obligations of Thompson Creek to consummate the transactions
contemplated by this Agreement are subject to the fulfillment of the following
conditions:

 

(a)                                  The representations and warranties of Royal
Gold contained herein, that are qualified as to materiality or words of similar
import shall be true and correct in all respects, and those not so qualified
shall be true and correct in all material respects, in each case when made and
on and as of the Closing as though made on and as of the Closing (except for
representations and warranties made as of a specified date, which shall be true
and correct as of the specified date).

 

(b)                                 Royal Gold shall have performed or complied
with, in all material respects, all covenants, agreements and conditions
contained herein required to be performed or complied with by it prior to or at
the time of the Closing.

 

(c)                                  No fact, event, occurrence or circumstance
shall have occurred that, individually or in aggregate, with or without the
passage of time, has had or is reasonably likely to result in a material adverse
effect on Royal Gold (without regard to effects from changes in metal prices or
industry wide events that do not have a disproportionate effect).

 

(d)                                 On or before the Closing, Royal Gold shall
have executed intercreditor agreements, in form and substance satisfactory to
the parties thereto, with (i) Wells Fargo Capital Finance, or such other lender
or lenders satisfactory to Thompson Creek, in regard to an asset backed
corporate credit facility to be secured against, among other things, inventory
and receivables; and (ii) any project finance lender or lenders as reasonably
requested by Thompson Creek.  The intercreditor agreements will be consistent
with the terms of section 8.6 of the Gold Purchase Agreement

 

6

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5.                                       Termination.

 

5.1                               Right to Terminate Prior to Closing of the
Acquisition Transaction.  This letter agreement and the transactions
contemplated hereby may be terminated at any time prior to the closing of the
Acquisition:

 

(a)                                  by the mutual written consent of Thompson
Creek and Royal Gold;

 

(b)                                 by either Thompson Creek or Royal Gold, by
written notice delivered to the other Party, if any Governmental Authority shall
have issued an order or taken any other action enjoining, restraining or
otherwise prohibiting the transactions contemplated hereby; provided, however,
the Party seeking to terminate this letter agreement pursuant to this clause
(b) shall not have initiated such proceeding or taken any action in support of
such proceeding;

 

(c)                                  by either Thompson Creek or Royal Gold, by
written notice delivered to the other Party, if the closing of the Acquisition
shall not have occurred prior to December 31, 2010, or such later date mutually
agreed upon in writing by the Parties (the “Outside Termination Date”);
provided, however, the right to terminate this letter agreement under this
Section 5.1(c) shall not be available to any Party whose failure to fulfill any
obligation under this letter agreement has been the cause of, or resulted in,
the failure of the closing of the Acquisition to occur on or before the Outside
Termination Date;

 

(d)                                 without further action by Thompson Creek or
Royal Gold, effective as of the date, if any, on which the Acquisition Agreement
is terminated without the consummation of the Acquisition or Thompson Creek’s
offer to Terrane’s shareholders contemplated thereby is withdrawn or abandoned;
provided, that Thompson Creek shall promptly notify Royal Gold in writing of
such event;

 

(e)                                  without further action by Thompson Creek or
Royal Gold, effective as of the date, if any, on which the shareholders of
Terrane decline to approve the Acquisition; provided, that Thompson Creek shall
promptly notify Royal Gold in writing of such event;

 

(f)                                    without further action by Thompson Creek
or Royal Gold, effective as of the date, if any, on which Thompson Creek or
Terrane publicly announce that the Acquisition will not be proceeding, provided,
that Thompson Creek shall promptly notify Royal Gold in writing of such event;

 

(g)                                 by Royal Gold, by written notice to Thompson
Creek, if

 

(i)                                     there has been a breach of any
representation, warranty, covenant or agreement of Thompson Creek contained in
this letter agreement that would, individually or in the aggregate, result in a
failure of a condition set forth in Section 4.2 on any date prior to the closing
of the Acquisition (it being understood that, for purposes of this
Section 5.1(g), such date prior to the closing of the Acquisition shall be
substituted for the closing of the Acquisition

 

7

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in determining whether the conditions contained in Section 5.1(g) have been
satisfied) and (ii) such breach cannot be or has not been cured within 30 days
after written notice is provided to Thompson Creek of such breach (it being
understood that Royal Gold may not terminate this Agreement pursuant to this
Section 5.1(g) if such breach by Thompson Creek is so cured within such 30-day
period); provided, however, that no such cure period shall be available or
applicable to any such breach which by its nature cannot be cured;

 

(ii)                                  there has been any event, change,
occurrence or circumstance (other than one caused by Royal Gold) that renders
the conditions set forth in Section 4.2 incapable of being satisfied by the
Outside Termination Date;

 

(iii)                               Thompson Creek materially increases the cash
portion of its July 9, 2010 offer to Terrane for the purchase of the shares of
Terrane pursuant to the Acquisition and, promptly following notification by
Thompson Creek to Royal Gold of such increase, Thompson Creek is not able to
demonstrate to the satisfaction of Royal Gold, acting reasonably, that Thompson
Creek has or has access to the financial resources necessary to complete the
Development in accordance with the Development Program.

 

(h)                                 by Thompson Creek, by written notice to
Royal Gold, if

 

(i)                                     there has been a breach of any
representation, warranty, covenant or agreement of Royal Gold contained in this
letter agreement that would, individually or in the aggregate, result in a
failure of a condition set forth in Section 4.3 on any date prior to the closing
of the Acquisition (it being understood that, for purposes of this
Section 5.1(h), such date prior to the closing of the Acquisition shall be
substituted for the Closing in determining whether the conditions contained in
Section 5.1(h) have been satisfied) and (ii) such breach cannot be or has not
been cured within 30 days after written notice is provided to Royal Gold of such
breach (it being understood that Thompson Creek may not terminate this Agreement
pursuant to this Section 5.1(h) if such breach by Royal Gold is so cured within
such 30-day period); provided, however, that no such cure period shall be
available or applicable to any such breach or event which by its nature cannot
be cured; or

 

(ii)                                  there has been any event, change,
occurrence or circumstance (other than one caused by Thompson Creek) that
renders the conditions set forth in Section 4.3 incapable of being satisfied by
the Outside Termination Date.

 

5.2                               Effect of Termination and Abandonment Prior to
Closing of the Acquisition.  In the event of termination of this letter
agreement and the abandonment of the transactions contemplated hereby pursuant
to Section 5.1 hereof, this letter agreement shall become void and of no effect
with no liability on the part of any Party hereto (or of any of its directors,
officers, employees, agents, legal and financial advisors or other
representatives); provided, however, no such termination shall relieve any Party
hereto of any liability or damages

 

8

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resulting from (i) any willful breach of any representations or warranties
contained in this letter agreement; (ii) any breach of any covenant or agreement
contained in this letter agreement; or (iii) instances of fraud, and provided
further, this Section 5.2 and the provisions of Section 6 shall survive any such
termination and shall remain in effect.

 

6.                                       Miscellaneous.

 

6.1                               Entire Agreement; Amendment.

 

(a)                                  This letter agreement and the Mutual
Non-Disclosure Agreement between Thompson Creek and Royal Gold effective as of
June 1, 2010 together constitute the entire agreement between the Parties hereto
with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the Parties with
respect to the subject matter hereof.

 

(b)                                 This letter agreement may not be changed,
amended, supplemented, or otherwise modified except pursuant to an instrument in
writing signed by each of the Parties.  No course of dealing between or among
any Persons having any interest in this letter agreement shall be deemed
effective to modify or amend any part of this letter agreement or any rights or
obligations of any Person under or by reason of this letter agreement.

 

6.2                               Notices.  All notices, requests, instructions
or other documents to be given under this Agreement shall be in writing and
shall be deemed effectively given only when personally delivered, when received
by facsimile, other electronic means or overnight delivery via a reputable
courier service, in each case, addressed as set forth in the Notice provision of
Exhibit 1.

 

6.3                               Governing Law.  The Parties agree that this
letter agreement shall be governed by and construed in accordance with the laws
of Colorado, excluding any rule or principle that might refer the governance or
the construction of this Agreement to the laws of another jurisdiction.

 

6.4                               Parties in Interest.  This letter agreement
shall be binding upon and inure solely to the benefit of each Party hereto and
its successors and permitted assigns, and nothing in this letter agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this
letter agreement.

 

6.5                               Time of Essence.  Time is of the essence in
the performance of this letter agreement.

 

6.6                               Assignment.  Prior to the Closing, no Party
may assign this letter agreement, nor any of the rights, interests or
obligations hereunder, by operation of law (including, but not limited to, by
merger or consolidation) or otherwise, without the prior written consent of the
other Party hereto; provided, however, that either Party shall have the right,
without the consent of the other Party to assign all or any portion of its
rights, duties and obligations under this letter agreement to any of its direct
or indirect subsidiaries; provided, that no such

 

9

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assignment shall relieve the assigning Party of its obligations hereunder.  Any
assignment in violation of the preceding sentence shall be void.

 

6.7                               Right to Specific Performance.  Without
limiting or waiving in any respect any rights or remedies of the Parties under
this letter agreement now or hereafter existing at law, in equity or by statute,
either Party may be entitled to specific performance of the obligations to be
performed by the other Party hereto in accordance with the provisions of this
letter agreement.

 

[Remainder of page left intentionally blank]

 

10

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If the foregoing conforms to your understanding of our agreement, please
countersign this letter agreement in the space provided below.

 

 

 

Sincerely,

 

 

 

 

 

Thompson Creek Metals Company Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Kevin Loughrey

 

 

Date:

July 15, 2010

 

 

Title:

Chief Executive Officer

 

 

 

 

Accepted and Agreed:

 

 

 

 

 

Royal Gold, Inc.

 

 

 

 

 

 

 

 

By:

/s/ Tony Jensen

 

 

Date:

July 15, 2010

 

 

Title:

President and Chief Executive Officer

 

 

 

11

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Exhibit 1 — Form of Gold Purchase Agreement

 

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PURCHASE AND SALE AGREEMENT

 

 

BY AND AMONG

 

[TERRANE METALS CORP.(1)],

 

[RG NEWCO.],

 

solely in respect of Article 10 and Sections 11.4 and 17.15 hereof,

 

ROYAL GOLD, INC.

 

and, solely in respect of Article 10 and Sections 3.5, 11.2 and 17.14 hereof,

 

THOMPSON CREEK METALS COMPANY INC.

 

DATED:  ·, 2010

 

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(1)           Corporate party holding title to Milligan Property may be
reorganized.

 

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TABLE OF CONTENTS

 

Article 1 INTERPRETATION

2

1.1

Definitions

2

1.2

Certain Rules of Interpretation

12

 

 

 

Article 2 PURCHASE AND SALE

13

2.1

Purchase and Sale of Refined Gold

13

2.2

Delivery Obligations

13

2.3

Statements

15

2.4

Gold Purchase Price

15

2.5

Payment

16

2.6

Sales Tax

16

 

 

 

Article 3 DEPOSIT

16

3.1

Payment Deposit

16

3.2

Initial Deposit

16

3.3

Scheduled Deposits

16

3.4

No Interest

16

3.5

Use of Payment Deposit

17

3.6

Deposit Record

17

3.7

Deposit at Expiry of Initial Term

17

 

 

 

Article 4 DELIVERIES

17

4.1

Deliveries of Vendor

17

4.2

Deliveries of Purchaser

18

 

 

 

Article 5 PAYMENT OF SCHEDULED DEPOSITS

19

5.1

Achievement of Deposit Events

19

5.2

Payment of Scheduled Deposits

19

5.3

Closing Conditions for Payment of Scheduled Deposits

20

 

 

 

Article 6 TERM

 

21

6.1

Term

21

 

 

 

Article 7 REPORTING; BOOKS AND RECORDS; INSPECTIONS

21

7.1

Monthly Reporting

21

7.2

Annual Reporting

21

7.3

Additional Reporting Requirements

21

7.4

Books and Records

22

7.5

Inspections

22

 

 

 

Article 8 COVENANTS

23

8.1

Conduct of Operations

23

8.2

Preservation of Corporate Existence

24

8.3

Processing/Commingling

24

8.4

Mineral Offtake Agreements

24

8.5

Insurance

25

8.6

Permitted Debt Financings and Permitted Encumbrances

25

8.7

Confidentiality

26

8.8

Compliance with Law

28

 

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

 

8.9

Unprocessed Ore

28

 

 

 

Article 9 RIGHT OF FIRST OFFER

28

9.1

Right of First Offer on Gold Interest

28

 

 

 

Article 10 TRANSFERS AND ASSIGNMENTS

30

10.1

Transfers of the Milligan Project

30

10.2

Exceptions Based on Intercreditor Agreements

30

10.3

Assignment

30

 

 

 

Article 11 REPRESENTATIONS AND WARRANTIES

32

11.1

Representations and Warranties of Vendor

32

11.2

Representations and Warranties of Thompson Creek

32

11.3

Representations and Warranties of the Purchaser

32

11.4

Representations and Warranties of Royal Gold

32

11.5

Survival of Representations and Warranties

32

11.6

Knowledge

33

 

 

 

Article 12 VENDOR EVENTS OF DEFAULT

33

12.1

Vendor Events of Default

33

12.2

Remedies

33

 

 

 

Article 13 PURCHASER EVENTS OF DEFAULT

34

13.1

Purchaser Events of Default

34

13.2

Remedies

34

 

 

 

Article 14 INDEMNITIES

35

14.1

Indemnity of Purchaser

35

14.2

Indemnity of Vendor

35

14.3

Limitations on Indemnification

35

 

 

 

Article 15 INDEPENDENT ENGINEER; ADDITIONAL PAYMENT TERMS; DISPUTES

36

15.1

Independent Engineer

36

15.2

Payments

37

15.3

Overdue Payments and Set-Off

37

15.4

Statement Disputes

37

15.5

Disputes and Arbitration

39

 

 

 

Article 16 TAXES

39

16.1

Taxes

39

 

 

 

Article 17 GENERAL

39

17.1

Further Assurances

39

17.2

Survival

40

17.3

No Joint Venture

40

17.4

Governing Law

40

17.5

Notices

40

17.6

[Reserved]

42

17.7

Amendments

42

17.8

Beneficiaries

42

17.9

Contests

42

17.10

Entire Agreement

42

 

ii

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17.11

Waivers

42

17.12

Severability

43

17.13

Counterparts

43

17.14

Thompson Creek Guarantee

43

17.15

Royal Gold Guarantee

43

 

iii

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THIS PURCHASE AND SALE AGREEMENT dated as of ·, 2010.

 

BY AND AMONG:

 

[RG NEWCO]., a ·

 

(the “Purchaser”),

 

- and-

 

TERRANE METALS CORP.(2), a corporation incorporated under the laws of British
Columbia

 

(the “Vendor”)

 

-and, solely in respect of Article 10 and Sections 11.4 and 17.15 hereof

 

ROYAL GOLD, INC., a corporation incorporated under the laws of the State of
Delaware

 

(“Royal Gold”)

 

- and, solely in respect of Article 10 and Sections 3.5, 11.2 and 17.14 hereof

 

THOMPSON CREEK METALS COMPANY INC., a corporation incorporated under the laws of
British Columbia

 

(“Thompson Creek”)

 

WITNESSES THAT:

 

WHEREAS Vendor has agreed to sell to the Purchaser and the Purchaser has agreed
to purchase from Vendor, an amount of Refined Gold equal to the Designated
Percentage of Produced Gold, subject to and in accordance with the terms and
conditions of this Agreement;

 

AND WHEREAS Vendor is the owner of a 100% interest in and to the Milligan
Property;

 

AND WHEREAS capitalized terms when used in these recitals shall have the
respective meanings set forth in Section 1.1.

 

NOW THEREFORE in consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties hereto, the Parties
mutually agree as follows:

 

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

(2)           See Footnote 1.

 

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Article 1
INTERPRETATION

 

1.1                               Definitions

 

In this Agreement, including in the recitals and schedules hereto:

 

“Acquisition” means the acquisition of all of the outstanding securities of
Terrane Metals Corporation and its interest in the Milligan Project by Thompson
Creek pursuant to the terms of an Arrangement Agreement dated July 15, 2010.

 

“Additional Term” has the meaning set out in Section 6.1(a).

 

“Affiliate” means, in relation to any person or entity, any other person or
entity controlling, controlled by or under common control with such first
mentioned person or entity.

 

“Agreement” means this purchase and sale agreement and all attached schedules,
in each case as the same may be supplemented, amended, restated, modified or
superseded from time to time in accordance with the terms hereof.

 

“Applicable Laws” means any international, federal, state, provincial, or
municipal law, regulation, ordinance, code, order or other requirement or
rule of law or the rules, policies, orders or regulations of any Governmental
Authority or stock exchange, including any judicial or administrative
interpretation thereof, applicable to a person or any of its properties, assets,
business or operations.

 

“Approvals” means all authorizations, clearances, consents, orders and other
approvals required to be obtained from any person, including any Governmental
Authority or stock exchange, in connection with the completion of the
transactions contemplated by this Agreement.

 

“Arbitration Rules” means the rules established pursuant to the International
Commercial Arbitration Act (British Columbia).

 

“Assignee” has the meaning set forth in Section 10.1(a).

 

“Assignment” has the meaning set forth in Section 10.1.

 

“Assignor” has the meaning set forth in Section 10.1.

 

“Auditor” means a national Canadian accounting firm, as supported in the
discretion of such accounting firm by a nationally recognized minerals
engineering firm, that is independent of the Parties and their respective
Affiliates, and that has experience and expertise in determining the quantity of
gold mined, produced, extracted or otherwise recovered from mining projects.

 

“Auditor’s Report” has the meaning set out in Section 15.4(a)(ii).

 

2

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“Business Day” means any day other than a Saturday or Sunday or a day that
(i) is a statutory holiday under the laws of the Province of British Columbia,
or (ii) national banking institutions in New York and Colorado are closed to the
public for conducting business.

 

“Commingling Plan” has the meaning set out in Section 8.3.

 

“Confidential Information” has the meaning set out in Section 8.7(a).

 

“Confidentiality Agreement” means the Mutual Non-Disclosure Agreement between
Thompson Creek and Purchaser effective as of June 1, 2010.

