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MINING OPTION AGREEMENT
(IOWA CANYON PROPERTY)

THIS AGREEMENT made as of September 9, 2011;

BETWEEN:

> > > TAC GOLD CORPORATION, a British Columbia company, with offices at 203 –
> > > 2780 Granville Street, Vancouver, BC, Canada V6H 3J3 (Facsimile:
> > > 604-730-0967);
> > > 
> > > (the “Optionor”)

AND:

> > > ALL AMERICAN GOLD CORP., a Wyoming corporation, of Suite 203, 700 North
> > > High School Road, Indianapolis, Indiana, USA 46214 (Facsimile: <>);
> > > 
> > > (the “Optionee”)

BACKGROUND

A.

The Optionor entered into a Mineral Property Option Agreement made as of the 6th
day of April, 2010 pursuant to which Minquest Inc. granted the Optionor an
option to acquire a 100% interest in the Property (as hereinafter defined) known
as the Iowa Canyon Property, which Mineral Property Option Agreement was amended
pursuant to an Amendment to Mineral Property Option Agreement made effective as
of April 6, 2011 (the Mineral Property Option Agreement as amended by the
Amendment to Mineral Property Option Agreement is called the “Minquest Option
Agreement”).

    B.

The Optionor and the Optionee have agreed that the Optionor will grant the
Optionee an option to acquire a 15% undivided interest in the Property subject
to the Optionor first acquiring a 100% interest in the Property, and an
additional option to acquire a further 25% interest in the Property, all on the
terms and conditions hereinafter set forth.

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 others 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)

“Affiliate” has the meaning set out in the British Columbia Business
Corporations Act, as amended from time to time.

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  (c)

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

        (d)

“Arbitrator” has the meaning set out in Section 10.4(a) of this Agreement.

        (e)

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in
British Columbia.

        (f)

“Claimant” has the meaning set out in section 10.4(a) of this Agreement.

        (g)

“Communication” has the meaning set out in Section 8.1 of this Agreement.

        (h)

“Effective Date” means September 9, 2011.

        (i)

“Encumbrances” means security interests, liens, royalties, charges, mortgages,
pledges, encumbrances, adverse claims or challenges of any nature or kind
whatsoever, whether written or oral, or direct or indirect.

        (j)

“Exploration Expenditures” has the meaning given in the Minquest Option
Agreement.

        (k)

“Government or Regulatory Authority” means any federal, provincial, regional,
municipal or other government, governmental department, regulatory authority,
commission, board, bureau, agency or instrumentality and that have lawful
authority to regulate or administer or govern an business or 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 on which shares of a party are listed for trading.

        (l)

“Joint Venture” has the meaning set out in Section 5.2.

        (m)

“Joint Venture Agreement” has the meaning set out in Section 5.2.

        (n)

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

        (o)

“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 Optionor including, without limiting the
generality of the foregoing, the work of assessment, geophysical, geochemical
and geological surveys, studies and mapping, investigating, drilling, designing,
examining, assaying, prospecting, 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

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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.

        (p) “Minquest Option Agreement” has the meaning given in background
paragraph A.
        (q) “Minquest NSR Royalty” means the 3% royalty on net smelter returns
on production from the Property in favour of Minquest Inc. provided for in the
Minquest Option Agreement.
        (r) “Notice of Arbitration” has the meaning set out in Section 10.4(a)
of this Agreement.
        (s) “Offer” has the meaning set out in Section 10.2 of this Agreement.
        (t) “Option” has the meaning set out in Section 3.1 of this Agreement.
        (u) “Option Period” means the period commencing on the Effective Date
and ending on April 6, 2018 unless terminated earlier by the exercise of the
Option by the Optionee or the lapse or termination of the Option.
        (v) “Payment Shares” means the common shares in the capital of the
Optionor issued by the Optionor to Minquest Inc. under the Minquest Option
Agreement.         (w) “Permitted Encumbrance” means
          (i) 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;
            (ii) the right reserved to or vested in any government 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;
            (iii) 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;
and
            (iv) the reservations, limitations, provisos and conditions in any
original grants from the Crown or interests therein and statutory exceptions to
title.

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  (x)

“Property” means the mineral interests described in Schedule A as they may be
augmented or reduced under the Minquest Option Agreement and all mining leases
and other mining interests derived therefrom, and a reference to a mineral claim
comprised in the Property includes any mineral leases or other interests into
which such mineral claim may have been converted and Property includes all
Property Rights.

        (y)

“Property Rights” means all licenses, permits, easements, rights-of-way, surface
or water rights and other rights, approvals obtained by either of the parties
either before or after the date of this Agreement and necessary or desirable for
the development of the Property, or for the purpose of placing the Property into
production or continuing production therefrom.

        (z)

“Proposed Purchaser” has the meaning set out in Section 10.2(a) of this
Agreement.

        (aa)

“Respondent” has the meaning set out in Section 10.4(a) of this Agreement.

        (bb)

“US Dollar Equivalent” means the US dollar equivalent of Canadian dollars
calculated in accordance with the exchange rate set by the Bank of Canada at the
relevant time.

        (cc)

“Weighted Average Trading Price” means the volume weighted average trading price
of the Optionor’s common shares on the CNSX, or another exchange where the
majority of the trading volume and value of the Optionor’s common shares occur,
calculated by dividing the total value by the total volume of the Optionor’s
common shares traded during the period of 30 consecutive trading days (being
days on which the CNSX or such other exchange is open for trading) ending
immediately before the relevant day.

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 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.

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1.5

Currency. All references to currency herein are to lawful money of the United
States of America, unless otherwise specified.

      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 counsel
on behalf of all parties hereto 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)

it is resident at the address set forth beside its name on the first page of
this Agreement;

      (b)

the Optionor is a corporation duly incorporated under the laws of the Province
of British Columbia with the corporate power to own its assets and to carry on
its business;

      (c)

the Optionor has good and sufficient authority to enter into and deliver this
Agreement;

      (d)

there is no contract, option or any other right of another 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 and the Minquest Option Agreement;

      (e)

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 of the articles, by-laws or other
constating documents of 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;

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  (f)

the Optionor has the right to acquire a 100% interest in and to the Property
pursuant to the Minquest Option Agreement, free and clear of all charges and
encumbrances other than the Minquest NSR Royalty;

          (g)

the Property is properly and accurately described in Schedule A and is in good
standing under the laws of the jurisdiction in which the Property is located;

          (h)

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 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

          (i)

the Optionor shall, during the Option Period:

          (i)

promptly provide the Optionee with any and all notices and correspondence from
Government or Regulatory Authorities in respect of the Property;

          (ii)

use its reasonable efforts to fulfill its obligations under the Minquest Option
Agreement in all material respects; and

          (iii)

maintain its corporate existence.

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 Wyoming 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 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;

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  (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 acknowledges that:

          (i)

it has received a copy of the Minquest Option Agreement and acknowledges that
its interest in this Agreement is subject to the terms of the Minquest Option
Agreement including, without limitation, the provisions contained in it
regarding the Minquest NSR Royalty;

          (ii)

the Optionor shall have full and complete discretion as to how it proceeds under
the Minquest Option Agreement including without limitation, what Exploration
Expenditures it incurs, what payments it makes to Minquest Inc. in order to
maintain the option granted to it under the Minquest Option Agreement and
whether or not to exercise such option; and

          (iii)

the payments made by the Optionee to the Optionor under this Agreement are not
refundable or returnable in the event the Optionor subsequently determines not
to acquire the Property and, accordingly, not to exercise the option granted to
it under the Minquest Option Agreement;

          (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)

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 or under the
Minquest Option Agreement; and

          (iii)

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. Effective on the date on which the Optionor acquires a 100%
interest in the Property pursuant to the Minquest Option Agreement, the Optionor
grants to the

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Optionee the exclusive option (the “Option”) to acquire an undivided 15%
interest in the Property. This right may be exercised in the manner referred to
in Section 4.1.

      3.2

Consideration. In consideration of the grant of the Option, the Optionee shall
pay the Optionor the sum of $50,000 concurrently with the execution and delivery
of this Agreement by the Optionee and $50,000 within 60 days of the execution
and delivery of this Agreement by the Optionee.

      3.3

Access to the Property, Reports. During the Option Period, the Optionor shall
have all of the rights to enter on and conduct Mining Operations on the Property
granted to it pursuant to the Minquest Option Agreement, shall be entitled to
exercise such rights as it may determine in its sole discretion and shall comply
with all of its obligations with respect to the Property pursuant to the
Minquest Option Agreement. The Optionor shall, during the Option Period, submit
to the Optionee periodic progress reports of the Mining Operations completed by
the Optionor on the Property, which reports shall be submitted not less than on
an annual basis, and shall provide the Optionee with access to all records, data
and information relating to the Property which is in the possession of the
Optionor. If permitted under the Minquest Option Agreement, the Optionee may, at
its own risk and expense and at reasonable times agreed to by the Optionor,
enter on the Property and examine the Mining Operations carried out by the
Optionor; provided, that the Optionee will not, in the opinion of the Optionor,
interfere with it.

      3.4

Maintenance of Option. In order to maintain in force the Option granted to it,
and to exercise the Option, the Optionee must pay to the Optionor:

      (a)

15% of the payments made by the Optionor to Minquest Inc. pursuant to
subsections 4.2(a), (b) and (c) of the Minquest Option Agreement;

      (b)

the US Dollar Equivalent of 15% of the Weighted Average Trading Price multiplied
by the number of Payment Shares issued from time to time by the Optionor to
Minquest Inc. pursuant to section 4.2(d) of the Minquest Option Agreement (“the
“Share Consideration”), as at the end of the day on which such Payment Shares
are issued; and

      (c)

15% of the Exploration Expenditures incurred by the Optionor pursuant to section
4.2(e) of the Minquest Option Agreement.

     

As the Optionor makes payments to Minquest Inc., issues Payment Shares to
Minquest Inc. and incurs Exploration Expenditures pursuant to the Minquest
Option Agreement, it shall provide the Optionee with statements setting out the
amounts paid, Payment Shares issued or Exploration Expenditures incurred and the
calculations of the amounts payable by the Optionee with respect thereto and in
order to maintain in force the Option and to exercise the Option, the Optionee
shall pay to the Optionor within 30 days of the Optionee’s receipt of each such
statement the amount payable in accordance with such statement.

      3.5

Lapse of Option. The Optionee may let the Option lapse by failing to make any of
the payments required pursuant to Section 3.4. Any termination under this
Section shall occur automatically, without any further action by the Optionor.

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4.

Formation of Joint Venture

    4.1

Option Exercise. If the Optionor exercises the option granted to it pursuant to
the Minquest Option Agreement and acquires a 100% interest in the Property it
shall forthwith notify the Optionee in writing that it has done so, and if the
Optionee has made all of the payments to be made by it pursuant to Section 3.2
and Section 3.4, all within the prescribed periods, then the Optionee has the
right, by giving written notice to the Optionor within 30 days of receipt of the
notice from the Optionor, to become the owner of a 15% undivided interest in all
or that part(s) of the Property as the Optionee may elect.

    4.2

Joint Venture. If the Optionee exercises its right under Section 4.1, and
becomes the owner of a 15% undivided interest in the Property, the Optionee and
Optionor shall be deemed conclusively without executing any further agreement,
to have formed a joint venture (the “Joint Venture”) for the purposes of further
exploring the Property and, if deemed warranted, of developing, constructing and
operating a mine on the Property or a part of it and marketing the Minerals
derived therefrom all according to the terms and conditions contained in the
form of joint venture agreement (the “Joint Venture Agreement”) attached hereto
as Schedule B. The Joint Venture Agreement shall govern the subsequent
relationship of the Optionee and Optionor in all subsequent mining operations on
the Property. The parties shall execute and deliver to each other, promptly upon
the Optionee exercising its Option under section 4.1, the Joint Venture
Agreement.

    4.3

Initial interests and expenditures. On the date of formation of the Joint
Venture the parties shall, for purposes of the Joint Venture Agreement, be
deemed to have the following initial interest and to have incurred, as prior
exploration costs, moneys under this Option Agreement in the amounts as follows:

    Undivided Interest Deemed Expenditures           Optionee 15% $ 330,000    
      Optionor 85% $ 1,870,000

4.4

Title to Property. The title to the Property shall be recorded on the formation
of the Joint Venture in each of the names of the Optionor and Optionee as to
their respective undivided interests.

