Exhibit 10.1 to Form 8-K
 
MINERAL LEASE AGREEMENT

THIS MINERAL LEASE AGREEMENT ("Agreement") is made effective as of the day of
October 24, 2006 ("Effective Date"), between DALTON LIVESTOCK, a Nevada general
partnership, and WINCHELL RANCH, a Nevada corporation, Lessors, and NEWGOLD,
INC., a Delaware corporation, Lessee.
RECITALS

A. Lessors are owners of the surface and varying interests of the minerals in
and to property described in Exhibit "A" attached hereto, which property is
located in Elko County, Nevada (the "Premises").

B. Lessee desires to lease the interests of Lessors in the Premises upon the
terms and conditions herein set forth.

C. Lessors desire to lease their interests in the Premises to Lessee upon the
terms and conditions herein set forth.

AGREEMENT

FOR AND IN CONSIDERATION of the payments herein required, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lessors and Lessee (the "Parties"
and individually a "Party") agree as follows:

1. GRANT OF LEASE RIGHTS

A. Grant of Lease. Lessors hereby lease exclusively to Lessee and its successors
and assigns all of Lessors' interest in and to all minerals, including barite,
(hereafter the "Mineral Substance") except for and excluding all oil, gas, oil
shale and other hydrocarbons (liquid or gaseous), coal, uranium and fissionable
materials and geothermal resources, of every nature and kind (hereinafter
"reserved substances") beneath the surface of, within, or that may be produced
from the premises.

B. Rights of Lessee. Lessee shall have the following rights in respect of the
Premises:

i. Mining and Access Rights. Subject only to any limitations imposed by federal,
state and local regulations, the free, unrestricted and uninterrupted right of
access, ingress and egress to the Premises over existing roads or alternate
routes approved by Lessors and the right to enter upon and occupy the Premises
for all purposes reasonably incident to exploring for, developing, mining (by
underground mining, surface mining, strip mining or any other surface or
subsurface method, including any method later developed), extracting, milling,
smelting, refining, stockpiling, storing, processing, removing and marketing
therefrom all ores, metals, minerals, mineral products (including intermediate
products) and materials of every nature or sort, and the right to place,
construct, maintain, use and thereafter remove such structures, facilities,
equipment, roadways, haulageways, utility lines, reservoirs and water courses,
and other improvements as may be necessary, useful or convenient for the full
enjoyment of all of the rights granted under this Agreement subject to
subsection F herein. Lessee shall have sole and exclusive custody, possession,
ownership and control of all ore, rock, drill core and other Mineral Substances
extracted or removed from the Premises and may sell or otherwise dispose
thereof. In the exercise of such rights, Lessee shall be subject only to
compliance with applicable statutes, rules, regulations and the terms of this
Agreement. These rights are also granted and may be utilized for the purpose or
in the course of carrying on exploration, development or mining operations on
any other properties in which Lessee may have or acquire any right or interest,
provided Lessors assent to the same.

ii. Cross Mining. The right, if Lessee so desires, to mine and remove any
Mineral Substances existing on, in or under the Premises through or by means of
shafts, openings or pits which may be sunk or made upon adjoining and nearby
properties, and the right to store any Mineral Substances from the Premises upon
any such properties. In addition, Lessee may use the Premises for any shafts,
openings, pits and storage areas sunk or made for the mining, removal and/or
stockpiling of any Mineral Substances from any adjoining or nearby properties.
Mineral Substances taken from the Premises shall at all times be kept entirely
separate and distinct from any other ore or concentrated product until the same
are measured and sampled so that the rights of Lessors shall be at all times
preserved and protected

iii. Commingling. The right to commingle ore removed from the Premises or
products derived therefrom after treatment, with other ore or products, before
or after concentration or beneficiation, so long as the data necessary to
determine the weight, grade, and recoverability of both the ore removed from the
Premises or products derived therefrom and the ore or products with which it is
commingled are obtained by Lessee. Lessee shall then use that data to determine
Lessors' royalty for such in minerals, metals and/or other products extracted
from ores or products so mixed. Such data and determinations shall be acquired
and completed in accordance with generally accepted industry practices.

iv. Deposit of Waste Materials. The right to temporarily or permanently deposit
on or off the Premises tailings, waste rock, overburden, surface stripping
materials, process solutions, and all other materials originating from the
Premises or from adjoining or nearby properties, even if the sole use of the
Premises may be for the placement of such materials subject to any and all
reclamation as required by state and Federal statutes and regulations, including
but not limited to providing access for livestock and seeding.

v. Treatment. The right, at Lessee's election and in any manner it deems fit, to
beneficiate, concentrate, process, smelt, refine, and otherwise treat on or off
the Premises any Mineral Substances taken from the Premises or from adjoining or
nearby properties by any physical or chemical method or methods. In exercising
this right, Mineral Substances may be removed to a plant or plants existing,
established or maintained upon the Premises or elsewhere.

vi. Water Rights. The right to use any of Lessors' water rights on, about, under
or appurtenant to the Premises or to which the Premises are riparian to
facilitate the exploration, mining and processing rights granted in this
Agreement subject to approval of the Lessors which will not unreasonably be
withheld if such use does not materially interfere with Lessors' livestock use
of the area.

