UNSECURED CONVERTIBLE DEBENTURE

US$2,000,0000 December 23, 2002

AS CONSIDERATION FOR THE PURCHASE OF certain equipment, Keystone Mines Limited,
a Nevada corporation, (the "Buyer") promises to pay to Capex Investments Limited
(the "Holder"), the sum of $2,000,000, plus interest thereon at the rate of two
point five percent (2.5%) per annum, payable quarterly in cash or, at the option
of Buyer, in "restricted" shares of common stock of the Buyer. The Holder of
this Convertible Debenture (the ''Debenture'') has the option of converting the
principal amount of, and all interest and other charges accrued on, at any time
or from time to time into fully paid and non-assessable ''restricted'' shares of
the common stock, US$.00001 par value per share, of the Buyer at a discount of
fiften percent (15%) to the market price of the common of Buyer share (the
"Conversion Shares"). This Debenture is due and payable five years from the date
hereof.

The Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the state of Nevada, and is qualified in no other
state. The authorized capital stock of Buyer consists of 100,000,000 shares of
common stock, $0.00001 par value per share, which after the closing 1,261,198
are validly issued and outstanding, fully paid and nonassessable. There are no
other securities other than as disclosed in Buyer's most recent Form 10-KSB as
filed with the Securities and Exchange Commission. The Buyer has the unqualified
right to sell, issue, and deliver the Debenture. The Buyer acknowledges that the
Debenture being issued to the Holder are "restricted securities" as that term is
defined in Rule 144 of the Securities Act of 1933, as amended (the "Act").

Neither the issuance and delivery of this Debenture nor the issuance and
delivery of the Conversion Shares upon conversion of the Debenture constitute a
violation or default under any term or provision of the Certificate of
Incorporation or Bylaws of Buyer, or of any contract, commitment, indenture,
other agreement or restriction of any kind or character to which Buyer is a
party or by which Buyer is bound.

Buyer has filed all reports required to be filed with the United States
Securities and Exchange Commission (hereinafter the "SEC"). The Holder
acknowledges receipt of copies of all filings made with the SEC and further
acknowledges that all reports have been filed.

The Holder acknowledges that the Certificates representing the Conversion Shares
to be delivered pursuant to the conversion of the Debenture shall bear a legend
in the following form:

 

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The securities evidenced hereby have not been registered under the Securities
Act of 1933, as amended, nor any other applicable securities act (the "Acts"),
and may not be sold, transferred, assigned, pledged or otherwise distributed,
unless there is an effective registration statement under such Acts covering
such securities or the Company receives an opinion of counsel for the holder of
these securities (concurred on by counsel for the Company) stating that such
sale, transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of such Acts.

If the Conversion Shares issued pursuant to the conversion of the Debenture have
been held for a period of at least one (1) years and if Rule 144 of the Act is
applicable (there being no representations by Buyer that Rule 144 is
applicable), then the Holder may make sales of the Conversion Shares only under
the terms and conditions prescribed by Rule 144 of the Act.

The Holder acknowledges that the Buyer is under no obligation to register or
seek an exemption under any federal and/or state securities acts for any stock
of Buyer or to cause or permit such stock to be transferred in the absence of
any such registration or exemption and that the Holder herein must hold such
stock indefinitely unless such stock is subsequently registered under any
federal and/or state securities acts or an exemption from registration is
available.

This Debenture shall be governed by and construed and enforced in accordance
with the laws of the state of Nevada without regard to its conflict-of-laws
rules and venue of any action brought will be in any state or federal court
located in the state of Nevada.

All amounts are reflected in U.S. dollars.

  Keystone Mines Limited

 

BY:   /s/ Mike Muzylowski
Mike Muzylowski, President

 

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