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MINING OPTION AGREEMENT
 

 
THIS MINING OPTION AGREEMENT made as of 1st of February, 2012 (the “Agreement”);
 
BY AND BETWEEN:
            
             MINERALES HOLDINGS CAN CORP., a Belize corporation  having an
address of Cor 12 Baymen Ave and Calle Al Mar, Belize City, Belize
 (the “ Optionor”)
OF THE FIRST PART
 
AND:
 

 
PANA-MINERALES S.A., a Nevada corporation, of First Floor Commercial Area, Calle
53, Marbella, Panama City, Panama
 (the “Optionee”)
OF THE SECOND PART
 

BACKGROUND
 
A.  
The Optionor holds an option for 100% of the claims comprising the Property more
particularly detailed on Schedule A appended hereto (the Property”).

 
B.  
The Optionee wishes to option a 100% interest in and to the Property from the
Optionor, subject only to a 2% Net Smelter Royalty.

 
In consideration of the mutual covenants and agreements contained herein and for
other good and valuable consideration (the receipt and sufficiency of which is
hereby acknowledged by each of the parties) the parties hereto covenant and
agree each with the other as follows:
 
1. Interpretation
 
1.1. Definitions.  In this Agreement:
 
(a)  
“Acts” means all legislation, as amended from time to time, of the jurisdiction
in which the Property is located, applicable to the Property, including title
to, and Mining Operations on, the Property.

 
(b)  
 “Agreement” means this agreement, including the recitals, and schedules, all as
amended, supplemented or restated from time to time.

 
(c)  
“AMI” means the area outlined in this Agreement or the Schedules hereto  and
shall constitute an Area of Mutual Interest, between the Optionor and the
Optionee and any Operator  which shall remain in force and effect for the term
of this Agreement, and any Operating Agreement or Joint Venture Agreement which
shall survive this Agreement.

 
(d)  
“Business Day” means a day other than a Saturday, Sunday or statutory holiday in
the United States of America.

 
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(e)  
“Effective Date” means February 1, 2012.

 
(f)  
“Encumbrances” means security interests, liens, royalties, charges, mortgages,
pledges and encumbrances of any nature or kind whatsoever, whether written or
oral, direct or indirect.

 
(g)  
 “Expenditures” means all costs, expenses and charges, direct or indirect, of or
incidental to the Mining Operations incurred by the Optionee, which costs,
expenses and charges shall be determined in accordance with the Optionee’s
accounting practices applicable from time to time to the extent that those
practices are consistent with Canadian generally accepted accounting principles.

 
(h)  
“Government” means any federal, provincial, regional, municipal or other
government, governmental department, regulatory authority, commission, board,
bureau, agency or instrumentality that have lawful authority to regulate or
administer or govern a business, property or affairs of any person, and for the
purposes of this Agreement also includes any corporation or other entity owned
or controlled by any of the foregoing and any stock exchange in which shares of
a party are listed for trading.

 
(i)  
“MDU” means map designated unit.

 
(j)  
“Minerals” means the end products produced or derived from operating the
Property as a mine.

 
(k)  
“Mining Operations” means every kind of work done on or in respect of the
Property or the Minerals derived from the Property during the Option Period by
or under the direction of the Optionee including, without limiting the
generality of the foregoing, the work of assessment, geophysical, geochemical
and geological surveys, studies and mapping, investigating, drilling, assaying,
prospecting, designing, examining, equipping, improving, surveying,
shaft-sinking, raising, cross-cutting and drifting, searching for, digging,
trucking, sampling, working and procuring minerals, ores and metals, surveying
and bringing any mining claims to lease or patent, reclaiming and all other work
usually considered to be prospecting, exploration, development, mining and
reclamation work; in paying wages and salaries of workers engaged in the work
and in supplying food, lodging, transportation and other reasonable needs of the
workers; in paying assessments or premiums for workers' compensation insurance,
contributions for unemployment insurance or other pay allowances or benefits
customarily paid in the district to those workers; in paying rentals, licence
renewal fees, taxes and other governmental charges required to keep the Property
in good standing; in purchasing or renting plant, buildings, machinery, tools,
appliances, equipment or supplies and in installing, erecting, detaching and
removing them; mining, milling, concentrating, rehabilitation, reclamation, and
environmental protections and in the management of any work which may be done on
the Property or in any other respect necessary for the due carrying out of the
prospecting, exploration and development work.

 
(l)  
“Net Smelter Return”  has the meaning set out in Schedule "B" hereto.

 
(m)  
 “Operator” shall be Optionor, who may appoint a designated party to undertake
its duties and has the meaning as set out in Schedule “C” appended hereto.

 
(n)  
“Option” has the meaning set out in Section 3.1 of this Agreement.

 
(o)  
“Option Period” means the period commencing on the Effective Date and ending on
the earlier of January 31, 2015, and the date on which the Option is terminated
or lapses in accordance with this Agreement.

 

 
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(p)  
 “Permitted Encumbrance” means

 
(i)  
a current Option Agreement between the Optionor and the owner of the Claims as
disclosed to the Optionee;

 
(ii)  
easements, rights of way, servitudes or other similar rights in land including,
without limiting the generality of the foregoing, rights of way and servitudes
for railways, sewers, drains, gas and oil pipelines, gas and water mains,
electrical light, power, telephone, telegraph or cable television conduits,
poles, wires and cables;

 
(iii)  
the right reserved to or vested in any Government or Regulatory Authority or
other public authority by the terms of any or by any statutory provision, to
terminate, revoke or forfeit any of the lease or mining claims or to require
annual or other periodic payments as a condition of the continuance thereof;

 
(iv)  
rights reserved to or vested in any municipality or governmental, statutory or
public authority to control or regulate in any manner, and all applicable laws,
rules and orders of any governmental authority;

 
the reservations, limitations, provisos and conditions in any original grants
from the Crown or interests therein and statutory exceptions to title.
 
 
(q)  
“Property” means all of the subject claims in the Province of Quebec,
Canada more particularly described in Schedule “A” attached hereto, and, when
the context so implies, the lands and premises subject thereto, and includes any
replacement or successor permit or claims, and all mining leases and other
mining interests derived from any such permit covering the same area of land.

 
 
(r)  
“Regulatory Authorities” means any and all securities regulatory authorities
having jurisdiction over this Agreement and the transactions contemplated
herein.

 
1.2. Headings.  The division of this Agreement into Sections and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.  The terms “this Agreement”,
“hereof”, “hereunder” and similar expressions refer to this Agreement and not to
any particular Article, Section or other portion hereof and includes any
variation or amendment hereto from time to time and any agreement supplemental
hereto.  Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to Articles and
Sections of this Agreement.
 