    4.5

Additional Option. As provided in the Joint Venture Agreement, if the Optionee
exercises the Option and acquires a 15% interest in the Property, it shall have
an additional option to acquire an additional 25% interest in the Property (for
a total 40% in the Property) by paying to the Optionor, no later than 60 days
prior to the first anniversary of the formation of the Joint Venture, an
additional $3,000,000. If the Optionee does not exercise this additional option
and acquire an additional 25% interest in the Property, the Optionor may buy
back the Optionee’s 15% interest in the Property by paying to the Optionee, on
or before the first anniversary of the formation of the Joint Venture, the
Exploration Expenditures and the Share Consideration incurred by the Optionee
with respect to the Property pursuant to this Agreement and the Joint Venture
Agreement plus 10%.

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5.

Termination

    5.1

Termination. The Option and this Agreement shall terminate in accordance with
Section 3.5 if the Optionee fails to make a payment in accordance with Section
3.4 or if the Optionee does not exercise the Option in accordance with Section
4.1 within the prescribed period. In addition, the Optionor may terminate the
Option and this Agreement effective upon giving notice of such termination if
the Optionee is in default in any material respect of any term or condition of
this Agreement (other than a payment pursuant to Section 3.4) and fails to cure
such default within 30 days of receiving notice from the Optionor specifying the
particulars of such default or if the Minquest Option Agreement is terminated
without the option granted to the Optionor thereunder being exercised by the
Optionor.

    5.2

Survival of provisions. The Optionee and Optionor shall remain liable to one
another for all matters, claims, demands and causes of action 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 of this Agreement shall
survive any termination of this Agreement.

    6.

Indemnification

    6.1

Indemnity. 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, 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.

    6.2

Survival. 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.

    6.3

Investigation. 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

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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.

    8.

Notices & Payments

    8.1

Notice. Any demand, notice or other communication (a “Communication”) 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 Communication 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.

    8.2

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 8.1. 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.

    9.

Public Announcements

    9.1

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; 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.

    10.

General Provisions

    10.1

Entire Agreement. This Agreement, including all the Schedules hereto,
constitutes the entire agreement among the parties party 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

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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.

      10.2

Assignment of interest. During the Option Period and prior to the formation of
the Joint Venture, if the Optionee:

      (a)

receives a bona fide offer from a third party (the “Proposed Purchaser”) dealing
at arm's length with the Optionee to purchase all or any part all of the
Optionee’s interest in this Agreement; or

      (b)

intends to sell all or any part of its interest in this Agreement other than to
an Affiliate,

the Optionee shall first offer (the “Offer”) such interest in writing to the
Optionor upon terms no less favourable than those offered by the Proposed
Purchaser or intended to be offered by the Optionee, as the case may be. The
Offer shall specify the price and terms and conditions of such sale, the name of
the Proposed Purchaser (which term shall, in the case of an intended offer by
the Optionee, mean the person or persons to whom the Optionee intends to offer
its interest) and, if the offer received by the Optionee from the Proposed
Purchaser provides for any consideration payable to the Optionee otherwise than
in cash, the Offer shall include the Optionee's good faith estimate of the cash
equivalent of the non-cash consideration. If within a period of 60 days of the
receipt of the Offer, the Optionor notifies the Optionee in writing that it will
accept the same, the Optionee shall be bound to sell such interest to the
Optionor (subject as hereinafter provided with respect to price) on the terms
and conditions of the Offer. If the Offer so accepted by the Optionor contains
the Optionee's good faith estimate of the cash equivalent consideration as
aforesaid, and if the Optionor disagrees with the Optionee's best estimate, the
Optionor shall so notify the Optionee at the time of acceptance and the Optionor
shall, in such notice, specify what it considers, in good faith, the fair cash
equivalent to be and the resulting total purchase price. If the Optionor so
notifies the Optionee, the acceptance by the Optionor shall be effective and
binding upon the Optionee and the Optionor and the cash equivalent of any such
non-cash consideration shall be determined by binding arbitration under the laws
of the jurisdiction in which the Property is located and shall be payable by the
Optionor, subject to prepayment as hereinafter provided, within 60 days
following its determination by arbitration. The Optionor shall in such case pay
to the Optionee, against receipt of an absolute transfer of clear and
unencumbered title to the interest of the Optionee being sold, the total
purchase price which it specified in its notice to the Optionee and such amount
shall be credited to the amount determined following arbitration of the cash
equivalent of any non-cash consideration. If the Optionor fails to notify the
Optionee before the expiration of the time limited therefor that it will
purchase the interest offered, the Optionee may sell and transfer such interest
at the price and on the terms and conditions specified in the Offer for a period
of 60 days, provided that the terms of this paragraph shall again apply to

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- 13 -

such interest if the sale is not completed within the said 60 days. Any sale
hereunder shall be conditional upon the Proposed Purchaser delivering a written
undertaking to the Optionor, in form and content satisfactory to its counsel, to
be bound by the terms and conditions of this Agreement.

    10.3

Encumbrances. During the Option Period, neither the Optionor or the Optionee
shall grant an Encumbrance, other than a Permitted Encumbrance, in their
respective interest in the Property or right under this Agreement.

    10.4

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 8.1 herein,
deliver a notice of arbitration (“Notice Of Arbitration”) to the other party
(the “Respondent”) detailing the nature of the dispute, the facts and the
relevant evidence. Within 7 days of the Respondent receiving the Notice Of
Arbitration, 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 Notice Of
Arbitration, 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. Neither the Claimant nor the
Respondent shall announce publicly the alleged claims or 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 one or more 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

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- 14 -

  (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.

        (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 10.4(a) must be a practising
lawyer, accountant, professor, or a retired justice of any of the courts of the
Province of British Columbia. An Arbitrator selected outside of the jurisdiction
of British Columbia 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 in 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
Supreme Court of British Columbia.

10.5

Confidentiality of information. All information and data concerning or derived
from the Mining Operations shall be kept confidential and, except to the extent
required by law, regulation or policy of any securities commission or stock
exchange, or in connection with the filing of an annual information form or a
prospectus by any party or any of its Affiliates, shall not be disclosed to any
person other than an Affiliate without the prior consent of all the other party,
which consent shall not unreasonably be withheld. 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.

    10.6

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.

    10.7

Enurement. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.

    10.8

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

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- 15 -

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.

    10.9

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

    10.10

Expenses. Each party shall be responsible for its own expense in connection with
negotiating and settling this Agreement.

    10.11

Amendment. This Agreement may be amended or varied only by agreement in writing
signed by each of the parties.

    10.12

Governing Law and Attornment. This Agreement shall be governed by and
interpreted in accordance with the laws of the Province of British Columbia and
the federal laws of Canada applicable therein and the parties hereby irrevocably
attorn to the jurisdiction of the Courts of the Province of British Columbia
sitting in Vancouver.

    10.13

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.

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

TAC GOLD CORPORATION       By: c/s     (Authorized Signatory)       ALL AMERICAN
GOLD CORP.     By: c/s     (Authorized Signatory)  

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

SCHEDULE A

To an Agreement made as of September 9, 2011 between Tac Gold
Corporation and All American Gold Corp.

THE PROPERTY

[Insert what is Exhibit A to the Minquest Option Agreement]

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

SCHEDULE B

To an Agreement made as of September 9, 2011 between Tac Gold
Corporation and All American Gold Corp.

JOINT VENTURE AGREEMENT
IOWA CANYON PROPERTY

THIS AGREEMENT made the ____ day of _____________, _______

> > > TAC GOLD CORPORATION, a British Columbia company, with offices at 203 –
> > > 2780 Granville Street, Vancouver, BC, Canada V6H 3J3 (Facsimile:
> > > 604-730-0967);
> > > 
> > > (the “Optionor”)

AND:

> > > ALL AMERICAN GOLD CORP., a Wyoming corporation, of Suite 203, 700 North
> > > High School Road, Indianapolis, Indiana, USA 46214 (Facsimile: <>);
> > > 
> > > (the “Optionee”)

THE PARTIES, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowedged, agree as follows:

1.

INTERPRETATION

      1.1

In this Agreement the following words, phrases and expressions shall have the
following meanings:

      (a)

"Accounting Procedure" means the procedure attached hereto as Appendix 1.

      (b)

"Affiliate" shall have the meaning attributed to it in the Canada Business
Corporations Act, as amended.

      (c)

"Assets" means all tangible and intangible goods, chattels, improvements or
other items including, but not limited to, land, buildings, and equipment but
excluding the Property, acquired for or made to the Property under the Option
Agreement or this Agreement in connection with the Mining Operations.

      (d)

"Completion Date" means the date determined by the Management Committee on which
it is demonstrated to the satisfaction of the Management Committee that the
preparing and equipping of the Mine is complete and is the date on which
commercial production commences.

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

2

  (e)

"Construction" means every kind of work carried out during the Construction
Period by the Operator in accordance with the Feasibility Report and Production
Notice related thereto, as approved by the Management Committee.

          (f)

"Construction Period" means, unless the Production Notice is subsequently
withdrawn, the period beginning on the date a Production Notice is given and
ending on the Completion Date.

          (g)

"Costs" means, except as to Prior Exploration Costs, all items of outlay and
expense whatsoever, direct or indirect, with respect to Mining Operations,
recorded by the Operator in accordance with this Agreement 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. Without limiting generality, the
following categories of Costs shall have the following meanings:

          (i)

"Construction Costs" means those Costs recorded by the Operator during the
Construction Period, including, but not limited to, the Operator's fee
contemplated in article 11;

          (ii)

"Exploration Costs" means those Costs recorded by the Operator during the
Exploration Period, including, but not limited to, the Operator's fee
contemplated in article 11;

          (iii)

"Mine Costs" means Construction Costs and Operating Costs;

          (iv)

"Operating Costs" means those Costs recorded by the Operator subsequent to the
Completion Date, including, but not limited to, the Operator's fee contemplated
in article 11; and

          (v)

"Prior Exploration Costs" means the deemed Expenditures of the parties under
paragraph 7.9.

          (h)

"Exploration Period" means the period beginning the Operative Date and ending
the date a Production Notice is given and Construction Costs are fully
committed.

          (i)

"Feasibility Report" means a detailed report, in form and substance sufficient
for presentation to arm's length institutional lenders considering project
financing, showing the feasibility of placing any part of the Property into
commercial production as a Mine and shall include a reasonable assessment of the
various categories of ore reserves and their amenability to metallurgical
treatment, a complete description of the work, equipment and supplies required
to bring such part of the Property into commercial production and the estimated
cost thereof, a

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

3

description of the mining methods to be employed and a financial appraisal of
the proposed operations and including at least the following:

  (i)

a description of that part of the Property to be covered by the proposed Mine;

        (ii)

the estimated recoverable reserves of Minerals and the estimated composition and
content thereof;

        (iii)

the proposed procedure for development, mining and production;

        (iv)

results of ore amenability treatment tests (if any);

        (v)

the nature and extent of the facilities proposed to be acquired, which may
include mill facilities if the size, extent and location of the ore body makes
such mill facilities feasible, in which event the study shall also include a
preliminary design for such mill;

        (vi)

the total costs, including capital budget, which are reasonably required to
purchase, construct and install all structures, machinery and equipment required
for the proposed Mine, including a schedule of timing of such requirements;

        (vii)

all environmental impact studies and costs of implementation;

        (viii)

the period in which it is proposed the Property shall be brought to commercial
production; and

        (ix)

such other data and information as are reasonably necessary to substantiate the
existence of an ore deposit of sufficient size and grade to justify development
of a mine, taking into account all relevant business, tax and other economic
considerations including a cost comparison between purchasing or leasing and
renting of facilities and equipment required for the operation of the Property
as a Mine.

  (j)

"Interest" means an undivided beneficial percentage interest in the Property,
the Assets and any Mine, calculated, during the Exploration Period, according to
article 7 and subsequent to the Exploration Period according to article 10.

        (k)

"Joint Operation" shall have the meaning attributed to it in paragraph 2.1.

        (l)

"Management Committee" means the committee established pursuant to article 4.

        (m)

"Mine" means the workings established and Assets acquired, including, but not
limited to, development headings, plant and concentrator installations,
infrastructure, housing, airport and other facilities in order to bring the
Property into commercial production in accordance with the Production Notice.

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

4

  (n)

"Minerals" means any and all ores (and concentrates derived therefrom) and
minerals, precious and base, metallic and nonmetallic, in, on or under the
Property which may lawfully be explored for, mined and sold.