 

“control” means the right, directly or indirectly, to direct or cause the
direction of the management of the business or affairs of a person, whether by
ownership of securities, by contract or otherwise; and “controls”,
“controlling”, “controlled by” and “under common control with” have
corresponding meanings.

 

“Corporate Financing” means one or more secured corporate credit facility(ies)
in favour of Vendor or any of its Affiliates, or pursuant to which the Vendor
would be a guarantor, that is secured partially or wholly against the Milligan
Project and to which proceeds thereof may or may not be used for the purpose of
financing all or a portion of the Project Costs of Development but does not
include any unsecured financing or secured financing of the Vendor or any of its
Affiliates that is not secured against the Milligan Project.

 

“Corporate Lenders” means the lenders and their agents and trustees under any
Corporate Financing.

 

“Corporate Lender Security” means Encumbrances (including Permitted
Encumbrances) in favour of any Corporate Lenders (or agent or trustee on their
behalf) as security for the payment and performance, when due, of the
obligations of Vendor or any of its Affiliates under any Corporate Financing.

 

“CSA” has the meaning set out in Section 8.7(a)(ii).

 

“Date of Delivery” has the meaning set out in Section 2.2(c).

 

“Default Deposit Reduction Date” means the date on which the Deposit Record
would have been reduced to nil assuming for all purposes that no Purchaser Event
of Default set forth in Section 13.1(a) or 13.1(b) occurred or continued.

 

“Definitive Agreement” has the meaning set out in Section 9.1(b).

 

“Delivery” means, in respect of a delivery of Refined Gold, either the crediting
of units of gold into a metal account or, if the Vendor elects to deliver
physical gold pursuant to Section 2.2(e), the physical delivery of Refined Gold
to a metal account and “Delivered” means that such Refined Gold has been so
credited or physically delivered.

 

“Deposit Event” has the meaning set out in Section 5.1.

 

3

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“Deposit Record” has the meaning set out in Section 3.6.

 

“Deposit Record Report” has the meaning set out in Section 7.3(d).

 

“Deposit Reduction Time” means the time at which the Deposit Record is reduced
to nil.

 

“Deposit Suspension Event” means an event that is reasonably beyond the control
of the Vendor and its Affiliates that prevents the Vendor and its Affiliates
from continuing to advance the Development Program, including (i) acts of God,
earthquake, cyclone, fire, explosion, flood, landslide, lightening storm,
tempest, drought or meteor, (ii) war (declared or undeclared), invasion, act of
foreign enemy, hostilities between nations, civil insurrection or military
usurper power, (iii) revolution or act of public enemy, sabotage, malicious
damage, terrorism, insurrection or civil unrest, (iv) confiscation,
nationalisation, requisition, expropriation, embargo, restraint or damage to
property by or under the order of any Governmental Authority, (v) shortages or
inability to obtain fuel, water, electric power, raw materials, supplies or
equipment (vi) transportation difficulties or handling or loading difficulties
at any port or storage facility, (vii) epidemic or quarantine restrictions, or
(viii) an event having the effect of damaging any part of the Milligan Project,
(ix) strikes, blockades, lock out or other labor dispute, or (vii) blockades by
First Nations groups that substantially prevent or inhibit ingress or egress to
the Milligan Project.

 

“Designated Percentage of Produced Gold” means, without duplication (i) 25%
“***” times the number of ounces of Produced Gold in the form of concentrate in
respect of which the Vendor or any of its Affiliates receives a Gold Payment,
(ii) 25% “***” times the number of ounces of Produced Gold in the form of doré
in respect of which the Vendor or any of its Affiliates receives a Gold Payment,
or (iii) 25% times any Gold Payment received by Vendor or any of its Affiliates,
in respect of Produced Gold that is not in the form of concentrate or doré.

 

“Development” means all activities, operations and work performed for the
purpose of or in connection with construction of the Milligan Facilities through
to the point of mechanical completion of relevant processing facilities as
determined in accordance with the principle Engineering Procurement Construction
Management contract (or equivalent contract) governing the construction of the
Milligan Facilities, and including (i) acquisitions of mineral rights, Surface
Rights, water rights, Permits and other interests necessary for the conduct of
construction and operation of the Milligan Project, (ii) pre-production
stripping and development for the commencement of open pit mining operations,
and (iii) activities undertaken to comply with any legal requirements arising
out of or related to any of the foregoing, all in material accordance with the
Milligan Report as it may be amended from time to time.

 

“Development Program” means the detailed monthly budget and schedule outlining
the Development in accordance with the mine plan set forth in the Milligan
Report and otherwise prepared in accordance with Schedule D, including an
estimate of Project Costs and showing, without limitation, the material
construction, mine development, equipment acquisitions and Permits to bring the
Milligan Project or any part thereof into commercial production, as amended from
time to time.

 

4

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“Dispute Notice” has the meaning set out in Section 15.4(a)(i).

 

“Dispute Period” has the meaning set out in Section 15.4(a)(i).

 

“Effective Date” means the date of this Agreement.

 

“Encumbrances” means any and all mortgages, charges, assignments, hypothecs,
pledges, security interests, liens and other encumbrances and adverse claims of
every nature and kind securing any obligation of any person, whether registered
or unregistered.

 

“Environmental Laws” mean Applicable Laws relating to pollution or protection of
the environment, including, without limitation, Applicable Laws relating to
emissions, discharges, releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground water,
aquifers, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes which are applicable to the Milligan
Project, the other assets owned, controlled or managed by the Vendor which are
used on or in connection with the or the Milligan Project or to the activities
of the Vendor on or in connection with the Milligan Project.

 

“Event of Force Majeure” means an event that is reasonably beyond the control of
a Party and its Affiliates, including (i) acts of God, earthquake, cyclone,
fire, explosion, flood, landslide, lightening storm, tempest, drought or meteor,
(ii) war (declared or undeclared), invasion, act of foreign enemy, hostilities
between nations, civil insurrection or military usurper power, (iii) revolution
or act of public enemy, sabotage, malicious damage, terrorism, insurrection or
civil unrest, (iv) confiscation, nationalisation, requisition, expropriation,
embargo, restraint or damage to property by or under the order of any
Governmental Authority, (v) epidemic or quarantine restrictions, or
(vi) strikes, blockades, lock out or other labor dispute, or (vii) blockades by
First Nations groups that substantially prevent or inhibit ingress or egress to
the Milligan Project.

 

“Fixed Price” means (i) with respect to the first 550,000 aggregate ounces of
Refined Gold sold by the Vendor to the Purchaser hereunder, US$400 per ounce,
and (ii) with respect to each ounce of Refined Gold sold by the Vendor to the
Purchaser hereunder in excess of 550,000 aggregate ounces, US$450 per ounce.

 

“Gold Payment” means (i) with respect to Minerals purchased by an Offtaker from
the Vendor or any of its Affiliates, the receipt by the Vendor or any of its
Affiliates of payment, whether provisional or final, or other consideration from
the Offtaker in respect of any Produced Gold, including amounts received in
respect of warehouse holding certificates, and (ii) with respect to Minerals
refined, smelted or otherwise beneficiated by an Offtaker on behalf of the
Vendor or any of its Affiliates, the receipt by the Vendor or any of its
Affiliates of Refined Gold, whether provisional or final settlement, in
accordance with the applicable Mineral Offtake Agreement.

 

“Gold Purchase Price” has the meaning set out in Section 2.4.

 

5

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“Governmental Authority” means any federal, provincial or local government,
agency, department, ministry, authority, tribunal, commission, official, court
or securities commission.  For the avoidance of doubt, Governmental Authority
shall not be deemed to include First Nations.

 

“Independent Engineer” has the meaning set out in Section 15.1.

 

“Initial Term” has the meaning set out in Section 6.1(a).

 

“Insolvency Event” means the making of an assignment for the benefit of
creditors by a Party or a Party becoming the voluntary or involuntary subject of
any proceedings under any bankruptcy or insolvency law, which proceedings remain
undischarged for a period of 30 days, or if a receiver or receiver/manager is
appointed for all or any substantial part of the property and business of a
Party and such receiver or receiver/manager remains undischarged for a period of
30 days, or if the corporate existence of a Party is terminated by voluntary or
involuntary dissolution or winding-up (other than by way of amalgamation or
reorganization).

 

“Lenders” means the lenders and their agents and trustees under any Vendor
Financing.

 

“LIBO Rate” means for any calendar month the British Bankers’ Association
Interest Settlement Rate for US Dollars for an interest period of three months
displayed and identified on the Reuters Screen LIBOR 01 Page at approximately
10:00 am (Toronto time) on the first Business Day of that month, provided
however, if such rate does not appear on the Reuters Screen LIBOR 01 Page at
that time, then the “LIBO Rate” for that calendar month shall be the six month
LIBO Rate (determined as at 10:00 am (Toronto time) on such Business Day) as
quoted to the Purchaser by a major UK bank.

 

“Losses” has the meaning set out in Section 0.

 

“Lot” means the applicable quantity of Minerals delivered to and accepted by an
Offtaker, that is separately sampled and assayed so that Vendor and the
applicable Offtaker can agree upon the content of some or all of the relevant
Minerals therein, all as set forth in the applicable Mineral Offtake Agreement.

 

“Lot Provisional Percentage” means for Lots in which a provisional payment
pursuant to Section 2.2(a)(ii) is applicable, “***”.

 

“Material Adverse Effect” means any event, occurrence, change or effect that,
when taken individually or together with all other events, occurrences, changes
or effects, is or could reasonably be expected to:

 

(a)                                  materially limit, restrict or impair the
ability of Vendor to perform its obligations under this Agreement;

 

6

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(b)                                 limit, restrict or impair the ability of
Vendor to operate the Milligan Project substantially in accordance with the mine
plan for the Milligan Project in effect at the time of the occurrence of the
Material Adverse Effect; or

 

(c)                                  cause any significant decrease to expected
gold production from the Milligan Project based on the mine plan for the
Milligan Project in effect at the time of the occurrence of the Material Adverse
Effect.

 

“Milligan Facilities” means the mining, processing, production, maintenance,
administration, infrastructure and related ancillary infrastructure constructed
or operated by the Vendor and its Affiliates to extract and beneficiate Minerals
on the Milligan Property.

 

“Milligan Gold Right” has the meaning set forth in Section 9.1.

 

“Milligan Project” means collectively, the Milligan Property and the Milligan
Facilities.

 

“Milligan Property” means the Mineral Claims and the Mining Lease listed in
Schedule B attached hereto, and includes any extension, renewal, replacement,
conversion or substitution of any such Mineral Claims into a Mining Lease,
Surface Rights or other right or concession or after acquired or resulting
Mining Lease, Mineral Claims, Surface Rights and other rights or concessions,
including any re-acquired after abandonment or other disposition, but in every
case without extending the area covered by the Milligan Property past the area
covered by the Mineral Claims and the Mining Lease listed in Schedule B.

 

“Milligan Report” means the Technical Report pursuant to National Instrument
43-101 of the CSA of Terrane Metals Corp. dated October 13, 2009, entitled
“Technical Report — Feasibility Update Mt. Milligan Property — Northern BC” or
such other technical report under National Instrument 43-101 as Thompson Creek
may prepare from time to time regarding the Milligan Project that establishes a
mine plan for initial commercial production of Minerals from the Milligan
Property, provided that such mine plan does not establish production at a
materially lower volume or materially extend the Development schedule compared
to that contemplated in the Milligan Report on the Effective Date.

 

“Mineral Claim” means a mineral claim issued under the Mineral Tenure Act
(British Columbia) or any successor statute thereto or by any Governmental
Authority.

 

“Mineral Offtake Agreement” means any agreement entered into by Vendor or any of
its Affiliates with an Offtaker (i) for the sale of Minerals to such Offtaker,
or (ii) for the smelting, refining or other beneficiation of Minerals by such
Offtaker for the benefit of the Vendor or any of its Affiliates, and all
amendments or addendums thereto.

 

“Minerals” means any and all marketable metal bearing material (including
Produced Gold) in whatever form or state that is mined, produced, extracted or
otherwise recovered from the Milligan Property, including any such material
derived from any processing or reprocessing of any tailings, waste rock or other
waste products originally derived from the Milligan Property, and including ore
and any other products requiring further milling, processing, smelting, refining
or other beneficiation, including concentrates or doré bars.

 

7

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

 

“Mining Lease” means a mining lease issued under the Mineral Tenure Act (British
Columbia) or any successor statute thereto or by any Governmental Authority.

 

“Monthly Construction Report” means a written report in relation to a calendar
month with respect to the Milligan Project prepared by the engineering,
procurement and construction management contractor and any other
internally-prepared monthly report covering aspects of the Development Program
but not included in the engineering, procurement and construction management
report, together with such other materials and information as the Purchaser
reasonably may request, which may include a summary of any (A) material health
and safety violations, (B) material violations of Applicable Law (including
Environmental Laws), (C) blockades or other disputes or disturbances with First
Nations groups, and (D) a summary of the status of Permits and Permit
applications, to be prepared by or on behalf of the Vendor for each month while
the Milligan Project is under Development.

 

“Monthly Report” means a written report in relation to a calendar month prepared
by the Vendor or its Affiliates with respect to the Milligan Project, together
with such other materials and information as the Purchaser reasonably may
request, which may include:

 

(i)            a summary of the types, tonnes or tons and gold grade of ore
mined;

 

(ii)           types, tonnes or tons and gold grade of any ore stockpiled;

 

(iii)          with respect to any processing plant of the Milligan Facilities,
the types, tonnes or tons and gold grade of processed ore; recoveries for gold;
dry concentrate tonnage or tonage and gold grades; and doré weight and gold
grade;

 

(iv)          the number of ounces of gold contained in ore processed during
such month, but not delivered to an Offtaker by the end of such month; and

 

(v)           such other matters as the Purchaser may reasonable request, which
may include a summary of any (A) exploration programs, (B) operational issues,
(C) material health and safety violations, (D) material violations of Applicable
Law (including Environmental Laws), (E) blockades or other disputes or
disturbances with First Nations groups, and (F) a summary of the status of
Permits and Permit applications.

 

“Negotiation Period” has the meaning set out in Section 9.1(b).

 

“Offtaker” means any person other than the Vendor or any of its Affiliates that
is a counterparty to a Mineral Offtake Agreement or an Affiliate of the Vendor
who contracts with the Vendor on arm’s length commercial terms in respect of the
applicable Mineral Offtake Agreement.

 

“Offtaker Documents” means the provisional documents and final settlement sheets
delivered to or in the possession of the Vendor that are necessary for the
Purchaser to determine the amount of Refined Gold sold by the Vendor to the
Purchaser pursuant to Section 2.1(a) and such other related documents delivered
to or in the possession of the

 

8

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Vendor as the Purchaser may reasonably request, which may include all invoices,
credit notes, bills of lading,  and any and all certificates and other
documentation prepared or produced by the Offtaker, including without
limitation, certificates in respect of provisional and final shipped moisture
content, all provisional and final analyses and assays evidencing the amount of
Minerals, including Produced Gold, delivered to an Offtaker in each Lot and
evidencing the amount of Refined Gold projected or resulting from the refining,
smelting or other beneficiation of a particular Lot.

 

“Other Minerals” means any and all marketable metal bearing material in whatever
form or state (including ore) that is mined, extracted or otherwise recovered
from any location that is not within the Milligan Property.

 

“Parties” means the parties to this Agreement.

 

“Payment Deposit” has the meaning set forth in Section 3.1.

 

“Permits” means all material licenses, permits, Approvals (including
environmental Approvals) rights (including surface and access rights),
privileges, concessions or franchises necessary for the construction,
development, operation and reclamation of the Milligan Project.

 

“Permitted Encumbrances” means at any time from time to time: (i) the Project
Security, (ii) undetermined or inchoate Encumbrances incidental to construction,
maintenance or operations which have not at the time been filed pursuant to law,
(iii) the Encumbrance of taxes and assessments for the then current year, the
Encumbrance for taxes and assessments not at the time overdue and Encumbrances
securing worker’s compensation assessments which are not overdue, (iv) cash or
governmental obligations deposited in the ordinary course of business in
connection with contracts, bids, tenders or to secure worker’s compensation,
unemployment insurance, surety or appeal bonds, costs of litigation, when
required by law, public and statutory obligations, Encumbrances or claims
incidental to current construction, mechanics’, warehousemen’s, carriers’ and
other similar Encumbrances, (v) security given in the ordinary course of
business to a public utility or any Governmental Authority when required by such
utility or Governmental Authority in connection with the operations of the
Vendor in the ordinary course of business, (vi) easements, rights of way and
servitudes in existence at the date hereof and future easements, rights of way
and servitudes, (vii) all rights reserved to or vested in any Governmental
Authority by the terms of any lease, licence, franchise, grant or permit held by
the Vendor or by any statutory provision to terminate any such lease, licence,
franchise grant or permit or to require annual or periodic payments as a
condition of the continuance thereof or to distrain against or to obtain an
Encumbrance on any property or assets of the Vendor in the event of failure to
make such annual or other periodic payments, (viii) such other Encumbrances as
may from time to time be consented to in writing by the Purchaser, and
(ix) Encumbrances noted on Schedule E.

 

“person” includes an individual, corporation, body corporate, limited or general
partnership, joint stock company, limited liability corporation, joint venture,
association, company, trust, bank, trust company, Governmental Authority or any
other type of organization, whether or not a legal entity.

 

9

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“Produced Gold” means any and all gold in whatever form or state that is derived
from any material mined, produced, extracted or otherwise recovered from the
Milligan Property during the Term.  For greater certainty, “Produced Gold” shall
include any gold derived from ores, concentrates, doré, tailings, waste rock or
other waste products, or other products originating from the Milligan Property.

 

“Project Costs” means the estimated total costs for the Development, including
capital costs, operating costs, working capital costs, interest costs, and
financing costs.

 

“Project Financing” means one or more credit facility(ies) available to the
Vendor or any of its Affiliates for the purpose of financing all or a portion of
the Project Costs of the Development in accordance with the Development Program
that complies with Section 8.6, including any refinancing thereof.

 

“Project Lenders” means the lenders and their agents and trustees under any
Project Financing.

 

“Project Security” means Encumbrances in favour of any Project Lenders (or agent
or trustee on their behalf) as security for the payment and performance, when
due, of the obligations of the Vendor or any of its Affiliates under any Project
Financing.