2. TERM

A.  Term. The term of this Agreement shall commence as of the Effective Date and
shall continue for a period of five years thereafter unless sooner terminated in
the manner herein provided. If at the end of said five-year period, being the
primary term, Lessee is engaged in Mining Operations (as defined below), the
term of this Agreement shall automatically continue for so long thereafter as
Lessee continues to be engaged in Mining Operations.

B. Definition of Mining Operations. For purposes of this Agreement "Mining
Operations" shall include, but shall not be limited to, development, extraction,
processing. leaching or sale of ores, concentrates or derivatives retrieved
through leaching of ores, produced from the Premises. Activities off the
Premises shall constitute Mining Operations when they are conducted in
connection with an integrated mining operation involving the Premises and other
properties in which Lessee holds an interest. Development includes activities,
including permitting, carried on diligently and in good faith preparatory to
commencing or resuming operations at a mine. Lessee shall be deemed to be
actively engaged in Mining Operations so long as all such operations, once
begun, do not cease for a period of more than 365 consecutive days. In the event
Lessee is actively engaged in Mining Operations at the end of the primary term
but at any time is unable to obtain a satisfactory market or a satisfactory
price for Mineral Substances and as a result suspends mining, processing or
marketing operations from time to time, then Mining Operations shall not be
deemed to have ceased and this Agreement shall not expire or terminate provided
that Lessee notifies Lessors of such loss of market or inability to obtain a
satisfactory price and diligently attempts to market Mineral Substances at a
satisfactory price and recommence operations. Mining Operations shall not be
deemed to have ceased if once begun they are interrupted through Force Majeure
in accordance with Section 8. If Mining Operations have not commenced at the end
of the primary term because of Force Majeure conditions, the primary term shall
be extended until such Force Majeure conditions cease.

C. Continuation of Use. If, at the end of the primary or extended term, Lessee
is not conducting or has ceased Mining Operations, but is utilizing the Premises
in support of Mining Operations on other lands, then this Agreement shall
continue in force as to the lands subject to such uses and such expansions
thereof as may reasonably be contemplated, as designated in good faith by
Lessee, and the payment provided in Section 3.A shall be rental for such uses.

3. PAYMENTS TO LESSORS
 
A. Annual Rental. As initial consideration for the lease rights granted herein,
Lessee shall pay to Lessors Twenty Thousand Dollars ($20,000.00). Subject to
Lessee's right to terminate this Agreement, Lessee shall pay the following
additional amounts to Lessors as rent:

Due Date (in each case prior to )
Payment
First yearly anniversary of Effective Date
Second yearly anniversary of Effective Date
Third yearly anniversary of Effective Date
Fourth yearly anniversary of Effective Date
Fifth yearly anniversary of Effective Date and
each subsequent anniversary of Effective Date thereafter
$50,000
$50,000
$50,000
$50,000
 
$50,000

 
On each five year term the annual rentals shall be subject to adjustment as set
forth in subsection E herein. 

None of the payments made in accordance with the schedule set forth above shall
be deductible as a credit against production royalties payable to Lessors
pursuant to Section 3.B until production commences. After production commences
no production royalties shall be due Lessors until the royalties exceed the
annual $50,000.00 rental after each anniversary of the effective date. Lessee's
production royalties shall be deductible as a credit against the annual payment
until the royalties exceed $50,000.00 during the lease year and then paid to
Lessors.

B. Production Royalty. When Lessee commences production of ores, minerals or
materials from the premises, Lessee shall pay to Lessors a production royalty
equal to Lessors' percentage in the mineral interest of the parcel from which
production occurs as set out in Exhibit "B" of a percentage of the Net Smelter
Returns (NSR) received by Lessee from the sale of said ores, minerals or
materials, except for barite, from the Premises, should such amount exceed the
annual rental payment specified above. The percentage of net smelter returns to
which Lessors' percentage payment shall be applied or credited to Lessee's
annual rental is as follows:
 
Price of Gold (U.S.)
Percent NSR
$150.00 to $250.00 per ounce or less
$250.00 to $350.00 per ounce
$350.00 to $450.00 per ounce
$450.00 to $550.00 per ounce
$550.00 to $650.00 per ounce
$650.00 to $750.00 per ounce
$750.00 per ounce or above
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%

For all other minerals other than gold, the average fair market value at the
time of production, as quoted in Metals Week or a comparable publication.

For barite, the production royalty shall be 5% of the gross revenues derived
from the sale of any barite mined upon the premises adjusted to Lessors'
percentage in the mineral interest in the parcel from which production occurs.

(1) If Lessee sells refined gold or silver, Lessee will be deemed to have
received proceeds from the sale thereof equal to the number of ounces of refined
gold or silver outturned to Lessee's account during the calendar quarter
multiplied in the case of gold by the average daily London Bullion Brokers P.M.
Gold Fixing during such calendar quarter and in the case of silver by the
average of the daily Engelhard industrial bullion price for silver during the
calendar quarter. The average price for a calendar quarter shall be determined
by dividing the sum of all daily prices posted during the calendar quarter by
the number of days that prices were posted The posted price shall be obtained
from the Wall Street Journal, Reuters, E&MJ or other industry-accepted source.
If a posted price referenced above becomes no longer available, Lessee shall,
acting reasonably, select an alternative posted price that closely approximates
such original posted price. Lessee shall have the right to market and sell to
third parties refined gold and silver in any manner it chooses, including the
sale of such refined gold and silver on the commodity market. In this regard,
Lessors shall have no right to participate in any gains and/or profits or
obligation to suffer any losses accruing to Lessee as a result of forward sales,
options trading, commodities futures trading or similar transactions.