1.3. Legislation.  Any reference to a provision in any legislation is a
reference to that provision as now enacted, and as amended, re-enacted or
replaced from time to time, and in the event of such amendment, re-enactment or
replacement of any reference to that provision shall be read as referring to
such amended, re-enacted or replaced provision.
 
1.4. Extended Meanings.  In this Agreement words importing the singular number
only shall include the plural and vice versa, words importing the masculine
gender shall include the feminine and neuter genders and vice versa and words
importing persons shall include individuals, partnerships, associations, trusts,
unincorporated organizations and corporations. All references to mineral claims
shall include map designated units.
 
1.5. Currency.  All references to currency herein are to lawful money of the
U.S, unless otherwise specified.

 
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1.6. Non-Merger. The provisions contained in this Agreement shall survive the
Effective Date and the completion of the transactions contemplated by this
Agreement and shall not merge in any conveyance, transfer, assignment, novation
agreement or other document or instrument delivered pursuant hereto or in
connection herewith.
 
1.7. Construction Clause. This Agreement has been negotiated and approved by the
parties hereto, who may have retained independent counsel and, notwithstanding
any rule or maxim of construction to the contrary, any ambiguity or uncertainty
will not be construed against any party hereto by reason of the authorship of
any of the provisions hereof.
 
1.8. No partnership. Nothing contained in this Agreement shall be construed as
creating a partnership of any kind or as imposing on any party any partnership
duty, obligation or liability to any other party.
 
2. Representations, Warranties and Covenants
 
2.1. Representations, Warranties and Covenants of the Optionor.  The Optionor
represents, warrants and covenants to the Optionee that:
 
(a)  
the Optionor is a corporation duly incorporated, organized and subsisting under
the laws of Belize with the corporate power to own its assets and to carry on
its business in the jurisdiction in which the Property is located;

 
(b)  
the Optionor has good and sufficient authority to enter into and deliver this
Agreement and to transfer its legal and beneficial interest in the Property as
required under this Agreement to the Optionee;

 
(c)  
other than disclosed herein there is no contract, option or any other right of
another form binding upon the Optionor to option, sell, transfer, assign,
pledge, charge, mortgage, explore or in any other way option, dispose of or
encumber all or part of the Property or any portion thereof or interest therein
other than pursuant to the provisions of this Agreement;

 
(d)  
the execution, delivery and performance of this Agreement by the Optionor, and
the consummation of the transactions herein contemplated will not (i) violate or
conflict with any term or provision of any agreements in regard to the property
entered into by the Optionor; (ii) violate or conflict with any term or
provision of any order of any court, Government or Regulatory Authority or any
law or regulation of any jurisdiction in which the Optionor’s business is
carried on; or (iii) conflict with, accelerate the performance required by or
result in the breach of any agreement to which it is a party or by which it is
currently bound;

 
(e)  
the Optionor holds an option for 100% of the right, title and working interest
in and to the Property, which, to the best of the Optionor’s knowledge without
having made any inquiries, is free and clear of all Encumbrances except for
those Permitted Encumbrances;

 
(f)  
the Property is properly and accurately described in Schedule “A” hereto and is
in good standing under the laws of the jurisdiction in which the Property is
located up to and including at least the expiry dates set forth in Schedule “A”;

 
(g)  
this Agreement has been duly authorized, executed and delivered by the Optionor
and constitutes a valid and binding obligation of the Optionor enforceable
against the Optionor in accordance with its terms, except as enforcement may be
limited by

 
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bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and except as limited by the application of
equitable principles when equitable remedies are sought; and

 
(h)  
the Optionor shall, during the Option Period:

 
(i)  
remain in good standing in the respective jurisdiction in which the Optionor is
registered, and all jurisdictions as required to hold the Property, failure to
do so will result in a default under this Agreement and the Optionee shall have
the right to register title to the Property in its name to protect its interest
in and to the Property;

 
(ii)  
promptly provide the Optionee with any and all notices and correspondence from
the title holder, the Government or Regulatory Authorities in respect of the
Property;

 
(iii)  
co-operate with the Optionee in obtaining any permits or licences required by
authorities in the jurisdictions in which the Property is situated;

 
(iv)  
not do or permit or suffer to be done any act or thing which would or might in
any way adversely affect the rights of the Optionee hereunder.

 
2.2. Representations, Warranties and Covenants of the Optionee.  The Optionee
represents, warrants and covenants to the Optionor that:
 
(a)  
the Optionee is a corporation duly incorporated, organized and subsisting under
the laws of Nevada with the corporate power to own its assets and will register
the required documentation, if required,  to carry on its business in the
jurisdiction in which the Property is located;

 
(b)  
the Optionee has all necessary power and authority to own or lease its assets
and carry on its business as presently carried on, to carry out its obligations
herein and to enter into this Agreement and any agreement or instrument referred
to in or contemplated by this Agreement and to do all such acts and things as
are required to be done, observed or performed by it, in accordance with the
terms of this Agreement and any agreement or instrument referred to in or
contemplated by this Agreement;

 
(c)  
the execution, delivery and performance of this Agreement by the Optionee, and
the consummation of the transactions herein contemplated will not (i) violate or
conflict with any term or provision of any of the articles, by-laws or other
constating documents of the Optionee; (ii) violate or conflict with any term or
provision of any order of any court, Government or Regulatory Authority or any
law or regulation of any jurisdiction in which the Optionee’s business is
carried on; or (iii) conflict with, accelerate the performance required by or
result in the breach of any agreement to which it is a party or by which it is
currently bound;

 
(d)  
this Agreement has been duly authorized, executed and delivered by the Optionee
and constitutes a valid and binding obligation of the Optionee enforceable
against the Optionee in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and except as limited by the
application of equitable principles when equitable remedies are sought;

 
(e)  
the Optionee shall promptly apply for and use it reasonable best efforts to
obtain all approvals, orders or acceptances required in connection with this
Agreement, including,

 
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but not limited to those required by the Exchange, any Government or Regulatory
Authorities, the shareholders of the Optionee and the Agency; and the Optionee
shall deliver to the Optionor copies of all such approvals, orders and
acceptances, as the case may be, forthwith upon receipt of them by the Optionee;
and

 
(f)  
the Optionee shall, during the Option Period:

 
(i)  
promptly provide the Optionor with any and all notices and correspondence from
Government or Regulatory Authorities in respect of the Property;

 
(ii)  
co-operate with the Optionor in obtaining any permits or licences required by
authorities in the regions which have authorization over the Property;

 
(iii)  
deliver to the Optionor, from time to time, copies of any and all geological
reports and assay results that pertain to the Property, within thirty (30) days
of receipt of the aforementioned data;

 
(iv)  
not do or permit or suffer to be done any act or thing which would or might in
any way adversely affect the rights of the Optionor hereunder; and

 
(v)  
maintain its corporate existence.