 

“Project Studies” has the meaning set out in Section 7.3(c).

 

“Purchaser” has the meaning set out in the recitals to this Agreement.

 

“Purchaser Event of Default” has the meaning set out in Section 13.1.

 

“Purchaser Gold Delivery” means the Delivery of Refined Gold to the Purchaser as
set out in Section 2.2(a).

 

“Purchaser’s Pro Rata Share of Funding” means the figure obtained by dividing
the remaining Scheduled Deposits by the Project Costs necessary to complete
Development.

 

“Receiving Party” has the meaning set out in Section 8.7(a).

 

“Reference Price” means the market price used to determine the price for Refined
Gold in connection with a sale of Minerals under a Mineral Offtake Agreement. 
For greater certainty, “Reference Price” does not include Refining Adjustments.

 

“Refining Adjustments” means any refining charges, treatment charges, penalties,
insurance charges, transportation charges, settlement charges, financing charges
or price participation charges, or other similar charges or deductions,
regardless of whether such charges or deductions are expressed as a specific
metal deduction, separate and apart from the recovery rate pursuant to the terms
of the applicable Mineral Offtake Agreement.

 

“Refined Gold” means marketable metal bearing material in the form of gold bars
or coins that is refined to a minimum 995 parts per 1,000 fine gold.

 

10

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“Restricted Person” means any person or entity that:

 

(a)                                  is named, identified, described on or
included on any of:

 

(i)      the lists maintained by the Office of the Superintendent of Financial
Institutions Canada with respect to terrorism financing;

 

(ii)     the Denied Persons List, the Entity List or the Unverified List,
compiled by the Bureau of Industry and Security, U.S. Department of Commerce;

 

(iii)    the List of Statutorily Debarred Parties compiled by the U.S.
Department of State;

 

(iv)    the Specially Designated Nationals Blocked Persons List compiled by the
U.S. Office of Foreign Assets Control; or

 

(v)     the annex to, or is otherwise subject to the provisions of, U.S.
Executive Order No. 13324,

 

(b)                                 is subject to trade restrictions under
United States law, including, but not limited to:

 

(i)      the International Emergency Economic Powers Act, 50 U.S.C.; or

 

(ii)     the Trading with the Enemy Act, 50 U.S.C. App. 1 et seq.; or any other
enabling legislation or executive order relating thereto, including the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107-56; or

 

(c)                                  is a person or entity who is an Affiliate
of a person or entity listed above.

 

“Sales Tax” has the meaning set out in Section 2.6.

 

“SEC” has the meaning set out in Section 8.7(a)(ii).

 

“Security Agreements” has the meaning set out in Section 4.1(b).

 

“Surface Rights” means all rights to use, enter and occupy the surface of a
Mineral Claim or Mining Lease for the exploration and development or production
of Minerals or placer minerals, including the treatment of ore and concentrates,
and all operations related to the exploration and development or production of
Minerals or placer minerals and the business of mining, and all leases,
licenses, contracts, agreements, Permits or other documents relating to such
rights, including without limitation, any and all surface rights related to
infrastructure such as electric power lines and roads, surface tenures issued by
a Governmental Authority such as investigative permits and temporary permits,
and any lease to the surface of the Milligan Property or license of occupation
or other occupation right and includes any fee simple rights over any part of
the Milligan Property.

 

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“Term” has the meaning set out in Section 6.1(a).

 

“Thompson Creek” has the meaning set out in the recitals to this Agreement.

 

“Time of Delivery” has the meaning set out in Section 2.2(c).

 

“Transfer” has the meaning set forth in Section 10.3.

 

“Vendor” has the meaning set out in the recitals to this Agreement.

 

“Vendor Event of Default” has the meaning set out in Section 12.1.

 

“Vendor Offer” has the meaning set out in Section 9.1(a).

 

1.2                               Certain Rules of Interpretation

 

Except as may be otherwise specifically provided in this Agreement and unless
the context otherwise requires:

 

(a)                                  the terms “Agreement”, “this Agreement”,
“the Agreement”, “hereto”, “hereof’, “herein”, “hereby”, “hereunder” and similar
expressions refer to this Agreement in its entirety and not to any particular
provision hereof;

 

(b)                                 references to an “Article”, “Section” or
“Schedule” followed by a number or letter refer to the specified Article or
Section of or Schedule to this Agreement;

 

(c)                                  headings of Articles and Sections are
inserted for convenience of reference only and shall not affect the construction
or interpretation of this Agreement;

 

(d)                                 where the word “including” or “includes” is
used in this Agreement, it means “including without limitation” or “includes
without limitation”;

 

(e)                                  the language used in this Agreement is the
language chosen by the Parties to express their mutual intent, and no rule of
strict construction shall be applied against any Party;

 

(f)                                    unless the context otherwise requires,
words importing the singular include the plural and vice versa and words
importing gender include all genders;

 

(g)                                 a reference to a statute includes all
regulations made pursuant to such statute and, unless otherwise specified, any
reference to a statute or regulation includes the provisions of any statute or
regulation which amends, supplements or supersedes any such statute or any such
regulation;

 

(h)                                 in this Agreement a period of days shall be
deemed to begin on the first day after the event which began the period and to
end at 5:00 p.m. (Mountain time) on the last day of the period. If, however, the
last day of the period does not fall on a Business Day, the period shall
terminate at 5:00 p.m. (Mountain time) on the next Business Day;

 

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(i)                                     unless specified otherwise in this
Agreement, all statements or references to dollar amounts in this Agreement are
to United States of America dollars; and

 

(j)                                     the following schedules are attached to
and form part of this Agreement:

 

Schedule A1

-

Vendor Representations and Warranties

Schedule A2

-

Thompson Creek Representations and Warranties

Schedule A3

-

Purchaser Representations and Warranties

Schedule A4

-

Royal Gold Representations and Warranties

Schedule B

-

Description of Milligan Property (with Maps)

Schedule C1

-

Form of Security Agreement for Milligan Property

Schedule C2

-

Form of Security Agreement for Personal Property

Schedule C3

-

Form of Security Agreement - Floating Charge

Schedule D

-

Development Program and Scheduled Deposits

Schedule E

-

Permitted Encumbrances

Schedule F

-

Provisional Payment Illustration

 

Article 2
PURCHASE AND SALE

 

2.1                               Purchase and Sale of Refined Gold

 

(a)                                  Subject to and in accordance with the terms
of this Agreement, the Vendor hereby agrees to sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Vendor, an amount of Refined Gold
equal to the Designated Percentage of Produced Gold, free and clear of all
Encumbrances.

 

(b)                                 For each sale of Refined Gold pursuant to
Section 2.1(a), the amount of Produced Gold used as the basis for calculating
the Designated Percentage of Produced Gold shall be determined by the amount of
contained gold in the Minerals received at the Offtaker as determined by the
Offtaker Documents.  Produced Gold shall not be reduced for, and the Purchaser
shall not be responsible for, any Refining Adjustments.

 

2.2                               Delivery Obligations

 

(a)                                  The Vendor will effect the sale to
Purchaser of the Refined Gold as contemplated in Section 2.1(a) within two
Business Days following the date of the relevant Gold Payment.  In the event a
Gold Payment consists of a provisional payment, then:

 

(i)                  if such Gold Payment represents a provisional payment in
respect of a Lot under a Mineral Offtake Agreement that is made in the form of
Refined Gold, the Vendor shall sell and deliver to the Purchaser Refined Gold
equal to the Designated Percentage of Produced Gold for such Lot multiplied by
the applicable provisional payment percentage specified in such Mineral Offtake
Agreement;

 

(ii)               if such Gold Payment represents a provisional payment in cash
in respect of a Lot under a Mineral Offtake Agreement, the Vendor shall sell and

 

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deliver to the Purchaser Refined Gold equal to the Designated Percentage of
Produced Gold (based on the Produced Gold identified on the provisional
settlement sheet provided by the Offtaker for such Lot) multiplied by the
applicable Lot Provisional Percentage;

 

(iii)          “***”

 

(iv)           in respect of a Gold Payment that represents the final settlement
payment under a Mineral Offtake Agreement for any Lot for which the Vendor
previously Delivered Refined Gold to the Purchaser in connection with a
provisional Gold Payment pursuant to Section 2.2(a)(i), 2.2(a)(ii) or
2.2(a)(iii) above, the Vendor shall sell and deliver to the Purchaser Refined
Gold in an amount equal to the amount by which the Designated Percentage of
Produced Gold determined pursuant to the final settlement with respect to such
Lot exceeds the Refined Gold previously delivered to the Purchaser in respect of
such Gold Payment pursuant to Sections 2.2(a)(i), 2.2(a)(ii) or
2.2(a)(iii) above, as supported by the documentation provided pursuant to
Section 2.3, provided, that, if such difference is negative, then the Vendor
shall only be entitled to set off and deduct such excess amount of Refined Gold
from the next required deliveries by the Vendor under this Agreement until it
has been fully offset against deliveries to the Purchaser of Refined Gold
pursuant to Sections 2.2(a)(i), 2.2(a)(ii) and 2.2(a)(iii); and

 

(v)              Schedule F sets forth an illustration of the determination of
Refined Gold to be delivered to the Purchaser in the case of a provisional Gold
Payment described in Sections 2.2(a)(ii) and 2.2(a)(iii) above and the Gold
Payment representing a final settlement payment in respect of the same Lot.

 

For the avoidance of doubt, in the event that the Vendor does not Deliver
Refined Gold to the Purchaser in connection with a provisional Gold Payment with
respect to any Lot, the Vendor will effect the sale to the Purchaser of Refined
Gold with respect to such Lot as contemplated in Section 2.1(a) within two
Business Days following the date of the Gold Payment in the form of a final
settlement for such Lot.

 

(b)                                 Vendor shall sell and deliver to the
Purchaser all Refined Gold to be sold and delivered under this Agreement by way
of Delivery to the metal account or accounts designated by the Purchaser from
time to time in North America, the United Kingdom or Switzerland or such other
location as is mutually agreed by the Parties (the “Purchaser Gold Delivery”).

 

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(c)                                  Delivery of Refined Gold to the Purchaser
shall be deemed to have been made at the time on the date of Delivery of Refined
Gold in the designated metal account of the Purchaser pursuant to paragraph
(b) (the “Time of Delivery” on the “Date of Delivery”). Title to, and risk of
loss of, Refined Gold shall pass from Vendor to the Purchaser at the Time of
Delivery. All costs and expenses pertaining to each Delivery of Refined Gold by
Vendor to the Purchaser shall be borne by Vendor.

 

(d)                                 Vendor hereby represents and warrants to the
Purchaser that, notwithstanding the Vendor’s prior sale to Offtaker of Minerals
from which the relevant Refined Gold is derived, at each Time of Delivery
(i) Vendor will be the legal and beneficial owner of the Refined Gold that is
Delivered to a metal account of the Purchaser, (ii) Vendor will have good, valid
and marketable title to such Refined Gold, and (iii) such Refined Gold will be
free and clear of all Encumbrances.

 

(e)                                  The Parties acknowledge that Vendor shall
be entitled but shall not be obliged to sell or deliver to the Purchaser the
Refined Gold physically resulting from gold mined, produced, extracted or
otherwise recovered from the Milligan Property, and for greater certainty, shall
be entitled to sell and Deliver Refined Gold that is otherwise obtained by the
Vendor for the purpose of making such sale and Delivery to the Purchaser.

 

2.3                               Statements

 

Vendor shall notify the Purchaser in writing of a Purchaser Gold Delivery, no
later than the Time of Delivery, by delivery of a statement to the Purchaser
that includes:

 

(a)                                  the calculation of the number of ounces of
Refined Gold credited or physically Delivered;

 

(b)                                 the Offtaker Documents on which the
calculation is based;

 

(c)                                  the Date of Delivery and estimated Time of
Delivery;

 

(d)                                 the Gold Purchase Price for such Refined
Gold; and

 

(e)                                  the Mineral Offtake Agreement under which
such delivery was made.

 

2.4                               Gold Purchase Price

 

The Purchaser shall pay to the Vendor a purchase price for each ounce of Refined
Gold sold and Delivered by the Vendor to the Purchaser under this Agreement (the
“Gold Purchase Price”) equal to:

 

(a)                                  prior to the Deposit Reduction Time, the
Reference, payable by wire transfer up to the amount of the Fixed Price; and, if
such Reference Price is greater than the Fixed Price, payable by crediting an
amount equal to the difference between such Reference Price and the Fixed Price
against the Payment Deposit in order to reduce the uncredited balance of the
Payment Deposit until the uncredited balance of the Payment Deposit has been
credited and reduced to nil; and

 

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(b)           from and after the Deposit Reduction Time, the lesser of the Fixed
Price and the Reference Price, payable by wire transfer.

 

2.5        Payment

 

Payment by the Purchaser for each Delivery of Refined Gold shall be made no
later than two Business Days after the applicable Purchaser Gold Delivery by
wire transfer to a bank account of the Vendor designated in accordance with
Section 15.2.

 

2.6          Sales Tax

 

All federal, provincial, state and foreign sales and transfer taxes, sales and
use taxes, goods and services taxes, value-added taxes, duties, fees,
registration charges or other like charges (“Sales Taxes”) which are properly
payable in connection with the purchase and sale of the Refined Gold
contemplated by this Agreement shall be borne by the Party responsible for such
Sales Taxes under the Applicable Law.  Each party shall cause to be filed as
required by it under applicable law all tax returns and other documentation, at
its own expense, with respect to such Sales Taxes.

 

Article 3
DEPOSIT

 

3.1          Payment Deposit

 

The Purchaser hereby agrees to pay a cash deposit of US$311,500,000 to be
applied against the Gold Purchase Price, on and subject to the terms of this
Agreement (the “Payment Deposit”).  The Purchaser shall only have the right to
demand refund or repayment of all or any unapplied portion of the Payment
Deposit as provided in Section 3.7 or as otherwise specifically provided in this
Agreement.

 

3.2          Initial Deposit

 

The Purchaser hereby agrees to pay US$226,500,000 of the Payment Deposit by wire
transfer to the Vendor on the Effective Date (this portion of the Payment
Deposit being the “Initial Deposit”).

 

3.3          Scheduled Deposits

 

The Purchaser hereby agrees to pay US$85,000,000 of the Payment Deposit (this
portion of the Payment Deposit being the “Scheduled Deposits”, and each partial
payment thereof a “Scheduled Deposit”) to the Vendor by way of cash deposits in
accordance with Article 5.  Once a Scheduled Deposit has been paid, such
Scheduled Deposit shall be referred to herein as a “Paid Scheduled Deposit.”

 

3.4          No Interest

 

No interest shall be payable on the Payment Deposit.

 

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3.5          Use of Payment Deposit

 

It is agreed and acknowledged that Thompson Creek and the Vendor shall use the
Payment Deposit as follows:

 

(a)           the Initial Deposit will be used as a portion of the consideration
payable to shareholders of Vendor by Thompson Creek in connection with the
Acquisition; and

 

(b)           the Scheduled Deposits will be used for Vendor’s funding
requirements with respect to the Development pursuant to the Development
Program.

 

3.6          Deposit Record

 

The Vendor shall, at all times, maintain a record of the Payment Deposit under
this Agreement (the “Deposit Record”), which shall be stated in US$ and the
balance thereof shall be equal to:

 

(Initial Deposit) + (all Paid Scheduled Deposits) – (all reductions of the
Payment Deposit in accordance with Section 2.4, 3.7 or otherwise)

 

3.7          Deposit at Expiry of Initial Term

 

Vendor shall pay any uncredited balance of the Payment Deposit, as evidenced by
the Deposit Record, by wire transfer to the Purchaser within 45 days after the
expiry of the Initial Term, and shall provide a detailed calculation of the
Deposit Record on the expiry of the Initial Term (other than the expiry of the
Term due to termination of this Agreement under Section 12.2 or Section 13.2)
unless the Vendor has sold and Delivered to the Purchaser an amount of Refined
Gold sufficient to reduce the balance of the Deposit Record to nil as calculated
in accordance with Section 3.6.

 

Article 4
DELIVERIES

 

4.1          Deliveries of Vendor

 

The Vendor hereby agrees to deliver to the Purchaser the following concurrent
with execution and delivery of this Agreement:

 

(a)           an executed certificate of a senior officer of Vendor in form and
substance satisfactory to the Purchaser, acting reasonably, dated as of the
Effective Date, as to: (i) resolutions of the board of directors or other
comparable authority of Vendor authorizing the execution, delivery and
performance of this Agreement, and the Security Agreements and the transactions
contemplated hereby, (ii) the names, positions and true signatures of the
persons authorized to sign this Agreement and the Security Agreements on behalf
of Vendor, and (iii) such other matters pertaining to the transactions
contemplated hereby as the Purchaser may reasonably require;

 

(b)           as security for the performance of its obligations to the
Purchaser under this Agreement, the executed Security Agreements in
substantially the form attached

 

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as Schedules C1, C2 and C3 (the “Security Agreements”), which Security
Agreements shall have been registered, filed or recorded in all offices, and all
actions shall have been taken, that may be prudent or necessary to preserve,
protect or perfect the security interest of the Purchaser under the Security
Agreements.  Without limiting the foregoing, the Security Agreements on the
Milligan Property shall also be registered in: (i) British Columbia’s Mineral
Titles Online Registry against each of the Mineral Claims and Mineral Leases
that are part of the Milligan Property, (ii) British Columbia’s Personal
Property Registry against all personal property of Vendor, and (iii) in the Land
Title Office with respect to any Surface Rights that are registered in the Land
Title Office from time to time, in which case the Vendor will grant to the
Purchaser a mortgage over its interest in such Surface Rights as security for
the performance of its obligations to the Purchaser under this Agreement in a
form acceptable to the Parties, acting reasonably;

 

(c)           a favourable legal opinion, in form and substance satisfactory to
the Purchaser, acting reasonably, dated as of the Effective Date, from legal
counsel to Vendor as to (i) the legal status of Vendor, (ii) the corporate power
and authority of Vendor to execute, deliver and perform this Agreement and the
Security Agreements, (iii) the execution and delivery of this Agreement and the
enforceability of this Agreement against the Vendor, (iv) such legal opinions
relating to the security granted in favour of the Purchaser as Purchaser may
reasonably request, and (v) such other legal opinions that the Purchaser may
reasonably request; and

 

(d)           evidence of the satisfaction and discharge of the following
charges in favour of the Bank of Montreal and related obligations of the Vendor:

 

(i)      Base Registration No. 478928E in the British Columbia Personal Property
Registry;

 

(ii)     Registration No. 123380 in the Nunavut Personal Property Registry;

 

(iii)    Registration No. 2008/07039 14865 in the Yukon Personal Property
Registry; and

 

(iv)    Registration No. 625251 in the Northwest Territories Personal Property
Registry.