(2) Charges to be deducted from proceeds in determining Net Smelter Returns are
the following:

(a) all costs, charges and expenses paid or incurred by Lessee for treatment in
the smelting and refining processes (including handling, processing, interest
and provisional settlement fees, sampling, assaying and representation costs,
penalties and other processor deductions);

(b ) all costs, charges and expenses paid or incurred by Lessee for
transportation (including freight, insurance, security, transaction taxes,
handling, port, demurrage, delay and forwarding expenses incurred by reason of
or in the course of such transportation) of Mineral Substances from the Premises
to the place or places of treatment and thence to the place or places of sale;

(3) Royalties shall accrue quarterly (based on calendar quarters) and shall
become due and payable by Lessee prior to the end of the month following the end
of each quarter. Royalty payments shall be accompanied by pertinent information
in sufficient detail to explain the calculation of the royalty payment.

(4) All statements for royalties rendered to Lessors by Lessee during any
quarter shall conclusively be presumed to be true and correct after one year
following the end of such quarter unless within said one-year period Lessors
takes written exception thereto and makes a claim on Lessee for adjustment. No
adjustment favorable to Lessee shall be made unless it is made within the same
prescribed period.

(5) Lessors, upon notice in writing to Lessee, and utilizing a designated
representative, shall have the right to audit Lessee's accounts and records
relating to the payment of the royalty for any calendar quarter within the
one-year period following the end of such calendar quarter; provided, however,
the making of any audit shall not extend the time for the taking of written
exception to and the adjustment of accounts as provided for in the paragraph
above. All audits shall be conducted by Lessors, at Lessors' sole expense, at
the office of Lessee where the relevant books and records are maintained and
such audit shall be conducted during normal business hours.

C. Place and Allocation of Payment. All payments shall be made and allocated in
accordance with the provisions of Section 9 below.

D. No Royalty on Test Materials. Lessee shall have the right to mine and market
amounts of Mineral Substances reasonably necessary for sampling. assaying.
metallurgical testing and evaluation of the mineral potential of the Premises
without incurring any obligation to make production royalty payments.

E. The primary term base rental shall be adjusted upward or downward, on each
Fifth yearly anniversary of the effective date by an increase or decrease based
on the Consumer Price Index (1982-84=100), base beginning with August 2006,
published by the Bureau of Labor and Statistics, United States Department of
Labor, as follows:

1. A basic index figure for the purpose herein shall be the index figure for the
month of August 2006 for "all items" in the Consumer Price Index' All Urban
Consumers, which is agreed to be 2039. If the corresponding index figure for the
month of August immediately preceding the commencement of each FIVE (5) year
term renewal of this Lease, shall vary from the basic index figure for the month
of August 2006, then the base rental for the Lease term commencing on the next
anniversary of the Effective Date following shall be adjusted upward or downward
to an amount arrived at by multiplying the sum of $50,000.00, times the
percentage increase or decrease in the basic index figure from August 2006 to
the month of August preceding the commencement of said the second five year
term. (Example: Based upon an August 2006 Consumer Price Index of 203.9 and an
increase to 215.00 for August 2011. 215.0-203.9 = 5.44%. (5.44% X $50,000.00) +
50,000.00 = $52,720.00 rental for the succeeding five year period.

2. The adjustment of the base rental, as provided in paragraph 1 above, shall be
determined as soon as the corresponding index figure to the basic index figure
is available from the Bureau of Labor Statistics, United States Department of
Labor, and the annual rental payment shall be adjusted accordingly. The adjusted
rental shall be applicable from the beginning of each five year term, whether or
not it has been calculated by said date.

3. The parties understand and agree that the provision for adjustment of base
rental herein contained is intended to provide for an increase or decrease, to
keep the base rental, commencing with the second five year term of this lease
and each five year term thereafter equivalent to the base rental adjusted for
the increase or decrease in the Consumer Price Index.

4. In the event that the Bureau of Labor Statistics, United States Department of
Labor changes the form or the basis of calculating the Consumer Price Index, the
parties agree that the comparable date shall be used to adjust the base rental
to an amount equivalent to the purchasing power of such rental as of August,
2006. In the event the Bureau of Labor Statistics shall change the base period
(now 1982-84 = 100), the new index number for the month of August, 2006 shall be
substituted for the number used in this Lease.

F. Compensation for Surface Disturbance and Use. Lessors shall receive no
compensation for surface damage to the Premises for the use of existing roads or
alternate routes approved by Lessors.

