Assignment of PURCHASE OPTION AGREEMENT

 

THIS ASSIGNMENT OF PURCHASE OPTION AGREEMENT

is dated for reference January 26, 2004 and made,

BETWEEN

:

> > > > Ken swaisland
> > > > 
> > > > , a person having an address at 2949 Palmerston Ave., West Vancouver,
> > > > B.C V7V 2X2
> > > > 
> > > > 
> > > > 
> > > > (the "Assignor")

AND

:

> > > > CARDINAL MINERALS INC.
> > > > 
> > > > a Nevada corporation having its office at Suite B- 2950 Flamingo Rd.,
> > > > Las Vegas, NV 89121Borrower1
> > > > 
> > > > 
> > > > 
> > > > (the "Assignee")
> > > > 
> > > >  
> > > > 
> > > > WITNESSES THAT WHEREAS
> > > > 
> > > > :

 A. A. The Assignor has an option to purchase all the assets of Hunter Gold
    Mining Inc. and Hunter Gold Mining Corporation including the Bates Hunter
    Mine and the Golden Gilpin Mill (collectively the "Bates-Hunter" mine and
    mill facilities), dewatering plant, mining properties, claims, permits, and
    all ancillary equipment free and clear of any and all financial liens or
    encumberances with the exception of a one percent net smelter return royalty
    payable to Goldrush Casino and Mining Corporation from George Otten and Jim
    Blair (the "Principle Vendors") and the other shareholders of the company
    (the "Other Vendors"), as the optionors; and

 B. B. Assignee desires to purchase all of Assignor's right title and interest
    in and to the Purchase Option Agreement attached as Schedule A.

THEREFORE in consideration of the sum of U.S.$1.00 and other good and valuable
consideration now paid by the Assignee to the Assignor (the receipt and
sufficiency of which is hereby acknowledged by the Assignor) the Assignor
warrants and represents to and covenants with the Assignee as follows:

 

ARTICLE 1

INTERPRETATION

1.1 Definitions

 

> In this Assignment:
> 
>  
> 
> (a) "Assigned Property" means:
> 
> >  
> > 
> > (i) all of the Assignor's estate, right, title and interest as optionee in
> > and to the Mines, the Companies and the Purchase Option Agreement, or
> > portion(s) thereof demised thereunder;

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> > (ii) all moneys, claims, benefits, rights, demands, judgments, securities
> > and the like whatsoever including any extensions or renewals thereof
> > (collectively, the "Rights") which the Assignor may now or at any time
> > hereafter have or be entitled to under or by virtue of or in respect of, or
> > incidental to, the Purchase Option Agreement, including:
> > 
> > >  
> > > 
> > > (A) any and all monies paid or payable to the Assignor under the Purchase
> > > Option Agreement; and
> > > 
> > > (B) any and all benefits and advantages due or accruing due or at any time
> > > after the date hereof to become due to the Assignor under the Purchase
> > > Option Agreement or under the Rights relating thereto; and
> > > 
> > > (C) the benefit of all covenants, guarantees, representations, warranties
> > > and indemnities which have been or in the future are granted to, received
> > > or negotiated by the Assignor, or any agent of the Assignor, in respect of
> > > the Purchase Option Agreement and/or the Rights relating thereto;
> > 
> > (iii) all letters, papers and other documents in any way evidencing or
> > relating to or which may, or at any time hereafter may, be received by the
> > Assignor as security for or on account of the Purchase Option Agreement, the
> > Rights relating thereto, or any of them;
> > 
> > (iv) the Engineering Report on the Bates-Hunter mine and mill facilities as
> > prepared by Glenn Gorman;
> 
> (b) "Assignee" means the party so described above and its successors and
> assigns, whether immediate or derivative;
> 
>  
> 
> (c) "Assignment" or "this Assignment" means this Assignment including all
> recitals and schedules hereto and includes all amendments thereto and
> modifications, restatements or replacements thereof, from time to time;
> 
>  
> 
> (d) "Assignor" means the party so described above and its successors and
> assigns, whether immediate or derivative;
> 
>  
> 
> (e) "Mine" means the Bates Hunter Mine and Golden Gilpin Mine (collectively
> the "Bates-Hunter" mine and mill facilities), dewatering plant, mining
> properties, claims, permits, and all ancillary equipment free and clear of any
> and all financial liens or encumberances with the exception of a one percent
> net smelter return royalty payable to Goldrush Casino and Mining Corporation,
> as described in the Purchase Option Agreement and any Schedules thereto;
> 
>  
> 
> (f) "Purchase Option Agreement" means the "Purchase of Hunter Gold Mining
> Corporation (the "Target") from George Otten and Jim Blair (the "Principle
> Vendors") and the other shareholders of the company (the "Other Vendors") by
> Ken Swaisland (the "Purchaser")";