 
2.3. Reliance and Survival.  The representations, warranties and
acknowledgements set out in this Section 2 have been relied on by the parties in
entering into this Agreement.  All representations and warranties made herein
will survive the delivery of this Agreement to the parties and the completion of
the transactions contemplated hereby and, notwithstanding such completion, will
continue in full force and effect for the benefit of the parties to whom they
are provided, as the case may be, indefinitely.
 
3. Grant of Option
 
3.1. Grant of Option. The Optionor grants to the Optionee an exclusive option
(the “Option”) with respect to the Property, for the period commencing on the
Effective Date and expiring on  December 31, 2013, subject to Sections 3.7 and 5
herein, to acquire an undivided one hundred (100) percent interest in the
Property. This right may be exercised in the manner referred to in Section 9.
 
3.2. Consideration. In consideration of the grant of the Option, the Optionee
shall issue to the Optionor the shares of common stock of the Optionor on the
terms as follows:
 
(i)  
22,500,000 shares of common stock upon execution of this Agreement;

 
(ii)  
10,000,000 shares of common stock on or before February 1, 2013;

 
(iii)  
7,500,000 shares of common stock on or before December 31, 2013.

 
3.3. Working Right. During the Option Period, the Optionee shall have the
exclusive working right on the Property, and to permit any other person or
persons as it may in its sole discretion decide to, enter on and conduct the
Mining Operations on the Property as the Optionee in its sole discretion may
decide. The Optionee shall have quiet and exclusive possession during the Option
Period with full power and authority to the Optionee, its servants, agents,
workers or contractors, to carry on Mining Operations in searching for minerals
in such manner as the Optionee in its discretion may determine, including the
right to erect, bring and install on the Property all buildings, plant,
machinery, equipment, tools, appliances or supplies as the Optionee shall deem
necessary and proper and the right to remove therefrom reasonable quantities of
rocks, ores and minerals and to transport them for the purposes of sampling,
metallurgical testing and assaying. The Optionee shall conduct all Mining
Operations in a careful and miner-like manner and in compliance in all material
respects with all Acts, regulations, by-laws, orders and judgments and all

 
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applicable directives, rules, consents, permits, orders, guidelines and policies
of any Government or Regulatory Authority with jurisdiction over the Property.
 
3.4. Maintenance of the Option.  In order to maintain in force the Option
granted to it, and to exercise the Option, the Optionee must:
 
(a)  
incur Expenditures in an aggregate amount of $525,000 as follows:

 
(i)  
subject to section 3.6 herein, at least $100,000  before December 31 , 2012;

 
(ii)  
$125,000 on or before December 31, 2013

 
(iii)  
$300,000 on or before December 31, 2014.

 
(b)  
during the Option Period, keep the Property in good standing by paying all
taxes, assessments and other charges and by doing all other acts and things that
may be necessary in that regard, which payments shall be made from the
Expenditures as detailed in 3.4(a) above.

 
Subject to section 3.6 herein, if the incurred Expenditures are less than the
required Expenditures as per Section 3.4, the Optionee must pay to the Optionor
an amount equal to the difference between the required Expenditures and the
Expenditures actually incurred by the Optionee (the “Shortfall Payment”)  by
certified cheque by the respective dates specified in all of Section 3.4  in
order to maintain the Option, in addition to the payment of an administration
fee equal to five (5) percent of the Shortfall Payment.
 
3.5 Lapse or acceleration of Option. In addition to the provisions of
termination set out in Section 5 herein, the Optionee may let the working right
and Option lapse by failing to incur Expenditures or perform any of the
obligations set out in Section 3.4, provided only that the Optionee’s
obligations under Section 5.3 are satisfied.  Further, the Optionee may
accelerate any or all of the Expenditures.
 
3.6 Agency. Subject to and in accordance with this Agreement the Optionor hereby
irrevocably appoints the Optionee or his assignee to conduct the Mining
Operations contemplated by this Agreement as agent for the Optionee.  For
greater certainty, the Optionee shall remain liable as principal under this
Agreement, notwithstanding the appointment of an agent for the purpose of
conducting the Mining Operations.
 
4. Optionee Conduct
 
4.1. Maintenance of Property. During the Option Period, the Optionee shall carry
out sufficient assessment work to maintain the Property in good standing and pay
all taxes, assessments and other charges lawfully levied or assessed against the
Property, which expenditures shall be covered in the Expenditures defined in
3.4(a)  above. The Optionor shall transmit promptly to the Optionee any notices
pertaining to the taxes, assessments and other charges.
 
4.2. Abandonment. The Optionee may at any time, during the Option Period,
abandon any one or more of the claims which comprise the Property. The Optionee
shall give the Optionor notice in writing of any abandonment. If any of the
claims comprising the Property are abandoned (including the termination of this
Option Agreement without the Optionee having exercised the Option), the Optionee
will retransfer such claims to the Optionor (if they are then in the name of the
Optionee), which shall be in good standing for a period of at least ninety days
from the notice of abandonment.
 
4.3. Assessments. The Optionee shall, during the Option Period, in consultation
with the Optionor, file, in whole or in part, the assessment credits as may
become available from Mining Operations conducted on the Property during the
Option Period. If the Optionee and Optionor do not agree on the assessment
credits to be filed, the Optionee's decision shall prevail.

 
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4.4. Insurance.
 
(a)  
The Optionee shall provide, maintain and pay for the following insurance which
costs shall be covered in the Expenditures defined in 3.4(a) above.  Said
insurance shall be placed with an insurance company or companies and in a form
as may be acceptable to the Optionor:

 
(i)  
comprehensive general liability insurance protecting the Optionee and Optionor
and their respective employees, agents, contractors, invitees and licencees
against damages arising from personal injury (including death) and from claims
for property damage which may arise directly or indirectly out of the operations
of the Optionee and Optionor under this Agreement, including coverage for
liability arising out of products, whether manufactured or supplied by the
Optionee and Optionor, completed operations, contingent employer's liability and
contractual liability, and

 
(ii)  
automobile insurance on the Optionee's owned and non-owned vehicles, if any,
protecting the Optionee and its employees, agents, contractors, invitees and
licencees against damages arising from bodily injury (including death) and from
claims for property damage arising out of the operations of the Optionee and
Optionor under this Agreement.

 
(b)  
Each policy of insurance contemplated in this Section shall:

 
(i)  
be in an amount which is  not less than $1,000,000 inclusive of any one
occurrence;

 
(ii)  
and the policy of insurance referred to in  Section 4.4(a)(i) shall:

 
1.  
include a standard form of cross-liability clause;

 
2.  
contain a clause waiving the insurer's right of subrogation against the
Optionor; and

 
3.  
indicate that the insurer will give the Optionor thirty days' prior written
notice of cancellation or termination of the coverage.