Lessors shall receive compensation for those rights granted to Lessee set forth
in subsection B on any portion of the Premises used by Lessors in excess of a
total of 100 acres upon which Lessors do not hold a 100% interest in the mineral
estate. Such compensation shall be at the rate of $25.00 per acre per annum
which may be prorated as follows:

1. If Lessors have an interest in the mineral rights and that portion is
actively being mined, the compensation shall be prorated on the basis of
Lessors' interest. Example: Lessors have a 50% interest in the minerals on a
parcel being actively mined. Lessors shall be compensated at the rate of $12.50
per acre per annum for any acreage in excess of 100 acres in the entire Leased
area.

2. If an area in excess of 100 acres is being disturbed by the uses set forth in
subsection B, and Lessors have no mineral interest in the excess acreage,
Lessors shall be compensated at the rate of $25.00 per acre per annum.

3. If Lessors have an interest in the mineral estate and that portion of the
Premises is not being actively mined but is occupied by the Lessee for other
uses incidental to such mining operation, and the total disturbed acreage in the
entire leased Premises exceeds 100 acres, Lessors shall be compensated at $25.00
per acre per annum prorated as to their interest, unless they will receive
royalties from other portions of the Premises Leased.

There shall be excluded from the 100 acre limit, any portion of the Premises
leased upon which Lessors own a 100% interest in the mineral estate and that
portion is being actively mined.

4. TITLE MATTERS

A. Representations and Warranties. Lessors covenant and warrant to Lessee, which
covenants and warranties shall survive termination of this Agreement, as
follows:

(1) Lessors warrant, to the best of their knowledge and belief, there are no
claims, actions, suits or proceedings pending or threatened on account of or as
a result of ownership of the real property which, if adversely determined, would
prevent or hinder the conditions contained in this Agreement.

(2) Lessors warrant, to the best of their knowledge and belief, they have good
and merchantable title to the surface of the property, except for reservations
and exceptions made by previous owners, including any reservations contained in
patents issued by the United States of America or the State of Nevada and that
Lessee has not entered into any leases, licenses, easements or other agreements,
recorded or unrecorded, granting rights to any parties in any of the premises
and no person or other entity has any right to possess in their occupancy of any
portion of the premises. Notwithstanding the foregoing, nothing contained in
this Agreement shall be construed to create an obligation on the part of the
Lessors to take any title clearative action whatsoever, including, but not
limited to, corrections to remove reservations, restrictions, restrictive
easements, easements or rights-of-way of record as may exist to the date hereof.

(3) Lessors warrant that they have no knowledge of violation of law or ordinance
with respect to the use of ownership of the premises.

(4) Lessors are duly organized and in good standing under the laws of the State
of Nevada and has full right, power and capacity to enter into this Agreement
under the terms set forth herein.

(5) Lessee shall have quiet and peaceable possession of the Premises.

(6) Lessors have no knowledge or information indicating that any reclamation
obligations for prior operations on the Premises are unsatisfied.

B. Title Defects, Defense and Protection. Lessee may at any time cause a title
search to be made covering all or any part of the Premises. Lessors shall
provide Lessee with any abstracts and other evidences of title in Lessors
possession or control. If, (1) in the opinion of Lessee, Lessors title to all or
any part of the Premises is defective or less than as represented in Section
4.A; or (2) Lessors title is contested, questioned or limited by any person or
entity and Lessors are unable or unwilling to promptly correct the alleged
defects, Lessee may, without obligation and without waiver of any remedies of
Lessee, attempt to perfect or defend Lessors' title. In that event, Lessors
shall cooperate as reasonably necessary to assist Lessee in its efforts to
perfect or defend Lessors title, time being of the essence. Any improvement or
perfection of title to the Premises shall inure to the benefit of Lessee in the
same manner and to the same extent as if such improvement or perfection had been
made prior to the execution of this Agreement.

C. Lesser Interest. If Lessors' mineral ownership interest in any of the
Premises from which production is made is less than 100%, then the production
royalty payable pursuant to Section 3.B shall be payable only as to the share of
production that is attributable to Lessors actual mineral ownership interest in
the portion of the Premises from which such production is made. Such reductions
in payments shall not waive or eliminate any other rights or remedies Lessee may
have in connection with the extent of Lessors' actual mineral interest in the
Premises. This lesser interest shall not apply to the payments payable pursuant
to Section 3.A.

5. OBLIGATIONS OF LESSEE

A. Outstanding Mineral Interests. Lessee has conducted a mineral review of the
Premises described in Exhibit "A" and is aware Lessors' mineral interest in the
above described lands vary from NONE to 100%. Lessee shall have the obligation,
to determine the outstanding mineral ownership on parcels of interest and obtain
proper authorization to mine from those third parties.

B. Protection from Liens. Lessee shall keep title to the Premises free and clear
from any liens, claims and encumbrances (other than liens for taxes not yet due
and delinquent) arising from its operations hereunder. Lessee shall pay for all
labor performed upon or material furnished to the Premises at the request of
Lessee and shall keep the Premises free and clear from liens of mechanics or
materialmen in connection with services performed and material supplied at
Lessee's request. Lessee shall, however, have the right in good faith to contest
the validity of any lien, claim or liability and shall not be required to remove
any such lien, claim or liability so long as Lessee is contesting the validity
or the amount thereof. The foregoing provisions shall not restrict Lessee from
placing a mortgage, trust deed or other lien upon its interest in the Premises
for financing purposes.