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> (g) "Persons" or "Person" means and includes any individual, sole
> proprietorship, corporation, partnership, bank, joint venture, trust,
> unincorporated association, association, institution, entity, party or
> government (whether national, federal, provincial, state, municipal, city,
> county or otherwise and including any instrumentality, division, agency, body
> or department thereof);
> 
>  
> 
> (h) "Option Price" means the sum of $3,000,000 in United States Currency to
> the Principle Vendors to purchase all the shares of Hunter Gold Mining
> Corporation and Hunter Gold Mining Inc. on or before July 31, 2004;
> 
>  
> 
> (i) "Net Smelter Royalty" ("NSR") means the retained royalty payable to the
> Assignor and the Principle Vendors pursuant to Article 4;
> 
> All headings and titles in this Assignment are for reference only and are not
> to be used in the interpretation of the terms hereof.

1.2 Amendment

 

Any amendment of this Assignment will not be binding unless in writing and
signed by the Assignee and the Assignor.

 

1.3 Included Words

 

Wherever the singular or the masculine are used herein, the same will be deemed
to include the plural or the feminine or the body politic or corporate where the
context or the parties so require.

 

1.4 Governing Law

 

This Assignment will be construed and enforced under and in accordance with the
laws of the State of Nevada.

 

1.5 Jurisdiction

 

The Assignor hereby irrevocably agrees that any legal action or proceeding
against it with respect to this Agreement may be brought in the courts of the
State of Nevada or in such other court as the Assignee may elect and, by
execution and delivery of this Agreement the Assignor hereby irrevocably submits
to each such jurisdiction and agrees to be bound by any suits, actions or
proceedings commenced in such courts and by any order or judgment resulting form
any such suit, action or proceeding.

 

1.6 Severability

 

Any provision of this Assignment which is prohibited by law or otherwise
ineffective will be ineffective only to the extent of such prohibition or
ineffectiveness and will be severable without invalidating or otherwise
affecting the remaining provisions of this Assignment.

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1.7 Joint and Several Liability

 

If the Assignor is comprised of more than one Person, the representations,
warranties, agreements, indemnity, and other obligations and liabilities of the
Assignor contained in this Assignment are deemed to have been made or incurred
by all of those Persons jointly and each of those Persons severally.

 

1.8 Capacity

 

If the Assigned Property or any portion thereof is held by the Assignor as a
partner of a firm, as a trustee, as an agent, or in any other similar capacity,
whether fiduciary or otherwise, each and every:

 

> (a) warranty, representation, covenant, agreement, term, condition, proviso
> and stipulation; and
> 
> (b) assignment and other charge constituted hereby,

made by or imposed upon the Assignor hereunder will be and be deemed to be
jointly and severally made by or imposed upon the Assignor and the partnership,
the beneficiary (or beneficiaries) of the trust, the principal(s) of the agent,
or other entity (or entities), as the case may be, and each assignment and other
charge contained in this Assignment will be deemed to be an assignment or charge
against the interest and title of the partnership, the beneficiary (or
beneficiaries), the principal(s), or such entity (or entities), as the case may
be, in and to the Assigned Property, as well as being an assignment of or charge
against the interest and title of the Assignor in and to the Assigned Property.