          (o)

"Mining Operations" means every kind of work done by the Operator:

          (i)

on or in respect of the Property in accordance with a Program or Production
Notice or Operating Plan; or

          (ii)

if not provided for in a Program or Production Notice or Operating Plan,
unilaterally and in good faith to maintain the Property in good standing, to
prevent waste or to otherwise discharge any obligation which is imposed upon it
pursuant to this Agreement and in respect of which the Management Committee has
not given it directions;

         

including, but not limited to, investigating, prospecting, exploring,
developing, property maintenance, preparing reports, estimates and studies,
designing, equipping, improving, surveying, construction and mining, milling,
concentrating, rehabilitation, reclamation, and environmental protection.

          (p)

"Minquest NSR Royalty" means the 3% royalty on net smelter returns on production
from the Property in favour of Minquest Inc. provided for in the Mineral
Property Option Agreement made as of the 6th day of April 2010 between Minquest
Inc. and TAC Gold Corporation as amended by an Amendment to Mineral Property
Option Agreement made effective as of April 6, 2010.

          (q)

"Net Smelter Returns" shall have the meaning attributed to it in Appendix 2.

          (r)

"Net Proceeds of Production" shall have the meaning attributed to it in Appendix
3.

          (s)

"Operating Plan" means the annual plan of Mining Operations submitted pursuant
to paragraph 14.2.

          (t)

"Operative Date" means the date upon which this Agreement becomes effective.

          (u)

"Operator" means the party appointed as the Operator in accordance with article
5.

          (v)

"Option Agreement" means the agreement between the Optionor and the Optionee
dated September 9, 2011;

          (w)

"Participant" means a party that is contributing to Exploration Costs or Mine
Costs, as the case may be.

          (x)

"party" or "parties" means the parties to this Agreement and their respective
successors and permitted assigns which become parties pursuant to this
Agreement.

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

5

  (y)

"Prime Rate" means the rate of interest stated by the Bank of Montreal, Main
Branch, Vancouver, British Columbia, as being charged by it on Canadian Dollar
demand loans to its most creditworthy domestic commercial customers.

        (z)

"Production Notice" means a notice which is given to each of the parties
pursuant to paragraph 9.2.

        (aa)

"Program" means the work plan and budget of Mining Operations conducted during
the Exploration Period and adopted pursuant to paragraph 7.2.

        (bb)

"Property" means the mineral properties that become subject to this Agreement on
the Operative Date, any additional mineral properties that become part of the
Property pursuant to this Agreement, the Minerals thereon, all information
obtained from Mining Operations and those rights and benefits appurtenant to the
Property that are acquired for the purpose of conducting Mining Operations.

        (cc)

"Proportionate Share" means that share which is equal to a party's percentage
Interest.

        (dd)

"Simple Majority" means a decision made by the Management Committee by more than
50 percent of the votes represented and entitled to be cast on the decision.

        (ee)

"Special Majority" means a decision made by the Management Committee by more
than 75 percent of the votes represented and entitled to be cast on the
decision.

        (ff)

"$" means US Dollars.

1.2

The words "article", "paragraph", "subparagraph", "herein" and "hereunder" refer
to this Agreement. The words "this Agreement" include every Schedule or Appendix
attached hereto but exclude the Option Agreement.

    1.3

The captions and the emphases of the defined terms have been inserted for
convenience and do not define the scope of any provision.

    2.

FORMATION OF THE JOINT VENTURE

    2.1

The parties hereby agree to associate and participate in a joint operation
(herein called the "Joint Operation") for the purpose of exploring the Property
and, if deemed warranted, bringing the Property or a portion thereof into
commercial production by establishing and operating a Mine.

    2.2

Except as expressly provided in this Agreement, each party shall have the right
independently to engage in and receive full benefits from business activities,
whether or not competitive with the Joint Operation, without consulting any
other party. The doctrines of "corporate opportunity" or "business opportunity"
shall not be applied to any

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

6

other activity, venture or operation of any party and no party shall have any
obligation to another party with respect to any opportunity to acquire any
assets outside of the Property at any time, or within the Property after the
termination of this Agreement. Unless otherwise agreed in writing, no party
shall have any obligation to mill, beneficiate or otherwise treat any Minerals
or any other party's share of Minerals in any facility owned or controlled by
such party.

    3.

INTERESTS

    3.1

Except as otherwise provided herein, the parties shall bear all Costs and all
liabilities arising under this Agreement and shall own the Property, the Assets
and any Mine all in proportion to their respective Interests.

    3.2

On the Operative Date the respective Interests of the parties shall be as
follows:

  Optionor 85%         Optionee 15%

3.3

The Optionee shall have the option to acquire an additional 25% Interest from
the Optionor by paying to the Optionor $3,000,000 at least 60 days before the
first anniversary of the formation of the Joint Venture (as defined and provided
in the Option Agreement). If the Optionee exercises this option and acquires an
addition 25% Interest, then thereafter the Optionee shall be credited with
additional Exploration Costs of $<> for the purposes of articles 7 and 10
hereof. If the Optionee does not exercise this option to acquire an additional
25% Interest, then the Optionor may purchase the Optionee’s Interest by paying
to the Optionee on or before the first anniversary of the formation of the Joint
Venture an amount equal to the Exploration Costs and Prior Exploration Costs
paid by the Optionee pursuant to this Agreement and the Option Agreement plus
10%. Each of the parties agrees to take all steps necessary and to execute and
deliver such documents as may be required in order to transfer to the Optionee
an additional 25% Interest if the Optionee exercises its option to acquire an
additional 25% Interest or in order to transfer to the Optionor the Optionee’s
Interest if the Optionee does not exercise its option to acquire an additional
25% Interest and the Optionor exercises its option to acquire the Optionee’s
Interest. All Interests transferred pursuant to this section shall be
transferred free and clear of all Encumbrances (as defined in the Option
Agreement) other than Permitted Encumbrances (as defined in the Option
Agreement).

    4.

MANAGEMENT COMMITTEE

    4.1

A Management Committee shall be established on or forthwith after the Operative
Date. Except as herein otherwise provided, the Management Committee shall make
all decisions in respect of Mining Operations.

    4.2

Each party owning an Interest shall forthwith appoint one representative and one
alternate representative to the Management Committee. The alternate
representative may act for a party's representative in his absence.

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

7

4.3

The Operator shall call a Management Committee meeting at least once every 12
months, and, in any event within 14 days of being requested to do so by any
representative.

    4.4

The Operator shall give notice, specifying the time and place of, and the agenda
for, the meeting to all representatives at least seven days before the time
appointed for the meeting. Unless otherwise agreed to by the Management
Committee, all meetings of the Management Committee shall be held in Vancouver,
British Columbia, Canada. Each agenda for a meeting shall include the
consideration and approval of the minutes of the immediately preceding meeting
of the Management Committee.

    4.5

Notice of a meeting shall not be required if representatives of all of the
parties are present and unanimously agree upon the agenda.

    4.6

A quorum for any Management Committee meeting shall be present if a
representative of each of the parties holding an Interest is present. If a
quorum is present at the meeting, the Management Committee shall be competent to
exercise all of the authorities, powers and discretions herein bestowed upon it
hereunder. The Management Committee shall not transact any business at a meeting
unless a quorum is present at the commencement of the meeting. If a quorum is
not present within 30 minutes following the time appointed for the commencement
of the Management Committee meeting, the meeting shall be automatically
re-scheduled for the same time of day and at the same place five business days
later, and the Operator shall be under no obligation to give any party notice
thereof. A quorum shall be deemed to be present at such re-scheduled meeting for
all purposes under this Agreement if at least one representative is present, and
a party or parties holding not less than 25% in Interest is or are represented.
A representative may attend and vote at a meeting of the Management Committee by
telephone conference call in which each representative may hear, and be heard
by, the other representatives.

    4.7

The Management Committee shall decide every question submitted to it by a vote
with each representative being entitled to cast that number of votes which is
equal to its party's Interest percentage. Other than as is expressly set out
herein to the contrary, the Management Committee shall make decisions by Simple
Majority. If a dispute or deadlock arises in the Management Committee, the two
nominees shall appoint an independent party to resolve the dispute or deadlock
and, failing agreement on such a party, the Management Committee shall accept
such party as is recommended by Strathcona Mineral Services Ltd. or, if
Strathcona is unwilling to make a recommendation, a comparable firm.

    4.8

The representative and alternate representative of the Operator shall be the
chairman and secretary, respectively, of the Management Committee meeting.

    4.9

The secretary of the Management Committee meeting shall take minutes of that
meeting and circulate copies thereof to each representative within a reasonable
time following the termination of the meeting, and in any event no later than
the time of delivery of the notice of the next following meeting of the
Management Committee.

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

8

4.10

The Management Committee may make decisions by obtaining the consent in writing
of the representatives of all parties. Any decision so made shall be as valid as
a decision made at a duly called and held meeting of the Management Committee.

        4.11

Management Committee decisions made in accordance with this Agreement shall be
binding upon all of the parties.

        4.12

Each party shall bear the expenses incurred by its representative and alternate
representative in attending meetings of the Management Committee.

        4.13

The Management Committee may, by agreement of the representatives of all the
parties, establish such other rules of procedure, not inconsistent with this
Agreement, as the Management Committee deems fit.

        4.14

Reference in this section to the "parties" shall apply during the Exploration
Period. After the date of a Production Notice this section shall be read as if
the word "Participant" appeared wherever the word "party" appears.

        5.

OPERATOR

        5.1

The Optionor shall act as Operator.

        5.2

The party acting as Operator may resign as Operator on at least 90 days' notice
to all the parties.

        5.3

The Management Committee may, by Special Majority (with the Operator not being
entitled to vote on such resolution), remove the party acting as Operator,
effective the date designated by the Management Committee if:

        (a)

that party makes an assignment for the benefit of its creditors, or consents to
the appointment of a receiver for all or substantially all of its property, or
files a petition in bankruptcy or is adjudicated bankrupt or insolvent; or

        (b)

a court order is entered without that party's consent:

        (i)

appointing a receiver or trustee for all or substantially all of its property;
or

        (ii)

approving a petition in bankruptcy or for a reorganization pursuant to the
applicable bankruptcy legislation or for any other judicial modification or
alteration of the rights of creditors; or

        (c)

the Operator is in default under this Agreement and fails to cure such default,
or to commence bona fide curative measures, within 30 days of receiving notice
of the default from a non-Operator;

        (d)

the Operator fails to meet any of its obligations pursuant to paragraph 6.4; or

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

9

  (e)

the Operator undergoes a change in "Control" (as hereinafter defined).

5.4

In paragraph 5.3, "Control" means the ability, directly or indirectly through
one or more intermediaries, to direct or cause the direction of the management
and policies of the Operator through (i) the legal or beneficial ownership of
voting securities; (ii) the right to appoint managers, directors or corporate
management; (iii) contract; (iv) operating agreement; (v) voting trust; or
otherwise.

    5.5

If a party resigns or is removed as Operator, the Management Committee (the
representative of the former Operator not being entitled to vote on the
resolution) shall thereupon select another party to become the Operator
effective the date established by the Management Committee.

    5.6

The new Operator shall assume all of the rights, duties, liabilities and status
of the previous Operator as provided in this Agreement. The new Operator shall
have no obligation to hire any employees of the former Operator resulting from
this change of Operator.

    5.7

Upon ceasing to be Operator, the former Operator shall forthwith deliver to the
new Operator custody of all Assets, Property, books, records, and other property
both real and personal which it prepared or maintained in its capacity as
Operator.

    5.8

If the Operator resigns or is removed and no other party consents to act as
Operator, the Joint Operation shall be terminated and the party which was the
Operator may, if it consents to act, continue to act as Operator to effect the
termination and the other parties shall be obligated to fund their respective
Proportionate Shares of the Costs incurred.

    6.

RIGHTS, DUTIES AND STATUS OF OPERATOR

    6.1

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.

    6.2

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 Management Committee and in accordance
with this Agreement.

    6.3

The Operator shall manage and carry out Mining Operations substantially in
accordance with Programs, Feasibility Reports and Production Notices, Operating
Plans, Mine Maintenance Plans and Mine Closure Plans adopted by the Management
Committee and in connection therewith shall, in advance if reasonably possible,
notify the Management Committee of any change in Mining Operations which the
Operator considers material and if it is not reasonably possible, the Operator
shall notify the Management Committee so soon thereafter as is reasonably
possible.