C. Indemnification. Lessee shall protect Lessors against any damages arising out
of Lessee's operations on the Premises and shall indemnify Lessors against
liability resulting from Lessee's operations on the Premises; provided, however,
that any act or omission by Lessors or any agent acting on their behalf, or any
breach of warranty by Lessors, shall not have been a contributing cause to the
event giving rise to any such damages.

D. Taxes and Assessments. Except as provided below, Lessee shall pay promptly
before delinquency all taxes and assessments that may be assessed during the
term of this Agreement upon the Premises resulting from Lessee's activities and
products derived therefrom. However, Lessee shall always have the right to
contest, in the courts or otherwise, either in its own name or in the name of
Lessors, the validity or amount of any such taxes or assessments, or to take
such other steps or proceedings as it may deem necessary to secure a
cancellation, reduction, readjustment or equalization thereof, before it shall
be required to pay such taxes or assessments. Notwithstanding the foregoing,
Lessee shall not permit any part of the Premises to be conveyed and title lost
as the result of nonpayment of such taxes and assessments. Lessee shall provide
Lessors with copies of all receipts evidencing payment of such taxes and
assessments. If Lessors should receive tax bills or claims that are the
responsibility of Lessee, Lessors shall promptly forward such bills or claims to
Lessee for appropriate action. Lessee shall pay the above-referenced taxes that
are assessed from the Effective Date of this Agreement to its date of
termination. Nothing in this paragraph shall be construed to obligate Lessee to
pay that portion of any tax based upon an assessment of improvements or
structures made or placed on the Premises by Lessors. Lessee shall not be liable
for any taxes levied on or measured by Lessors' income or based upon payments
made to Lessors by Lessee under this Agreement.

E.  Compliance with Laws and Regulations. Lessee shall perform all of its
operations on the Premises in compliance with all applicable federal, State and
local laws and regulations pertaining to environmental protection, reclamation
and bonding. Specifically, Lessee shall comply with all permitting and other
regulatory requirements set forth by the U.S. Bureau of Land Management, the
U.S. Forest Service, the U.S. Environmental Protection Agency, the Nevada
Department of Environmental Protection, and any other regulatory authority
having rightful jurisdiction in the conduct of exploration, development and
production operations on the Premises, including without limitation,
requirements applicable to the plugging of drill holes and reclaiming,
re-contouring and re-seeding of drill pads, trenches, access roads and other
disturbances. Lessee shall have no obligations with respect to prior operations
or preexisting conditions on the Premises. The indemnification obligations of
Lessee pursuant to Section 5.B shall specifically be applicable to all of
Lessee's environmental obligations. The obligations of Lessee under this Section
5.D shall survive termination of this Agreement.

F. Cooperation with Lessors' Ranching Operations. In exercising its rights
hereunder, Lessee shall use reasonable efforts to avoid interfering with
Lessors' ranching operations on the Premises and immediate vicinity. Such
efforts shall include, but not be limited to the following:

(1) Location of roads.

(2) Control of dust conditions on the roads which are causing damage to
livestock forage whether such roads are on or off the leased lands but within
the grazing area of use.

(3) Fencing of areas which create a hazard for livestock use together with the
gates and cattle guards as may be requested by Lessors.

(4) Placement of culverts at road crossings and water courses and drainage to
insure natural stream flow and drainage.

(5) Reimbursement to Lessors for the full market value for all livestock killed
or injured by activities of the Lessee.

(6) Placement of livestock waters comparable to those now used by Ellison in the
event existing stockwater sources are damaged or inaccessible to livestock and
such use adversely effects the customary grazing of livestock in the area.

(7) Remediation of any noxious weeds introduced by its activities on the
premises.

G. Lessors' Right to Inspect. During the term of this Agreement Lessee shall
allow Lessors and representatives of Lessors, at their sole risk and expense,
access to the Premises for the purposes of viewing or inspecting Lessee's
operations, at times which, in Lessee's discretion, do not unreasonably
interfere with its operations. Lessors and Lessors' representatives agree to
indemnify, protect, save and hold harmless Lessee and its affiliated and direct
and indirect parent corporations and their respective directors, partners,
officers, employees, agents and corporate affiliates from and against any and
all losses, costs, damages, expenses, attorney fees, claims, demands,
liabilities, suits and actions of every kind and character that may be imposed
upon or incurred by Lessee and its affiliated and direct and indirect parent
corporations and their respective directors, partners, officers, employees,
agents or corporate affiliates on account of, or arising directly or indirectly
from, Lessors rights under this Section 5.G. Lessors acknowledges and agrees
that information obtained pursuant to this Section 5.G shall be subject to the
confidentiality provisions set forth in Section 10 hereof.

H.  Delivery to Data. Upon termination of this Agreement, Lessee shall furnish
Lessors within a reasonable time and without warranty or liability one set of
copies of all available data generated from work by or for Lessee on the
Premises. Such data is to include, but not necessarily be limited to,
geochemical and assay data; sample maps; geologic maps, cross sections and
reports; geophysical maps, cross sections and reports; and drill logs. Lessee
shall authorize and permit Lessors to take possession of any available drill
core, drill cuttings, rejects and pulps derived from the Premises whether or not
such materials are stored on the Premises. Lessee shall have no liability to
Lessors or any third party for lack of availability or poor condition of any
such cores or samples or for any deficiencies in the accuracy, reliability or
completeness of any information and data furnished to Lessors. Lessors shall
assume all risks stemming from reliance upon such data by itself and by third
parties after disclosure thereof by Lessors and shall indemnify and hold
harmless Lessee as to any claims made by such third parties.

