*
 
IRON MINING GROUP INC.
295 Madison Ave, 12th Floor
New York, NY 10067
USA

IMG IRON ORE TRADING S.A.
295 Madison Ave, 12th Floor
New York, NY 10067
USA

*, 21 June 2011 / PFU

PURCHASE CONTRACT
401-11-27970-P

This contract is concluded on the 21st day of June 2011 (the “Effective Date”)
between IRON MINING GROUP INC., 295 Madison Ave, 12th Floor, New York, NY 10067,
USA and IMG IRON ORE TRADING S.A., 295 Madison Ave, 12th Floor, New York, NY
10067, USA (together the “Seller”) and * (the “Buyer”).

1.
JOINT AND SEVERAL LIABILITY

Unless expressly provided otherwise in this contract, IRON MINING GROUP INC. and
IMG IRON ORE TRADING S.A. shall be jointly and severally liable for all
obligations and liabilities of the Seller arising under this contract.

The Buyer may take action against, or release or compromise the liability of,
either of IRON MINING GROUP INC. and IMG IRON ORE TRADING S.A. or grant time or
other indulgence, without affecting the liability of the others.

IRON MINING GROUP INC. and IMG IRON ORE TRADING S.A. acknowledge and agree that
the Buyer shall be entitled to rely on any instructions, notices or other
communications of whatsoever nature from either of them in connection with this
contract and that such instructions, notices or other communications shall be
binding on each other as if given by themselves.

IRON MINING GROUP INC. and IMG IRON ORE TRADING S.A. confirm that they are
members of the same group of companies, entities or other organisations, under
common control, and are Affiliates and/or are Subsidiary and Holding Company
(directly or indirectly).

2.
SCOPE OF THE CONTRACT

The Seller agrees to sell iron ore and the Buyer agrees to buy iron ore at the
terms and conditions set out below:
3.
DEFINITIONS

Affiliates means:
 
in relation to any company or corporation, a Subsidiary or Holding Company of
that company or corporation, or of any other Subsidiary of that company or
corporation, or of that Holding Company;
Banking Day and Business Day mean:
 
any day except a Saturday or Sunday on which banks in the city of  New York, New
York, USA are generally open for the conduct of business;
CCIC means:
 
China Certification and Inspection Company of the People’s Republic of China;

 
 
 

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PURCHASE CONTRACT
401-11-27970-P
2
      

 
CIQ means:
 
the Entry-Exit Inspection and Quarantine of the People’s Republic of China;
Fe means:
 
Iron;
Holding Company:
 
has the meaning given to it in the definition of Subsidiary;
INCOTERMS 2010 means:
 
the 2010 edition of the standard trade definitions published by the
International Chamber of Commerce;
Metric ton (MT) means:
 
1 metric ton of 1,000 kilograms or 2,204.62 lbs;
Month of Actual Shipment means:
 
in respect of any shipment of the Ore, the calendar month in which shipment
takes place as evidenced by the bill of lading date;
Ore means:
 
iron ore lumps produced by Mineral BarraNava S.A. de C.V. and International
Business Corporation Jafid S.A. de C.V. in Manzanillo, Mexico having the
specifications listed under clause 6. QUALITY;
Subsidiary means:
 
a company or corporation which, in relation to another company or corporation (a
“Holding Company”): (a) is controlled, directly or indirectly, by the Holding
Company; (b) more than half the issued share capital of which is beneficially
owned, directly or indirectly by the Holding Company; or (c) which is a
Subsidiary of another Subsidiary of the Holding Company; and for this purpose, a
company or corporation shall be treated as being controlled by a Holding Company
if the Holding Company is able to direct its affairs and/or to control the
composition of its board of directors or equivalent body;
TSI CFR China Index for 62% Fe means:
 
The official TSI Iron Ore reference price for Iron Ore Fines 62% Fe, Chinese
Imports, CFR China Port as published in The Steel Index (US$/dry tonne);
US$ means:
 
the lawful currency of the United States of America.

 
4.
CONTRACT TERM

The Contract Term shall run from June 2011 through to and including December
2011.

5.
QUANTITY

300,000 (three hundred thousand) wet metric tons +/- 10% in Buyer’s option of
Ore shall be assigned as follows:

§
A trial lot of 100,000 (one hundred thousand) wet metric tons +/- 10% in Buyer’s
option of Ore (the “Trial Lot”); and

§
Subject to the successful delivery of the Trial Lot, the contract shall be
extended for the remaining 200,000 (two hundred thousand) wet metric tons +/-
10% in Buyer’s option of Ore (the “Optional Tonnage”). For the avoidance of
doubt, the commercial terms under this contract shall be applicable to the
Optional Tonnage.