 

4.2          Deliveries of Purchaser

 

Purchaser hereby agrees to deliver to Vendor the following concurrent with
execution and delivery of this Agreement:

 

(a)           wire transfer of funds to or to the direction of Vendor equal to
the Initial Payment Deposit;

 

(b)           a certificate of a senior officer of the Purchaser, in form and
substance satisfactory to Vendor, acting reasonably, as to: (i) the resolutions
of the board of directors of the Purchaser, authorizing the execution, delivery
and performance of this Agreement and the transactions contemplated hereby,
(ii) the names, positions

 

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and true signatures of the persons authorized to sign this Agreement on behalf
of the Purchaser, and (iii) such other matters pertaining to the transactions
contemplated hereby as Vendor may reasonably require; and

 

(c)           a favourable legal opinion, in form and substance satisfactory to
Vendor, acting reasonably, from external legal counsel to the Purchaser as to
(i) the legal status of the Purchaser, (ii) the corporate power and authority of
the Purchaser to execute, deliver and perform this Agreement, (iii) the
execution and delivery of this Agreement and the enforceability of this
Agreement against the Purchaser, and (iv) such other legal opinions as the
Vendor may reasonably request.

 

Article 5
PAYMENT OF SCHEDULED DEPOSITS

 

5.1          Achievement of Deposit Events

 

Vendor may, from time to time, demand payment by Purchaser to Vendor of a
Scheduled Deposit in accordance with the requirements set forth in Schedule D (a
“Deposit Event”) by providing to the Purchaser and the Independent Engineer a
statement containing the following at least 10 calendar days prior to the
relevant Deposit Event:

 

(a)           the date of the Deposit Event;

 

(b)           an accounting of the amount of Project Costs to date contributed
by each of Purchaser, Vendor, and any third party funding the Development;

 

(c)           an estimate of the amount of Project Costs necessary to complete
the Development in accordance with the Development Program and any modifications
thereto;

 

(d)           a current calculation of the Purchaser’s Pro Rata Share of
Funding;

 

(e)           Vendor’s forecast of the total Project Costs to be used during the
period of time encompassing the corresponding Scheduled Deposit;

 

(f)            the amount of United States dollars requested for the
corresponding Scheduled Deposit;

 

(g)           the anticipated uses for the corresponding Scheduled Deposit; and

 

(h)           the expected date of the next ensuing Deposit Event.

 

5.2          Payment of Scheduled Deposits

 

Subject to Section 5.3, Purchaser shall pay the Vendor the Scheduled Deposit
under a Deposit Event by wire transfer no later than one Business Day following
the date upon which the corresponding Deposit Event occurs to a bank account of
Vendor designated in accordance with Section 15.2.

 

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5.3          Closing Conditions for Payment of Scheduled Deposits

 

The obligation of the Purchaser to make a Scheduled Deposit payment in
accordance with a Deposit Event is subject to the satisfaction of the following
conditions:

 

(a)           the Vendor shall have delivered to Purchaser the relevant
statement described in Section 5.1;

 

(b)           the Vendor shall have delivered to the Purchaser an executed
certificate of a senior officer of the Vendor certifying (and evidencing in the
case of (iv) and (v) below) that, as of the Deposit Event:

 

(i)      the representations and warranties made by the Vendor and Thompson
Creek set forth in Schedule A1 and Schedule A2 and in the Security Agreements,
remain true and correct in all material respects on and as of such date;

 

(ii)     no Vendor Event of Default (or an event which with notice or lapse of
time or both would become a Vendor Event of Default) has occurred and is
continuing;

 

(iii)    except as otherwise previously communicated to the Purchaser and the
Independent Engineer, no changes to the Development Program have occurred, the
Development is in accordance with the Development Program and the Vendor has not
abandoned the Milligan Project;

 

(iv)    the Vendor has obtained or has access to sufficient financing to
complete the Development (including pursuant to any modifications to the
Development Program);

 

(v)     all material Permits have been obtained and are in good standing for the
conduct of the activities conducted in the Development Program to date and for
the use of funds contemplated by the Deposit Event, and no material Permit has
been revoked or rescinded that is necessary for the commencement of commercial
production of Minerals from the Milligan Project;

 

(vi)    no written notice of any Encumbrance other than a Permitted Encumbrance
against the Milligan Property has been received by Vendor; and

 

(vii)   no Deposit Suspension Event has occurred and is continuing.

 

(c)           the Purchaser has not received from the Independent Engineer,
prior to the date of the Deposit Event, notification that (i) the Development is
not in accordance with the Development Program, (ii) the Vendor does not have
sufficient Permits to complete the proposed work program represented by the
funds under the Deposit Event or that one or more material Permits has been
revoked, rescinded or is not in good standing, or (iii) the Purchaser’s Pro Rata
Share of Funding set forth in the statement described in Section 5.1 is not
correct.

 

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Article 6
TERM

 

6.1          Term

 

(a)           The term of this Agreement shall commence on the date of this
Agreement and, subject to Sections 12.2, 13.2 and 6.1(b), shall continue until
the date that is 50 years after the date of this Agreement (the “Initial Term”)
and thereafter shall automatically be extended for successive 10 year periods
(each an “Additional Term” and, together with the Initial Term, the “Term”).

 

(b)           This Agreement may be terminated by the Parties on mutual written
consent, or as otherwise provided in this Agreement.

 

Article 7
REPORTING; BOOKS AND RECORDS; INSPECTIONS

 

7.1          Monthly Reporting

 

During the full period in which Development expenditures are being made, the
Vendor shall deliver to the Purchaser a Monthly Construction Report on or before
the 30th calendar day after the end of each calendar month.  Commencing with the
month in which Minerals are first shipped to an Offtaker, the Vendor shall
deliver to the Purchaser a Monthly Report on or before the 30th calendar day
after the end of each calendar month.

 

7.2          Annual Reporting

 

Within 60 calendar days after the end of each calendar year, Vendor will deliver
to the Purchaser an annual report that addresses the following for the Milligan
Project:

 

(a)           a statement setting out the most recent estimated gold reserves
and resources for the Milligan Property for such calendar year and the
assumptions used, including cut-off grade, metal prices and metal recoveries;

 

(b)           a budget, mine operating plan and production forecast of the
number of ounces of Produced Gold expected to be produced over the next calendar
year, including:

 

(i)      tonnes or tons, types and gold grade of ore to be mined;

 

(ii)     types, tonnes or tons and gold grade of ore to be stockpiled; and

 

(iii)    a forecast as to the amount of Minerals expected to be produced over
the next year.

 

7.3          Additional Reporting Requirements

 

(a)           The Vendor shall provide to Purchaser a copy of any life of mine
plan or similar comprehensive operating plan produced by or on behalf of Vendor
detailing the production and development plan for the Milligan Property reserves
and resource,

 

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including all supportive narrative, assumptions and strategies, and any update
thereto, within 15 days after any life of mine plan or update is prepared.

 

(b)           The Vendor or its Affiliates shall provide the Purchaser with
copies of reserve and resource reports on the Milligan Property from time to
time as they become available.

 

(c)           To the extent not otherwise required to be delivered herein, the
Vendor shall promptly provide the Purchaser with all feasibility studies and all
geological, reserve, engineering and metallurgical and related data and
evaluations of the Milligan Project prepared by or for the benefit of the Vendor
or otherwise in the possession and control of Vendor which would reasonably be
expected to be material to the Purchaser’s interest in the Milligan Project (the
“Project Studies”).

 

(d)           The Vendor shall provide to the Purchaser a statement setting out
the Deposit Record, including the outstanding balance owing under the Deposit
Record, as at June 30 and as at December 31 of each calendar year, in each case
within 30 days following such date (a “Deposit Record Report”).

 

7.4          Books and Records

 

(a)           Vendor and its Affiliates shall, in all material respects, keep
true, complete and accurate books and records of all of its operations and
activities with respect to the Milligan Project, including the mining and
production of Minerals and the treatment, processing, milling, concentrating,
transportation and sale of Minerals. Vendor and its Affiliates shall permit the
Purchaser and its authorized representatives and agents to perform audits no
more than once each year and additional limited reviews and examinations of its
books and records and other information relevant to the production, delivery and
determination of Produced Gold and Refined Gold from time to time at reasonable
times, all at the Purchaser’s sole risk and expense and upon reasonable notice
to confirm compliance with the terms of this Agreement. The Purchaser shall
diligently complete any audit or other reviews and examination permitted
hereunder.

 

(b)           Vendor shall use reasonable commercial efforts to provide in the
terms of relevant Mineral Offtake Agreements a right of Purchaser to have access
to and review relevant testing, documents and data of Offtakers and otherwise
derived pursuant to relevant Mineral Offtake Agreements in respect of smelting,
refining and beneficiation of Minerals.

 

7.5          Inspections

 

Subject at all times to the workplace rules and supervision of Vendor, and
provided any rights of access do not interfere with any exploration,
development, mining or processing work conducted on the Milligan Property,
Vendor shall grant to the Purchaser and its representatives and agents,
including, without limitation, the Independent Engineer, at reasonable times and
upon reasonable notice and at the Purchaser’s sole risk and, subject to
Section 15.1, expense, the right to access and inspect the Milligan Property and
to monitor Vendor’s mining and processing operations on the Milligan Project. 
The Vendor shall not be responsible for injuries to or damages suffered by

 

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the Purchaser and its representatives and agents, including, without limitation
the Independent Engineer, while visiting the Milligan Property unless such
injuries or damages are caused or contributed to by the gross negligence or
wilful misconduct of the Vendor or its representatives. The Purchaser may avail
itself of such right of access a maximum of twice per calendar year, other than
as required by the Independent Engineer.  To the extent permitted under Mineral
Offtake Agreements, Purchaser and its representatives and agents, including
without limitation, the Independent Engineer, shall also have the right to be
present or to be represented at any smelter, refinery or other processing
facility at which the weighing, sampling and assaying of metals and the
calculation of the Refined Gold will be determined (i) at any time that the
Vendor or any Affiliate, its representatives or agents is present, provided,
that the Vendor or any such Affiliate shall give the Purchaser reasonable
advanced notice of any such visit, and (ii) at such other time as the Purchaser
may request, provided, that the Purchaser shall give the Vendor reasonable
advanced notice of the date on which Purchaser intends to conduct such visit. 
Vendor shall grant to the Independent Engineer such access to the Milligan
Project and its site, facilities and employees, and to construction and other
contractors at such times and on such notice as the Independent Engineer
considers reasonable for the performance of the Independent Engineer’s duties
with respect to this Agreement.

 

Article 8
COVENANTS

 

8.1          Conduct of Operations

 

(a)           All decisions regarding the Milligan Project, including all
decisions concerning the methods, extent, times, procedures and techniques of
any (i) exploration, development and mining related to the Milligan Project,
including spending on capital expenditures, (ii) leaching, milling, processing
or extraction, (iii) materials to be introduced on or to the Milligan Project,
and (iv) except as provided herein, the sales of Minerals and terms thereof
shall be made by Vendor, in its sole discretion. Without limiting the generality
of the foregoing, Vendor shall be permitted to amend the mine plan, process
design and/or plant and equipment for the Milligan Project at any time and from
time to time in its sole discretion, provided that it is acting in a
commercially reasonable manner and not inconsistent with accepted Canadian
mining practice.

 

(b)           Notwithstanding Section 8.1(a), Vendor agrees that it shall carry
out and perform all mining operations and activities pertaining to or in respect
of the Milligan Project in a commercially reasonable manner and in accordance
with Applicable Laws, all applicable licences, Permits and other authorizations
and accepted mining, processing, engineering and environmental practices
prevailing in the mining industry.

 

(c)           Notwithstanding Section 8.1(a), Vendor and its Affiliates shall
operate the Milligan Project as though the Vendor had a full economic interest
in all the gold produced from the Milligan Property and shall not consider the
economic impact of the Agreement in its reserves and resources calculations or
mine planning provided, that the Vendor may seek the Purchaser’s written consent
(which consent may be withheld in the Purchaser’s sole discretion) to consider
the economic impact of this Agreement with respect to a material expansion of
the

 

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Milligan Project or the reprocessing of tailings, waste rock or other waste
products.

 

(d)           Vendor shall at all times during the Term do all things necessary
to maintain the Milligan Property and, subject to Sections 9.1 (a)(ii) and
(d)(ii) and 10.3(b), maintain the related Mineral Claims and Mining Leases in
good standing, including paying all taxes owing in respect thereof.

 

(e)           Notwithstanding anything else contained in this Section 8.1,
nothing in this Agreement shall require Vendor or any of its Affiliates to
construct, operate or continue the Milligan Project or to explore or develop the
Milligan Project.

 

8.2          Preservation of Corporate Existence

 

Vendor shall at all times during the term of this Agreement do and cause to be
done all things necessary or advisable to maintain its corporate existence.

 

8.3          Processing/Commingling

 

The Vendor may, and may cause each of its Affiliates to, process Other Minerals
through the Milligan Facilities in priority to, or commingle Other Minerals
with, Minerals mined, produced, extracted or otherwise recovered from the
Milligan Property, provided: (i) Vendor (or such Affiliate) has adopted and
employs best industry practices and procedures for weighing, determining
moisture content, sampling and assaying and determining recovery factors (a
“Commingling Plan”), (ii) the Purchaser has approved the Commingling Plan, such
approval not to be unreasonably withheld, and (iii) Vendor or such Affiliate
keeps records required by the Commingling Plan.

 

8.4          Mineral Offtake Agreements

 

(a)           During the Term, the Vendor shall deliver, and (subject to
Section 2.1(a)) Vendor shall sell, all Minerals that contain Produced Gold to an
Offtaker pursuant to a Mineral Offtake Agreement, in such quantity, description
and amounts and at such times and places as required under and in accordance
with a Mineral Offtake Agreement.

 

(b)           Vendor shall take commercially reasonable steps to ensure that it
has sufficient Mineral Offtake Agreements to efficiently recover gold as and
when Minerals are produced from the Milligan Project.  Vendor shall use
commercially reasonable efforts to cause the market price for determination of
any and all Refined Gold (including under provisional payments) sold by Vendor
under each Mineral Offtake Agreement to be based on an average set by the London
Bullion Market Association (or any successor thereto) or such other benchmark on
such gold market as the Parties may mutually agree.  Vendor shall provide the
Purchaser with a final signed copy of any Mineral Offtake Agreement within ten
Business Days after the execution thereof.

 

(c)           Vendor shall take commercially reasonable steps to enforce its
rights and remedies under each Mineral Offtake Agreement with respect to any
breaches of the terms thereof relating to the timing and amount of payments for
gold to be

 

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made thereunder. Vendor shall notify the Purchaser in writing when any dispute
arising out of or in connection with any such Mineral Offtake Agreement is
commenced in respect of Minerals and shall provide the Purchaser with timely
updates of the status of any such dispute and the final decision and award of
the court or arbitration panel with respect to such dispute, as the case may
be.  Vendor shall notify the Purchaser in writing upon the occurrence of any
force majeure or similar provision under any Mineral Offtake Agreement and shall
provide the Purchaser with timely updates of the status thereof.

 

(d)           The Vendor shall use its commercially reasonable efforts to cause
each Mineral Offtake Agreement to provide for provisional Gold Payments in the
form of Refined Gold, which for purposes of this Section 8.4(d) does not include
paying to an Offtaker greater consideration for its services than would be
payable for a provisional payment that was in the form of cash.

 

8.5          Insurance

 

(a)           Vendor shall maintain with reputable insurance companies insurance
with respect to the Milligan Project and for the construction, development and
operations on and in respect of the Milligan Project against such casualties and
contingencies and of such types and in such amounts as is customary in the
Canadian mining industry for similar operations.

 

(b)           Vendor shall ensure that each shipment of Produced Gold is
adequately insured, in such amounts and with such coverage as is customary in
the Canadian mining industry, until the time that risk of loss and damage for
such Produced Gold is transferred to the Offtaker pursuant to a Mineral Offtake
Agreement.

 

(c)           Where the Vendor or its Affiliate receives payment under any
insurance policy in respect of a shipment of Produced Gold that is lost or
damaged after leaving the Milligan Project and before the risk of loss or damage
is transferred to the Offtaker, the Vendor shall sell and deliver to the
Purchaser (without duplication to the extent previously sold and delivered to
the Purchaser by the Vendor) pursuant to Sections 2.1 and 2.4, an amount of
Refined Gold having a value equal to 25% of the amount of the insurance payment
received by the Vendor and its Affiliates in respect of Produced Gold in such
shipment.

 

8.6                               Permitted Debt Financings and Permitted
Encumbrances

 

[Provisions below (and conforming definitions) have not been settled/agreed to
by parties] 

 

[Provisions on timing of release of security to be settled/agreed to by parties]

 

(a)                                  [The Vendor agrees that, with respect to
any secured Project Financing that the Vendor arranges for the Milligan Project,
the Project Financing shall provide that the Project Lenders (or any agent or
trustee that holds their Project Security) will enter into an intercreditor
agreement with the Purchaser and Vendor on terms acceptable to each of the
parties thereto, acting reasonably, under which, inter alia, the Project Lenders
and the Purchaser and the other parties thereto would agree that:

 

(i)                 Vendor’s obligation to deliver the Designated Percentage of
Produced Gold to the Purchaser against payment of the Gold Purchase Price (and
subject to Vendor’s right to credit the relevant portion of the Gold Purchase
Price against the Payment Deposit) rank ahead of any obligation to the Project
Lenders;

 

(ii)             Subject to the foregoing, the Purchaser would subordinate the
Purchaser’s security interest under the Security Agreements to the Project
Security for the Project Financing;

 

(iii)         the Project Lenders’ rights of realization and sale in a default
situation would be subject to the obligation to make any transferee of the
Milligan Project or any portion of the Milligan Project (including the Project
Lenders if they take title to the Milligan Project or any such portion)
acknowledge and agree directly with the Purchaser to assume jointly and
severally with any other holders of an interest in the Milligan Project, the
rights and obligations of the Vendor under this Agreement; and

 

(iv)            other reasonable terms and provisions, including any relating to
mutual cure rights, notices, and other remedies, would be included.