 
(c)  
The Optionee shall provide the Optionor with such evidence of insurance as the
Optionor may request.

 
4.5. Access. The Optionee shall, during the Option Period, submit to the
Optionor periodic progress reports of Mining Operations completed on the
Property, which reports shall be submitted not less than quarterly on an annual
basis and shall provide the Optionor with access to all records, data and
information relating to the Property which is in the possession of the Optionee.
The Optionor may, at its own risk and expense and at reasonable times agreed to
by the Optionee, enter on the Property and examine the Mining Operations;
provided, that the Optionor will not, in the opinion of the Optionee, interfere
with it.
 
4.6. Environmental Matters. During the Option Period, the Optionee shall:
 
(a)  
receive, handle, use, store, treat, ship and dispose of any and all
environmental contaminants (as established from time to time by applicable
legislation or regulation or by-law) in strict compliance with all applicable
environmental, health or safety laws, regulations, order or approvals; and will
remove prior to the lapse or termination of the Option, from and off the
Property all environmental contaminants.

 
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(b)  
not release into the environment, or deposit, discharge, place, or dispose of
at, on or near the Property any hazardous or toxic materials, substances,
pollutants, contaminants or wastes as a result of the mining operations
conducted by it; and

 
(c)  
not use the Property, not permit any other person to use the Property as a
landfill or waste disposal site.

 
4.7. Environmental assessment. Whenever requested by the Optionor, the Optionee
shall provide the Optionor with access, during reasonable business hours and on
reasonable prior notice, to the Property for the purpose of conducting an
environmental assessment of the Property, provided that the assessment is
conducted in a manner that will not unreasonably interfere with the Optionee’s
operations. The environmental assessment shall be at the Optionor’s sole
expense. If the environmental assessment conducted by the Optionor reveals any
release of hazardous substances on or under the Property that, in the opinion of
the Optionor, acting reasonably, occurred after the date hereof, then the
Optionor may give written notice to the Optionee of remedial measures as the
Optionor may, based on the results of the environmental assessment, consider
necessary, which measures the Optionee shall, at its expense, promptly
undertake. If the Optionee fails to undertake diligently the remedial measures
specified by the Optionor within 60 days of the receipt of notice, the Optionor
may undertake such remedial measures and the Optionee shall be liable to the
Optionor for any such costs related thereto.
 
5. Termination
 
5.1. Termination. The Option and this Agreement shall automatically terminate
and be of no force and effect if, during the Option Period:
 
(a)  
With the exception of a default under Section 5.1(b) herein, the Optionee is in
default in any material respect of any term or condition of this Agreement and
fails to cure such default within thirty (30) Business Days of receiving notice
from the Optionor specifying the particulars of such default;

 
(b)  
the Optionee fails to incur all of the Expenditures within the time periods set
out herein;

 
(c)  
the Optionee fails to carry out the assessment work or pay the taxes,
assessments and other charges described in Section 3.4 and fails to cure such
default within 30 days of receiving notice from the Optionor specifying the
particulars of such default;

 
(d)  
the Optionee fails to make the Exploration Program Advances as set out in this
Agreement; or

 
(e)  
the Optionee fails to file the required assessment credits in respect of the
Mining Operations in a timely manner, as prescribed herein and by the
jurisdiction to which fees must be paid.

 
5.2. Any termination under this Section shall occur automatically, without any
further action by the Optionor.
 
5.3. Surrender of Rights.  Subject to Section 5.4, the Optionee may at any time
during the Option Period give the Optionor written notice of its intentions to
surrender all of its rights hereunder, whereupon the Option and this Agreement
shall terminate and the working right herein shall lapse.
 
5.4. Obligations on Termination.  Notwithstanding any other provisions of this
Agreement, in the event of lapse, termination or surrender of the Option and
termination of this Agreement, the Optionee shall:
 
(a)  
ensure that any claims or map designated units comprising the Property are in
good standing for a period of at least 90 days from the lapse, termination or
surrender of the

 
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Option and/or this Agreement, as the case may be, and upon request of the
Optionor, retransfer the Property to the Optionor (if it is then in the name of
the Optionee) free and clear of all Encumbrances;

 
(b)  
ensure that the Property is in at least the same state concerning environmental
and hazardous conditions as the Property was on the date of this Agreement and
that it is free and clear of all liens, claims and encumbrances that may have
been created by the Optionee;

 
(c)  
deliver to the Optionor any and all reports, maps, assessment reports and maps,
samples, assay results, drill cores, data and other information of any kind
whatsoever pertaining to the Property or related to Mining Operations which have
not been previously delivered to the Optionor;

 
(d)  
remove all materials supplies and equipment from the Property; provided however,
that the Optionor may at the cost of the Optionee, dispose of any such
materials, supplies or equipment not removed from the Property within 90 days of
receipt of such notice by the Optionee; and

 
(e)  
not engage in any form of conduct, or make any statements or representations
that disparage or may disparage or otherwise harm the Optionor’s reputation,
good will or commercial interest.

 
5.5. Survival of provisions. The Optionee and Optionor shall remain liable to
one another for all claims, matters, demands and causes of action arising prior
to the termination of this Agreement that relate in any way to the provisions of
this Agreement, and in particular, without limiting the generality of the
foregoing, the provisions of Section 6 and section 3.2 of this Agreement shall
survive any termination of this Agreement.
 
6. Indemnification
 
6.1. Indemnity.
 
(a)  
The Optionee shall and does hereby indemnify and save the Optionor harmless from
and against all losses, liabilities, claims, demands, damages, expenses, suits,
injury or death in any way referable to Mining Operations conducted by or on
behalf of the Optionee after the date hereof; provided that the Optionor shall
not be indemnified for any loss, liability, claim, demand, damage, expense,
suit, injury or death resulting from the negligence or wilful misconduct of the
Optionor or its employees, agents or contractors. For further clarity, the
parties intend that the Optionee shall be responsible for all liabilities, known
or unknown, contingent or otherwise, which were incurred or arose during the
Option Period, relating to or arising out of:

 
(i)  
the conduct of activities in, on or under the Property;

 
(ii)  
the environmental protection, clean-up, remediation, and reclamation of the
Property including, but not limited to, the obligations and liabilities arising
out of or related to:

 
1.  
the disturbance or contamination of land, water (above or below surface) or the
environment by exploration, mining, processing or waste disposal activities;

 
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2.  
any failure to comply with all past, current or future governmental or
regulatory authorizations, licenses, permits, and orders and all
non-governmental prohibitions, covenants, contracts and indemnities;

 
3.  
any act or omission causing or resulting in the spill, discharge, leak,
emission, ejection, escape, dumping or release of hazardous or toxic substances,
materials, or wastes as defined in any federal, provincial, or local law or
regulation in connection with or emanating from the Property; and

 
4.  
the long-term reclamation and remediation of the Property and the care and
monitoring of the Property, and the posting and maintaining of bonds or other
financial assurances required in connection therewith.