6.
QUALITY

The Ore shall conform to the following specifications:

A.
Chemical Specifications on a dry basis:

   
Typical
 
Minimum / Maximum
 
Rejection Limit
Fe
 
63%
 
62.0% minimum
 
62.0%
SiO2 
 
4.50%
 
4.5% maximum
 
8.0%
Al2O3
 
2.0%
 
2.0% maximum
 
3.0%
S
 
0.08%
 
0.150% maximum
 
0.150%
P
 
0.08%
 
0.10% maximum
 
0.10%

 
 
 

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PURCHASE CONTRACT
401-11-27970-P
3
      

 
The Ore shall conform to CIQ’s regulations for iron ore imported into China in
effect at the Effective Date of this contract, namely:

Impurity Elements
 
Limit
K2O and Na2O
 
0.25%
Pb
 
0.1%
As
 
0.07%
Zn
 
0.1%
Cu
 
0.2%
TiO2
 
0.1%

The Buyer shall have the right to reject any shipment of the Ore if any of the
analysis results for an impurity element, as determined in accordance with
clause 15. SAMPLING AND ANALYSIS, are above the above-specified limits. If the
Buyer rejects a shipment, then on rejection:

a.
Risk to all rejected Ore, if already passed, shall revert to Seller;

b.
Title to all rejected Ore, if already passed, shall revert to the Seller;

c.
Removal and/or disposal of the rejected Ore shall be for Seller's account;

d.
No invoice shall be raised by the Seller for the rejected Ore or any invoice
raised prior to the rejection shall be cancelled;

e.
The Buyer shall not be obliged to pay the Seller for any rejected Ore. If the
Buyer has paid for a shipment prior to rejecting the shipment, the Seller shall
promptly repay the amount paid in full to the Buyer.

B.
Moisture content (Free moisture loss at 105 degrees centigrade): 8.00% maximum

C.
Physical (size) on a natural basis:

   
Minimum / Maximum
 
Rejection Limit
Above 40 mm
 
5% minimum
 
10%
Below 10 mm
 
5% maximum
 
10%

The Ore shall be able to withstand the voyage safely, upon all customary forms
of transportation, to the destination intended by the Buyer. The Ore shall
conform to all local regulations and the International Maritime Organisation
Code of Safe Practice for Solid Bulk Cargoes prevailing at the time of shipment.

The Seller shall present valid Transportable Moisture Limit and Flow Moisture
Point certificates and moisture certificates, which are representative of the
Ore at the time of loading.

Seller shall ensure that the Ore is covered and protected from the weather at
all times prior to loading.
7.
SHIPMENT

The Ore shall be shipped in lots of 100,000 (one hundred thousand) wet metric
tons +/- 10% in Buyer’s option, or in any other lot size mutually agreed between
Buyer and Seller during the Contract Term (the “Lot”).

The first Lot shall be shipped on or before the 31st of August 2011.

Latest shipment date: 31st December 2011.
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
4
      

 
If the Seller fails to deliver any Lot within 5 (five) calendar days of the
mutually agreed delivery date to Buyer’s warehouse in Manzanillo, Mexico for any
reason unless excused by an event of force majeure, Buyer’s failure to pay
Seller as provided for in this contract, or any action by Buyer which prevents
Seller from performing its obligations under this contract, then Buyer shall
nominate a smaller vessel for quantities of approximately 50,000 (fifty
thousand) to 70,000 (seventy thousand) wet metric tons of the Ore (the “Revised
Lot”). In the event that Seller is unable to deliver a minimum of 50% (fifty
percent) of the Lot or the Revised Lot (the (“Minimum Quantity”), then Seller
shall pay Buyer liquidated damages of US$ 0.25 (US$ zero point two five) per dry
metric ton of the undelivered quantity of the Minimum Quantity per calendar day
from the 31st of August 2011 to the date on which delivery of the undelivered
quantity of such Minimum Quantity is completed. The Buyer shall issue an invoice
to the Seller for such amount and the Seller shall pay this amount within 3
(three) Business Days. Buyer shall have the right to set off this sum from any
sums due from Buyer to Seller under this contract or any other contracts between
the parties.

If Seller fails to load the Minimum Quantity on board the vessel at the port of
loading within the laycan, all dead freight charges actually incurred by Buyer,
if any, shall be paid by Seller to Buyer in accordance with the Buyer’s Charter
Party. The Seller shall pay this amount within 3 (three) Business Days of
receipt of Buyer’s invoice for the dead freight. The Buyer shall have the right
to set off this sum from any sums due from Buyer to Seller under this contract.