 

(b)                                  Financing that the Vendor arranges for
assets (including without limitation,  mobile mining equipment, motor vehicles
and office equipment) subject to operating leases or similar financing
arrangements shall also be entitled to priority over the Security Agreement and
there shall be no requirement to enter into an intercreditor agreement with the
Purchaser.

 

(c)                                  The Purchaser acknowledges that the Vendor
or its Affiliates may from time to time enter into commitments for certain
Corporate Financings.

 

(d)                                  In connection in any commitment for
Corporate Financing, the Vendor covenants and agrees to negotiate in good faith
with any Corporate Lender and the Purchaser to enter into an intercreditor
agreement on terms acceptable to each of the parties thereto, acting reasonably,
under which,

 

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inter alia, the Corporate Lenders and the Purchaser and the other parties
thereto would agree that:

 

(i)                 Vendor’s obligation to deliver the Designated Percentage of
Produced Gold to the Purchaser against payment of the Gold Purchase Price (and
subject to Vendor’s right to credit the relevant portion of the Gold Purchase
Price against the Payment Deposit) rank ahead of any obligation to the Corporate
Lenders;

 

(ii)             the Corporate Lenders’ rights of realization and sale in a
default situation would be subject to the obligation to make any transferee of
the Milligan Project or any portion of the Milligan Project (including the
Corporate Lenders if they take title to the Milligan Project or any such
portion) acknowledge and agree directly with the Purchaser to assume jointly and
severally with any other holders of an interest in the Milligan Project, the
rights and obligations of the Vendor under this Agreement; and

 

(iii)         other reasonable terms and provisions, including any relating to
mutual cure rights, notices, and other remedies, would be included.

 

(e)                                  The security interests referred to in this
Section 8.6 which are registered in the (i) Personal Property Security Registry;
(ii) British Columbia’s Mineral Titles Online Registry; and (iii) in the Land
Title Office with respect to any Surface Rights that are registered in the Land
Title Office from time to time shall be deemed to be Permitted Encumbrances.

 

(f)                                    Purchaser shall consider, but not be
obligated hereby to, subordinate Purchaser’s security interests under the
Security Agreements to the Corporate Lender Security for the Corporate
Financing.]

 

8.7                               Confidentiality

 

(a)                                  Each Party (a “Receiving Party”) agrees
that it shall maintain as confidential and shall not disclose, and shall cause
its Affiliates, employees, officers, directors, advisors, agents and
representatives to maintain as confidential and not to disclose, the terms
contained in this Agreement and all information (whether written, oral or in
electronic format) received or reviewed by it as a result of or in connection
with this Agreement, including any draft or final technical reports provided
under Section 7.3, any Mineral Offtake Agreement provided under
Section 8.4(a) and the information received by it pursuant to the
Confidentiality Agreement (“Confidential Information”), provided that a
Receiving Party may disclose Confidential Information in the following
circumstances:

 

(i)            to its auditor, legal counsel, lenders, brokers, underwriters and
investment bankers and to persons with which it is considering or intends to
enter into a transaction for which such Confidential Information would be
relevant, provided that such persons are advised of the confidential nature of
the confidential information, undertake to maintain the confidentiality of it

 

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and are strictly limited in their use of the confidential information to those
purposes necessary for such persons to perform the services for which they were,
or are proposed to be, retained by the Receiving Party or to consider or effect
the applicable transaction, as applicable;

 

(ii)           subject to Section 8.6(c) and 17.6, where that disclosure is
necessary to comply, in a Party’s reasonable judgment, with Applicable Laws,
including rules and regulations promulgated by the U.S. Securities and Exchange
Commission (the “SEC”), the Canadian Securities Administrators (the “CSA”), a
provincial securities commission, court order or the policies of any relevant
stock exchange, provided that such disclosure is limited to only that
Confidential Information so required to be disclosed and that the Receiving
Party will have evaluated the availability of any laws, rules, regulations or
contractual rights as to disclosure on a confidential basis to which it may be
entitled and sought such treatment for portions of such documents it reasonably
believes are eligible for such treatment;

 

(iii)          for the purposes of the preparation of an Auditor’s Report under
Section 15.4 or any arbitration proceeding commenced under Section 15.5;

 

(iv)          where such information is already widely known by the public other
than by a breach of the confidentiality terms of this Agreement or is known by
the Receiving Party prior to the entry into of this Agreement and the
Confidentiality Agreement or obtained independently of this Agreement and the
disclosure of such information would not breach any other confidentiality
obligations;

 

(v)           with the consent of the disclosing Party; and

 

(vi)          to those of its and its Affiliates’ directors, officers,
employees, representatives and agents who need to have knowledge of the
Confidential Information;

 

(b)                                 Each Party shall ensure that its and its
Affiliates’ employees, directors, officers, representatives and agents and those
persons listed in Section 8.6(a)(i) are made aware of this Section 8.6 and the
Confidentiality Agreement and comply with the provisions hereof and thereof.
Each Party shall be liable to the other Party for any improper use or disclosure
of such terms or information by such persons.

 

(c)                                  The Vendor hereby acknowledges that the
Purchaser will be required to file this Agreement on EDGAR and SEDAR in order to
comply with Applicable Laws, including the rules and regulations of the SEC and
the CSA.  Purchaser hereby agrees that, prior to such filing, it shall consult
in good faith with the Vendor regarding redactions, if any, that are permitted
to be made to this Agreement as filed on EDGAR pursuant to Applicable Law,
including the rules and regulations of the SEC; provided, however, that the
final determination of such redactions, if any, shall be made in the Purchaser’s
sole discretion.  If in order to comply with

 

27

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Applicable Laws, including rules or regulations promulgated by the CSA, the
Vendor is required to file this Agreement on SEDAR, the Vendor shall notify the
Purchaser of such requirement at least two Business Days prior to the last date
to file on SEDAR, and the Parties shall consult in good faith with the Vendor
regarding redactions, if any, that are permitted to be made to this Agreement as
filed on SEDAR pursuant to Applicable Law, including the rules and regulations
of the CSA; provided, however, that the final determination of such redactions,
if any, shall be made in the Vendor’s sole discretion.

 

(d)                                 Vendor and the Purchaser will consult with
each other before issuing any press release concerning the execution of this
Agreement or otherwise making any public disclosure concerning the execution of
this Agreement and shall not issue any such press release or make any such
public disclosure before receiving the consent of the other party.  Nothing in
this Section 8.6(d) prohibits any party from making a press release or other
disclosure that is, in a Party’s reasonable judgement, required by Applicable
Laws or by the policies of any stock exchange if the party making the disclosure
has first used its commercially reasonable efforts to consult the other party
with respect to the timing and content thereof.

 

8.8                               Compliance with Law

 

(a)                                  The Vendor shall materially comply with all
Applicable Laws relating to the Vendor’s operations on or with respect to the
Milligan Property, including but not limited to Environmental Laws; provided,
however, the Vendor shall have the right to contest enforcement actions and any
allegations of infringement of the same in its discretion.  The Vendor shall
timely and fully perform in all material respects all environmental protection
and reclamation activities required pursuant to Applicable Laws, including but
not limited to Environmental Laws, on or with respect to the Milligan Property

 

(b)                                 Each of the Parties agrees that it will
comply with the Corruption of Foreign Public Officials Act (Canada) in
connection with its dealings relating to this Agreement and the Milligan
Project.

 

8.9                               Unprocessed Ore

 

The Vendor hereby agrees that it shall not (i) sell unprocessed ore from the
Milligan Property, or (ii) enter into any agreement to toll process ores at
facilities owned by third parties (other than Affiliates of the Vendor), in each
case without the prior written consent of the Purchaser, which consent may not
be unreasonably withheld.

 

Article 9

RIGHT OF FIRST OFFER

 

9.1                               Right of First Offer on Gold Interest

 

(a)                                  Subject to Section 10.4, if

 

(i)            at any time and from time to time, Vendor or any of its
Affiliates wishes to offer for sale to any third party or, following an offer by
a third party to

 

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purchase (A) a gold royalty on production from the Milligan Property, (B) an
amount of gold based on production from any portion of the Milligan Property, or
(C) any participating interest in gold based on production from the Milligan
Property, or

 

(ii)           the Vendor wishes to terminate or not renew a Mineral Claim or
Mining Lease from any portion of the Milligan Property,

 

(collectively, a “Milligan Gold Right”)

 

then the Vendor shall, by notice in writing to the Purchaser, first offer to
sell such Milligan Gold Right to the Purchaser at the price and upon
substantially the terms that the Vendor proposes to offer or accept from a third
party (which offer the Vendor shall promptly provide to the Purchaser) (the
“Vendor Offer”). Notwithstanding anything to the contrary herein, if the
Milligan Gold Right represents less than 25% of the fair market value of the
assets the Vendor wishes to offer for sale to a third party, then this
Section 9.1(a) shall not apply to such offer to sell to a third party

 

(b)                                 Upon receipt of a Vendor Offer, the Vendor
and the Purchaser shall negotiate in good faith for a period of up to 45 days
commencing on the date of delivery by the Vendor to the Purchaser of the Vendor
Offer (the “Negotiation Period”) the definitive terms of an agreement for the
Milligan Gold Right which is the subject of the Vendor Offer (the “Definitive
Agreement”).

 

(c)                                  If, during the Negotiation Period, the
Vendor and the Purchaser agree on the terms of the Definitive Agreement, then
the Vendor and the Purchaser shall enter into the Definitive Agreement and
proceed to close the transaction as soon as commercially reasonable thereafter
pursuant to the terms of such Definitive Agreement.

 

(d)                                 If, during the Negotiation Period, the
Vendor and the Purchaser are unable to agree on the terms of, and enter into,
the Definitive Agreement, then, on the earlier of (i) the last day of the
Negotiation Period, and (ii) the day on which the Vendor and the Purchaser agree
that negotiations have ended,

 

(i)            the Vendor may commence negotiations with a third party for the
sale of the Milligan Gold Right which is the subject of the Vendor Offer, and,
either directly or through an Affiliate, sell the Milligan Gold Right that is
the subject of the Vendor Offer to a third party, provided that the terms of
sale are no more favourable to such third party than those offered to the
Purchaser in the Vendor Offer, or

 

(ii)           in the case of the termination or non-renewal of a Mineral Claim
or Mining Lease, the Vendor may terminate or choose not to renew such Mineral
Claim or Mining Lease.

 

(e)                                  For the avoidance of doubt, this
Section 9.1 shall not apply to any (i) gold spot sales, gold forward sales or
options or other gold sales or gold loans to a financial institution or bullion
bank, (ii) internal transfers among Vendor and its Affiliates,

 

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provided that any such transfer complies with Section 8.4(a), (iii) a sale of
all or substantially all of the Milligan Property or of the Milligan Project or
a sale of substantially all of the assets of the Vendor, (iv) the sale of an
equity interest in the Vendor, or (v) any Mineral Offtake Agreement.

 

Article 10

TRANSFERS AND ASSIGNMENTS

 

10.1                        General.  No Party may sell, transfer, assign,
convey, grant any right, title or interest in or to, or otherwise dispose of,
this Agreement, in whole or in part, or its rights under this Agreement, in
whole or in part, (and Vendor may not effectuate such an assignment under the
Security Agreements) and Thompson Creek and Vendor may not effectuate a Transfer
(any such assignment or Transfer referred to herein as an “Assignment”) except
to the extent such Assignment complies with this Article 10, including the
conditions set forth in this Section 10.1.  Any Party making an Assignment
hereunder shall be referred to as an “Assignor”.

 

(a)                                  Any assignee pursuant to an Assignment (an
“Assignee”) must execute an instrument in writing by which it expressly assumes
any and all of the obligations of the Assignor pursuant to the Assignment, and
the failure of any such Assignee to execute such a written instrument shall mean
that the Assignment is null and void.

 

(b)                                 Any Assignor must provide all other Parties
hereunder no less than twenty (20) Business Days advance written notice of a
proposed Assignment.

 

(c)                                  Upon completion of an Assignment by an
Assignor in compliance with this Article 10, (i) if the Assignor is either the
Vendor or Thompson Creek, then the Purchaser and Royal Gold shall release such
Assignor from its obligations under this Agreement or the Security Agreements
(in the case of an Assignment by the Vendor under the Security Agreements), and
(ii) if the Assignor is either the Purchaser or Royal Gold, then the Vendor and
Thompson Creek shall release such Assignor from all further obligations under
this Agreement, in each case in a form reasonably acceptable to the Assignor.

 

(d)                                 No Party hereunder may complete an
Assignment while it is in breach or default of any term, condition or obligation
under this Agreement or the Security Agreements.

 

(e)                                  No Party hereunder may make an Assignment
to a Restricted Person.

 

10.2                        Transfers to Affiliates.  Subject to Section 10.1
and notwithstanding Sections 10.5 or 10.6, either Vendor or Purchaser may from
time to time complete an Assignment to an Affiliate.

 

10.3                        Transfers of the Milligan Project

 

(a)           Subject to Sections 10.1, 10.2 and 10.4(b), (i) the Vendor may
sell, transfer, assign, convey, grant any right, title or interest in or to, or
otherwise dispose of, all or any part of the Milligan Project, and (ii) Thompson
Creek or Vendor may

 

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sell, transfer, assign, grant any right, title or interest in or to, or
otherwise dispose of any equity interest in the Vendor (each of clauses (i) and
(ii), a “Transfer”), unless Purchaser demonstrates to Vendor, acting reasonably,
that at the time of the Transfer the transferee does not have sufficient
financial resources and operational expertise to continue developing and
operating the Milligan Project in a manner that provides reasonable assurance
that the Development will be completed in accordance with the Development
Program and, after Development, operate the Milligan Project in accordance with
Section 8.1(b).

 

(b)                                 Subject to Section 9.1, the Vendor may
relinquish, surrender or terminate all or any part of any Mineral Claims or
Mining Leases constituting the Milligan Project if Vendor reasonably determines
that the cost of maintaining such relinquished, surrendered or terminated
Mineral Claims or Mining Leases is not justified.  If Vendor acquires or
reacquires any Mineral Claims or Mining Leases that cover or relate to any
previously released portion of the Milligan Project, this Agreement shall apply
fully to such acquired or reacquired portion.

 

(c)                                  Notwithstanding Section 10.3(a) above, the
Vendor may enter into a joint venture with another person or persons with
respect to the Milligan Project provided that:

 

(i)            Vendor retains at least a 50% undivided interest in the Milligan
Project; Vendor is at all times the operator of the Milligan Project; and each
joint venture participant agrees in a document, or documents, acceptable to the
Purchaser, acting reasonably, with Vendor, the Purchaser and any other joint
venture participant to assume on a joint and several basis with the Vendor all
of the obligations and duties under this Agreement and to acknowledge and assume
the obligations under the Security Agreements; and

 

(ii)           all filings have been made and all other actions have been taken
that are required in order for the Purchaser to continue at all times following
such transfer to have a valid and perfected security interest in the Milligan
Property and the Produced Gold.

 

10.4                        Exceptions Based on Intercreditor Agreements

 

(a)                                  The rights of the Purchaser pursuant to
Section 9.1 shall be subject to the provisions of any intercreditor agreement
pursuant to Section 8.6 and shall not terminate upon a realization by the
Project Lenders, if applicable.

 

(b)                                 The restrictions on Assignment under this
Article 10 shall not apply to any grant of an Encumbrance on all or any portion
of the Milligan Project that is permitted under Section 8.6.

 

(c)                                  The restrictions on Assignment under this
Article 10 shall apply to any sale, transfer, assignment, conveyance, grant of
any right, title or interest in or to or other disposition of all or any portion
of the Milligan Project in connection with or resulting from a realization by
the Project Lenders, if applicable, which realization shall be subject to the
provisions of any intercreditor agreement made pursuant to Section 8.6.

 

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10.5                        Assignment by Purchaser Group

 

Subject to Sections 10.1 and 10.2, until such time as all of the Scheduled
Deposits have been paid to Vendor, neither Purchaser nor Royal Gold shall make
an Assignment except with the prior written consent of Vendor, such consent not
to be unreasonably withheld.  Thereafter, Purchaser and Royal Gold may make an
Assignment without the consent of Vendor.

 

10.6                        Assignment by Vendor Group

 

Subject to Sections 10.1 and 10.2, neither the Vendor nor Thompson Creek shall
make an Assignment in respect of this Agreement or the Security Agreements (in
the case of the Vendor) except to the extent such Assignment is concurrent with
a Transfer or otherwise with the prior written consent of the Purchaser, such
consent not to be unreasonably withheld.

 

Article 11

REPRESENTATIONS AND WARRANTIES

 

11.1                        Representations and Warranties of Vendor

 

Vendor, acknowledging that the Purchaser and Royal Gold are entering into this
Agreement in reliance thereon, hereby makes the representations and warranties
set forth in Schedule A1 to the Purchaser and Royal Gold on and as of the date
of this Agreement and on and as of any other date required pursuant to this
Agreement.

 

11.2                        Representations and Warranties of Thompson Creek

 

Thompson Creek, acknowledging that the Purchaser and Royal Gold are entering
into this Agreement in reliance thereon, hereby makes the representations and
warranties set forth in Schedule A2 to the Purchaser and Royal Gold on and as of
the date of this Agreement and on and as of any other date required pursuant to
this Agreement.

 

11.3                        Representations and Warranties of the Purchaser

 

The Purchaser, acknowledging that Vendor and Thompson Creek are entering into
this Agreement in reliance thereon, hereby makes the representations and
warranties set forth in Schedule A3 to Vendor and Thompson Creek on and as of
the date of this Agreement.

 

11.4                        Representations and Warranties of Royal Gold

 

Royal Gold, acknowledging that Vendor and Thompson Creek are entering into this
Agreement in reliance thereon, hereby makes the representations and warranties
set forth in Schedule A4 to Vendor and Thompson Creek on and as of the date of
this Agreement.