I.   No Obligation to Mine. Nothing in this Agreement shall impose any
obligation or covenant, express or implied, upon Lessee to conduct any
exploration, development or mining operations upon the Premises, it being the
intent of the Parties that Lessee shall have sole discretion to determine the
technical and economic feasibility, timing, method, manner and rate of
conducting any such operations. Only the express duties and obligations provided
under this Agreement shall be binding upon Lessee. The nature, manner and extent
of all exploration development, mining and other operations, if any, shall be
matters to be determined solely within the discretion of Lessee.

J. Exploration. Lessee shall expend sums for exploration work within the
premises as follows:

First lease year
Second lease year
Third lease year
Fourth lease year
Fifth lease year
$
150,000.00
450,000.00
1,000,000.00
1,500,000.00
2,000,000.00

At the request of Lessors, Lessee shall provide to Lessors an accounting of the
expenditures made to evidence satisfaction of this obligation.
 
6. TERMINATION

A.  Termination by Lessors. In the event Lessors consider that Lessee has not
complied with any obligation hereunder, Lessors shall notify Lessee setting out
specifically in what respect it is claimed that Lessee has breached this
Agreement. If the alleged breach is not cured within 30 days after written
notice is given of default for failure to make a required cash payment or 60
days after written notice is given of any other default or if Lessee has not
within that time either commenced to cure the alleged breach (other than a
breach for non-payment) and does not thereafter diligently complete such cure,
or challenges the legitimacy of the allegation, Lessors may terminate this
Agreement by delivering to Lessee written notice of such termination; provided,
however, that in the event Lessee challenges the legitimacy of the allegation,
Lessee may give written notice to Lessors within such 30-day or 60-day period
setting forth such fact. If Lessors give written notice within 15 days of
Lessee's notice that Lessors reject Lessee's position then this Agreement shall
not be terminable by Lessors until there is a final judicial determination by a
court of competent jurisdiction that a default exists and shall not be
terminated thereafter if Lessee shall satisfy such judgment within 30 days
following its entry (or if an appeal of such judgment is taken following its
affirmance by the highest court to which such an appeal is made). Failure of
Lessors to give such notice shall constitute agreement by Lessors that Lessee is
not in default. Lessors shall not be entitled to terminate this Agreement for
any default which by its nature is not retroactively curable if Lessee has used
its best efforts to cure such a default to the extent practical or if Lessee has
paid Lessors' damages for such default where damages are an appropriate remedy.
Lessors shall have no right to terminate this Agreement except as expressly
provided in this Section 6.A, and termination of this Agreement shall be the
sole remedy of Lessors. Neither the service of any notice nor the performance of
any acts by Lessee intended to meet any such alleged breach shall be deemed an
admission or presumption that Lessee has failed to perform all of its
obligations under this Agreement. Notwithstanding the foregoing provisions of
this Section 6.A, this Agreement may not be terminated, in whole or in part, by
less than all the individuals or entities included within the term "Lessors."

B. Termination by Lessee. Lessee shall have the right in its sole discretion to
terminate this Agreement atany time with respect to all or any part of the
Premises by giving Lessors written notice of such termination. Partial
termination shall not cause a reduction in the payments prescribed in
Section3.A. Upon such termination, all right, title and interest of Lessee under
this Agreement shall terminate with respect to the Premises affected. Lessee
shall be relieved of all further obligations set forth in this Agreement as to
the Premises affected except those obligations, if any, which have accrued prior
to such termination. Any taxes, assessments and governmental charges for which
Lessee was responsible prior to termination shall be prorated as of the
termination date.

C. Release. Following termination of this Agreement as to all or a part of the
Premises, Lessee shall promptly deliver to Lessors a fully executed release of
this Agreement in recordable form, as to those parts of the Premises that are
affected.

D. Reclamation: Removal of Property. Upon termination of this Agreement, Lessee
shall have a continuing right to enter upon the Premises to complete required
reclamation. Lessee shall within one year after the date of termination remove
from the Premises all of its machinery, buildings, structures, facilities,
equipment and other property of every nature and description erected, placed or
situated thereon except foundations of a permanent nature, supports, track and
pipe placed in shafts, drifts or openings in the Premises. Any property of
Lessee not removed by the end of this one-year period shall become the property
of Lessors; however, Lessee does not warrant the condition or safety of any such
property. Lessee shall have the right to keep a watchman on the Premises during
this one-year period.

7. LIENS

In the event that Lessors fail to promptly pay, when due, taxes, mortgages or
other liens levied against the Premises and payable by Lessors, Lessee shall
have the right (but shall not be obligated) to pay such past due amounts and, if
Lessee does so, Lessee shall be subrogated to all the rights of the holders
thereof and Lessors shall reimburse Lessee for all such payments and for all
related costs and expenses paid or incurred by Lessee (including, without
limitation, related attorney fees) within three months after the same are paid
or incurred by Lessee. Any payments to Lessors under this Agreement may be
credited by reimbursements to Lessee under this Section. The provisions of this
Section shall survive termination of this Agreement.