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6.4

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 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)

keep the Property and Assets free of all liens and encumbrances (other than
those, if any, in effect on the Operative Date, those the creation of which is
permitted pursuant to this Agreement, or builder's or mechanic's liens) arising
out of the Mining Operations and, in the event of any lien being filed as
aforesaid, proceed with diligence to contest or discharge the same;

      (d)

with the approval of the Management Committee prosecute claims and, where a
defence is available, defend litigation arising out of the Mining Operations,
provided that any Participant may join in the prosecution or defence at its own
expense;

      (e)

subject to paragraph 20.6, perform such assessment work or make payments in lieu
thereof and pay such rentals, taxes or other payments and do all such other
things as may be necessary to maintain the Property in good standing, including,
but not limited to, staking and restaking mining claims, and applying for
licenses, leases, grants, concessions, permits, patents and other rights to and
interests in the Minerals;

      (f)

maintain books of account in accordance with the Accounting Procedure, provided
that the judgment of the Operator as to matters related to the accounting, for
which provision is not made in the Accounting Procedure, shall govern if the
Operator's accounting practices are in accordance with accounting principles
generally accepted in the mining industry in Canada;

      (g)

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 and this Agreement;

      (h)

prepare and deliver the reports provided for in paragraph 21.2; and

      (i)

have such additional duties and obligations as the Management Committee may from
time to time determine.

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7.

EXPLORATION PROGRAMS

    7.1

The Operator shall prepare draft Programs for consideration by the Management
Committee. Unless otherwise agreed to by a Special Majority, 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 Exploration Costs to
be incurred and an estimate of the time when they will be incurred, and shall be
delivered to each Participant on or before March 1 of each calendar year to
which the draft Program relates. Each draft Program shall be accompanied by such
reports and data as are reasonably necessary for each party to evaluate and
assess the results from the Program for the then current year and, to the extent
not previously delivered, from earlier Programs.

    7.2

The Management Committee shall review the draft Program prepared and, if it
deems fit, adopt the Program with such modifications, if any, as the Management
Committee deems necessary. The Operator shall be entitled to an allowance for a
Cost overrun of 10 percent in addition to any budgeted Exploration Costs and any
Costs so incurred shall be deemed to be included in the Program, as adopted.

    7.3

The Operator shall forthwith submit the adopted Program to the parties. Each
party may, within 30 days of receipt of the Program, give notice to the Operator
committing to contribute its Proportionate Share of the Exploration Costs for
that Program. A party which fails to give that notice within the 30 day period
shall be deemed to have elected not to contribute to that Program.

    7.4

If any party elected not to contribute to a Program, the amounts to be
contributed by the parties who elected to contribute shall be increased pro
rata, subject to the right of any of them to elect, prior to the commencement of
the Program, not to contribute more than its Proportionate Share. If one or more
party so elects to contribute no more than its Proportionate Share and the other
parties do not elect to contribute pro rata to the resulting shortfall, the
Operator shall in good faith revise the Program and Budget such that the
technical objectives of the original Program are retained to the extent that is
reasonably practicable given the reduced contributions to Costs. The Operator
shall, within 15 days following the end of the 30-day period set out in
paragraph 7.3, deliver to each party a copy of the said revised Program which,
if the budget contemplates Costs of at least 80% of those contemplated in the
original adopted Program, shall then be deemed for all purposes under this
Agreement to be the adopted Program . If the budget for the revised Program
contemplates Costs of less than 80% of those contemplated in the original
adopted Program, the revised Program shall be re-submitted to the Management
Committee as a draft Program pursuant to paragraph 7.1, and the procedure set
out in paragraph 7.1 to 7.4 inclusive shall be repeated.

    7.5

The Operator shall be entitled to invoice each Participant:

  (a)

no more frequently than monthly, for its Proportionate Share of Exploration
Costs incurred and paid by the Operator in carrying out a Program; or

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  (b)

not more than 60 days in advance of requirements, for an advance of that
Participant's Proportionate Share of Exploration Costs estimated to be incurred
and paid by the Operator in carrying out a Program.

Each invoice shall be signed by a financial officer of the Operator. Each
Participant shall pay to the Operator the amount invoiced within 30 days of
receipt of the invoice. If a Participant protests the correctness of an invoice
it shall nevertheless be required to make the payment.

    7.6

If any Participant, after having committed to contribute pursuant to paragraph
7.3, fails to pay an invoice within the 30-day period referred to in paragraph
7.5 the Operator may by notice demand payment. If no payment is made within the
period of 30 days next succeeding the receipt of the demand notice, that
Participant shall be deemed to have forfeited its right to contribute to any
further Costs under this Agreement and it shall be deemed to have elected not to
contribute to each Program subsequently conducted and to any Production Notice,
and accordingly, shall have its Interest reduced in the manner contemplated in
paragraphs 7.9 and 10.2(b).

    7.7

The Operator shall expend all monies advanced by a Participant ratably with the
advances of the other Participants. If the Operator suspends or prematurely
terminates a Program, any funds advanced by a Participant in excess of that
Participant's Proportionate Share of Exploration Costs incurred prior to the
suspension or premature termination shall be refunded within 30 days of the
suspension or premature termination. Unless approved unanimously by the
Management Committee, the Operator shall be exclusively liable for the payment
of all Costs incurred in excess of 110 percent of any budgeted Exploration
Costs.

    7.8

Unless otherwise directed by the Management Committee, the Operator may suspend
or terminate prematurely any Program 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. If any Program is
altered, suspended or terminated prematurely so that the Exploration Costs
incurred on that Program as altered, suspended or terminated are less than 80
percent of the Exploration Costs set out in the adopted Program, any party which
elected not to contribute to that Program shall be given notice of the
alteration, suspension or termination by the Operator and shall be entitled to
contribute its Proportionate Share of the Exploration Costs incurred on that
Program by payment thereof to the Operator within 30 days after receipt of the
notice, but shall not be entitled to review the results of the Program until it
has made full payment. If payment is not made by that party within the 30 days
aforesaid it shall forfeit its right to contribute to that Program without a
demand for payment being required to be made thereafter by the Management
Committee. If payment is made by that party within the 30 days as aforesaid, the
Operator shall distribute the payment to the original Participants pro rata
according to their respective contributions to the Program, and shall deliver to
the new Participant copies of all data previously delivered to the other
Participants with respect to that Program

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7.9

If a party elected not to contribute to the Exploration Costs of any Program the
Interest of that party shall be decreased and the Interest of each Participant
contributing in excess of its Proportionate Share of the Exploration Costs shall
be increased so that, subject to paragraph 7.10, at all times during the
Exploration Period the Interest of each party will be that percentage which is
equivalent to its Exploration Costs and Prior Exploration Costs expressed as a
percentage of the Exploration Costs and Prior Exploration Costs of all parties.
Notwithstanding the foregoing but subject to paragraph 7.10 hereof, the party
whose Interest has been reduced (other than a party who has forfeited the right
to contribute pursuant to paragraph 7.6) shall be entitled to receive details of
and to contribute to future Programs to the extent of its then Interest. On the
Operative Date, the parties' respective Interests and Prior Exploration Costs
shall be deemed to be as follows:

    Prior Exploration Costs Interest           Optionor $1,870,000 85%          
Optionee $330,000 15%

7.10

If the effect of the application of paragraph 7.9 is to reduce the Interest of
any party to less than 10%, such party shall then be deemed to have assigned and
conveyed its Interest to the Participants, if more than one then in proportion
to their respective Interests, and shall be entitled to receive as its sole
remuneration and benefit in consideration of that assignment and conveyance, by
way of royalty, 1% of Net Smelter Returns, subject to adjustment as provided in
paragraph 7.12.

      7.11

If the Operator fails to submit a draft Program or a revised 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 or revised Program
for the subject period;

      (b)

any Participant other than the Operator whose Interest is not less than 20% may,
within 30 days following the date by which the Operator's draft Program or
revised Program was due, submit a draft Program (the "Non-Operator's Program")
for the subject period for consideration by the Management Committee;

      (c)

the Management Committee shall review the Non-Operator's Program and, if it
deems fit (the Operator not being entitled to vote with respect thereto), adopt
the Non-Operator's Program with such modifications, if any, as the Management
Committee deems necessary; the adopted Program shall then be submitted to the
parties pursuant to paragraph 7.3;

      (d)

if the Operator is a party and elects to contribute to the Non-Operator's
Program, it shall remain as the Operator for the duration of the Non-Operator's
Program;

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  (e)

if the Operator is a party and elects not to contribute to the Non-Operator's
Program, it shall cease to be the Operator for the duration of the
Non-Operator's Program, and the Management Committee shall appoint another party
as Operator (the former Operator not being entitled to vote with respect
thereto);

        (f)

following the completion of the Non-Operator's Program the former Operator
shall, subject to the provisions of paragraph 5.3, automatically become the
Operator, save and except in the instance where the former Operator fails to pay
an invoice within the 30-day period referred to in paragraph 7.5 and is subject
to the consequences set out in paragraph 7.6.

7.12

Each of the Optionee and the Optionor hereby agree that the maximum royalty to
which it and its assigns shall be collectively entitled pursuant to this
Agreement is 1% of Net Smelter Returns. For example, if:

      (a)

the Optionor assigns a part of its Interest to a third party pursuant to this
Agreement, and

      (b)

the Optionor then becomes entitled to receive 0.5% of Net Smelter Returns
pursuant to paragraph 7.10; and

      (c)

the said third party then also becomes entitled to receive 0.5% of Net Smelter
Returns pursuant to paragraph 7.10,

     

then the Optionor and such third party shall collectively be entitled to receive
1% of Net Smelter Returns, allocated between them on a proportionate basis based
upon the respective Prior Exploration Costs and Exploration Costs of each of the
Optionor and such third party at the time that the assignment and conveyance of
its Interest took place.

      8.

FEASIBILITY REPORT

      8.1

Except as provided in paragraph 8.2, a Feasibility Report shall only be prepared
with the approval of the Management Committee. The Operator shall provide copies
of the completed Feasibility Report to each of the parties forthwith upon
receipt, together with copies of all of the latest technical data and
information generated or received by the Operator from the immediately preceding
Program and not contained in the Feasibility Report.

      8.2

Notwithstanding the provisions of paragraph 8.1, if a party (the "Proponent") is
of the view that a Feasibility Report should be prepared, such party shall give
notice thereof to the Operator and the Operator shall call a Management
Committee meeting to consider the matter. If the Management Committee fails to
approve the preparation of the Feasibility Report supported by the Proponent,
the Proponent may, either alone or with other parties, at its or their sole
cost, prepare a Feasibility Report. If such Feasibility Report indicates that
production from the Property would be profitable to the Proponent, the Proponent
shall deliver the Feasibility Report to the Operator who shall then call a
Management Committee meeting to consider the Proponent's Feasibility Report. If
the

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15

Management Committee adopts the Feasibility Report, the non-contributing parties
may either pay the Proponent an amount equal to 150% of their respective
proportionate costs of the preparation of the Feasibility Report, or shall
suffer reduction of their respective Interests pursuant to paragraph 7.9. Upon
the adoption by the Management Committee of the Proponent's Feasibility Report,
it shall become a Feasibility Report for all purposes hereunder.

        8.3

The parties shall meet at reasonable intervals and times to review the
Feasibility Report and discuss whether the establishing and bringing of a Mine
into commercial production in conformity with the Feasibility Report is feasible
or desirable.

        9.

PRODUCTION NOTICE

        9.1

The Operator shall call a Management Committee meeting to consider the
Feasibility Report for a date no sooner than three months and no later than six
months after the Feasibility Report was provided to each of the parties.

        9.2

The Management Committee shall consider the Feasibility Report prepared and may
approve the Feasibility Report, with such modifications, if any, as it considers
necessary or desirable, together with an estimate of Construction Costs. If a
Feasibility Report is approved as aforesaid the Management Committee shall
forthwith cause a Production Notice to be given to each of the parties by the
Operator stating that the Management Committee has approved that a Mine be
established and brought into production in conformity with the Feasibility
Report and estimated Construction Costs as so approved.

        10.

ELECTION TO CONTRIBUTE

        10.1

Each party with an Interest may, within 60 days of the receipt of the Production
Notice, give the Operator notice committing to contribute its Proportionate
Share of Construction Costs. A party which fails to give that notice within the
60-day period shall be deemed to have elected not to contribute to Construction
Costs.