 
(b)  
Each party hereto shall indemnify and save harmless the other, as well as its
officers, directors and shareholders, from and against any and all claims,
losses, liabilities, damages, fees, fines, penalties, interests, deficiencies,
costs and expenses, of any nature or kind whatsoever (collectively, the
“Claims”), arising by virtue or in respect of any breach of covenant contained
herein or failure to comply with any provision herein, or any inaccuracy,
misstatement, misrepresentation or omission made by such party in connection
with any matter set out herein, and any and all actions, suits, proceedings,
demands, claims, costs, legal and other expenses related or incidental thereto.

 
(c)  
Notwithstanding any other provision of this Agreement and any termination of
this Agreement, the indemnities provided herein shall remain in full force and
effect until all possible liabilities of the persons indemnified thereby are
extinguished by the operation of law and will not be limited to or affected by
any other indemnity obtained by such indemnified persons from any other person.

 
(d)  
No investigation made by or on behalf of either of the parties hereto at any
time shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation, warranty or covenant made by the other party
herein or pursuant hereto.  No waiver by either of the parties hereto of any
condition herein, in whole or in part, shall operate as a waiver of any other
condition herein.

 
7. Force majeure
 
7.1. Force majeure. Notwithstanding anything contained in this Agreement to the
contrary, if any party is prevented from or delayed in performing any obligation
under this Agreement and failure is occasioned by any cause beyond its
reasonable control, excluding only lack of finances then, subject to Section
7.2, the time for the observance of the condition or performance of the
obligation in question shall be extended for a period equivalent to the total
period the cause of the prevention or delay persists or remains in effect
regardless of the length of the total period.
 
7.2. Notice. Any party claiming suspension of its obligations shall promptly
notify the other party to that effect and shall take all reasonable steps to
remove or remedy the cause and effect of the force majeure described in the
notice in so far as it is reasonably able so to do and as soon as possible;
provided, that the terms of settlement of any labour disturbance or dispute,
strike or lock-out shall be wholly in the discretion of the party claiming
suspension of its obligations by reason thereof; and that party shall not be
required to accede to the demands of its opponents in any labour disturbance or
dispute, strike or lock-out solely to remedy or remove the force majeure thereby
constituted.
 
7.3. Extension. The extension of time for the observance of conditions or
performance of obligations as a result of force majeure shall not relieve the
Optionee from its obligations to keep the Property in good standing, and to
issue the Payment Shares within the prescribed periods.

 
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8. Financial Reporting
 
8.1. Audit. An audit shall be prepared annually by the Optionee.  Each annual
audit shall be final and not subject to adjustment unless the Optionor delivers
to the Optionee written exceptions in reasonable detail within six months after
the Optionor receives the report.  The Optionor shall not have access to any
books and records of the Optionee.  The audit shall be conducted by a chartered
or certified public accountant of recognized standing.  The Optionee shall have
the right to condition access to its books and records on execution of a written
agreement by the auditor that all information will be held in confidence and
used solely for purposes of audit and resolution of any disputes related to the
Report.  A copy of the Optionor’s report shall be delivered to the Optionee upon
completion, and any discrepancy between the amount actually paid by the Optionee
and the amount which should have been paid according to the Optionor’s report
shall be paid in a timely manner, one party to the other.  If the discrepancy
requires a payment to the Optionor of an amount in excess of 10% of the amount
which was paid to the Optionor for the audited period, the entire cost of the
audit shall be borne by the Optionee, and the Optionee shall reimburse the
Optionor accordingly; otherwise, the Optionor shall bear the entire cost of the
audit.
 
8.2. No restriction on staking.  Nothing contained in this Agreement shall have
the effect of restricting in any way the entitlement of the Optionor to stake or
otherwise acquire, directly or indirectly, interests and rights in MDUs and
mining claims, and licenses, leases, grants, concessions, permits and patents
relating to a mineral property.  However, any mineral properties shall be
subject to the AMI as defined herein.
 
9. Transfer of Interest
 
9.1. Option Exercise. If the Optionee has made the payments referred to in
Section 3.2 and incurred the Expenditures referred to in Section 3.4, all within
the prescribed periods, and filed the required assessment credits as
contemplated herein, then the Optionee has the right, by giving written notice
to the Optionor on or before December 31, 2015, to become the owner of a 100%
undivided interest in all or those part(s) of the Property as the Optionee may
elect.

10. Notices & Payments
 
10.1. Notice.  Any demand, notice or other communication (the “Notice”) to be
made or given in connection with this Agreement shall be made or given in
writing and may be made or given by personal delivery or facsimile addressed to
the recipient at the addresses or facsimile numbers of the parties provided on
the first page of this Agreement or such other address or individual as may be
designated by notice by any party to the other.  Any Notice made or given by
personal delivery shall be conclusively deemed to have been given on the day of
actual delivery thereof, and if made or given by facsimile, on the day, other
than a day which is not a Business Day, following the day it was sent. 
 
10.2. Payments.  Payments hereunder shall be made addressed to the recipient at
the addresses of the recipient parties provided on the first page of this
Agreement or such other address or individual as may be designated by notice by
the recipient party in accordance with Section 10.1.  If any payment herein
becomes due on a day that is not a Business Day, such payment shall be made on
the next succeeding Business Day.

 
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11. Public Announcements
 
11.1. Public Announcements.  The Optionee shall not, without the prior consent
of the Optionor, make any disclosure regarding the existence, purpose, scope,
content, terms or conditions of this Agreement or other agreements relating
thereto save to the extent such disclosure comprises information substantially
already publicly available or unless it is necessary for any party to make such
disclosure in order to comply with a statutory obligation or the requirements of
a competent government or statutory agency or Regulatory Authority; provided
that, where practicable, a copy of any proposed announcement or statement shall
be furnished to the Optionor in advance of the proposed date of publication, and
the Optionee shall make every reasonable effort to incorporate the Optionor’s
comments prior to dissemination.
 
12. General Provisions
 
12.1. Entire Agreement.  This Agreement, including all the Schedules hereto,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes any and all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties and there
are no warranties, representations or other agreements among the parties in
connection with the subject matter hereof except as specifically set forth
herein and therein. Each party acknowledges that this Agreement is entered into
after full investigation and that no party is relying on any statement or
representation made by any other which is not embodied in this agreement. Each
party acknowledges that it shall have no right to rely on any amendment,
promise, modification, statement or representation made or occurring subsequent
to the execution of this Agreement unless it is in writing and executed by each
of the parties.
 