8. FORCE MAJEURE

Lessee shall not be liable for failure to perform any of its obligations, other
than making payments due under Section 3A, during any period in which
performance is prevented, in whole or inpart, by causes herein termed Force
Majeure. For purposes of this Agreement, the term "Force Majeure" shall include
labor disputes; acts of God; action of the elements, including inclement
weather, floods, slides, cave-ins, sinkholes, earthquakes and drought; laws,
rules, regulations, orders, directives and requests of governmental bodies or
agencies; delay, failure or inability of suppliers or transporters of materials,
parts, supplies, services or equipment or by contractors' or subcontractors'
shortage of, or inability to obtain, labor, transportation, materials,
machinery, equipment, supplies, utilities or services; accidents; breakdown of
equipment, machinery or facilities; judgments or orders of any court or agency;
inability to obtain on reasonably acceptable terms or in reasonably acceptable
time any public or private licenses, permits or other authorizations;
curtailment or suspension of activities to remedy or avoid an actual or alleged,
present or future violation of federal, state or local environmental standard;
acts of war or conditions arising out of or attributable to war, whether
declared or undeclared; riot; civil strife; fire; explosion; or any other cause
whether similar or dissimilar to the foregoing, except for the inability to meet
financial commitments. If Lessee desires to invoke the provisions of this
Section, Lessee shall give notice of the commencement of the circumstances
giving rise to such Force Majeure. The time for discharging Lessee's obligations
with respect to the prevented performance, or the time within which Lessee must
undertake or complete any activity, shall then be extended for the period of
Force Majeure.

9. NOTICES AND METHODS OF MAKING PAYMENTS

A.  Notices. Any required notice or communication shall be in writing and shall
be effective when personally delivered (including delivery by express courier
service) to the following addresses, or when addressed as follows and deposited,
postage prepaid, in the United States mail for certified delivery:

If to Lessors:
 
 
 
 
If to Lessee:
 
Walter Winchell
Winchell Ranch
PO Box 456
Wells, NV 89835
 
Newgold, Inc.
400 Capitol Mall, Suite 900
Sacramento, CA 95814
Vernon Dalton
Dalton Livestock
HC 60, Box 125
Wells, NV 89835
 
 
 

Either party may, by notice to the other given as aforesaid, change its mailing
address for future notices.

B. Any payment required to be made by Lessee to lessors may be made in cash or
by check, in the sole discretion of Lessee, and may be delivered personally or
deposited in the United States mail, postage prepaid and registered or
certified, return receipt requested. All payments shall be allocated as follows:

(1) The initial consideration and each annual rental shall be paid one-half
(1/2) to DALTON LIVESTOCK and one-half (1/2) to WINCHELL RANCH.

(2) Any production royalty shall be paid to each Lessors or credited to each
Lessor in the percentage as set forth in Exhibit "B".

C. Payments After a Transfer of Interest. In the event payments should be made
to other parties because of any transfer of the interest of any of the entities
constituting Lessors, payments tendered to Lessors' designated agent, or to the
party making the transfer if only one party constitutes Lessors, shall
conclusively be deemed payment to the transferee until Lessee receives notice
and evidence satisfactory to it from both the agent (if applicable) and the
transferor that the transferor's interest has been transferred and that payments
should be made to the transferee or the transferee's designated agent.

10. CONFIDENTIALITY

Lessors shall not, without the express written consent of Lessee not to be
unreasonably withheld, disclose any information concerning the terms of this
Agreement (excepting the Memorandum of Mineral Lease Agreement described in
Section 11.F) or operations conducted under this Agreement (except information
and data that is generally available to the public), nor issue any press
releases concerning such information. However, if Lessors contemplates
transferring its interest to a third party, it shall have the right to disclose
such information to that party if it first obtains an agreement in writing from
such third party, satisfactory to Lessee after review in advance, providing that
the third party shall hold confidential the information furnished to it.

11. MISCELLANEOUS 

A. Cooperation by Lessors. Lessors shall execute all documents and otherwise
cooperate with Lessee as needed in connection with the conduct of operations on
the Premises, including the acquisition of governmental permits, post-mining
reclamation approvals, water rights, and other rights and privileges related to
the conduct of operations on the Premises and reclamation thereof. In that
regard, Lessors agrees not to protest, challenge or otherwise oppose any water
right or operational permit filings that Lessee may make to facilitate
operations or proposed operations on or in connection with the Premises if, in
the opinion of Lessors, any such water right or permit filing does not adversely
effect Lessors' livestock operation or water rights presently held by Lessors.

B. Sharing of Data by Lessors. Lessors shall, upon execution of this Agreement,
provide or make available to Lessee any available technical and title
information and drill core and other samples (such as cuttings, pulps, drill
logs, assay results, feasibility reports, etc.) concerning the Premises that are
in Lessors' possession or control. Similarly, Lessors shall, as soon as
possible, provide or make available to Lessee any such information and samples
that Lessors may acquire subsequent to the execution of this Agreement, whether
obtained personally or from third parties..