 

11.5                        Survival of Representations and Warranties

 

The representations and warranties set forth in Schedules A1, A2, A3 and A4
shall survive the execution and delivery of this Agreement for a term of five
years following the payment of the final Scheduled Deposit.

 

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11.6                        Knowledge

 

Where any representation or warranty contained in this Agreement is expressly
qualified by reference to the “knowledge” of Vendor to refer to the actual
knowledge of any of the Chief Executive, Chief Financial and Chief Operating
Officers of Thompson Creek.(3)

 

Article 12

VENDOR EVENTS OF DEFAULT

 

12.1                        Vendor Events of Default

 

Each of the following events or circumstances constitutes an event of default by
Vendor (each, a “Vendor Event of Default”):

 

(a)                                  Vendor fails to sell and deliver Refined
Gold to the Purchaser on the terms and conditions set forth in this Agreement
within ten Business Days after receipt of notice from the Purchaser notifying
Vendor of such default;

 

(b)                                 other than as provided in Section 12.1(a),
Vendor is in breach or default of any terms or conditions, or any of its
covenants or obligations, set forth in this Agreement or the Security Agreements
in any material respect, which is incapable of being cured, or, if any such
term, condition, covenant or obligation is capable of being cured, such breach
or default is not remedied within a period of 30 days following delivery by the
Purchaser to Vendor of written notice of such breach or default, or such longer
period of time as the Purchaser may determine in its sole discretion;

 

(c)                                  the Vendor is in breach of Article 10;

 

(d)                                 if, prior to the Deposit Reduction Time,
Vendor or any of its Affiliates defaults under any indebtedness and such default
is not remedied within the cure period permitted under such indebtedness and
materially adversely affects the financial condition of Vendor such that it
impairs its ownership of the Milligan Project or its ability to operate the
Milligan Project in the ordinary course; or

 

(e)                                  upon the occurrence of an Insolvency Event
affecting Vendor.

 

12.2                        Remedies

 

(a)                                  If a Vendor Event of Default occurs and is
continuing, the Purchaser shall have the right, upon written notice to Vendor,
at its option, and in addition to and not in substitution for any other remedies
available to it at law or in equity, to terminate this Agreement and demand from
Vendor on 90 days notice the repayment of the uncredited balance of the Payment
Deposit, as evidenced by the Deposit Record, without interest.

 

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

(3)  Potentially, officers of Vendor to be added.

 

33

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(b)                                 For greater certainty, if the Purchaser does
not exercise its right under Section 12.2(a), the obligation of Vendor or any
successor on a realization hereunder shall continue in full force and effect.

 

Article 13

PURCHASER EVENTS OF DEFAULT

 

13.1                        Purchaser Events of Default

 

Each of the following events or circumstances constitutes an event of default by
the Purchaser (each, a “Purchaser Event of Default”):

 

(a)                                  the Purchaser fails to pay for Refined Gold
delivered to the Purchaser in accordance with Section 2.4 within 10 days of
receipt of notice from Vendor notifying the Purchaser of such default;

 

(b)                                 subject to satisfaction of the conditions
set forth in Section 5.3 and Schedule D, the Purchaser fails to pay any portion
of the Payment Deposit to Vendor, within 10 days of receipt of notice from
Vendor notifying the Purchaser of such default;

 

(c)                                  the Purchaser is in breach of Article 10;

 

(d)                                 the Purchaser is in breach or default of any
of the terms or conditions, or any of its covenants or obligations, set forth in
this Agreement in any material respect (other than a breach or default of the
covenants or obligations referenced in Sections 13.1(a) and 13.1(b) above),
which is incapable of being cured, or, if any such term, condition, covenant or
obligation is capable of being cured, such breach or default is not remedied
within a period of 30 days following delivery by the Vendor to Purchaser of
written notice of such breach or default, or such longer period of time as the
Vendor may determine in its sole discretion; or

 

(e)                                  upon the occurrence of an Insolvency Event
affecting Purchaser.

 

13.2                        Remedies

 

In addition to Vendor’s rights and remedies available to it at law or in equity,
if a Purchaser Event of Default described in Sections 13.1(a), 13.1(b) or
13.1(c) occurs and is continuing, Vendor shall have the right, upon written
notice to the Purchaser, to suspend its obligations under this Agreement;
provided, however, that those obligations that existed prior to the date of such
written notice and such other provisions of this Agreement as are required to
give effect thereto, shall not be suspended and provided that, if suspension is
as a result of a Purchaser Event of Default for a breach of Article 10, the
provisions of Article 7 shall also be suspended and Vendor shall not be
obligated to sell or deliver any Refined Gold to the Purchaser during such
suspension.  If the Purchaser cures the Purchaser Event of Default in full
within 60 days, then Vendor’s obligations under this Agreement shall recommence
as of the date the Purchaser cures the Purchaser Event of Default in full. If
the Purchaser fails to cure the Purchaser Event of Default described in Sections
13.1(a) or 13.1(b) in full within 60 days then Vendor may elect at any time
thereafter to suspend its obligations to deliver Refined Gold under this
Agreement for the remainder of the Term of the Agreement, and thereupon the
Purchaser shall only have the right or conversely, Vendor shall only have the
obligation, to refund the uncredited portion of the

 

34

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Payment Deposit, as evidenced by the Deposit Record, on the Default Deposit
Reduction Date.  In addition, Purchaser shall indemnify Vendor, and save it
harmless, on an after-tax basis, from and against any tax liability of Vendor to
the extent that it arises (i) as a consequence of Vendor electing to suspend its
obligations to deliver Refined Gold for the reminder of the Term of the
Agreement, and (ii) in the taxation year of Vendor in which such suspension
occurs.  If a Purchaser Event of Default under Sections 13.1(d) and 13.1(e) has
occurred and is continuing, then Vendor shall have no right to terminate this
Agreement, but it shall be entitled to all other remedies available to it at law
or in equity.

 

Article 14

INDEMNITIES

 

14.1                        Indemnity of Purchaser

 

Subject to Section 14.4, the Vendor agrees to indemnify the Purchaser from and
against, and to hold the Purchaser harmless from any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
claims, expenses or disbursements of any kind whatsoever (collectively “Losses”)
which may at any time be imposed on, incurred by or asserted against the
Purchaser in any way to the extent relating to or arising out of (A) any breach
by the Vendor or Thompson Creek or any misrepresentation or inaccuracy of any
representation or warranty of the Vendor or Thompson Creek contained in this
Agreement, including without limitation the representations and warranties set
forth on Schedules A1 and A2 hereto, or in any document, instrument or agreement
delivered pursuant hereto; (B) any breach, including breach due to
non-performance, by the Vendor or Thompson Creek of any covenant or agreement to
be performed by the Vendor or Thompson Creek contained in this Agreement or in
any document, instrument or agreement delivered pursuant hereto.

 

14.2                        Indemnity of Vendor

 

Subject to Section 14.4, the Purchaser agrees to indemnify the Vendor from and
against, and to hold the Vendor harmless from, any and all Losses which may at
any time be imposed on, incurred by or asserted against the Vendor in any way to
the extent relating to or arising out of (A) any breach by the Purchaser or
Royal Gold or any misrepresentation or inaccuracy of any representation or
warranty of the Purchaser contained in this Agreement, including without
limitation the representations and warranties set forth on Schedules A3 and A4
hereto, or in any document, instrument or agreement delivered pursuant hereto;
and (B) any breach, including breach due to non-performance, by the Purchaser or
Royal Gold of any covenant or agreement to be performed by the Purchaser or
Royal Gold contained in this Agreement or in any document, instrument or
agreement delivered pursuant hereto.

 

14.3                        Limited Indemnity for Losses Related to Incidental
Connection to Property

 

Subject to Section 14.4, the Vendor agrees to indemnify the Purchaser and Royal
Gold from and against, and to hold the Purchaser and Royal Gold harmless from,
any and all Losses which may at any time be imposed on, incurred by or asserted
against the Purchaser and Royal Gold in any way to the extent relating to or
arising out of (A) the failure of the Vendor or Thompson Creek to comply with
any Applicable Law, including any Applicable Law relating to environmental
protection and reclamation obligations, with respect to the Milligan Property;
(B) the physical environmental condition of the Milligan Project and matters of
health or safety related to the

 

35

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Milligan Project or any action or claim brought with respect thereto; and
(C) any actual or threatened withdrawal by any Governmental Authority of any
material Approval under Environmental Laws which is necessary for the
construction or operation of the Milligan Project, or any actual or threatened
challenge by any person to any material Approval under Environmental Laws which
is necessary for the construction or operation of the Milligan Project. 
Vendor’s indemnification obligation pursuant to this Section 14.3 shall arise to
the extent such Losses are direct, such as but not limited to Losses incurred
from defending enforcement actions or defending lawsuits joined against
Purchaser or Royal Gold.  Vendor’s indemnification obligation pursuant to this
Section 14.3 shall not arise (i) where indemnification is available to Purchaser
pursuant to Section 14.1, and (ii) where Losses are incidental or consequential
to the occurrence of the matters listed in this Section 14.3 (A), (B) and (C),
such as but not limited to lost profits from the resulting failure of Vendor to
develop the Milligan Project, to extract or process Minerals, or to deliver or
sell Minerals to an Offtaker.

 

14.4                        Limitations on Indemnification

 

Notwithstanding anything else to the contrary in this Article 14, in no event
will either Party be liable to the other Party for:

 

(a)                                  any lost profits or incidental, indirect,
speculative, consequential, special, punitive, or exemplary damages of any kind
(whether based in contract, tort, including negligence, strict liability, fraud,
or otherwise, or statutes, regulations, or any other theory) arising out of or
in connection with this Agreement, even if advised of such potential damages; or

 

(b)                                 Losses directly arising from an Event of
Force Majeure.

 

Article 15
INDEPENDENT ENGINEER; ADDITIONAL PAYMENT TERMS; DISPUTES

 

15.1                        Independent Engineer

 

(a)                                  Following the Effective Date, the Parties
will select by mutual agreement an individual to serve as an independent
engineer under this Agreement (the “Independent Engineer”). To the extent he is
no longer available to perform the service or if agreed by the Purchaser and
Vendor, a replacement Independent Engineer will be selected by the mutual
agreement of the Purchaser and Vendor. If the Purchaser and Vendor cannot agree
upon an initial Independent Engineer within 45 days following the date of this
Agreement or a replacement Independent Engineer within 15 days after an existing
Independent Engineer ceases to perform such service, the Independent Engineer
shall be selected by the following procedure: the Purchaser will nominate three
Qualified Candidates, one of which Vendor will elect within 10 days after Vendor
shall have received notice of the Purchaser’s nomination, failing which the
Purchaser shall appoint one of the nominees as the Independent Engineer. For
purposes hereof, a “Qualified Candidate” shall mean an individual with not less
than 15 years of relevant mineral engineering expertise in the precious metals
industry. The Qualified Candidate will not have been a director, officer,
employee of, or contractor or service provider to, or director, officer,
beneficial owner or close relative of a

 

36

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beneficial owner of any contractor or service provider to the Purchaser or
Vendor or any Affiliate thereof for a period of five years preceding his or her
nomination by the Purchaser unless mutually agreed between the Purchaser and
Vendor.

 

(b)                                 The regular retainer of the Independent
Engineer shall be paid by the Purchaser. All incremental fees, costs and
expenses of the Independent Engineer, including, without limitation, the costs
related to reviewing data resulting from a proposed change to Project Costs or
the Development Program, will be borne by Vendor.

 

15.2                        Payments

 

All payments of funds due by one Party to another under this Agreement shall be
made in U.S. Dollars or such other currency as the Parties may agree from time
to time in writing and shall be made by wire transfer in immediately available
funds to the bank account or accounts designated by the receiving Party in
writing from time to time.

 

15.3                        Overdue Payments and Set-Off

 

(a)                                  Any payment not made by a Party on or by
any applicable payment date referred to in this Agreement shall incur interest
from the due date until such payment or delivery is paid or made in full at a
per annum rate equal to the LIBO Rate on the due date plus four percent,
calculated and compounded monthly in arrears.

 

(b)                                 Any such overdue dollar amount owed to the
Vendor under this Agreement may be set off against future Refined Gold owed to
Purchaser based on the London Bullion Market Association afternoon price fix for
gold on the date such dollar amount became overdue.

 

(c)                                  The value of any such overdue payment
associated with Refined Gold owed to the Purchaser under this Agreement shall be
based on the London Bullion Market Association afternoon fix for gold on the
date such Refined Gold became overdue, and the Purchaser may elect to receive
such overdue payment in Refined Gold or as a set off against future Gold
Purchase Price payments owed to the Vendor under Section 2.5.

 

15.4                        Statement Disputes

 

(a)                                  If the Purchaser disputes any statement
provided pursuant to Section 2.3, the number of ounces of Refined Gold to be
Delivered in any Delivery of Refined Gold to the Purchaser hereunder, or the
uncredited balance of the Payment Deposit set forth in any Deposit Record
Report:

 

(i)                  the Purchaser may notify Vendor in writing (the “Dispute
Notice”) of such dispute within one year from the date of delivery of the
applicable Deposit Record Report (in the case of a dispute regarding the
calculation of the uncredited balance of the Deposit Record) or the applicable
statement under Section 2.3 (in the case of a dispute regarding any statement or
the number of ounces of Refined Gold to be delivered to the Purchaser
hereunder), as applicable (the “Dispute Period”);

 

37

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(ii)               if the Purchaser and Vendor have not resolved the dispute
within a 60-day period, then the Purchaser shall have the right during the
ensuing 60 days to require Vendor to retain an Auditor to prepare a written
report on the subject matter of the dispute (the “Auditor’s Report”);

 

(iii)            the Auditor shall have the same inspection rights as the
Purchaser under Section 7.4(a) in order to prepare the Auditor’s Report and
Vendor shall provide, or cause to be provided, to the Auditor any information
reasonably requested by the Auditor to enable the auditor to prepare the
Auditor’s Report;

 

(iv)           promptly following completion of the Auditor’s Report, Vendor
will deliver a copy thereof to the Purchaser;

 

(v)              the cost of obtaining the Auditor’s Report shall be paid by the
Purchaser unless the Auditor’s Report concludes that (i) in the case of a
dispute regarding the number of ounces of Refined Gold to be delivered in any
delivery of Refined Gold to the Purchaser hereunder, the number of ounces that
should have been delivered by Vendor (in aggregate for all deliveries in
dispute) was more than 5% greater than the actual number of ounces so delivered
by Vendor, or (ii) in the case of a dispute regarding the calculation of the
uncredited balance of the Payment Deposit in a Deposit Record Report, the
correct uncredited balance of the Payment Deposit is more than 5% different from
the amount reported by Vendor in the applicable Deposit Record Report, in each
of which cases the cost of obtaining the Auditor’s Report shall be for the
account of Vendor;

 

(vi)           if either Vendor or the Purchaser disputes the Auditor’s Report
and such dispute is not resolved between the Parties within 10 days after the
date of delivery of the Auditor’s Report, then such dispute may be resolved by
arbitration in accordance with the arbitration provisions set out in
Section 15.5 of this Agreement provided that such dispute must be referred to
arbitration within 30 days after the end of such 10-day period; and

 

(vii)        if such dispute is not referred to arbitration within such 30-day
period, then the Auditor’s Report will be deemed final and binding on the
Parties;

 

(b)                                 If the Purchaser does not deliver a Dispute
Notice within the applicable Dispute Period, then each statement provided
pursuant to Section 2.3, the number of ounces of Refined Gold to be delivered in
any delivery of Refined Gold to the Purchaser hereunder or the calculation of
the uncredited balance of the Payment Deposit set forth in any Deposit Record
Report, as applicable, will be deemed final and binding on the Parties after the
expiry of the applicable Dispute Period.

 

(c)                                  Any matter in respect of which a Dispute
Notice is delivered shall be resolved only pursuant to this Section 15.4
including, if applicable, an arbitration commenced in accordance with
Section 15.4(a)(vi).

 

38

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15.5                        Disputes and Arbitration

 

Any dispute, controversy or claim arising out of or relating to this Agreement
or the breach, termination or invalidity thereof which has not been resolved by
the Parties in accordance with the procedures set out herein, if any, and within
the time frames specified herein (or where no time frames are specified, within
15 days of the delivery of written notice by either Party of such dispute,
controversy or claim), including the determination of the scope or applicability
of this Agreement to arbitrate, shall be settled by binding arbitration, and any
party may so refer such dispute, controversy or claim to binding arbitration.
Such referral to binding arbitration shall be to a qualified single arbitrator
pursuant to the Arbitration Rules, as may be amended from time to time, which
rules shall govern such arbitration proceeding except to the extent modified by
the rules for arbitration set out in Annex 1 and the discretion of the
arbitrator thereunder.  The determination of such arbitrator shall be final and
binding upon the Parties and the costs of such arbitration shall be as
determined by the arbitrator.  Judgment on the award may be entered in any court
having jurisdiction. This Section 15.5 shall not preclude the Parties from
seeking provisional remedies in aid of arbitration from a court of competent
jurisdiction. The Parties covenant and agree that they shall conduct all aspects
of such arbitration having regard at all times to expediting the final
resolution of such arbitration.

 

Article 16
TAXES

 

16.1                        Taxes

 

(a)                                  Except as described in Section 16.1(c), all
deliveries of Refined Gold or payments made by a Party shall be made without any
deduction, withholding, charge or levy for or on account of any tax, duty or
other charges of whatever nature imposed by any taxing or Governmental
Authority, all of which shall be for the account of the Party making the
delivery or payment.

 

(b)                                 The Parties acknowledge and agree that this
Agreement and the purchase and sale transactions contemplated hereby are, and
are intended to be, transactions for the purchase and sale of gold and the
Parties do not intend this Agreement and the transactions contemplated hereby to
constitute the purchase and sale of a resource property for Canadian legal and
tax purposes.

 

(c)                                  If the Purchaser is an entity that is a non
resident of Canada for the purposes of the Income Tax Act (Canada), the
Purchaser shall indemnify the Vendor for any Canadian withholding on any amount
paid or credited to the Purchaser as, on account or in lieu of payment of, or in
satisfaction of a payment of Refined Gold or any other payment to be made to the
Purchaser under this Agreement.  If the Vendor does withhold any amount, it
shall provide written proof of any such withholding payment to the Purchaser.