        10.2

If any party elects not to contribute to Construction Costs that party, subject
to its rights under paragraph 10.4, shall forfeit the right to contribute to any
further Costs under this Agreement, and those parties which elected to
contribute as aforesaid may thereupon elect to increase their contribution to
Construction Costs, if more than one party then in proportion to their
respective Interests, by the amount which any party has declined to contribute.
If elections are made so that Construction Costs are fully committed:

        (a)

the Interest of each Participant shall be increased and that of each
non-Participant shall be decreased as Costs are incurred so that the Interest of
each party at all times is that percentage which is equivalent to

        (i)

the sum of its Exploration Costs, its Prior Exploration Costs and its
contribution to Construction Costs;

       

divided by

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  (ii)

the sum of the total Exploration Costs, total Prior Exploration Costs and the
total Construction Costs of all the parties;

       

multiplied by

        (iii)

100;

  (b)

then, at the Completion Date, each non-Participant shall be deemed to have
assigned and conveyed its Interest to the Participants, if more than one then in
proportion to their respective Interests, and shall be entitled to receive as
its sole remuneration and benefit in consideration of that assignment and
conveyance, by way of royalty, that percent of the Net Proceeds of Production,
as and when available, which is equivalent to the Interest, calculated at the
Completion Date, subject to adjustment in the same manner as the Net Smelter
Royalty is to be adjusted as provided in paragraph 7.12.

        (c)

each Participant shall severally calculate and cause to be paid to each non-
Participant any Net Proceeds of Production derived from the Property in the
manner provided in Appendix 3; and

        (d)

notwithstanding the provisions of subparagraphs 10.2(b) and (c), if the effect
of the application of subparagraph 10.2(a) reduces any party's Interest to less
than one percent it shall forfeit its Interest to the Participants, if more than
one then in proportion to their respective Interests, and that party shall have
no further right or interest under this Agreement.

10.3

If, after the operation of paragraph 10.2, Construction Costs are not fully
committed the Production Notice shall be deemed to be withdrawn, and shall not
be resubmitted, either in the same or a revised form, for a period of at least
six months following such withdrawal.

    10.4

If, after the operation of paragraph 10.2, Construction Costs are fully
committed, the Participants shall diligently proceed with bringing a Mine into
production in substantial conformity with the Feasibility Report. If the
Participants fail to commence the implementation of the Feasibility Report
within twelve months of Construction Costs being fully committed, for reasons
other than general economic conditions in the mining industry, any party which
forfeited the right to contribute to Construction Costs pursuant to paragraph
10.2 shall have the right, exercisable in the 30 days following the expiration
of such twelve month period, to reacquire from the Participants not less than
all of its Interest as last held, by paying its Proportionate Share of
Construction Costs incurred to the end of such twelve month period (together
with interest at the Prime Rate plus 3%) to the Participants in proportion to
their respective Interests.

    10.5

During the twelve-month period referred to in paragraph 10.4, neither the
Operator nor any Participant shall be obliged to provide any non-Participant
with the results of any work carried out on the Property, the Participants' sole
obligation during such period being to provide any non-Participant, on the
written request of such non-Participant made

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17

only once during the said twelve months, with a summary of the nature of the
work carried out and the total Costs thereof.

    11.

OPERATOR'S FEE

    11.1

The Operator may charge an operator’s fee with respect to Programs of 10% of all
Costs which amount shall be paid promptly upon being invoiced.

    12.

MINE FINANCING

    12.1

The contributions of the Participants toward the Mine Costs shall be
individually and separately provided by them.

    12.2

Any party may pledge, mortgage, charge or otherwise encumber its Interest in
order to secure moneys borrowed and used by that party for the sole purpose of
enabling it to finance its participation under this Agreement or in order to
secure by way of floating charge as a part of the general corporate assets of
that party moneys borrowed for its general corporate purposes, provided that the
pledgee, mortgagee, holder of the charge or encumbrance (in this subsection
called the "Chargee") shall hold the same subject to the provisions of this
Agreement and that if the Chargee realizes upon any of its security it will
comply with this Agreement. The Agreement between the party hereto, as borrower,
and the Chargee shall contain specific provisions to the same effect as the
provisions of this paragraph.

    13.

CONSTRUCTION

    13.1

Subject to paragraphs 10.2 and 10.3, the Management Committee shall cause the
Operator to, and the Operator shall, proceed with Construction with all
reasonable dispatch after a Production Notice has been given. Construction shall
be substantially in accordance with the Feasibility Report subject to any
variations proposed in the Production Notice, and subject also to the right of
the Management Committee to cause such other reasonable variations in
Construction to be made as the Management Committee, by Special Majority, deems
necessary and advisable.

    14.

OPERATION OF THE MINE

    14.1

Commencing on the Completion Date, all Mining Operations shall be planned and
conducted and all estimates, reports and statements shall be prepared and made
on the basis of a calendar year.

    14.2

With the exception of the year in which the Completion Date occurs, an Operating
Plan for each calendar year shall be submitted by the Operator to the
Participants not later than November 1 in the year immediately preceding the
calendar year to which the Operating Plan relates. Each Operating Plan shall
contain the following:

  (a)

a description of the proposed Mining Operations;

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18

  (b)

a detailed estimate of all Mine Costs plus a reasonable allowance for
contingencies;

        (c)

an estimate of the quantity and quality of the ore to be mined and the
concentrates or metals or other products and by-products to be produced; and

        (d)

such other facts as may be necessary to reasonably illustrate the results
intended to be achieved by the Operating Plan.

Upon request of any Participant the Operator shall meet with that Participant to
discuss the Operating Plan and shall provide such additional or supplemental
information as that Participant may reasonably require with respect thereto.

    14.3

The Management Committee shall adopt each Operating Plan, with such changes as
it deems necessary, by November 30 in the year immediately preceding the
calendar year to which the Operating Plan relates; provided, however, that the
Management Committee, by Special Majority, may from time to time and any time
amend any Operating Plan.

    14.4

The Operator shall include in the estimate of Mine Costs referred to in
subparagraph 14.2(b) hereof the establishment of a trust or escrow fund
providing for the reasonably estimated costs of satisfying continuing
obligations that may remain after the permanent termination of Mining
Operations, in excess of amounts actually expended. Such continuing obligations
are or will be incurred as a result of the Joint Operation and shall include
such things as monitoring, stabilization, reclamation or restoration
obligations, severance and other employee benefit costs and all other
obligations incurred or imposed as a result of the Joint Operation which
continue or arise after the permanent termination of Mining Operations and the
termination of this Agreement and settlement of all accounts. The payment of
such continuing obligations shall be made on the basis of units of production,
and shall be in amounts reasonably estimated to provide over the lifetime of
proven and probable reserves funds adequate to pay for such reclamation and long
term care and monitoring. The Participants shall contribute to the trust or
escrow fund cash (or provide letters of credit or other forms of security
readily convertible to cash in form approved by the Management Committee). The
amount contributed from time to time for the satisfaction of such continuing
obligations shall be classified as Costs hereunder but shall be segregated into
a separate account.

    15.

PAYMENT OF MINE COSTS

    15.1

The Operator may invoice each Participant, from time to time, for that
Participant's Proportionate Share of Construction Costs or Operating Costs
incurred to the date of the invoice, or not more than 30 days prior to the
beginning of each calendar quarter for an advance equal to that Participant's
Proportionate Share of the estimated cash disbursements to be made during that
quarter. Each Participant shall pay its Proportionate Share of the Construction
Costs or Operating Costs or the estimated cash disbursements aforesaid to the
Operator within 30 days after receipt of the invoice. If the payment or advance
requested is not so made, the amount of the payment or advance shall bear
interest calculated monthly not in advance from the 30th day after the date of

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19

receipt of the invoice thereof by that Participant at a rate equivalent to the
weighted average Prime Rate for the month plus 4% until paid. The Operator shall
have a lien on each Participant's Interest in order to secure that payment or
advance together with interest which has accrued thereon.

      15.2

If any Participant fails to pay an invoice contemplated in paragraph 15.1 within
the 30-day period aforesaid, the Operator may, by notice, demand payment. If no
payment is made within 30 days of the Operator's demand notice, the Operator
may, without limiting its other rights at law, enforce the lien created by
paragraph 15.1 by taking possession of all or any part of that Participant's
Interest. The Operator may sell and dispose of the Interest which it has so
taken into its possession by:

      (a)

first offering that Interest to the other Participants, if more than one then in
proportion to the respective Interests of the Participants who wish to accept
that offer, for that price which is the fair market value stated in the lower of
two appraisals obtained by the Operator from independent appraisers competent in
the appraisal of mining properties; and

      (b)

if the Participants have not purchased all or part of that Interest as
aforesaid, then by selling the balance, if any, either in whole or in part or in
separate parcels at public auction or by private tender (the Participants being
entitled to bid) at a time and on whatever terms the Operator shall arrange,
having first given notice to the defaulting Participant of the time and place of
the sale.

     

As a condition of the sale as contemplated in subparagraph 15.2(b), the
purchaser shall agree to be bound by this Agreement and, prior to acquiring the
Interest, shall deliver notice to that effect to the parties, in form acceptable
to the Operator. The proceeds of the sale shall be applied by the Operator in
payment of the amount due from the defaulting Participant and interest as
aforesaid, and the balance remaining, if any, shall be paid to the defaulting
Participant after deducting reasonable costs of the sale. Any sale or disposal
made as aforesaid shall be a perpetual bar both at law and in equity by the
defaulting Participant and its successors and assigns against all other
Participants.

      16.

DISTRIBUTION IN KIND

      16.1

It is expressly intended that, upon implementation of any Production Notice
hereunder, the association of the parties hereto shall be limited to the
efficient production of Minerals from the Property and related activities, and
that each of the parties shall be entitled to use, dispose of or otherwise deal
with its Proportionate Share of Minerals as it sees fit. Each Participant shall
take in kind, f.o.b. truck or railcar on the Property, and separately dispose of
its Proportionate Share of the Minerals produced from the Mine. From the time of
delivery, each Participant shall have ownership of and title to its
Proportionate Share of Minerals separate from, and not as tenant in common with,
the other Participants, and shall bear all risk of loss of Minerals. Extra costs
and expenses incurred by reason of the Participants taking in kind and making
separate dispositions shall be paid by each Participant directly and not through
the Operator or Management Committee.

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20

16.2

Each Participant shall construct, operate and maintain, all at its own cost and
expense, any and all facilities which may be necessary to receive and store and
dispose of its Proportionate Share of the Minerals at the rate the same are
produced.

      16.3

If a Participant has not made the necessary arrangements to take in kind and
store its share of production as aforesaid the Operator shall, at the sole cost
and risk of that Participant store, in any location where it will not interfere
with Mining Operations, the production owned by that Participant. The Operator
and the other parties shall be under no responsibility with respect thereto. All
of the Costs involved in arranging and providing storage shall be billed
directly to, and be the sole responsibility of the Participant whose share of
production is so stored. The Operator's charges for such assistance and any
other related matters shall be billed directly to and be the sole responsibility
of the Participant. All such billings shall be subject to the provisions of
paragraphs 15.1 and 15.2 hereof.

      16.4

If any Participant fails to makes the necessary arrangements to take in kind or
separately dispose of its Proportionate Share of the Minerals, the Operator as
agent may purchase for its own account or sell that share, subject to the right
of the Participant owning the share to revoke at will the Operator's authority
under this paragraph in respect of Minerals not then purchased by the Operator
or committed for sale to others, and the Operator shall be entitled to deduct
from the sale proceeds all costs of or related to marketing the Mineral as is
consistent with generally accepted industry marketing practices including, but
not limited to, transportation, storage, commissions and discounts but all
contracts of sale executed by the Operator for a Participant's share of Minerals
shall be only for reasonable periods of time as are consistent with the minimum
needs of the industry under the circumstances and in no event shall any contract
be for a period in excess of one year.

      16.5

Proceeds, if any, from the sale by the Operator of Minerals pursuant to
paragraph 16.4 shall be calculated by the Operator separately for each
Participant at the end of each calendar month and shall be paid monthly within
twenty days after the end of each calendar month following payment to the
Operator by each Participant of its respective share of Costs outstanding as at
the end of that calendar month.

      16.6

If the Operator or any person with whom the Operator is not dealing at arm's
length is a purchaser of Minerals from the Operator, and if the value of the
Minerals is used to determine any matter arising under this paragraph, the
Operator shall be required to receive competitive prices for all Minerals so
sold.

      17.

SURRENDER OF INTEREST

      17.1

Any party not in default hereunder may, at any time upon notice, surrender its
entire Interest to the other parties by giving those parties notice of
surrender. The notice of surrender shall:

      (a)

indicate a date for surrender not less than three months after the date on which
the notice is given; and

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21

  (b)

contain an undertaking that the surrendering party will:

          (i)

satisfy its Proportionate Share, based on its then Interest, of all obligations
and liabilities which arose at any time prior to the date of surrender;

          (ii)

if the Operator has not included in Mine Costs the costs of continuing
obligations as set out in paragraph 14.4 hereof, pay on the date of surrender
its reasonably estimated Proportionate Share, based on the surrendering party's
then Interest, of the Costs of rehabilitating the Mine site and of reclamation
based on the Mining Operations completed as at the date of surrender; and

          (iii)

will hold in confidence, for a period of two years from the date of surrender,
all information and data which it acquired pursuant to this Agreement.