8.
PRICE

The price per dry metric ton of the Ore shall be determined as follows:

* Base Price

* Base Price = CFR China Price – Freight – Discount

Where:

CFR China Price means:
 
The average of the TSI CFR China Index for 62% Fe: a) averaged over the 5 (five)
consecutive TSI market days prior to the bill of lading date; and b) averaged
over the 5 (five) consecutive TSI market days after the bill of lading date.
 
Prior to the commencement of the pricing period and upon mutual agreement
between Buyer and Seller, the CFR China Price may be amended to be the TSI CFR
China Index for 62% Fe averaged over Month of Actual Shipment.
     
Freight means:
 
A freight rate expressed in US$ per wet metric ton to be mutually agreed between
Buyer and Seller on a shipment-by-shipment basis in line with competitive
prevailing market rates at the time of shipment for parcels and vessels of a
similar size.
 
The Freight amount per wet metric ton will be converted into US$ per dry metric
ton by deducting the provisional moisture content determined at the port of
loading on the Third Provisional Payment invoice and the final moisture content
determined at the port of discharge on the final invoice.
     
Discount means:
 
12.5% (twelve point five percent) of the CFR China Price.

 
 
 

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PURCHASE CONTRACT
401-11-27970-P
5
      

 
Price Adjustment for Iron Content
 
The * Base Price is based on an iron content of 62.0% (sixty-two point zero
percent) and shall be increased by US$ 5.00 (US$ five) per dry metric ton for
each 1% (one percent) the iron content of the Ore is above 62.0% (sixty-two
point zero percent), fractions pro rata.

If the iron content, as determined by the analysis of the samples taken upon
arrival of the Ore at Buyer’s warehouse in Manzanillo, Mexico, is below 62.0%
(sixty-two point zero percent), Buyer shall have the option to: (a) reject the
Ore; or (b) agree with Seller on a new pricing structure.

Price Adjustment for Impurity Contents

The * Base Price shall be reduced by:

Alumina

US$ 0.10 (US$ zero point one zero) per dry metric ton of the Ore for each 1%
(one percent) by which the Alumina content exceeds 2% (two percent). Buyer shall
have the right to reject the Ore if the Alumina content exceeds 3.0% (three
point zero percent).

Phosphorus

US$ 0.05 (US$ zero point zero five) per dry metric ton of the Ore for each 0.01%
(zero point zero one percent) by which the Phosphorus content exceeds 0.08%
(zero point zero eight percent). Buyer shall have the right to reject the Ore if
the Phosphorus content exceeds 0.10% (zero point one zero percent).

Silica

US$ 0.10 (US$ zero point one zero) per dry metric ton of the Ore for each 1%
(one percent) by which the Silica content exceeds 4.50% (four point five zero
percent). If the Silica content exceeds 8.0% (eight point zero percent) Buyer
and Seller shall agree on a new deduction in line with prevailing market rates
at the time of shipment.

Sulphur

US$ 0.05 (US$ zero point zero five) per dry metric ton of the Ore for each 0.01%
(zero point zero one percent) by which the Sulphur content exceeds 0.08% (zero
point zero eight percent). Buyer shall have the right to reject the Ore if the
Sulphur content exceeds 0.150% (zero point one five zero percent).

All fractions pro rata.

Price Adjustment for Size

The * Base Price shall be reduced by:

Oversize: US$ 0.25 (US$ zero point two five) per dry metric ton of the Ore on a
natural basis for the quantity which is above 40 mm (forty millimetres) in size
in excess of 5% (five percent) for the entire shipment. Buyer shall have the
right to reject the Ore if the size above 40 mm (forty millimetres) exceeds of
10% (ten percent).

Undersize: US$ 0.25 (US$ zero point two five) per dry metric ton of the Ore on a
natural basis for the quantity, which is below 10 mm (ten millimetres) in size
in excess of 5% (five percent) for the entire shipment. Buyer shall have the
right to reject the Ore if the size below 10 mm (ten millimetres) exceeds of 10%
(ten percent).

All fractions pro rata.
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
6
      

  
Price Adjustment for Moisture

If free moisture loss at 105 degrees centigrade exceeds 8.0% (eight point zero
percent) for any shipment of Ore, the Seller shall pay the Buyer the full actual
freight attributable to moisture content over 8.0% (eight point zero percent) in
accordance with the relevant freight debit note covering such shipment in
accordance with the Charter Party.