13.   Each party represents and warrants to the other party that it has the
authority to enter into this Agreement and that execution and delivery of this
Agreement has been duly approved by resolution of the board of directors.  Each
individual (the “Authorized Signatory”) executing this Agreement on behalf of
each party represents and warrants that he or she is duly authorized to execute
and deliver this Agreement on behalf of said party.
 
13.1. Assignment of Interest.  Neither the Optionee or the Optionor may sell,
transfer or otherwise dispose of all or any portion of its interest in and to
the Property and this Option Agreement without the prior written consent of the
other party, being the Optionor and Optionee respectively, which consent may not
be unreasonably withheld.
 
13.2. Right to Purchase.  In the event of Optionor’s insolvency or bankruptcy,
the Optionee shall have the right to purchase at fair market value, based on an
independent third party appraisal, the Optionor’s interest and rights to the
Property.
 
13.3. Encumbrances. During the Option Period, neither the Optionor nor the
Optionee shall grant an Encumbrance, other than a Permitted Encumbrance, in
their respective interest in the Property.
 
13.4. Confidentiality of information. During the Option Period, the Optionee
shall keep all information and data concerning or derived from the Mining
Operations confidential and, except to the extent required by law, regulation or
policy of any Regulatory Authority, or in connection with the filing of an
annual information form or a prospectus by the Optionee or any of its
Affiliates, no information derived from the Mining Operations shall be disclosed
to any person other than an Affiliate without the prior consent of the Optionor,
which consent shall not unreasonably be withheld or delayed. Each party shall,
where practicable, use reasonable commercial efforts to cause the text of any
news releases or other public statements which a party desires to make with
respect to the Property to be made available to the other party prior to
publication and the other party shall have the right to make suggestions for
changes therein.

 
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13.5. Waiver.  The failure of a party in any one or more instances to insist
upon strict performance of any of the terms of this Agreement or to exercise any
right or privilege arising under it shall not preclude it from requiring by
reasonable notice that any other party duly perform its obligations or preclude
it from exercising such a right or privilege under reasonable circumstances, nor
shall waiver in any one instance of a breach be construed as an amendment of
this Agreement or waiver of any later breach.
 
13.6. Enurement. This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
 
13.7. Further Assurances.  The parties hereto shall from time to time at the
request of any of the other parties hereto and without further consideration,
execute and deliver all such other additional assignments, transfers,
instruments, notices, releases and other documents and shall do all such other
acts and things as may be necessary or desirable to assure more fully the
consummation of the transactions contemplated hereby.
 
13.8. Time.  Time shall be of the essence of this Agreement.
 
13.9. Expenses. Each party shall be responsible for its own expenses in
connection with negotiating and settling this Agreement.
 
13.10. Amendment.  This Agreement may be amended or varied only by agreement in
writing signed by each of the parties.
 
13.11. Arbitration.
 
(a)  
If there is a dispute between the parties with respect to this Agreement, or the
interpretation of this Agreement, the Optionee and the Optionor shall, firstly,
be obligated to use best efforts to reconcile and settle each and every
dispute.  In the event that a settlement or agreement cannot be reached between
the parties, the aggrieved party (“Claimant”) shall, pursuant to Section 10.1
herein, deliver an arbitration notice (“Arbitration Notice”) to the other party
(the “Respondent”) detailing the nature of the dispute, the facts and the
relevant evidence.  Within 7 days that the Respondent receives the Arbitration
Notice, each of the Claimant and the Respondent shall appoint a nominee.  The
two nominees so appointed shall, within 21 days of the date of the Arbitration
Notice, in turn select a single arbitrator (the “Arbitrator”) to settle all
matters arising from the dispute.  In the event that either the Claimant or
Respondent, or their selected nominees, fail to appoint the Arbitrator within
the prescribed periods, the party in default of the time provisions shall
automatically accept the arbitrator selected by the party not in default, as
being the Arbitrator to settle all matters arising from the dispute.

 
(b)  
The Claimant shall deposit with the Arbitrator a full and complete formal
statement of claim, which shall not be subject to amendment at any time during
the arbitration process unless otherwise permitted by the Arbitrator, within 30
days of the date that the Arbitrator was selected.  Unless otherwise required by
the Regulatory Authorities, neither the Claimant nor the Respondent shall
announce publicly the alleged claims or

 
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dispute until such time as a formal statement of claim has been deposited with
the Arbitrator.

 
(c)  
Each of the Claimant and the Respondent shall jointly instruct the Arbitrator to
create an arbitration protocol in a timely manner dealing with the timing and
procedures (including security for costs) of all matters that are subject to the
dispute, taking into consideration: (i) the fact that each of the Claimant and
the Respondent are reporting issuers, as that term is described in applicable
securities legislation, and; (ii) the seasonality of the Mining Operations and
what correlative effects the process may have on logistics.

 
(d)  
The award made by the Arbitrator shall be final and binding upon the parties,
and shall in all respects be kept and observed.  The Arbitrator shall have the
authority to award and direct that the parties, or either of them, execute and
deliver such releases, conveyances, deeds, assurances and other documents as the
Arbitrator thinks fit, and these releases, conveyances, deeds, assurances and
other documents shall be executed and delivered accordingly

 
(e)  
All costs of the arbitral proceedings shall be in the discretion of the
Arbitrator who may direct to and by whom, and in what manner, (including
allocation between the parties) the costs or any part of them shall be paid, it
being the intention of the parties that the first principle in the exercise of
the Arbitrator’s discretion shall be that the costs of the arbitral proceedings
shall follow the event of the award.  The costs of the arbitral proceedings and
the award shall include, but not be limited to, the sum of (i) the Arbitrator’s
fees and applicable taxes, (ii) all actual, reasonable legal fees and
disbursements of the Arbitrator and the parties to the dispute, and (iii) a sum
equal to the product of $200 multiplied by the number of days in the period
commencing on the date that is 90 days prior to the date of the arbitral hearing
(or trial) and ending on the last date of such hearing or trial.

 
(f)  
The Arbitrator may proceed ex parte in case either party, or any of their
witnesses, shall at any time neglect or refuse to attend the arbitration
proceedings after 7 days’ notice in writing under the hand of the Arbitrator
given to each party or to the parties’ solicitor, unless the party, prior to the
time fixed to attend, presents to the Arbitrator what the latter considers
sufficient cause for failure to attend.