17.2

Upon the surrender of its entire Interest as contemplated in paragraph 17.1 and
upon delivery of a release in writing, in form acceptable to counsel for the
Operator, releasing the other parties from all claims and demands hereunder, the
surrendering party shall be relieved of all obligations or liabilities hereunder
except for those which arose or accrued or were accruing due on or before the
date of the surrender.

    17.3

A party to whom a notice of surrender has been given as contemplated in
paragraph 17.1 may elect, by notice within 90 days to the party which first gave
the notice to accept the surrender, in which case paragraphs 17.1 and 17.2 shall
apply, or to join in the surrender. If all of the parties join in the surrender
the Joint Operation shall be terminated in accordance with article 18.

    18.

TERMINATION OF MINING OPERATIONS

    18.1

The Operator may, at any time subsequent to the Completion Date, on at least 30
days notice to all Participants, recommend that the Management Committee approve
that the Mining Operations be suspended. The Operator's recommendation shall
include a plan and budget (in this article 18 called the "Mine Maintenance
Plan"), in reasonable detail, of the activities to be performed to maintain the
Assets and Property during the period of suspension and the Costs to be
incurred. The Management Committee may, by Special Majority, at any time
subsequent to the Completion Date, cause the Operator to suspend Mining
Operations in accordance with the Operator's recommendation with such changes to
the Mine Maintenance Plan as the Management Committee deems necessary. The
Participants shall be committed to contribute their Proportionate Share of the
Costs incurred in connection with the Mine Maintenance Plan. The Management
Committee, by Special Majority, may cause Mining Operations to be resumed at any
time.

    18.2

The Operator may, at any time following a period of at least 90 days during
which Mining Operations have been suspended, upon at least 30 days notice to all
Participants, or in the events described in paragraph 18.1, recommend that the
Management Committee approve the permanent termination of Mining Operations. The
Operator's

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22

recommendation shall include a plan and budget (in this article 18 called the
"Mine Closure Plan"), in reasonable detail, of the activities to be performed to
close the Mine and reclaim and rehabilitate the Property, as required by
applicable law, regulation or contract by reason of this Agreement. The
Management Committee may, by unanimous approval of the representatives of all
Participants, approve the Operator's recommendation with such changes to the
Mine Closure Plan as the Management Committee deems necessary.

      18.3

If the Management Committee approves the Operator's recommendation as aforesaid,
it shall cause the Operator to:

      (a)

implement the Mine Closure Plan, whereupon the Participants shall be committed
to pay, in proportion to their respective Interests, such Costs as may be
required to implement that Mine Closure Plan;

      (b)

remove, sell and dispose of such Assets as may reasonably be removed and
disposed of profitably and such other Assets as the Operator may be required to
remove pursuant to applicable environmental and mining laws; and

      (c)

sell, abandon or otherwise dispose of the Assets and the Property.

The disposal price for the Assets and the Property shall be the best price
reasonably obtainable and the net revenues, if any, from the removal and sale
shall be credited to the Participants in proportion to their respective
Interests.

    18.4

If the Management Committee does not approve the Operator's recommendation
contemplated in paragraph 18.2, the Operator shall maintain Mining Operations in
accordance with the Mine Maintenance Plan as pursuant to paragraph 18.1.

    19.

THE PROPERTY

    19.1

Title to the Property shall be held in the name of the Operator in trust for the
parties in proportion to their respective Interests as adjusted from time to
time. Each of the parties shall have the right to receive, forthwith upon making
demand therefor from the Operator, such documents as it may reasonably require
to confirm its Interest.

    19.2

This Agreement, or a memorandum of this Agreement, shall, upon the written
request of any party, be recorded in the office of any governmental agency so
requested, in order to give notice to third parties of the respective interests
of the parties in the Property and this Agreement. Each party hereby covenants
and agrees with the requesting party to execute such documents as may be
necessary to perfect such recording.

    20.

AREA OF COMMON INTEREST

    20.1

The area of common interest shall be deemed to comprise that area which is
included within the outermost boundary of the mineral properties which
constitute the Property as at the Operative Date.

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23

20.2

If at any time during the subsistence of this Agreement any party or the
Affiliate of any party (in this section only called in each case the "Acquiring
Party") stakes or otherwise acquires, directly or indirectly, any right to or
interest in any mining claim, licence, lease, grant, concession, permit, patent,
or other mineral property located wholly or partly within the area of interest
referred to in subparagraph 20.1, the Acquiring Party shall forthwith give
notice to the other parties of that staking or acquisition, the total cost
thereof and all details in the possession of that party with respect to the
details of the acquisition, the nature of the property and the known
mineralization.

    20.3

The Management Committee (the representative of the Acquiring Party not being
entitled to vote with respect thereto) may, within 30 days of receipt of the
Acquiring Party's notice, elect, by notice to the Acquiring Party, to require
that the mineral properties and the right or interest acquired be included in
and thereafter form part of the Property for all purposes of this Agreement.

    20.4

If the election aforesaid is made, all the other parties shall reimburse the
Acquiring Party for that portion of the cost of acquisition which is equivalent
to their respective Interests.

    20.5

If the Management Committee does not make the election aforesaid within that
period of 30 days, the right or interest acquired shall not form part of the
Property and the Acquiring Party shall be solely entitled thereto.

    20.6

Notwithstanding subparagraph 6.4(e), the Operator shall be entitled, at any time
and from time to time to surrender all or any part of the Property or to permit
the same to lapse, but only upon first either obtaining the unanimous consent of
the Management Committee, or giving 60 days notice of its intention to do so to
the other parties. In this latter event, the parties, other than the Operator,
shall be entitled to receive from the Operator, on request prior to the date of
the surrender or lapse, pro rata in accordance with their respective Interests,
a conveyance of that portion of the Property intended for surrender or lapse,
together with copies of any plans, assay maps, diamond drill records and factual
engineering data in the Operator's possession and relevant thereto. Any part of
the Property so acquired shall cease to be subject to this Agreement and shall
not be subject to paragraph 20.2. Any part of the Property which has not been so
acquired by any of the parties shall remain subject to paragraph 20.2.

    21.

INFORMATION AND DATA

    21.1

At all times during the subsistence of this Agreement the duly authorized
representatives of each Participant shall, at its and their sole risk and
expense and at reasonable intervals and times, have access to the Property and
to all technical records and other factual engineering data and information
relating to the Property which is in the possession of the Operator.

    21.2

During the Exploration Period while Programs are being carried out, the Operator
shall furnish the Participants with monthly progress reports and with a final
report within 60 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

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24

of Costs and copies of pertinent plans, assay maps, diamond drill records and
other factual engineering data. During the Construction Period and during the
implementation of an Operating Plan the Operator shall provide monthly progress
reports to the Participants, which report shall include information on any
changes or developments affecting the Mine that the Operator considers are
material.

      21.3

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
Participants, which consent shall not unreasonably be withheld.

      21.4

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.

      22.

LIABILITY OF THE OPERATOR

      22.1

Subject to paragraph 22.2, each party 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.

      22.2

Notwithstanding paragraph 22.1, 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.

      22.3

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 Management Committee; 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.

      22.4

The obligation of each party to indemnify and save the Operator harmless
pursuant to paragraph 22.1 shall be in proportion to its Interest as at the date
that the loss, liability, claim, demand, damage, expense, injury or death
occurred or arose.

      22.5

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.

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25

23.

INSURANCE

    23.1

Commencing on the Operative Date, the Management Committee shall cause the
Operator to place and maintain with a reputable insurer or insurers such
insurance, if any, as the Management Committee in its discretion deems advisable
in order to protect the parties together with such other insurance as any
Participant may by notice reasonably request. The Operator shall, upon the
written request of any Participant, provide it with evidence of that insurance.

    23.2

Paragraph 23.1 shall not preclude any party from placing, for its own account
insurance for greater or other coverage than that placed by the Operator.

    24.

RELATIONSHIP OF PARTIES

    24.1

The rights, duties, obligations and liabilities of the parties shall be several
and not joint nor joint and several, it being the express purpose and intention
of the parties that their respective Interests shall be held as tenants in
common.

    24.2

Nothing herein contained shall be construed as creating a partnership of any
kind or as imposing upon any party any partnership duty, obligation or liability
to any other party hereto.

    24.3

No party shall, except when required by this Agreement or by any law, by-law,
ordinance, rule, order or regulation, use, suffer or permit to be used, directly
or indirectly, the name of any other party for any purpose related to the
Property or this Agreement.

    25.

PARTITION

    25.1

Each of the parties hereto waives, during the term of this Agreement, any right
to partition of the Property or the Assets or any part thereof and no party
shall seek to be entitled to partition of the Property or the Assets whether by
way of physical partition, judicial sale or otherwise during the term of this
Agreement.

    26.

TAXATION

    26.1

All Costs incurred hereunder shall be for the account of the party or parties
making or incurring the same, if more than one then in proportion to their
respective Interests, and each party on whose behalf any Costs have been
incurred shall be entitled to claim all tax benefits, write-offs, and deductions
with respect thereto.

    27.

FORCE MAJEURE

    27.1

Notwithstanding anything herein contained to the contrary, if any Participant is
prevented from or delayed in performing any obligation under this Agreement, and
such failure is occasioned by any cause beyond its reasonable control, excluding
only lack of finances, then, subject to paragraph 27.2, the time for the
observance of the condition or performance of the obligation in question shall
be extended for a period equivalent to the

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26

total period the cause of the prevention or delay persists or remains in effect
regardless of the length of such total period.

    27.2

Any party hereto claiming suspension of its obligations as aforesaid shall
promptly notify the other parties to that effect and shall take all reasonable
steps to remove or remedy the cause and effect of the force majeure described in
the said notice insofar 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 lockout 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 such labour
disturbance or dispute, strike, or lockout solely to remedy or remove the force
majeure thereby constituted. The party claiming suspension of its obligations
shall promptly notify the other parties when the cause of the Force Majeure has
been removed.

    27.3

The extension of time for the observance of conditions or performance of
obligations as a result of force majeure shall not relieve the Operator from its
obligations to keep the Property in good standing pursuant to sub-paragraphs
6.4(a) and 6.4(e).

    28.

NOTICE

    28.1

All invoices, notices, consents and demands under this Agreement shall be in
writing and may be delivered personally, transmitted by fax (with transmission
confirmed in writing), or may be forwarded by first class prepaid registered
mail to the address for each party specified in this Agreement or to such
addresses as each party may from time to time specify by notice. Any notice
delivered or sent by fax shall be deemed to have been given and received on the
business day next following the date of delivery or transmission. Any notice
mailed as aforesaid shall be deemed to have been given and received on the fifth
business day following the date it is posted, provided that if between the time
of mailing and the actual receipt of the notice there shall be a mail strike,
slowdown or other labour dispute which affects delivery of the notice by mails,
then the notice shall be effective only if actually delivered.

    29.

WAIVER

    29.1

No waiver of any breach of this Agreement shall be binding unless evidenced in
writing executed by the party against whom charged. Any waiver shall extend only
to the particular breach so waived and shall not limit any rights with respect
to any future breach.

    30.

AMENDMENTS

    30.1

Except for those provisions, if any, of the Option Agreement specifically
incorporated herein by reference, this Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
An amendment or variation of this Agreement shall only be binding upon a party
if evidenced in writing executed by that party.

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27

31.

TERM

      31.1

Unless earlier terminated by agreement of all parties having an Interest or as a
result of one party acquiring both a 100 percent Interest and a 100 percent
interest in the ** of Net Smelter Returns, the Joint Operation and this
Agreement shall remain in full force and effect for so long as any party has any
right, title or interest in the Property. Termination of this Agreement shall
not, however, relieve any party from any obligations theretofore accrued but
unsatisfied, nor from its obligations with respect to rehabilitation of the Mine
site and reclamation.

      32.

TIME OF ESSENCE

      32.1

Time is of the essence of this Agreement.

      33.