9.
DELIVERY

* (Incoterms 2010) ST Manzanillo, Mexico.

Seller shall provide at the loading port a safe berth reachable on arrival where
the vessel shall always be able to enter, load, lie and leave afloat.

Laycan

Buyer shall give written notice to Seller of the proposed 15 (fifteen) day
laycan for each shipment at least 10 (ten) calendar days prior to the first day
of the laycan. Seller shall confirm the proposed laycan within 2 (two) Business
Days, otherwise Seller shall be deemed to have accepted such proposed laycan.

Vessel Nomination

Buyer shall nominate the vessel 5 (five) calendar days prior to the vessel’s
Estimated Time of Arrival (“ETA”) at the load port. Buyer shall notify the
Seller of the following details in writing:

a.
The name (or IMO number) of the vessel that the Buyer nominates including the
age, flag, class, deadweight tonnage, beam, length overall and draft of the
vessel;

b.
The estimated date of arrival of the vessel at the port of loading.

The Buyer shall give written notice to the Seller of the progress of the vessel
5 (five) days, 3 (three) days, 2 (two) days and 24 (twenty-four) hours before
the ETA of the vessel at the port of loading. The Buyer shall inform the Seller
of any deviation in excess of 24 (twenty-four) hours to the aforementioned ETA.

The Buyer may substitute any vessel nominated under this contract with another
vessel by giving a notice of substitution to the Seller at any time prior to ETA
of the original vessel. Any delays in loading as a result of this change shall
in no way affect Seller’s obligation under this contract.

Loading Rate

Seller shall guarantee a minimum average load rate of 18,000 (eighteen thousand)
metric tons per day, Sundays and Holidays included (PWWD SHINC).

Loading

The Seller shall load, stow, and trim the vessel to the Master’s satisfaction
and in compliance with the IMO Code of Safe Practice for Solid Bulk Cargoes and
all applicable laws, regulations and standards from time to time issued and
amended by any relevant governmental or other statutory body or authority.

The stevedores shall be appointed by the Seller. The stevedores and anyone
employed by the stevedores shall be under the supervision of the Master. Loss or
damage caused by stevedore act or omission, if any, to be settled directly
between stevedores / Seller and Master / owners.

The Buyer and/or the Master of the vessel shall have the right (exercisable at
their sole and absolute discretion) to refuse to accept for loading all or any
Ore, which, in the opinion of the Buyer of the Master of the vessel, does not
comply with this contract or constitutes any risk to the safety of the vessel.
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
7
      

 
Notice of Readiness and Laytime

After arrival at the port of loading, Notice of Readiness (“NOR”) may be
tendered by the vessel during or outside of office hours at any time of day or
night, Saturdays, Sundays and holidays included, whether in port or not, whether
in berth or not, whether in free pratique or not, whether customs cleared or
not.

If NOR is tendered within the laycan, laytime shall commence at the earlier of:

a.
12 (twelve) hours after NOR has been tendered; or

b.
The actual commencement of loading.

If the vessel arrives before the laycan, laytime shall begin from the
commencement of loading or at 00:00 hours on the first day or the laycan,
whichever occurs first.

If the vessel arrives after the laycan, loading shall take place in rotation and
laytime shall commence on actual commencement of loading. In such event, the
Seller shall use its reasonable endeavours to ensure availability of Ore at the
port of and a ready berth for the Buyer’s vessel.

In the event of weather conditions which, in the opinion of either the Port
Authority or the Master make loading perilous, and all loading operations are
suspended then all such time lost shall not count as laytime unless the vessel
is already on demurrage, and the Master may close hatches in case of heavy rain,
heavy snow, or hail. In case of rain, all holds, which have not been fully
loaded should be closed in order to avoid wetting the Ore.

The following shifting time, stoppages and/or interruptions to loading shall not
count as laytime, but if the vessel is on demurrage, then demurrage will
continue to accrue:

a.
The time taken from shifting from anchor aweigh or pilot on board whichever is
earlier, until vessel is all fast alongside the designated berth and ready in
all respects to load;

b.
Any time lost if loading is interrupted by the vessel in order to conduct
business on behalf of the owner;

c.
Any time lost as a result of breakdown, inefficiency, repairs or any other
inability of the vessel to load the Ore;

d.
Any time lost due to compliance with statutory and class requirements for the
vessel;

e.
Any time lost due to Force Majeure;

The following shifting time, stoppages and/or interruptions to loading shall
count as laytime or time on demurrage:

a.
Any time lost due to the Seller or any governmental authority or port authority
preventing, impeding or prohibiting loading;

b.
Any time lost due to a labour dispute, strike, go slow, work to rule, lock out,
stoppage or restraint of labour involving the Master, officers or crew of the
vessel or tug boats or pilots;

c.
Any time lost for shifting of the vessel as per Sellers or Port Authority
request, for reason, which cannot be attributable to the vessel or the Buyers.