 

1.9 Binding Effect

 

This Assignment will be binding on the Assignor and the respective heirs,
executors, personal representatives, successors and assigns of each Person
comprising the Assignor and will enure to the benefit of the Assignee and its
successors and assigns.

 

ARTICLE 2

GRANT OF Assignment

 

2.1 Grant of Assignment

 

The Assignor hereby assigns, transfers and sets over the Assigned Property to
the Assignee to have, hold and enjoy the same, with all and every benefit and
advantage that may or can now or hereafter be derived therefrom and with full
power and right to take all lawful measures and pursue all lawful remedies which
the Assignor might have taken (and whether in the name of the Assignor or
otherwise) for the full enforcement thereof and the enjoyment of all
entitlements thereunder.

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ARTICLE 3
Payment of Option price and Option closing price

 

3.1 Payment of Closing Option Price

 

Immediately upon the execution of the closing of the formal agreement to acquire
the Assigned Property, the Assignee shall cause its transfer agent to issue to
the Assignor TWO MILLION (2,000,000) SHARE PURCHASE WARRANTS exercisable into
common shares at a value equal to the TEN (10) day trading average of the common
shares of Assignee immediately prior to the closing of the formal agreement.

 

3.2 Payment of Option Price

 

Upon execution of this Assignment of Purchase Option Agreement the Assignee
hereby agrees to pay the sum of THIRTY THOUSAND ($30,000.00) DOLLARS. The
Assignor agrees to accrue this debt until such time as payment may be made by
way of cash, or exchange for shares, or other such means, as may be mutually
acceptable.

 

3.3 Closing Option Shares Not Registered

 

Assignor acknowledges that the Closing Option Shares (collectively, hereinafter
the "Securities") have not been and will not be registered pursuant to the
securities laws of any jurisdiction and are being transferred pursuant to
exemptions from registration contained in the United States Securities Act of
1933, as amended (the "1933 Act"), and the Securities may only be sold in a
jurisdiction in accordance with the restrictions on resale prescribed under the
laws of the jurisdiction in which such shares are sold, all of which may vary
depending on the jurisdiction.

 

Legend.

It is understood and agreed that the certificates evidencing the Securities will
bear the following legend:

> > NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE
> > UNITED STATES SECURITIES ACT OF 1933 ACT (THE "1933 ACT"), OR ANY U.S. STATE
> > SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD,
> > DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT
> > PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR
> > PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
> > THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN
> > ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
> > TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
> > COMPLIANCE WITH THE 1933 ACT.

Assignor acknowledges that the Securities acquired pursuant to the terms of this
Agreement will have such hold periods as are required under applicable
securities laws and as a result may not be sold, transferred or otherwise
disposed, except pursuant to an effective registration statement under the 1933
Act or pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the 1933 Act and in each case only in accordance
with applicable state and provincial securities laws.

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

Assignor agrees that it will sign such reasonable documents as may be required
by Assignee or its counsel in order to evidence that the transactions
contemplated in this Agreement qualify for an exemption from the registration
requirements of the 1933 Act.

 

ARTICLE 4
NET SMELTER RETURNS ROYALTY PRESENTATIONS AND WARRANTIES

 

> > > > 4 Net Smelter Returns Royalty
> > > > 
> > > > .

The Assignee hereby acknowledges that the Assignor has retained, out of the
interest in the Assigned Property transferred by the Assignor to the Assignee
hereunder, and acknowledges itself bound by and hereby covenants to pay to the
Assignor, a two percent (2%) Net Smelter Returns Royalty. It is hereby
acknowledged and agreed by the parties that their mutual intent is that the Net
Smelter Return Royalty is not be contractual only, but is to be an interest in
land and a burden on, and to bind and run with, the Assigned Properties and the
lands subject thereto, and the Assignee covenants and agrees with the Assignor
that the Assignee will, at the request of the Assignor, enter into a separate
agreement with respect to the Net Smelter Return Royalty which agreement will be
recorded against such mining lease(s) as an interest in land.