ASSIGNMENT - RIGHT OF FIRST REFUSAL

      33.1

If a party (hereinafter in this paragraph referred to as the "Owner"):

      (a)

receives a bona fide offer from a third party (the "Proposed Purchaser") dealing
at arm's length with the Owner to purchase all or any part all of the Owner's
Interest or its interest in this Agreement (which for certainty shall include
the Owner's right to receive 1% of Net Smelter Returns, which offer the Owner
desires to accept; or

      (b)

If the Owner intends to sell all or any part of its Interest or its interest in
this Agreement,

the Owner shall first offer (the "Offer") such interest in writing to the other
party upon terms no less favourable than those offered by the Proposed Purchaser
or intended to be offered by the Owner, as the case may be. The Offer shall
specify the price and terms and conditions of such sale, the name of the
Proposed Purchaser (which term shall, in the case of an intended offer by the
Owner, mean the person or persons to whom the Owner intends to offer its
interest) and, if the offer received by the Owner from the Proposed Purchaser
provides for any consideration payable to the Owner otherwise than in cash, the
Offer shall include the Owner's good faith estimate of the cash equivalent of
the non-cash consideration. If within a period of 60 days of the receipt of the
Offer, the other party notifies the Owner in writing that it will accept the
same, the Owner shall be bound to sell such interest to the other party (subject
as hereinafter provided with respect to price) on the terms and conditions of
the Offer. If the Offer so accepted by the other party contains the Owner's good
faith estimate of the cash equivalent consideration as aforesaid, and if the
other party disagrees with the Owner's best estimate, the other party shall so
notify the Owner at the time of acceptance and the other party shall, in such
notice, specify what it considers, in good faith, the fair cash equivalent to be
and the resulting total purchase price. If the other party so notifies the
Owner, the acceptance by the other party shall be effective and binding upon the
Owner and the other party and the cash equivalent of any such non-cash
consideration shall be determined by binding arbitration under the laws of
Québec and shall be payable by the other party, subject to

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28

prepayment as hereinafter provided, within 60 days following its determination
by arbitration. The other party shall in such case pay to the Owner, against
receipt of an absolute transfer of clear and unencumbered title to the interest
of the Owner being sold, the total purchase price which it specified in its
notice to the Owner and such amount shall be credited to the amount determined
following arbitration of the cash equivalent of any non-cash consideration. If
the other party fails to notify the Owner before the expiration of the time
limited therefor that it will purchase the interest offered, the Owner may sell
and transfer such interest at the price and on the terms and conditions
specified in the Offer for a period of 60 days, provided that the terms of this
paragraph shall again apply to such interest if the sale is not completed within
the said 60 days. Any sale hereunder shall be conditional upon the Proposed
Purchaser delivering a written undertaking to the other party, in form and
content satisfactory to its counsel, to be bound by the terms and conditions of
this Agreement.

    34.

SUCCESSORS AND ASSIGNS

    34.1

This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.

    35.

GOVERNING LAW

    35.1

This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of British Columbia.

IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.

TAC GOLD CORPORATION       By: c/s     (Authorized Signatory)       ALL AMERICAN
GOLD CORP.       By: c/s     (Authorized Signatory)  

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THIS IS APPENDIX 1 TO THAT CERTAIN JOINT VENTURE AGREEMENT (THE
"AGREEMENT") BETWEEN ______________AND ______________MADE AS OF
THE ____ DAY OF ___________, _______.

ACCOUNTING PROCEDURE

1.

INTERPRETATION

      1.1

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)

“Employee” means those employees of the Operator who are assigned to and
directly engaged in the conduct of Mining Operations, whether on a full-time or
part-time basis.

      (b)

“Employee Benefits” means the Operator's cost of holiday, vacation, sickness,
disability benefits, field bonuses, amounts paid to and the Operator's costs of
established plans for employee's group life insurance, hospitalisation, pension,
retirement and other customary plans maintained for the benefit of Employees and
Personnel, as the case may be, which costs may be charged as a percentage
assessment on the salaries and wages of Employees or Personnel, as the case may
be, on a basis consistent with the Operator's cost experience.

      (c)

“Field Offices” means the necessary sub-office or sub-offices in each place
where a Program is being conducted.

      (d)

“Government Contributions” means the cost or contributions made by the Operator
pursuant to assessments imposed by governmental authority which are applicable
to the salaries or wages of Employees or Personnel, as the case may be.

      (e)

“JV Account” means the books of account maintained by the Operator to record all
assets, liabilities, costs, expenses, credits and other transactions arising out
of or in connection with the Mining Operations.

      (f)

“Material” means the personal property, equipment and supplies acquired or held,
at the direction or with the approval of the Optionee, for use in the Mining
Operations and, without limiting the generality, more particularly “Controllable
Material” means such Material which is ordinarily classified as Controllable
Material, as that classification is determined or approved by the Optionee, and
controlled in mining operations.

      (g)

“Personnel” means those management, supervisory, administrative, clerical or
other personnel of the Operator normally associated with the Supervision Offices
whose salaries and wages are charged directly to the Supervision Office in
question.

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2

  (h)

“Reasonable Expenses” means the reasonable expenses of Employees or Personnel,
as the case may be, for which those Employees or Personnel may be reimbursed
under the Operator's usual expense account practice, as accepted by the
Optionee; including but not limited to, any relocation expenses necessarily
incurred in order to properly staff the Mining Operations if the relocation is
approved by the Optionee.

        (i)

“Supervision Offices” means the Operator's offices or department within the
Operator's offices from which the Mining Operations are generally supervised.

2.

STATEMENTS AND BILLINGS

      2.1

The Operator shall, by invoice, charge for Costs in the manner provided in the
Agreement.

      2.2

The Operator shall deliver, with each invoice rendered for Costs incurred a
statement indicating:

      (a)

all charges or credits to the JV Account relating to Controllable Material ; and

      (b)

all other charges and credits to the JV Account summarised by appropriate
classification indicative of the nature of the charges and credits.

      2.3

The Operator shall deliver with each invoice for an advance of Costs a statement
indicating:

      (a)

the estimated Costs to be incurred during the next succeeding three months;

      (b)

the addition thereto or subtraction therefrom, as the case may be, made in
respect of Costs actually having been incurred in an amount greater or lesser
than the advance which was made by each of the Optionor and the Optionee for the
penultimate month preceding the month of the invoice; and

      (c)

the advances made by the Optionor and the Optionee to date and the Costs
incurred to the end of the penultimate month preceding the month of the invoice.

      3.

DIRECT CHARGES

      3.1

The Operator shall charge the JV Account with the following items:

      (a)

Contractor's Charges:

     

All costs directly relating to the Mining Operations incurred under contracts
entered into by the Operator with third parties.

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3

  (b)

Labour Charges:

          (i)

The salaries and wages of Employees in an amount calculated by taking the
monthly salary or wage of each Employee multiplied by that fraction which has as
its numerator the total time for the month that the Employees were directly
engaged in the conduct of Mining Operations and as its denominator the total
normal working time for the month of the Employee;

          (ii)

the Reasonable Expenses of the Employees; and

          (iii)

Employee Benefits and Government Contributions in respect of the Employees in an
amount proportionate to the charge made to the JV Account in respect to their
salaries and wages.

  (c)

Office Maintenance:

          (i)

The cost or a pro rata portion of the costs, as the case may be, of maintaining
and operating the Field Offices and the Supervision Offices. The basis for
charging the JV Account for such maintenance costs shall be as follows:

  A.

the expense of maintaining and operating Field Offices, less any revenue
therefrom; and

          B.

that portion of maintaining and operating the Supervision Offices which is equal
to

          1.

the anticipated total operating expenses of the Supervision Offices

         

divided by

          2.

the anticipated total staff man days for the Employees whether in connection
with the Mining Operations or not;

         

multiplied by

          3.

the actual total time spent on the Mining Operations by the Employee expressed
in man days.

  (ii)

Without limiting generality, the anticipated total operating expenses of the
Supervision Offices shall include:

          A.

the salaries and wages of the Operator's Personnel which have been directly
charged to the Supervision Offices;

          B.

the Reasonable Expense of the Personnel; and

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

4

  C.

Employee Benefits.

  (iii)

The Operator shall make an adjustment in respect of the Office Maintenance cost
forthwith after the end of each Operating Year upon having determined the actual
operating expenses and actual total staff man days referred to in clause
3.1(c)(i)B of this Appendix 1.

  (d)

Material:

         

Material purchased or furnished by the Operator for use on the Property as
provided under section 4 of this Appendix 1.

          (e)

Transportation Charges:

         

The cost of transporting Employees and Material necessary for the Mining
Operations.

          (f)

Service Charges:

          (i)

The cost of services and utilities procured from outside sources other than
services covered by Section 3.1(h); and

          (ii)

Use and service of equipment and facilities furnished by the Operator as
provided in Section 4.3 of this Appendix 1.

          (g)

Damages and Losses to Joint Property:

         

All costs necessary for the repair or replacement of Assets made necessary
because of damages or losses by fire, flood, storms, theft, accident or other
cause. If the damage or loss is estimated by the Operator to exceed $10,000, the
Operator shall furnish each Participant with written particulars of the damages
or losses incurred as soon as practicable after the damage or loss has been
discovered. The proceeds, if any, received on claims against any policies of
insurance in respect of those damages or losses shall be credited to the JV
Account.

          (h)

Legal Expense:

         

All costs of handling, investigating and settling litigation or recovering the
Assets, including, but not limited to, attorney's fees, court costs, costs of
investigation or procuring evidence and amounts paid in settlement or
satisfaction of any litigation or claims; provided, however, that, unless
otherwise approved in advance by the Management Committee, no charge shall be
made for the services of the Operator's legal staff or the fees and expenses of
outside solicitors.

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5

  (i)

Taxes:

         

All taxes, duties or assessments of every kind and nature (except income taxes)
assessed or levied upon or in connection with the Property, the Mining
Operations thereon, or the production therefrom, which have been paid by the
Operator for the benefit of the parties.

          (j)

Insurance:

         

Net premiums paid for

          (i)

such policies of insurance on or in connection with Mining Operations as may be
required to be carried by law; and

          (ii)

such other policies of insurance as the Operator may carry for the protection of
the parties in accordance with the Agreement; and

         

the applicable deductibles in event of an insured loss.

          (k)

Rentals:

         

Fees, rentals and other similar charges required to be paid for acquiring,
recording and maintaining permits, mineral claims and mining leases and rentals
and royalties which are paid as a consequence of the Mining Operations.

          (l)

Permits:

         

Permit costs, fees and other similar charges which are assessed by various
governmental agencies.

          (m)

Other Expenditures:

         

Such other reasonable costs and expenses which are not covered or dealt with in
the foregoing provisions of this subsection 3.1 of this Appendix 1 as are
incurred with the approval of the Management Committee for Mining Operations or
as may be contemplated in the Agreement.

4.

PURCHASE OF MATERIAL

    4.1

Subject to subsection 4.3 of this Appendix 1, the Operator may purchase all
Materials and procure all services required to conduct the Programs that have
been approved by the Management Committee.

    4.2

Materials purchased and services procured by the Operator directly for the
Programs shall be charged to the JV Account at the price paid by the Operator
less all discounts actually received.

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6

4.3

Notwithstanding the foregoing provisions of this section 4, the Operator, after
having obtained the prior approval of the Management Committee, shall be
entitled to supply for use in connection with the Programs equipment and
facilities which are owned by the Operator and to charge the JV Account with
such reasonable costs as are commensurate with the ownership and use thereof.

    5.

DISPOSAL OF MATERIAL

    5.1

The Operator, with the approval of the Optionee may, from time to time, and
shall upon termination of the Agreement, sell any Material which has become
surplus to the foreseeable needs of the Mining Operations for the best price and
upon the most favourable terms and conditions available.

    5.2

The net revenues received from the sale of any Material to third parties or to a
Participant shall be credited to the JV Account.

    6.

MATERIALS

    6.1

The Operator shall maintain records of Material in reasonable detail and records
of Controllable Material in detail.

    7.

ADJUSTMENTS

    7.1

Payment of any invoice by a Participant shall not prejudice the right of that
Participant to protest the correctness of the statement supporting the payment;
provided, however, that all invoices and statements presented to the
Participants by the Operator during any calendar year shall conclusively be
presumed to be true and correct upon the expiration of 3 months following the
end of the calendar year to which the invoice or statement relates, unless
within that 3 month period a Participant gives notice to the Operator making
claim on the Operator for an adjustment to the invoice or statement.

    7.2

The Operator shall not adjust any invoice or statement in favour of itself after
the expiration of 3 months following the end of the calendar year to which the
invoice or statement relates.

    7.3

Each Participant shall be entitled upon notice to the Operator to request that
the independent external auditor of the Operator provide the Participants with
its opinion that any invoice or statement delivered pursuant to the Agreement in
respect of the period referred to in subsection 7.1 of this Appendix 1 has been
prepared in accordance with this Agreement.