 

Article 17
GENERAL

 

17.1                        Further Assurances

 

Each Party shall execute all such further instruments and documents and do all
such further actions as may be necessary to effectuate the documents and
transactions contemplated in this

 

39

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Agreement, in each case at the cost and expense of the Party requesting such
further instrument, document or action, unless expressly indicated otherwise.

 

17.2                        Survival

 

The following provisions shall survive termination of this Agreement: 8.7, 12.2,
13.2, Article 14, 15.4, 15.5 and Sections [·] of each of the Security Agreements
and such other provisions of this Agreement as are required to give effect
thereto.

 

17.3                        No Joint Venture

 

Nothing herein shall be construed to create, expressly or by implication, a
joint venture, mining partnership, commercial partnership, agency relationship
or fiduciary relationship between the Purchaser and Vendor under Canadian law.

 

17.4                        Governing Law

 

This Agreement shall be governed by and construed under the laws of the Province
of British Columbia and the federal laws of Canada applicable therein (without
regard to its laws relating to any conflicts of laws).  The United Nations
Vienna Convention on Contracts for the International Sale of Goods shall not
apply to this Agreement.

 

17.5                        Notices

 

(a)                                  Unless otherwise specifically provided in
this Agreement, any notice or other correspondence required or permitted by this
Agreement shall be deemed to have been properly given or delivered when made in
writing and hand-delivered to the Party to whom directed, or when given by
facsimile transmission, with all necessary delivery charges fully prepaid (or in
the case of a facsimile, upon confirmation of receipt), and addressed to the
Party to whom directed at the following address:

 

(i)                  if to Vendor to:

 

[26 W. Dry Creek Circle
Suite 810
Littleton, CO  80120   USA
Attention:  l]
Facsimile:  (303) 761-7420

 

with a copy, which shall not constitute notice, to:

 

Goodmans
Barristers and Solicitors
1900 — 355 Burrard Street
Vancouver, BC  V6C 2G8

 

40

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(ii)               if to Thompson Creek to:

 

26 W. Dry Creek Circle
Suite 810
Littleton, CO  80120   USA
Attention:  l
Facsimile:  (303) 761-7420

 

with a copy, which shall not constitute notice, to:

 

Goodmans
Barristers and Solicitors
1900 — 355 Burrard Street
Vancouver, BC  V6C 2G8

 

(iii)            if to the Purchaser to:

 

[RG Newco]

c/o Royal Gold, Inc.

1660 Wynkoop Street, Suite 1000

Denver, CO 80202-1132 USA

Attention: Vice President and General Counsel

Facsimile: (303) 595-9385

 

with a copy, which shall not constitute notice, to:

 

Hogan Lovells US LLP

One Tabor Center

1200 Seventeenth Street, Suite 1500

Denver, CO 80202   USA

Attention:  Paul Hilton, Esq.

Facsimile:  (303) 899-7333

 

(iv)           if to Royal Gold, to:

 

Royal Gold, Inc.

1660 Wynkoop Street, Suite 1000

Denver, CO 80202-1132 USA

Attention: Vice President and General Counsel

Facsimile: (303) 595-9385

 

with a copy, which shall not constitute notice, to:

 

Hogan Lovells US LLP

One Tabor Center

1200 Seventeenth Street, Suite 1500

Denver, CO 80202   USA

Attention:  Paul Hilton, Esq.

Facsimile:  (303) 899-7333

 

41

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(b)                                 Any notice or other communication given in
accordance with this section, if delivered by hand as aforesaid shall be deemed
to have been validly and effectively given on the date of such delivery if such
date is a Business Day and such delivery is received before 4:00 pm at the place
of delivery; otherwise, it shall be deemed to be validly and effectively given
on the Business Day next following the date of delivery. Any notice of
communication which is transmitted by facsimile transmission as aforesaid shall
be deemed to have been validly and effectively given on the date of transmission
if such date is a Business Day and such transmission was received before 4:00 pm
at the place of receipt; otherwise it shall be deemed to have been validly and
effectively given on the Business Day next following such date of transmission.

 

17.6                        [Reserved]

 

17.7                        Amendments

 

This Agreement may not be changed, amended or modified in any manner, except
pursuant to an instrument in writing signed on behalf of each of the Parties
hereto.

 

17.8                        Beneficiaries; Successors and Assigns

 

This Agreement is for the sole benefit of the Parties and shall enure to the
benefit of and be binding on their successors and permitted assigns and, except
as expressly contemplated herein, nothing herein is intended to or shall confer
upon any other person any legal or equitable right, benefit or remedy of any
nature or kind whatsoever under or by reason of this Agreement.

 

17.9                        Contests

 

The Vendor hereby consents to the Purchaser’s participation (at the Purchaser’s
sole expense) to protect its interest and investment in any proceeding relating
to any act of eminent domain, expropriation, confiscation, or nationalization of
all or part of the Milligan Property.

 

17.10                 Entire Agreement

 

This Agreement, the Security Agreements and the Confidentiality Agreement
together constitute the entire agreement between the Parties with respect to the
subject matter hereof and cancel and supersede any prior understandings and
agreements between the Parties with respect thereto. There are no
representations, warranties, terms, conditions, opinions, advice, assertions of
fact, matters, undertakings or collateral agreements, express, implied or
statutory, by or between the Parties (or by any of their respective employees,
directors, officers, representatives or agents) other than as expressly set
forth in this Agreement, the Security Agreements or the Confidentiality
Agreement.

 

17.11                 Waivers

 

Any waiver of, or consent to depart from, the requirements of any provision of
this Agreement shall be effective only if it is in writing and signed by the
Party giving it, and only in the specific instance and for the specific purpose
for which it has been given. No failure on the part of any Party to exercise,
and no delay in exercising, any right under this Agreement shall operate as a

 

42

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waiver of such right. No single or partial exercise of any such right shall
preclude any other or further exercise of such right or the exercise of any
other right.

 

17.12                 Severability

 

If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, all other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any Party.

 

17.13                 Counterparts

 

This Agreement may be executed in one or more counterparts, and by the Parties
in separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopy or electronic scan shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

17.14           Thompson Creek Guarantee

 

Thompson Creek hereby absolutely, unconditionally and irrevocably guarantees the
prompt and complete performance of all of the terms, covenants, conditions and
provisions to be performed by the Vendor pursuant to this Agreement, and shall
perform such terms, covenants, conditions and provisions upon the default or
non-performance thereof by the Vendor.

 

17.15           Royal Gold Guarantee

 

Royal Gold hereby absolutely, unconditionally and irrevocably guarantees the
prompt and complete performance of all of the terms, covenants, conditions and
provisions to be performed by the Purchaser pursuant to this Agreement, and
shall perform such terms, covenants, conditions and provisions upon the default
or non-performance thereof by the Purchaser.

 

43

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IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first written above.

 

 

[PURCHASER]

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[VENDOR]

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Solely in respect of Article 10 and Sections 11.4 and 17.14 hereof

 

 

 

 

 

ROYAL GOLD, INC.

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

44

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Solely in respect of Article 10 and Sections 3.5, 11.4 and 17.15 hereof

 

 

 

 

 

THOMPSON CREEK METALS COMPANY INC.

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

Per:

 

 

 

Name:

 

 

Title:

 

45

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ANNEX 1

 

ARBITRATION RULES

 

The following rules and procedures shall apply with respect to any matter to be
arbitrated by the Parties in accordance with Section 15.5 of the Agreement.

 

1.     Initiation of Arbitration Proceedings

 

(a)           If any Party to this Agreement wishes to have any matter under
this Agreement arbitrated in accordance with the provisions of this Agreement,
it shall give notice to the other Party hereto specifying particulars of the
matter or matters in dispute and proposing the name of the person it wishes to
be the single arbitrator. Within 20 days after receipt of such notice, the other
Party to this Agreement shall give notice to the first Party advising whether
such Party accepts the arbitrator proposed by the first Party. If such notice is
not given within such 20-day period, the other Party shall be deemed to have
accepted the arbitrator proposed by the first Party. If the Parties do not agree
upon a single arbitrator within such 20-day period such arbitrator shall be
chosen by British Columbia International Commercial Arbitration Centre,
Vancouver, British Columbia, at the written request of either Party.

 

(b)           The individual selected as Arbitrator shall be qualified by
education and experience to decide the matter in dispute. The Arbitrator shall
be at arm’s length from both Parties and shall not be a member of the audit or
legal firm or firms who advise either Party or a person who is otherwise
regularly retained by either of the Parties.

 

2.     Submission of Written Statements

 

(a)           Within 20 days of the appointment of the Arbitrator, the Party
initiating the arbitration (the “Claimant”) shall send the other Party (the
“Respondent”) a statement of claim setting out in sufficient detail the facts
and any contentions of law on which it relies, and the relief that it claims.

 

(b)           Within 15 days of the receipt of the statement of claim, the
Respondent shall send the Claimant a statement of defence stating in sufficient
detail which of the facts and contentions of law in the statement of claim it
admits or denies, on what grounds, and on what other facts and contentions of
law the Respondent relies.

 

(c)           Within ten days of receipt of the statement of defence, the
Claimant may send the Respondent a statement of reply.

 

(d)           All statements of claim, defence and reply shall be accompanied by
copies (or, if they are especially voluminous, lists) of all essential documents
on which the Party concerned relies and which have not previously been submitted
by any Party, and (where practicable) by any relevant samples.

 

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(e)           After submission of all the statements, the Arbitrator will give
directions for the further conduct of the arbitration.

 

3.     Meetings and Hearings

 

(f)            The arbitration shall take place in Vancouver, British Columbia
or in such other place as the Claimant and the Respondent shall agree upon in
writing.

 

(g)           The arbitration shall be conducted in English unless otherwise
agreed by such Parties and the Arbitrator.

 

(h)           All meetings and hearings will be in private unless the Parties
otherwise agree.

 

(i)            Any Party may be represented at any meetings or hearings by legal
counsel.

 

(j)            Each Party may examine, cross-examine and re-examine all
witnesses at the arbitration.

 

4.     The Decision

 

(k)           The Arbitrator will make a decision in writing and, unless the
Parties otherwise agree, will set out reasons for decision in the decision

 

(l)            The Arbitrator will send the decision to the Parties as soon as
practicable after the conclusion of the final hearing, but in any event no later
than 60 days thereafter, unless that time period is extended for a fixed period
by the Arbitrator on written notice to each Party because of illness or other
cause beyond the Arbitrator’s control.

 

(m)          The decision shall determine and award costs.

 

(n)           Any Party may appeal the decision of the Arbitrator on a question
of law. In the event either Party initiates any court proceeding in respect of
the decision of the Arbitrator or the matter arbitrated, such Party, if
unsuccessful in the court proceeding, shall pay the other Party’s costs of such
proceedings on a substantial indemnity basis.

 

5.     Jurisdiction and Powers of the Arbitrator

 

(o)           By submitting to arbitration under the Arbitration Rules, the
Parties shall be taken to have conferred on the Arbitrator the following
jurisdiction and powers, to be exercised at the Arbitrator’s discretion subject
only to the Arbitration Rules and the relevant law with the object of ensuring
the just, expeditious, economical and final determination of the dispute
referred to arbitration.  Without limiting the jurisdiction of the Arbitrator at
law, the Parties agree that the Arbitrator shall have jurisdiction to:

 

(i)            determine any question of law or fact arising in the arbitration;

 

(ii)           determine any question as to the Arbitrator’s jurisdiction;

 

2

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(iii)          determine any question of good faith, dishonesty or fraud arising
in the dispute;

 

(iv)          order any Party to furnish further details of that Party’s case,
in fact or in law;

 

(v)           proceed in the arbitration notwithstanding the failure or refusal
of any Party to comply with these Rules or with the Arbitrator’s orders or
directions, or to attend any meeting or hearing, but only after giving that
Party written notice that the Arbitrator intends to do so;

 

(vi)          receive and take into account such written or oral evidence
tendered by the Parties as the Arbitrator determines is relevant, whether or not
strictly admissible in law;

 

(vii)         make one or more interim awards;

 

(viii)        hold meetings and hearings, and make a decision (including a final
decision) in Vancouver, British Columbia or elsewhere with the concurrence of
the Parties thereto;

 

(ix)           order the Parties to produce to the Arbitrator, and to each other
for inspection, and to supply copies of, any documents or other evidence or
classes of documents in their possession or power which the Arbitrator
determines to be relevant;

 

(x)            award any remedy or relief that a court could order or grant in
accordance with the Agreement, including, without limitation, specific
performance of any obligation created under the Agreement, the issuance of an
interim, interlocutory or permanent injunction, or the imposition of sanctions
for abuse or frustration of the arbitration process; and

 

(xi)           make interim orders to secure all or part of any amount in
dispute in the arbitration.

 

6.     Confidentiality

 

(p)           The arbitration, including any settlement discussions between the
parties related to the subject matter of the arbitration, shall be conducted on
a private and confidential basis and any and all information exchanged and
disclosed during the course of the arbitration shall be used only for the
purposes of the arbitration. Neither party shall communicate any information
obtained or disclosed during the course of the arbitration to any third party
except to those experts or consultants employed or retained by, or consulted
about retention on behalf of, such party in connection with the arbitration and
solely to the extent necessary for assisting in the arbitration, and only after
such persons have agreed to be bound by these confidentiality conditions. In the
event that disclosure of any information related to the arbitration is required
to comply with Applicable Law or court order, the disclosing Party shall
promptly notify the other Party of such disclosure, shall limit such disclosure
limited to only that information so required to be disclosed

 

3

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and shall have availed itself of the full benefits of any laws, rules,
regulations or contractual rights as to disclosure on a confidential basis to
which it may be entitled.

 

(q)           The award of the Arbitrator and any reasons for the decision of
the Arbitrator shall also be kept confidential except (i) as may reasonably be
necessary to obtain enforcement thereof, (ii) for either Party to comply with
its disclosure obligations under Applicable Law, (iii) to permit the parties to
exercise properly their rights under the Arbitration Rules, and (iv) to the
extent that disclosure is required to allow the Parties to consult with their
professional advisors.

 

4

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Schedule A1 — Vendor Representations and Warranties

 

The Vendor hereby represents and warrants to the Purchaser as follows:

 

(a)           it is a company validly existing under the laws of its
jurisdiction of incorporation and is up to date in respect of all filings
required by law to maintain its existence;

 

(b)           all requisite corporate acts and proceedings have been done and
taken by it, including obtaining all requisite board of directors’ approvals,
with respect to entering into this Agreement and the Security Agreements and
performing its obligations hereunder and thereunder;

 

(c)           it has the requisite corporate power, capacity and authority to
enter into this Agreement and the Security Agreements and to perform its
obligations hereunder and thereunder;

 

(d)           this Agreement and the Security Agreements and the exercise of its
rights and performance of its obligations hereunder and thereunder do not and
will not, (i) conflict with or result in a default under any agreement,
mortgage, bond or other instrument to which it is a party or which is binding on
its assets, (ii) conflict with its constating or constitutive documents, or
(iii) conflict with or violate any Applicable Laws, in each case except as would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect;

 

(e)           it is not currently in breach or default under any agreement,
mortgage, bond or other instrument to which it is a party or which is binding on
or affecting any of its assets, and no event has occurred that with the passage
of time would constitute such a breach or default, except in each case where the
breach or default would not, or would not reasonably be expected to, have a
Material Adverse Effect, and it has no knowledge of a material breach or default
by any counterparty thereto or the inability of any counterparty to perform its
obligations thereunder;

 

(f)            no Approvals are required to be obtained by it in connection with
the execution and delivery or the performance by it of this Agreement or any of
the Security Agreements or the transactions contemplated hereby and thereby;

 

(g)           each of this Agreement and the Security Agreements has been duly
and validly executed and delivered by it and constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms
subject to any qualification regarding enforceability in the legal opinions
provided pursuant to Section 4.1(c);

 

(h)           there is no Insolvency Event in respect of it, and it is not now
aware of any circumstance which, with notice or the passage of time, or both,
would give rise to an Insolvency Event with respect to it;

 

(i)            other than the Haslinger Royalty, no person has any agreement,
option, right of first refusal or right, title or interest or right capable of
becoming an agreement,

 

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

 

option, right of first refusal or right, title or interest, in or to all or any
part of the Milligan Project or the gold produced from the Milligan Project;

 

(j)            all mining patents, fees and other amounts have been paid when
due and payable and all other actions have been taken and all other obligations
as are required to maintain the Milligan Project have been complied with, except
where the failure to make a payment when due or take an action or perform an
obligation would not be material to the Company;

 

(k)           it has obtained or been issued all licences, permits, Approvals
(including environmental Approvals), authorizations, rights (including surface
and access rights), privileges, concessions or franchises necessary for the
construction and Development of the Milligan Project as contemplated by the
Development Program, other than those that are not necessary on the date this
representation and warranty is given and are expected to be obtained in the
ordinary course of business by the time they are necessary, and such licences,
permits, approvals, authorizations, rights, privileges, concessions or
franchises the failure to have or obtain which will not, or will not reasonably
be expected to have, individually or in the aggregate, Material Adverse Effect,
and to the knowledge its knowledge, other than the Nak’azdli Litigation, there
are no facts or circumstances that might reasonably be expected to adversely
affect the issuance of any such material licences, permits, Approvals (including
environmental Approvals), authorizations, rights (including surface and access
rights), privileges, concessions or franchises;

 

(l)            the Mineral Claims and Mining Leases referred to in Schedule B
(the “Milligan Tenures”) constitute all of the rights that comprise its interest
in the Mineral reserves and resources of the Milligan Project as of the date of
this Agreement and it is the registered, recorded and beneficial owner of a 100%
undivided interest in and to the Milligan Project, free and clear of all
Encumbrances, except Permitted Encumbrances or as would not have, individually
or in the aggregate, a Material Adverse Effect or materially affect the security
interest of the Purchaser under any Security Agreement or other security
document;

 

(m)          the Milligan Tenures are in full force and effect and it has
complied in all respects with its obligations in respect thereof under
Applicable Laws (including without limitation Environmental Laws) and the terms
thereof except to the extent such non-compliance would not be reasonable
expected to result in a Material Adverse Effect on the operation of the Milligan
Project;