 

ARTICLE 5
REPRESENTATIONS AND WARRANTIES

5 Representations and Warranties

 

The Assignor represents and warrants to the Assignee with respect to the
Assigned Property as follows:

> > i. Authority to Assign: the Assignor has a good right, full power and
> > absolute authority to assign, transfer, set over the Assigned Property to
> > the Assignee in the manner contemplated by this Assignment;
> > 
> > ii. No Other Assignments: none of the Assigned Property has been previously
> > assigned to or pledged or encumbered in favour of any other Person;
> > 
> > iii. Purchase Option Agreement Valid and Subsisting: the Purchase Option
> > Agreement is a valid and subsisting Purchase Option Agreement and is in full
> > force and effect;
> > 
> > iv. Purchase Option Agreements Complete: the Purchase Option Agreement
> > represents the entire agreement between the parties thereto with respect to
> > the subject matter thereof;
> > 
> > v. No Breaches: the Assignor has not committed any act or omitted to perform
> > any obligation, nor has the Assignor permitted any act or omission to occur,
> > which would be a breach or a default of the Assignor's obligations pursuant
> > to the Purchase Option Agreement or which would vitiate the continued
> > obligations or liabilities of any other party to the Purchase Option
> > Agreement;

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

> > vi. No Defaults: the Assignor is not aware of any default under the Purchase
> > Option Agreement by the Assignor or by any other party thereto;
> > 
> > vii. No Disputes: there are no disputes of which the Assignor is aware
> > between the Assignor and any other party to the Purchase Option Agreement
> > concerning the Purchase Option Agreement;
> > 
> > viii. Obligations Performed: the Assignor has fulfilled and performed all of
> > its obligations and liabilities under the Purchase Option Agreement to be
> > performed by it through the date of this Assignment and has maintained all
> > of its Rights thereunder; and
> > 
> > ix. No Consents Required: no consents are required from any other Person to
> > the assignment of or creation of a security interest in the Assigned
> > Property as contemplated hereby, in order to effect this assignment or
> > create such security interest.

6 MISCELLANEOUS

>  
> 
> a. Notice

Any notice, demand or other document to be given, or any delivery to be made
hereunder shall be effective if in writing and delivered in person and left
with, or if telecopied and confirmed by prepaid registered letter addressed to
the attention of:

>  
> 
> > i. in the case of the Assignee, addressed as follows:
> > 
> >  
> > 
> > Cardinal Minerals Inc.
> > Suite B - 2950 East Flamingo Rd.
> > 
> > Las Vegas, NV 89121
> > Attention: President
> > 
> > Fax Number: c/o 702-794-0744
> > 
> >  
> > 
> > ii. in the case of the Assignor, addressed as follows:
> > 
> >  
> > 
> > Kenneth F. Swaisland
> > 2949 Palmerston Ave
> > West Vancouver, B.C. V7V 2X2
> > 
> >  
> > 
> > Fax Number: 604-925-3592

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Any notice, demand or other document or delivery so given or made shall be
deemed to have been given or made and received at the time of delivery in person
or on the business day next following the date of telecopying of the same. Any
party hereto may from time to time by notice in writing change his or its
address (or in the case of a corporate party, the designated recipient) for the
purposes of this section.

>  
> 
> b. Execution in Counterparts

If the Assignor is comprised of more than one party, this Assignment may be
executed by such parties in several counterparts, each of which will be deemed
to be an original and all of which will together constitute one and the same
instrument.

>  
> 
> c. Time of the Essence

Time is of the essence of this Assignment.

 

IN WITNESS WHEREOF

the Assignor has duly executed this Assignment on this ____ day of January,
2004.

 

KENNETH F. SWAISLAND

 

per: ___{signed - Kenneth F. Swaisland}___
Authorized Signatory

 

CARDINAL MINERALS INC.

 

per: ___{signed - Roland Vetter__________
Authorized Signatory