    7.4

The time for giving the audit opinion contemplated in subsection 7.3 of this
Appendix 1 shall not extend the time for the taking of exception to and making
claims on the Operator for adjustment as provided in subsection 7.1 of this
Appendix 1.

    7.5

The cost of the auditor's opinion referred to in subsection 7.3 of this Appendix
1 shall be solely for the account of the Participant requesting it unless the
audit disclosed a material

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7

error adverse to such Participant, in which case the cost shall be solely for
the account of the Operator.

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THIS IS APPENDIX 2 TO THAT CERTAIN JOINT VENTURE AGREEMENT (THE
"AGREEMENT") BETWEEN ______________AND ______________MADE AS OF
THE ____ DAY OF ___________, _______.

NET SMELTER RETURNS

1.

OBLIGATION

      1.1

If any non-Participant becomes entitled to a royalty pursuant to paragraph 7.10,
each Participant shall separately calculate, as at the end of each calendar
quarter subsequent to the Completion Date, the Net Smelter Returns.

      1.2

Each Participant shall within 60 days of the end of each calendar quarter, as
and when any Net Smelter Returns are available for distribution:

      (a)

severally pay or cause to be paid to each non-Participant that percentage of the
Net Smelter Returns to which that non-Participant is entitled under paragraph
7.10 of the Agreement;

      (b)

deliver to each non-Participant a statement indicating the amount of Net Smelter
Returns to which that non-Participant is entitled;

      1.3

Nothing contained in the Agreement or this Appendix 2 shall be construed as:

      (a)

imposing on a Participant any obligation with respect to the payments of royalty
due hereunder to a non-Participant from any other Participant; or

      (b)

conferring on any non-Participant any right to or interest in any Property or
Assets except the right to receive royalty payments from each Participant as and
when due.

      1.4

The Participants agree that on the request of any non-Participant they will
execute and deliver such documents as may be necessary to permit that
non-Participant to record its royalty right against the Property.

      1.5

The Optionor and the Optionee shall be subject to, and obligated to make the
payments required by, the Minquest NSR Royalty, all such obligations to be
shared pro rata basis (based on the percentage interests determined by Section
7.09 of this Agreement as the basis for the starting percentage interests).

      2.

NET SMELTER RETURNS

      2.1

“Net Smelter Returns” means the amount paid or credited by a smelter or other
buyer in respect of the sale of ore, ore concentrates, minerals and metals from
the Property after deduction of the sum of:

  (a)

smelter and/or refining charges;

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2

  (b)

government imposed production and value-added taxes (excluding taxes on income);

        (c)

ore treatment charges, penalties and any and all charges made by the purchaser
of ore or concentrates; and

        (d)

all transportation and insurance costs which may be incurred in connection with
the transportation of ore or concentrates.

2.2

Payment of Net Smelter Returns by the Participant to the non-Participant shall
be made quarterly within 45 days after the end of each fiscal quarter of the
Participant and shall be accompanied by unaudited financial statements
pertaining to the operations carried out on the Property. Within 90 days after
the end of each fiscal year of the Participant in which Net Smelter Returns are
payable to the non-Participant, the records relating to the calculation of Net
Smelter Returns for such year shall be audited by the Participant’s external
independent auditor and any resulting adjustments in the payment of Net Smelter
Returns payable to the non-Participant shall be made forthwith. A copy of the
said auditor's report and accompanying financial information shall be delivered
to the non- Participant within 30 days of the end of such 90-day period.

    2.3

Each annual audit shall be final and not subject to adjustment unless the
non-Participant delivers to the Participant written exceptions in reasonable
detail within six months after the non-Participant receives the report. The
non-Participant, or its representative duly authorized in writing, at its
expense, shall have the right to audit the books and records of the Participant
related to Net Smelter Returns to determine the accuracy of the report, but
shall not have access to any other books and records of the Participant. The
audit shall be conducted by a chartered or certified public accountant of
recognized standing. The Participant 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
non-Participant's report shall be delivered to the Participant upon completion,
and any discrepancy between the amount actually paid by the Participant and the
amount which should have been paid according to the non-Participant's report
shall be paid forthwith, one party to the other. In the event that the said
discrepancy is to the detriment of the non-Participant and exceeds 5% of the
amount actually paid by the Participant, then the Participant shall pay the
entire cost of the audit.

    2.4

No error in accounting or in interpretation of the Agreement shall be the basis
for a claim of breach of fiduciary duty, or the like, or give rise to a claim
for exemplary or punitive damages or for termination or rescission of the
Agreement or the estate and rights acquired and held by the Participant under
the terms of the Agreement.

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THIS IS APPENDIX 3 TO THAT CERTAIN JOINT VENTURE AGREEMENT (THE
"AGREEMENT") BETWEEN ______________AND ______________MADE AS OF
THE ____ DAY OF ___________, _______.

NET PROCEEDS OF PRODUCTION

1.

OBLIGATION

        1.1

If any non-Participant becomes entitled to a royalty pursuant to paragraph
subparagraph 10.2(b) of the Agreement, each Participant shall separately
calculate, as at the end of each calendar quarter subsequent to the Completion
Date, the Net Proceeds of Production.

        1.2

Each Participant shall within 60 days of the end of each calendar quarter, as
and when any Net Proceeds of Production are available for distribution:

        (a)

severally pay or cause to be paid to each non-Participant that percentage of the
Net Proceeds of Production to which that non-Participant is entitled under
subparagraph 10.2(b) of the Agreement;

        (b)

deliver to each non-Participant a statement indicating:

        (i)

the Gross Receipts during the calendar quarter;

        (ii)

the deductions therefrom made in the order itemized in subsection 3.1 of this
Appendix 3;

        (iii)

the amount of Net Proceeds of Production remaining; and

        (iv)

the amount of those Net Proceeds of Production to which that non- Participant is
entitled;

provided, however, that until such time as there are Net Proceeds of Production
available, each Participant shall deliver to each non-Participant, within 60
days of the end of each calendar quarter commencing with the first calendar
quarter following the Completion Date, a statement indicating the Gross Receipts
during the calendar quarter less the deductions therefrom made in the order
itemized in subsection 3.1 of this Appendix 3.

      1.3

Nothing contained in the Agreement or this Appendix 3 shall be construed as:

      (a)

imposing on a Participant any obligation with respect to the payments of royalty
due hereunder to a non-Participant from any other Participant; or

      (b)

conferring on any non-Participant any right to or interest in any Property or
Assets except the right to receive royalty payments from each Participant as and
when due.

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- 2 -

1.4

The Participants agree that on the request of any non-Participant they will
execute and deliver such documents as may be necessary to permit that
non-Participant to record its royalty right against the Property.

        2.

DEFINITIONS

        2.1

Terms defined in the Agreement shall, subject to any contrary intention, bear
the same meaning herein.

        2.2

In addition to the definitions of the classes of Costs provided in paragraph
1.1(g) of the Agreement and without limiting the generality thereof:

        (a)

"Distribution Costs" means all costs of:

        (i)

transporting ore or concentrates from a Mine or a concentrating plant to a
smelter, refinery or other place of delivery designated by the purchaser and, in
the case of concentrates tolled, of transporting the concentrate or metal from a
smelter or refinery to the place of delivery designated by the purchaser;

        (ii)

handling, warehousing and insuring the concentrates and metal; and

        (iii)

in the case of concentrates tolled, of smelting and refining, including any
penalties thereon or in connection therewith.

  (b)

"Interest Costs" means interest computed each calendar quarter and calculated as
follows:

          (i)

the average of the opening and closing monthly outstanding balances for each
month during the quarter of the net unrecovered amounts of all costs in the
classes enumerated in subparagraphs 1.1(g)(i), (ii), (iv) and (v) of the
Agreement, and in paragraphs 2.2 (a), (b), (c) and (d) of this Appendix 3;

         

multiplied by:

          (ii)

the Prime Rate plus two percent;

         

multiplied by:

          (iii)

the number of days in the quarter;

         

divided by:

          (iv)

the number of days in the Year;

          (c)

"Marketing Costs" means such reasonable charge for marketing of diamonds, ores
and concentrates sold or of concentrates tolled as is consistent with generally

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- 3 -

 

accepted industry marketing practices including, without limitation, costs of
market analysis, preparation of diamonds for sale, collection of sale proceeds
and the costs of all associated activities; and

        (d)

"Taxes and Royalties" means all taxes (other than income taxes), royalties or
other charges or imposts provided for pursuant to any law or legal obligation
imposed by any government in connection with a Participant's involvement in the
Joint Operation if paid by the Participant.

2.3

Wherever used in this Appendix 3, "Gross Receipts" means the aggregate of all
receipts, recoveries or amounts received by or credited to a Participant in
connection with its participation under the Agreement including, without
limiting the generality of the foregoing:

      (a)

the receipts from the sale of that Participant's proportionate share of the
concentrates derived from the Mineral produced from the Mine;

      (b)

all proceeds received from the sale of the Property or Assets subsequent to the
Operative Date;

      (c)

all insurance recoveries (including amounts received to settle claims) in
respect of loss of, or damage to any portion of the Property or Assets
subsequent to the Operative Date;

      (d)

all amounts received as compensation for the expropriation or forceable taking
of any portion of the Property or Assets subsequent to the Operative Date;

      (e)

the fair market value, at the Property, of those Assets, if any, purchased for
the Joint Account, that are transferred from the Property for use by a
Participant elsewhere subsequent to the Operative Date; and

      (f)

the amount of any negative balance remaining after the reallocation of negative
balances pursuant to subsection 3.3 of this Appendix 3;

to the extent that those receipts, recoveries or amounts have not been applied
by the Participant as a recovery of any of the classes of Costs itemized in
subsection 3.1 of this Appendix 3.

      3.

NET PROCEEDS OF PRODUCTION

      3.1

"Net Proceeds of Production" means the Gross Receipts minus deductions
therefrom, to the extent of but not exceeding the amount of those Gross
Receipts, of the then net unrecovered amounts of the following classes of Costs
made in the following itemized order:

      (a)

Marketing Costs;

      (b)

Distribution Costs;

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- 4 -

  (c)

Operating Costs;

        (d)

Taxes and Royalties;

        (e)

Interest Costs;

        (f)

Construction Costs;

        (g)

Exploration Costs; and

        (h)

Prior Exploration Costs;

it being understood that the deductions in respect of the Costs referred to in
paragraphs 3.1(a), (b), (d) and (e) of this Appendix 3 shall be based on those
Costs as recorded by that Participant and the deductions in respect of the Costs
referred to in paragraphs 3.1(c), (f), (g) and (h) of this Appendix 3 shall be
based on that Participant's Proportionate Share of those Costs as recorded by
the Operator.

    3.2

Any amount by which the aggregate of the Costs set out in paragraphs 3.1(a) to
(h) inclusive in any quarter exceeds Gross Receipts for such quarter shall,
together with any negative balance carried forward from the previous quarter, be
carried forward for deduction from Gross Receipts in the immediately succeeding
quarter.

    4.

ADJUSTMENTS AND VERIFICATION

    4.1

Payment of any Net Proceeds of Production by a Participant shall not prejudice
the right of that Participant to adjust its own statement supporting the
payment; provided, however, that all statements presented to the non-Participant
by that Participant for any quarter shall conclusively be presumed to be true
and correct upon the expiration of 12 months following the end of the quarter to
which the statement relates, unless within that 12 month period that Participant
gives notice to the non-Participant making claim on the non-Participant for an
adjustment to the statement which will be reflected in subsequent payment of Net
Proceeds of Production.

    4.2

The Participant shall not adjust any statement in favour of itself after the
expiration of 12 months following the end of the quarter to which the statement
relates.

    4.3

The non-Participant shall be entitled upon notice to any Participant to request
that the auditor of that Participant provide the non-Participant with its
opinion that any statement delivered pursuant to subsection 1.1 of this Appendix
3 in respect of any quarterly period falling within the 12 month period
immediately preceding the date of the non- Participant's notice has been
prepared in accordance with this Agreement.

    4.4

The time for giving the audit opinion contemplated in subsection 4.3 of this
Appendix 3 shall not extend the time for the taking of exception to and making
claim on the non- Participant for adjustment as provided in subsection 4.1 of
this Appendix 3.

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- 5 -

4.5

The cost of the auditor's opinion referred to in subsection 4.3 of this Appendix
3 shall be solely for the account of the non-Participant requesting the
auditor's opinion, except where the said opinion is to the effect that the
statement has not been prepared substantially in accordance with this Agreement,
in which case the cost shall be solely for the account of the Participant.

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