Laytime shall cease counting upon completion of final draft survey and
completion of all necessary documentation related to the cargo loaded required
for the sailing of the vessel.
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
8
      

 
Demurrage and Despatch

The demurrage rate shall be as per the governing Charter Party.

If total laytime used exceeds total laytime allowed, Seller shall pay Buyer
demurrage per day or pro rata for the excess time. If the total laytime used is
less than the total laytime allowed, the Buyer shall pay despatch to the Seller
for the time saved at the rate equal to 50% (fifty percent) of the demurrage
rate per day or pro rata part thereof.

Laytime calculations shall be presented by the Seller within 30 (thirty)
calendar days of the completion of discharge. Demurrage / despatch shall be paid
by the party so owing within 3 (three) Business Days of agreement of laytime
calculations against presentation of the owed party’s invoice.

10.
PAYMENT

All payments shall be made in US$ by telegraphic transfer.

First Provisional Payment

First Provisional Payments shall be made for lots of minimum 5,000 (five
thousand) wet metric tons of the Ore after the Ore has been delivered to the
Buyer’s warehouse at Manzanillo, Mexico.

Buyer shall pay for 65% (sixty-five percent) of the provisional value of each
lot of minimum 5,000 (five thousand) wet metric tons of the Ore, based on the
provisional weight and assays determined by Alfred H. Knight, Blvd Miguel de la
Madrid 402, 1ER Piso, Col. Tapeixtles, Manzanillo, Colima, Mexico C.P. 28876
(“AHK”) upon arrival of the Ore at Buyer’s warehouse, latest 2 (two) Business
Days following Buyer’s receipt of the following original documents:

1.
Seller’s First Provisional Payment invoice;

2.
Certificate of weight issued by AHK as provided for in clause 14. WEIGHING;

3.
Certificate of analysis issued by AHK as provided for in clause 15. SAMPLING AND
ANALYSIS.

Second Provisional Payment

The Second Provisional Payment shall be paid upon completion of delivery of the
full Lot or the Revised Lot to Buyer’s warehouse at Manzanillo, Mexico.

Buyer shall pay for 75% (seventy-five percent) of the provisional value of the
Ore, based on the provisional weight and assays of the Ore determined by AHK
upon arrival of the Ore at Buyer’s warehouse, and less the value of the First
Provisional Payment, latest 2 (two) Business Days following Buyer’s receipt of
the following original documents:

1.
Seller’s Second Provisional Payment invoice;

2.
Certificate of weight issued by AHK as provided for in clause 14. WEIGHING;

3.
Certificate of analysis issued by AHK as provided for in clause 15. SAMPLING AND
ANALYSIS.

Third Provisional Payment

Buyer shall pay for 95% (ninety-five percent) of the provisional value of the
Ore, based on the bill of lading weight and provisional moisture and analysis
determined by AHK during loading of the vessel at the port of loading, and less
the value of the First Provisional Payment and the Second Provisional Payment,
latest 2 (two) Business Days following Buyer’s receipt of the following original
documents:
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
9
      

1.
Seller’s Third Provisional Payment invoice;

2.
Draft survey report and certificate of weight issued by AHK as provided for in
clause 14. WEIGHING;

3.
Certificate of analysis issued by AHK as provided for in clause 15. SAMPLING AND
ANALYSIS;

4.
Certificate of origin issued and legalised by the local Chamber of Commerce.

The 3/3 original full set of clean on board bills of lading shall not be
withheld by Seller.

Final Payment

Final payment shall be made within 3 (three) Banking Days of presentation of
Seller’s final invoice once final prices, weights, moisture and analysis are
known.

If Seller is indebted to Buyer by reason of having received provisional payment
in excess of the amount of the final invoice, this difference shall be re-paid
by Seller to Buyer by telegraphic transfer within 5 (five) Banking Days of
prices, weights, moisture and analysis being known.

Payment Due Dates

If payment falls due on a Saturday or New York bank holiday other than a Monday,
the payment date shall be the first preceding New York banking day. If payment
falls due on a Sunday or a Monday New York bank holiday, the payment date shall
be the first following New York banking day.