 

(n)           its right, title and interest in and to the Milligan Project is
not subject to any Encumbrances, other than Permitted Encumbrances, except as
would not reasonably be expected to have a Material Adverse Effect or materially
affect the security interest of the Purchaser under any Security Agreement or
other security document;

 

(o)           the maps attached hereto as Schedule B depict the location of the
Milligan Project in all material respects;

 

2

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(p)           subject only to the rights of any Governmental Authority, no
person is entitled to or has been granted any rent or royalty, or other payment
in the nature of rent or royalty on or in respect of any Produced Gold other
than Haslinger Royalty;

 

(q)           it has not received any notice of any expropriation proceeding or
decision to expropriate all or any part of the Milligan Project, and it does not
have knowledge of any expropriation proceeding pending or threatened against or
affecting all or any part of the Milligan Project or of any discussions or
negotiations which could lead to any such expropriation proceeding;

 

(r)            except as would not, or would not reasonably be expected to, have
individually or in the aggregate, a Material Adverse Effect, conditions on and
relating to the Milligan Project and the surface area or mining lots covered by
the Milligan Project respecting all past and current operations conducted
thereon by it are in material compliance with Applicable Laws (including without
limitation Environmental Laws), and conditions on and relating to the Milligan
Project and the surface area or mining lots covered by the Milligan Project
respecting all past operations conducted thereon by persons other than the
Vendor are, to its knowledge, in compliance in all material respects with
Applicable Laws (including without limitation Environmental Laws);

 

(s)           other than the Nak’azdli Litigation, it has not been notified that
it is a party or is subject to any action, suit, proceeding, investigation or
claim affecting or pertaining to the Milligan Project or any part thereof,
except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, to its knowledge, no such action,
suit, proceeding, investigation or claim is threatened or outstanding;

 

(t)            neither it nor the Milligan Project, nor any part thereof, is
subject to any outstanding judgment, order, writ, injunction or decree that has
or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect;

 

(u)           it enters into and performs this Agreement on its own account and
not as trustee or a nominee of any other person;

 

(v)           except for Permitted Encumbrances, the Vendor has not granted, nor
agreed to grant, an Encumbrance affecting or in the Minerals or the Milligan
Project, or any part thereof, to any person other than to the Purchaser;

 

(w)          the Technical Reports are accurate in all material respects and do
not contain a misrepresentation.  The Technical Reports were prepared in
accordance with Canadian industry standards set forth in NI 43-101 and the
information contained in the Technical Reports was, at the time of delivery
thereof, complete and accurate in all material respects and there has occurred
no change to such information since the date of delivery thereof other than any
change that would not reasonably be expected to have a Material Adverse Effect;
and

 

3

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

 

(x)            since December 31, 2009, neither the business, properties,
assets, liabilities (contingent or otherwise), condition (financial or
otherwise), capitalization, operation or results of operations of the Vendor,
have been affected by any change, effect, event or occurrence (whether or not
insured against) which could reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.

 

4

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Schedule A2 — Thompson Creek Representations and Warranties

 

Thompson Creek hereby represents and warrants to the Purchaser as follows:

 

(a)           it is a company validly existing under the laws of its
jurisdiction of incorporation and is up to date in respect of all filings
required by law to maintain its existence;

 

(b)           all requisite corporate acts and proceedings have been done and
taken by it, including obtaining all requisite board of directors’ approvals,
with respect to entering into this Agreement and performing its obligations
hereunder;

 

(c)           it has the requisite corporate power, capacity and authority to
enter into this Agreement and to perform its obligations hereunder;

 

(d)           this Agreement and the exercise of its rights and performance of
its obligations hereunder do not and will not, (i) conflict with or result in a
default under any agreement, mortgage, bond or other instrument to which it is a
party or which is binding on its assets, (ii) conflict with its constating or
constitutive documents, or (iii) conflict with or violate any Applicable Laws,
in each case except as would not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on Thompson Creek or the performance
of its obligations under this Agreement;

 

(e)           it is not currently in breach or default under any material
agreement, mortgage, bond or other instrument to which it is a party or which is
binding on its assets, and no event has occurred that with the passage of time
would constitute such a breach or default, and it has no knowledge of a material
breach or default by any counterparty thereto or the inability of any
counterparty to perform its obligations thereunder;

 

(f)            no Approvals are required to be obtained by it in connection with
the execution and delivery or the performance by it of this Agreement or the
transactions contemplated hereby;

 

(g)           this Agreement has been duly and validly executed and delivered by
it and constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms subject to any qualification regarding
enforceability in the legal opinion provided pursuant to Section 4.1(c);

 

(h)           it has not suffered an Insolvency Event and it is not now aware of
any circumstance which, with notice or the passage of time, or both, would give
rise to an Insolvency Event with respect to it; and

 

(i)            it enters into and performs this Agreement on its own account and
not as trustee or a nominee of any other person.

 

5

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Schedule A3 — Purchaser Representations and Warranties

 

Purchaser hereby represents and warrants to the Vendor and Thompson Creek as
follows:

 

(a)           it is a company validly existing under the laws of its
jurisdiction of incorporation and is up to date in respect of all filings
required by law to maintain its existence;

 

(b)           all requisite corporate acts and proceedings have been done and
taken by it, including obtaining all requisite board of directors’ approvals,
with respect to entering into this Agreement and performing its obligations
hereunder;

 

(c)           it has the requisite corporate power, capacity and authority to
enter into this Agreement and to perform its obligations hereunder;

 

(d)           this Agreement and the exercise of its rights and performance of
its obligations hereunder do not and will not, (i) conflict with or result in a
default under any agreement, mortgage, bond or other instrument to which it is a
party or which is binding on its assets, (ii) conflict with its constating or
constitutive documents or (iii) conflict with or violate any Applicable Laws, in
each case except as would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Purchaser or the performance of
its obligations under this Agreement;

 

(e)           it is not currently in breach or default under any material
agreement, mortgage, bond or other instrument to which it is a party or which is
binding on its assets, and no event has occurred that with the passage of time
would constitute such a breach or default, and it has no knowledge of a material
breach or default by any counterparty thereto or the inability of any
counterparty to perform its obligations thereunder;

 

(f)            no Approvals are required to be obtained by it in connection with
the execution and delivery or the performance by it of this Agreement or the
transactions contemplated hereby;

 

(g)           this Agreement has been duly and validly executed and delivered by
it and constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms subject to any qualification regarding
enforceability in the legal opinion provided pursuant to Section 4.2(c);

 

(h)           it has not suffered an Insolvency Event and it is not now aware of
any circumstance which, with notice or the passage of time, or both, would give
rise to an Insolvency Event with respect to it; and

 

(i)            it enters into and performs this Agreement on its own account and
not as trustee or a nominee of any other person.

 

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Schedule A4 — Royal Gold Representations and Warranties

 

Royal Gold hereby represents and warrants to the Vendor and Thompson Creek as
follows:

 

(a)                                  it is a company validly existing and in
good standing under the laws of State of Delaware;

 

(b)                                 all requisite corporate acts and proceedings
have been done and taken by it, including obtaining all requisite board of
directors’ approvals, with respect to entering into this Agreement and
performing its obligations hereunder;

 

(c)                                  it has the requisite corporate power,
capacity and authority to enter into this Agreement and to perform its
obligations hereunder;

 

(d)                                 this Agreement and the exercise of its
rights and performance of its obligations hereunder do not and will not, (i)
conflict with or result in a default under any agreement, mortgage, bond or
other instrument to which it is a party or which is binding on its assets, (ii)
conflict with its charter or bylaws, or (iii) conflict with or violate any
Applicable Laws, in each case except as would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
Purchaser or the performance of its obligations under this Agreement;

 

(e)                                  it is not currently in breach or default
under any material agreement, mortgage, bond or other instrument to which it is
a party or which is binding on its assets, and no event has occurred that with
the passage of time would constitute such a breach or default, and it has no
knowledge of a material breach or default by any counterparty thereto or the
inability of any counterparty to perform its obligations thereunder;

 

(f)                                    no Approvals are required to be obtained
by it in connection with the execution and delivery or the performance by it of
this Agreement or the transactions contemplated hereby;

 

(g)                                 this Agreement has been duly and validly
executed and delivered by it and constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms subject to
any qualification regarding enforceability in the legal opinion provided
pursuant to Section 4.2(c);

 

(h)                                 it has not suffered an Insolvency Event and
it is not now aware of any circumstance which, with notice or the passage of
time, or both, would give rise to an Insolvency Event with respect to it; and

 

(i)                                     it enters into and performs this
Agreement on its own account and not as trustee or a nominee of any other
person.

 

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Schedule B — Description of Milligan Property (with Maps)

 

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Schedule C1 — Form of Security Agreement for Milligan Property

 

[To be Settled]

 

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Schedule C2 — Form of Security Agreement for Personal Property

 

[To be settled]

 

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Schedule C3 — Form of Security Agreement — Floating Charge

 

[To be Settled]

 

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Schedule D — Development Program and Scheduled Deposits

 

1.               Development Program: The Vendor shall deliver the Development
Program to the Purchaser and the Independent Engineer at least 30 days prior to
the first Scheduled Deposit.

 

2.               Modifications to the Development Program:  The Vendor and
Purchaser acknowledge that the Development Program may require modifications
throughout Development.  Immediately when known, the Vendor shall provide the
Independent Engineer and Purchaser written notice of any material change to the
Development Program and reconcile the changes in a report.  The Independent
Engineer shall review and provide to the Purchaser an opinion as to whether such
changes are reasonable and shall keep a record of the current and prior
Development Program.

 

3.               Basis for making Scheduled Payments:

 

a.               Promptly when received, the Independent Engineer shall review
the Development Program and will establish a method for tracking the overall
Project Costs in consultation with the Vendor and the Purchaser;

 

b.              The Independent Engineer shall keep a record of all funding
sources and the calculations of the Independent Engineer shall represent the
definitive record of the Purchaser’s Pro Rata Share of Funding;

 

c.               The Purchaser shall contribute Scheduled Payments no more
frequently than every 30 days in an amount consistent with the Purchaser’s Pro
Rata Share of Funding after accounting for the use of proceeds contemplated in
the relevant Deposit Event along with all proceeds concurrently being funded by
Vendor and third parties for the Development Program, payable in accordance with
each Deposit Event;

 

d.              Notwithstanding any other provision of this Agreement,
Purchaser’s obligation to make a Scheduled Payment shall be suspended if:

 

i.                  Vendor has not delivered to Purchaser copies of executed
Mineral Offtake Agreements representing at least 75% of the Minerals projected
to be produced during the first five years of operation of the Milligan Project,
and at such time as the Development has surpassed the cumulative investment of
50% of Project Costs; or

 

ii.               after March 31, 2011, the Vendor shall have failed to obtain
and keep in good standing the Fishery and Oceans Permits.

 

e.               If Purchaser’s obligation to make Scheduled Payments are
suspended in accordance with 3.d.i. or 3.d.ii. above, Purchaser will make a
Scheduled Payment in the amount to regain the Purchaser’s Pro Rata Share of
Funding on the Deposit Event occurring subsequent to the time that the Vendor
satisfies the conditions set forth in 3.d.i. or 3.d.ii. above (a “Catch-Up
Payment”).  Interest shall accrue on any Catch-Up Payment from the date the
Scheduled Payments are suspended at an

 

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interest rate equivalent to the average three month United States Treasury bill
yield, as quoted daily in the Wall Street Journal during such suspension,
compounded annually, and shall be paid with the Catch-Up Payment.  The “Fishery
and Oceans Permits” means (i) an authorization pursuant to section 35(2) of the
Fisheries Act for the harmful alteration, disruption or destruction of fish
habitat in respect of tailings impoundment area for the Milligan Project as
described in the Milligan Report, and (ii) the addition of the area of the
tailings impoundment area for the Milligan Project as described in the Milligan
Report to Schedule 2 to the Metal Mining Effluent Regulations for the purposes
of section 5(1) thereof, and the approval pursuant to section 27.1(1) of the
Metal Mining Effluent Regulations of a habitat compensation plan for such
tailings impoundment area that complies with the requirements of section 27.1 of
the Metal Mining Effluent Regulations.

 

f.                 Notwithstanding anything to the contrary, if Vendor completes
the Development, Vendor will be entitled to establish a Deposit Event for the
outstanding balance of Scheduled Deposits that have not been funded to date.

 

2

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Schedule E — Permitted Encumbrances

 

Personal Property Registry (BC)

 

Base Registration No.: 166686D
Registration Date: August 8, 2006
Registration Length: 5 years
Secured Party: Canadian Imperial Bank of Commerce
Debtor(s): Terrane Metals Corp.

 

 

 

 

 

Base Registration No.: 262518D
Registration Date: September 27, 2006
Registration Length: Infinity
Secured Party: Kennecott Canada Exploration Inc
Debtor(s): Terrane Metals Corp.

 

 

 

 

 

Base Registration No.: 478928E
Registration Date: July 15, 2008
Registration Length: 5 years
Secured Party: Bank of Montreal, as Administrative Agent
Debtor(s): Terrane Metals Corp.

 

 

 

 

 

Base Registration No.: 605381F
Registration Date: June 10, 2010
Registration Length: 4 years
Secured Party: Key Lease Canada Ltd.
Debtor(s): Terrane Metals Corp.

 

 

 

 

 

Base Registration No.: 605397F
Registration Date: June 10, 2010
Registration Length: 4 years
Secured Party: Key Lease Canada Ltd.
Debtor(s): Terrane Metals Corp.

 

 

 

Personal Property Registry (Nunavut)

 

Registration No.: 123380
Registration Date: July 30, 2008
Registration Length: 5 years
Secured Parties: Bank of Montreal, as Administrative Agent, Bank of Montreal
Debtor(s): Terrane Metals Corp.

 

 

 

Personal Property Registry (Yukon)

 

Registration No.: 2008/07/30 14865
Registration Date: July 30, 2008
Registration Length: 5 years
Secured Parties: Bank of Montreal, as Administrative Agent, Bank of Montreal
Debtor(s): Terrane Metals Corp.

 

 

 

Personal Property Registry (Northwest Territories)

 

Registration No.: 625251
Registration Date: July 30, 2008
Registration Length: 5 years
Secured Parties: Bank of Montreal, as Administrative Agent, Bank of Montreal
Debtor(s): Terrane Metals Corp.

 

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Schedule F — Provisional Payment Illustration

 

‘***’

 

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Schedule 1 — Royal Gold Representations and Warranties

 

Royal Gold hereby represents and warrants to the Vendor and Thompson Creek as
follows:

 

(a)                                  it is a company validly existing and in
good standing under the laws of State of Delaware;

 

(b)                                  all requisite corporate acts and
proceedings have been done and taken by it, including obtaining all requisite
board of directors’ approvals, with respect to entering into this letter
agreement and performing its obligations hereunder;

 

(c)                                  it has the requisite corporate power,
capacity and authority to enter into this letter agreement and to perform its
obligations hereunder;

 

(d)                                  this letter agreement and the exercise of
its rights and performance of its obligations hereunder do not and will not,
(i) conflict with or result in a default under any agreement, mortgage, bond or
other instrument to which it is a party or which is binding on its assets,
(ii) conflict with its charter or bylaws, or (iii) conflict with or violate any
Applicable Laws, in each case except as would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on Royal Gold
or the performance of its obligations under this Agreement;

 

(e)                                  it is not currently in breach or default
under any material agreement, mortgage, bond or other instrument to which it is
a party or which is binding on its assets, and no event has occurred that with
the passage of time would constitute such a breach or default, and it has no
knowledge of a material breach or default by any counterparty thereto or the
inability of any counterparty to perform its obligations thereunder;

 

(f)                                    no Approvals are required to be obtained
by it in connection with the execution and delivery or the performance by it of
this letter agreement or the transactions contemplated hereby;

 

(g)                                 this letter agreement has been duly and
validly executed and delivered by it and constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms subject to
any qualification regarding enforceability in the legal opinion provided
pursuant to Section 4.2(c) of Exhibit 1;

 

(h)                                 it has not suffered an Insolvency Event and
it is not now aware of any circumstance which, with notice or the passage of
time, or both, would give rise to an Insolvency Event with respect to it; and

 

(i)                                    it enters into and performs this letter
agreement on its own account and not as trustee or a nominee of any other
person.

 

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Schedule 2 — Thompson Creek Representations and Warranties

 

Thompson Creek hereby represents and warrants to the Purchaser as follows:

 

(a)                                  it is a company validly existing under the
laws of its jurisdiction of incorporation and is up to date in respect of all
filings required by law to maintain its existence;

 

(b)                                  all requisite corporate acts and
proceedings have been done and taken by it, including obtaining all requisite
board of directors’ approvals, with respect to entering into this letter
agreement and performing its obligations hereunder;

 

(c)                                  it has the requisite corporate power,
capacity and authority to enter into this letter agreement and to perform its
obligations hereunder;

 

(d)                                  this letter agreement and the exercise of
its rights and performance of its obligations hereunder do not and will not,
(i) conflict with or result in a default under any agreement, mortgage, bond or
other instrument to which it is a party or which is binding on its assets,
(ii) conflict with its constating or constitutive documents, or (iii) conflict
with or violate any Applicable Laws, in each case except as would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect
on Thompson Creek or the performance of its obligations under this letter
agreement;

 

(e)                                  it is not currently in breach or default
under any material agreement, mortgage, bond or other instrument to which it is
a party or which is binding on its assets, and no event has occurred that with
the passage of time would constitute such a breach or default, and it has no
knowledge of a material breach or default by any counterparty thereto or the
inability of any counterparty to perform its obligations thereunder;

 

(f)                                    no Approvals are required to be obtained
by it in connection with the execution and delivery or the performance by it of
this letter agreement or the transactions contemplated hereby;

 

(g)                                 this letter agreement has been duly and
validly executed and delivered by it and constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms subject to
any qualification regarding enforceability in the legal opinion provided
pursuant to Section 4.1(c) of Exhibit 1;

 

(h)                                 it has not suffered an Insolvency Event and
it is not now aware of any circumstance which, with notice or the passage of
time, or both, would give rise to an Insolvency Event with respect to it; and

 

(i)                                    it enters into and performs this letter
agreement on its own account and not as trustee or a nominee of any other
person.

 

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