 
(g)  
The Arbitrator and any nominee under Subsection 12.11(a) must be a resident of
Alberta and either of a practising notary, lawyer, advocate, accountant,
professor, in the State of Nevada, or a retired justice of any of the courts of
the State of Nevada.  An Arbitrator selected outside of the jurisdiction of
Nevada may only be effective if agreed to in writing by each of the Claimant and
the Respondent. The language to be used in the arbitral proceedings shall be
English.

 
(h)  
Any award made by the Arbitrator may, at the instance of either of the parties
to the dispute and without notice to the other of them, be made an Order of the
Courts of Nevada

 
13.12. Governing Law and Attornment.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Nevada and the federal
laws of the United States of Americaapplicable therein and the parties hereby
irrevocably attorn to the jurisdiction of the Courts of the State of
Nevada.  For the purpose of all legal proceedings, this Agreement shall be
deemed to have been executed in the State of Nevada and the courts of the State
of Nevada shall have exclusive jurisdiction to entertain any action arising
under this Agreement

 
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-  –
 

 
13.13. Language.  It is the express wish of the parties hereto that this
Agreement and all documents contemplated hereby shall be drawn up in English.
 
13.14. Counterparts.  This Agreement may be executed by facsimile and in as many
counterparts as are necessary and shall be binding on each party when each party
hereto has signed and delivered one such counterpart.  When a counterpart of
this Agreement has been executed by each party, all counterparts together shall
constitute one agreement.

REST OF PAGE INTENTIONALLY LEFT BLANK

 
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THE PARTIES, intending to be contractually bound, have entered into this
Agreement as of the date set out on the first page.

 
 
PANA-MINERALES S.A.
 
By:
 
 
(Authorized Signatory)
   
 
MINERALES HOLDINGS CAN CORP.
 
 
By:
 
 
(Authorized Signatory)
   

 
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SCHEDULE "A"
DESCRIPTION OF THE PROPERTY
 
 
-OMITTED-

 
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SCHEDULE "B"
 
To an Agreement made as of February 1, 2012 by and between Pana-Minerales S.A.
and Minerales Holdings Can Corp.
 
NET SMELTER RETURNS
 
 
1.  
For the purposes of this Agreement, the term "Net Smelter Returns" shall mean
the net proceeds actually paid to the Optionee from the sale by the Optionee of
minerals or other products mined and removed from the Property, after deduction
of the following:

 
smelting costs, treatment charges and penalties including, but not being limited
to, metal losses, penalties for impurities and charges for refining, selling and
handling by the smelter, refinery or other purchaser; provided, however, in the
case of leaching operations or other solution mining or beneficiation
techniques, where the metal being treated is precipitated or otherwise directly
derived from such leach solution, all processing and recovery costs incurred by
the Optionee, beyond the point at which the metal being treated is in solution,
shall be considered as treatment charges;
 
costs of handling, transporting and insuring ores, minerals and other materials
or concentrates from the Property or from a concentrator, whether situated on or
off the Property, to a smelter, refinery or other place of treatment;
 
actual sales and brokerage costs, if any, and
 
ad valorem taxes and taxes based upon production, but not income taxes.
 
 
2.  
In the event the Optionee commingles minerals from the Property with minerals
from other properties, the Optionee shall establish procedures, in accordance
with sound mining and metallurgical techniques, for determining the proportional
amount of the total recoverable metal content in the commingled minerals
attributable to the input from each of the properties by calculating the same on
a metallurgical basis, in accordance with sampling schedules and mining
efficiency experience, so that production royalties applicable to minerals
produced from the Property may reasonably be determined.

 
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SCHEDULE “C”

To an Agreement made as of February 1, 2012 by and between Pana-Minerales S.A.
and Minerales Holdings Can Corp.

Operator
 

1.                      INTERPRETATION
 
1.01                      Terms defined in the Agreement shall, subject to any
contrary intention, have the same meanings herein.  In this Schedule the
following words, phrases and expressions shall have the following meanings:
 
 
(a)
“Agreement” means the Agreement to which this Schedule is attached.

 
(b)  
“Program” means the work plan and budget of Mining Operations conducted during
the Option Period and adopted pursuant to Section 4 of the Agreement.

 
(c)  
“Costs” means all items of outlay and expense whatsoever, direct or indirect,
with respect to Mining Operations, recorded by the Operator after the date
hereof in accordance with this Agreement and prior to the formation of the Joint
Venture and shall include all obligations and liabilities incurred or to be
incurred with respect to the protection of the environment such as future
decommissioning, reclamation and long-term care and monitoring, even if not then
due and payable so long as the amounts can be estimated with reasonable
accuracy, and whether or not a mine reclamation trust fund has been established.

 
2.           OPERATOR
 
2.01                      The Optionor shall act as Operator and may appoint
such other parties as Operator as they may determine to undertake the operations
as required under the operating agreement until such time as the Optionee has
earned all of its interest pursuant to Page 5, Section 4.1 of the Option
Agreement of which this Schedule C forms a part.
 
2.02                      The party acting as Operator may resign as Operator on
at least 90 days' notice to all the parties.
 
2.03                      Upon ceasing to be Operator, the former Operator shall
forthwith deliver to the Optionee and Optionor custody of all books, records,
and other property both real and personal which it prepared or maintained in its
capacity as Operator.
 
3.           RIGHTS, DUTIES AND STATUS OF OPERATOR
 
3.01                      The Operator in its operations hereunder shall be
deemed to be an independent contractor.  The Operator shall not act or hold
itself out as agent for any of the parties nor make any commitments on behalf of
any of the parties unless specifically permitted by this Agreement or directed
in writing by a party.

 
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3.02                      Subject to any specific provision of this Agreement
and subject to it having the right to reject any direction on reasonable grounds
by virtue of its status as an independent contractor, the Operator shall perform
its duties hereunder in accordance with the directions of the Optionee and in
accordance with this Agreement.
 
3.03                      The Operator shall manage and carry out Mining
Operations substantially in accordance with Programs adopted by the Optionee and
in connection therewith shall, in advance if reasonably possible, notify the
Optionee of any change in Mining Operations which the Operator considers
material and if it is not reasonably possible, the Operator shall notify the
Optionee so soon thereafter as is reasonably possible.
 
3.04                      The Operator shall have the sole and exclusive right
and authority to manage and carry out all Mining Operations in accordance
herewith and to incur on behalf of the Optionee the Costs required for that
purpose.  In so doing the Operator shall:
 
(a)  
comply with the provisions of all agreements or instruments of title under which
the Property or Assets are held;

 
(b)  
pay all Costs properly incurred promptly as and when due;

 
(c)  
maintain books of account in accordance with the normal industry accounting
procedure, and the judgment of the Operator as to matters related to the
accounting shall govern if the Operator's accounting practices are in accordance
with accounting principles generally accepted in the mining industry in Canada;
and

 
(d)  
perform its duties and obligations hereunder in a sound and workmanlike manner,
in accordance with sound mining and engineering practices and other practices
customary in the Canadian mining industry, and in substantial compliance with
all applicable federal, provincial, Territorial and municipal laws, by-laws,
ordinances, rules and regulations.