C. Relationship of the Parties. Nothing contained herein shall be deemed to
constitute
either Party, in its capacity as such, the partner, agent or legal
representative of the other Party, or to create any partnership, mining
partnership or other partnership relationship, or fiduciary relationship between
them, for any purpose whatsoever. Except as expressly provided in this
Agreement, each Party shall have the free, unrestricted and independent right to
engage in and receive the full benefits of any and all business endeavors of any
sort whatsoever outside the Premises or outside the scope of this Agreement,
whether or not competitive with the endeavors contemplated herein, without
consulting the other or inviting or allowing the other therein.

D. Transfers. Lessors and Lessee and their respective successors shall have the
right to assign or otherwise transfer their respective interests in this
Agreement in whole or in part provided that the transferee agrees in writing to
assume all, or a portion of all if applicable, obligations of Lessors or Lessee
hereunder, as the case may be. No such transfer shall be effective against the
non-transferring Party until that Party receives written notice of the transfer
in accordance with Section 9A.

E. Binding Effect. Subject to the provisions of Section 11.D above, the
provisions of this Agreement shall inure to the benefit of and be binding upon
the Parties and their respective
heirs, executors, administrators, personal representatives, beneficiaries,
successors and assigns.

F. Memorandum of Agreement. Upon execution of this Agreement, the Parties shall
also execute a short form of this Agreement (the "Memorandum of Mineral Lease
Agreement") which shall be recorded in the office of the EIko County Recorder.
The execution and recording of the Memorandum of Mineral Lease Agreement shall
not limit, increase or in any manner affect any of the terms of this Agreement,
or any rights, interests or obligations of the Parties.

G. Construction of Agreement. This Agreement and its Exhibit constitute the
entire understanding of the Parties with respect to the Premises, all previous
agreements, promises, representations, negotiations, writings and understandings
between the Parties concerning the Premises being expressly rescinded. Except
for obligations of good faith and fair dealing, there are no terms or
conditions, express or implied, other than herein stated. This Agreement shall
be subject to all valid and applicable provisions of statutory or common law,
rules and regulations. Should this Agreement or any of its provisions or
operations be found to be contrary to any such valid law, rule or regulation,
the latter shall be deemed to control and this Agreement shall be regarded as
modified accordingly. Subject to the preceding sentence, no modification or
alteration of this Agreement shall be effective unless made in writing and
executed by the Parties with the same formality as this Agreement. Wherever the
term "including" is used herein. it shall be deemed to mean "including without
limitation, " and wherever the phrase "shall include" is used herein, it shall
mean "shall include without limitation. "

H. Headings. The headings used herein are for convenience only and shall be
disregarded in construing and enforcing this Agreement.

I. Multiple Counterparts. This Agreement may be executed in multiple
counterparts and all counterparts taken together shall be deemed to constitute
one and the same document

J. Rule Against Perpetuities. The Parties do not intend nor desire for this
Agreement to violate the common law Rule Against Perpetuities or any analogous
statutory provision or any other statutory or common law rule imposing time
limits on the vesting or termination of estates in land. If any provision of
this Agreement does or would violate the Rule Against Perpetuities or any
analogous statutory provision or any other statutory or common law rule imposing
time limits on the vesting or termination of estates in land, then this
Agreement shall not be deemed void or voidable, but shall be interpreted in such
a way as to maintain and carry out the Parties' objectives to the fullest extent
possible by law.

K. Applicable law. This Agreement shall be construed, interpreted and governed
by the laws of the State of Nevada.

L. Attorney Fees. In the event either Party brings any action or proceeding for
damages or equitable relief against the other Party for an alleged breach or
default of any provision of this Agreement to recover monies due or to enforce,
protect or establish any right or remedy of either Party under this Agreement,
the prevailing Party shall be entitled to recover as a part of such action or
proceeding reasonable attorney fees and court costs.

M. Disputes. Disputes or differences between the Parties shall not interrupt
performance of this Agreement or the continuation of operations hereunder. In
the event of any dispute or difference. operations may be continued and payments
may be made hereunder in the same manner as prior to such dispute or difference,
In case of suit, adverse claim. dispute or question as to the ownership of the
Premises or production royalties. or any interest therein. Lessee may, in its
sole discretion, deposit the payment ( or the portion of the payment in dispute.
if less than the whole payment is in dispute) into an escrow account and Lessee
shall not be held in default in payment thereof until such suit, claim. dispute
or question has been finally disposed of.

IN WITNESS WHEREOF the Parties have executed this Agreement on the dates set
forth in the acknowledgments below. but effective as of the Effective Date.

 
LESSORS:
 
DALTON LIVESTOCK, a Nevada partnership
 
By: /s/ D. Vernon Dalton                                              
    D. VERNON DALTON, General Partner
 
WINCHELL RANCH, a Nevada corporation
 
By: /s/ Walter W. Winchell                                          
    WALTER W. WINCHELL, President
 
LESSEE:
 
NEWGOLD, INC., a Delaware corporation
 
By:/s/ Scott Dockter                                                        
    SCOTT DOCKTER, President