Interest for Late Payments

In the event that a payment to be made by either party to the other pursuant to
this contract is not made by the payment due date, the party which is liable for
such payment shall also pay interest on the late payment calculated from the
payment due date to the date on which payment is made in full at the 3-month
London Interbank Offered Rate as published in the Financial Times on the first
Banking Date after the payment due date plus 3% (three percent) per annum. This
clause shall apply to provisional and final payments.

11.
TITLE AND RISK

Title shall pass from Seller to Buyer upon Buyer’s First Provisional Payment.
The Seller warrants good title to the Ore to be delivered hereunder and that the
Ore will be free of any liens, charges, or encumbrances of whatever kind.

Risk in the Ore shall pass from Seller to Buyer when the Ore is delivered on
board the performing vessel at the port of loading.

12.
INSURANCE

Notwithstanding that the Ore is delivered *, insurance shall be taken out and
maintained by the Buyer from the time the Ore is delivered to Buyer’s warehouse
at Manzanillo, Mexico.

13.
TOTAL AND PARTIAL LOSS

Total loss

In the event of a total loss of a shipment after risk passes from Seller to
Buyer as defined in clause 11. TITLE AND RISK, provisional payment shall be made
as set out in clause 10. PAYMENT and final settlement shall be made as soon as
all necessary details are available based on the bill of lading wet weight,
shipped moisture as per Seller’s provisional weight and moisture certificate,
assays as per Seller’s provisional assay certificate and otherwise in accordance
with the terms of this contract. Seller shall assist Buyer to best of its
ability in providing any documentation Buyer may request from time to time in
order to pursue any insurance claim.
 
 
 

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PURCHASE CONTRACT
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10
      

 
Partial loss

In the event of a partial loss of a shipment after risk passes from Seller to
Buyer as defined in clause 11. TITLE AND RISK and before the completion of the
operations described in clause 14. WEIGHING, provisional payments shall be made
as set out in clause 10. PAYMENT. Final settlement shall be made as soon as all
necessary details are available based on the bill of lading wet weight, the
shipped moisture as per Seller’s provisional weight and moisture certificate,
the assays as provided in clause 15. SAMPLING AND ANALYSIS on that part of the
cargo which has been safely delivered and otherwise in accordance with the terms
of this contract. Seller undertakes to assist Buyer to best of its ability in
providing any documentation Buyer may request from time to time in order to
pursue any insurance claim.

14.
WEIGHING

Weight Determination at Buyer’s warehouse in Manzanillo, Mexico

Upon delivery of the Ore to Buyer’s warehouse in Manzanillo, Mexico, Buyer and
Seller shall appoint AHK on a joint basis to weigh the Ore in the usual
technical manner in accordance with standard international practices. AHK shall
issue a certificate of weight for the Ore on a wet basis and shall make a
determination of such weight on a dry basis by deducting the free moisture loss
at 105°C. The costs of these operations shall be shared equally between the
parties. The dry weight thus determined shall be used to calculate the value of
the Ore for Seller’s First Provisional Payment and Second Provisional Payment
invoices.

Weight Determination at the Port of Loading

Buyer and Seller shall appoint AHK on a joint basis to weigh the Ore during
loading operations at the port of loading by draft survey. AHK shall issue a
certificate of weight for the Ore on a wet basis and this weight shall be shown
on the bill of lading. AHK shall make a determination of such weight on a dry
basis by deducting the free moisture loss at 105°C. The costs of these
operations shall be shared equally between the parties. The dry weight thus
determined shall be used to calculate the value of the Ore for Seller’s Third
Provisional Payment invoice.

Weight Determination at the Port of Discharge

The weight of the Ore shall be determined at the port of discharge by draft
survey performed by CIQ / CCIC. CIQ / CCIC shall issue a certificate of weight
for the Ore on a wet basis and shall make a determination of such weight on a
dry basis by deducting the free moisture loss at 105°C. The costs of these
operations shall be for Buyer’s account.

The Seller shall have the right to be represented during these operations at its
own expense. 

The dry weight thus determined by CIQ / CCIC shall be final and binding for
settlement purposes, save for (a) fraud or manifest error;

If no draft survey is performed at the port of discharge then the weight
determined by the surveyor at the Buyer’s warehouse shall be final and binding
for settlement purposes.
 