 
4.           EXPLORATION PROGRAMS
 
4.01                      The Operator shall prepare draft Programs for
consideration by the Optionee.  Unless otherwise agreed to by the Optionee, each
Program shall cover a calendar year.  The draft Program shall contain a
statement in reasonable detail of the proposed Mining Operations, estimates of
all Costs to be incurred and an estimate of the time when they will be incurred,
and shall be delivered to the Optionee by no later than May 1st of each year to
which the draft Program relates.  Each draft Program shall be accompanied by
such reports and data as are reasonably necessary for the Optionee to evaluate
and assess the results from the Program for the then current year and, to the
extent not previously delivered, from earlier Programs.
 
4.02                      The Optionee shall review the draft Program prepared
and, if it deems fit, adopt the Program with such modifications, if any, as the
Optionee deems necessary.  The Operator shall be entitled to an allowance for
Cost overruns of 10 percent in addition to any budgeted Costs and any Costs so
incurred shall be deemed to be included in the Program, as adopted.

 
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4.03                      The Operator shall be entitled to invoice the
Optionee:
 
 
(a)
no more frequently than monthly, for the Costs incurred and paid by the Operator
in carrying out a Program; or

 
 
(b)
not more than 120 days in advance of requirements, for an advance of the Costs
estimated to be incurred and paid by the Operator in carrying out a Program or
portion thereof.

 
Each invoice shall be signed by an officer of the Operator.  The Optionee shall
pay to the Operator the amount invoiced within 20 days of receipt of the
invoice.  If the Optionee protests the correctness of an invoice it shall
nevertheless be required to make the payment.
 
4.04           If the Optionee fails to pay an invoice within the 20-day period
referred to in Section 4.03, the Optionee shall be deemed to have elected to
terminate the Program then in effect, and accordingly, the Operator shall have
no further obligations under this Agreement in respect of that Program.
 
4.05           If the Operator suspends or prematurely terminates a Program, any
funds advanced by a Participant in excess of Costs incurred prior to the
suspension or premature termination shall be refunded within 30 days of the
suspension or premature termination.  Unless approved by the Optionee, the
Operator shall be exclusively liable for the payment of all Costs incurred in
excess of 110 percent of any budgeted Costs.
 
4.06           Unless otherwise directed by the Optionee, the Operator may
suspend or terminate prematurely any Program, by delivering notice to that
effect to the Optionee, when the Operator, in good faith, considers that
conditions are not suitable for the proper continuation or completion of the
Program or the results obtained to that time eliminate or substantially impair
the technical rationale on which the Program was based.  The Optionee may
suspend or terminate prematurely any Program at any time by delivering notice to
that effect to the Operator. If any Program is terminated prematurely, the
Operator shall, within 30 days of such termination, refund to the Optionee the
amount by which the amounts advanced by the Optionee to the Operator on account
of projected Costs exceeds the sum of such Costs and the amounts payable to the
Operator under Section 5 of this Schedule.
 
4.07             If the Operator fails to submit a draft Program by the date set
out in this Agreement, the following shall apply:
 
 
(a)
the Operator shall not be entitled to submit a draft Program for the subject
period;

 
 
(b)
the Optionee may submit a draft Program (the “Non-Operator's Program”) for the
subject period for consideration by the Operator;

 
 
(c)
if the Operator elects to proceed with the Non-Operator's Program, it shall
remain as the operator for the duration of the Non-Operator's Program; and

 
 
(d)
if the Operator elects not to proceed with the Non-Operator’s Program, it shall
cease to be the Operator for the duration of the Non-Operator's Program, and the
Optionee shall carry out the Non-Operator Program itself.

 
 
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5.           OPERATOR'S FEE
 
5.01                      Except if Subsection 4.07(d) applies, the Optionee
shall pay the Operator a fee for its services with respect to Programs as
follows, which amount shall be paid promptly upon being invoiced:
 
 
(a)
10% for each individual contract which is not more than $100,000;

 
 
(b)
8% for each individual contract which exceeds $100,000;

 
 
(c)
10% of all other Costs not included in clauses 5.01(a) and 5.01(b).

 
6.           INFORMATION AND DATA
 
6.01                      While Programs are being carried out, the Operator
shall use its best efforts to furnish the Optionee with monthly progress reports
and with a final report within 90 days following the conclusion of each
Program.  The final report shall show the Mining Operations performed and the
results obtained and shall be accompanied by a statement of Costs and copies of
pertinent plans, assay maps, diamond drill records and other factual engineering
data.
 
6.02                      All information and data concerning or derived from
the Mining Operations shall be kept confidential and, except to the extent
required by law or by regulation of any securities regulatory authority or stock
exchange, shall not be disclosed to any person other than an Affiliate without
the prior consent of all the other parties to this Agreement, which consent
shall not unreasonably be withheld.
 
6.03                      The text of any news releases or other public
statements which a party intends to make with respect to the Property or this
Agreement shall, to the extent practicable, be made available to the other
parties prior to publication and the other parties shall have the right to make
suggestions for changes therein.
 
7.           LIABILITY OF THE OPERATOR
 
7.01                      Subject to Section 7.02, the Optionee shall indemnify
and save the Operator harmless from and against any loss, liability, claim,
demand, damage, expense, injury or death (including, without limiting the
generality of the foregoing, legal fees) resulting from any acts or omissions of
the Operator or its officers, employees or agents.
 
7.02                      Notwithstanding Section 7.01, the Operator shall not
be indemnified nor held harmless by any of the parties for any loss, liability,
claim, damage, expense, injury or death, (including, without limiting the
generality of the foregoing, legal fees) resulting from the negligence or
willful misconduct of the Operator or its officers, employees or agents.
 
7.03                      An act or omission of the Operator or its officers,
employees or agents done or omitted to be done:
 
 
(a)
at the direction of, or with the concurrence of, the Optionee; or

 
 
(b)
unilaterally and in good faith by the Operator to protect life or property

 
shall be deemed not to be negligence or willful misconduct.
 
 
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7.04                      The Operator shall not be liable to any other party
nor shall any party be liable to the Operator in contract, tort or otherwise for
special or consequential damages, including, without limiting the generality of
the foregoing, loss of profits or revenues.
 
8.         AMI
 
8.01                      The area of interest shall comprise that area which is
included within five (5) miles of the outermost boundary of the mineral
properties which constitute the Property as outlined in Schedule “A” to the
Agreement.
 

 
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