 
 

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PURCHASE CONTRACT
401-11-27970-P
11
      

15.
SAMPLING AND ANALYSIS

Sampling and Analysis at Buyer’s warehouse in Manzanillo, Mexico
Buyer and Seller shall appoint AHK on a joint basis to analyse each lot of 2,500
(two thousand five hundred) wet metric tons from the samples taken by AHK during
sampling operations at Buyer’s warehouse at Manzanillo, Mexico in the usual
technical manner in accordance with standard international practices. AHK shall
conduct the analysis of chemical and physical composition and for free moisture
loss at 105°C and shall issue a certificate of analysis for the Ore as to the
results of such analysis. The costs of these operations shall be shared equally
between the parties. The results of this analysis shall be used to calculate the
value of the Ore for Seller’s First Provisional Payment and Second Provisional
Payment invoices.

Sampling and Analysis at the Port of Loading

Buyer and Seller shall appoint AHK on a joint basis to take samples of the Ore
during loading operations at the port of loading. The samples shall be analysed
for chemical and physical composition and for free moisture content. AHK shall
issue a certificate of analysis as to the results of such analysis. The costs of
these operations shall be shared equally between the parties. The results of
this analysis shall be used to calculate the value of the Ore for Seller’s Third
Provisional Payment invoice.

Sampling and Analysis at the Port of Discharge

Sampling and analysis at the port of discharge shall be conducted by CIQ / CCIC.
The costs of these operations shall be shared equally between the parties.
Seller shall have the right to be represented during these operations at its own
expense.

CIQ / CCIC shall sample from each shipment and divide the samples as follows:

§
1 (one) set of sealed samples for the Seller;

§
1 (one) set of sealed samples for the Buyer;

§
1 (one) set of sealed samples to be retained by an internationally recognised
supervision company for use by umpire in the event one is appointed.

CIQ / CCIC shall analyse the Buyer’s sample within 60 (sixty) calendar days
after completion of discharge and issue and promptly forward a certificate of
analysis showing the chemical contents, the percentage of free moisture loss at
105°C and the relevant screen analysis. CIQ’s / CCIC’s analysis shall be final
and binding for settlement purposes, save for: a) fraud or manifest error; or b)
or unless challenged in accordance with the procedure described below:

If the iron content of the Ore determined at the port of loading differs from
the iron content of the Ore determined at the port of discharge by more than 1%
(one percent) then Seller and Buyer shall consult to reconcile such difference.
If the parties are unable to reach agreement within 3 (three) Business Days an
umpire analysis shall be conducted. The umpire sample shall be analysed by a
mutually agreed internationally recognised independent laboratory and the iron
content determined by the umpire shall be final and binding for settlement
purposes, save for fraud or manifest error. The cost of the umpire shall be
borne by the party whose results were furthest from the umpire’s reusults. If
the umpire analysis is the exact mean of the analysis of Seller and the analysis
of CIQ / CCIC, then such expenses shall be equally borne by both parties.

16.
FORCE MAJEURE

If either party is prevented, hindered or delayed from performing in whole or in
part any obligation or condition of this contract by reason of force majeure
(the “Affected Party”), the Affected Party shall give written notice to the
other party promptly and in any event within 3 (three) Business Days after
receiving notice of the occurrence of a force majeure event giving, to the
extent reasonably practicable, the details and expected duration of the force
majeure event and the quantity of Ore affected (the “Force Majeure Notice”).
 
 
 

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Provided that a Force Majeure Notice has been given, for so long as the event of
force majeure exists and to the extent that performance is prevented, hindered
or delayed by the event of force majeure, neither party shall be liable to the
other and the Affected Party may suspend performance of its obligations under
this contract (a “Force Majeure Suspension”). During the period of a Force
Majeure Suspension, the other party may suspend the performance of all or a part
of its obligations to the extent that such suspension is commercially
reasonable.

The Affected Party shall use commercially reasonable efforts to avoid or remove
the event of force majeure and shall promptly notify the other party when the
event of force majeure is terminated.

If a Force Majeure Suspension occurs, the time for performance of the affected
obligations and, if applicable, the term of this contract shall be extended for
a period equal to the period of suspension.

If the period of the Force Majeure Suspension is equal to or exceeds 3 (three)
months from the date of the Force Majeure Notice, and so long as the force
majeure event is continuing, either party may, in its sole discretion and by
written notice, terminate this contract or, in the case of multiple deliveries
under this contract, terminate the affected deliveries. Upon termination in
accordance with this clause, neither party shall have any further liability to
the other in respect of this contract or, as the case may be, the terminated
deliveries except for any rights and remedies previously accrued under the
contract, including any payment obligations.

“Force Majeure” means any cause or event reasonably beyond the control of a
party, including, but not limited to fires, earthquakes, lightning, floods,
explosions, storms, adverse weather, landslides and other acts of natural
calamity or acts of god; navigational accidents or maritime peril; vessel damage
or loss; strikes, grievances, actions by or among workers or lock-outs (whether
or not such labour difficulty could be settled by acceding to any demands of any
such labour group of individuals); accidents at, closing of, or restrictions
upon the use of mooring facilities, docks, ports, harbours, railroads or other
navigational or transportation mechanisms; disruption or breakdown of, storage
plants, terminals, machinery or other facilities; acts of war, hostilities
(whether declared or undeclared), civil commotion, arrest and/or detention of
the Ore and/or vessel, embargoes, blockades, terrorism, sabotage or acts of the
public enemy; any act or omission of any governmental authority; good faith
compliance with any order, request or directive of any governmental authority;
or any other cause reasonably beyond the control of a party, whether similar or
dissimilar to those above and whether foreseeable or unforeseeable, which, by
the exercise of due diligence, such party could not have been able to avoid or
overcome. A party’s inability economically to perform its obligations under the
contract shall not constitute an event of force majeure.

This clause shall not apply to any obligations to pay, indemnify or provide
security or to any Ore for which vessel space has been booked, pricing has been
established or payment has been made unless the Buyer has expressly consented in
writing.

17.
SUSPENSION OF QUOTATIONS

The index prices and currency quotations specified under this contract are the
quotations in general use for the pricing of ore.

In the event that any of these price quotations cease to exist or cease to be
published then, upon the request of either party, Seller and Buyer will promptly
consult together with a view to agree on a new pricing basis and on the date for
bringing such basis into effect. The basic objective will be to secure the
continuity of fair pricing.
 
 
 

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18.
DISPUTE RESOLUTION

Any dispute or claim arising out of or relating to this contract, or a breach
thereof (a “Dispute”), shall be decided by final and binding arbitration in New
York before three arbitrators. The arbitration shall be administered by the
American Arbitration Association (the “AAA”) in accordance with the United
States Arbitration Act (the “Act”) and the AAA’s Commercial Arbitration Rules
(the “Rules”). If there is a conflict between the provisions of this clause and
the provisions of the Act or the Rules, the provisions of this clause shall
prevail. If there is a conflict between the Act and the Rules, the provisions of
the Act shall prevail. Either party may notify the other that the Dispute is to
be resolved pursuant to this clause, and in that notice name one arbitrator
selected by it. Within 15 (fifteen) calendar days after the receipt of such
notice, the other party shall select an arbitrator and notify the party which
initiated the arbitration of the name of its arbitrator. Within 15 (fifteen)
calendar days after notice is given of the appointment of the second arbitrator,
the two arbitrators selected shall select a third arbitrator. If any party fails
to appoint an arbitrator or the party-appointed arbitrators fail to appoint the
third arbitrator within the prescribed 15 (fifteen) calendar day period then, on
reasonable notice to the other party, either party may ask the AAA to appoint
such arbitrators within 15 (fifteen) calendar days of the request therefore with
due regard for the selection criteria herein. The arbitrators shall be qualified
by education, experience or training to render a decision upon the issues of the
Dispute.

The arbitrators promptly shall hear and determine (after giving the parties due
notice of hearing and reasonable opportunity to be heard) the issues submitted
to them and shall render their decision within 60 (sixty) calendar days after
they have notified the parties that the arbitration hearings have been closed
or, if oral hearings have been waived, from the date of the AAA’s transmittal of
the parties’ final statements and proofs to the arbitrators. Pending the final
decision of the arbitrators, both parties shall proceed diligently with
performance of all obligations under this contract, including the payment of all
sums not in dispute. Notwithstanding the foregoing the parties reserve the right
to apply to any court of competent jurisdiction for the purpose of enforcing the
provisions of this clause or obtaining security or other provisional relief to
satisfy or effectuate an eventual arbitration award, including without
limitation attachment and injunctive relief.  The commencement of any such
action shall not constitute a waiver of the right to arbitration nor shall it
prejudice in any way the right to proceed to arbitration.

The arbitrators shall render their decision and the reasons therefore in
writing. The decision of no less than a majority of the arbitrators shall be
final and binding upon the parties without appeal to the courts. Judgment may be
rendered upon such decision in a court of competent jurisdiction. The
arbitrators are not empowered to render any award other than monetary damages or
to award damages inconsistent with the provisions of this contract, any
transaction or in excess of compensatory damages and each party waives its
right, if any, to recover any damages in excess of those provided for under this
contract or any transaction. Each party shall bear the costs and expenses of its
own arbitrator, attorneys and witnesses and the parties shall share equally the
costs of the third arbitrator and any hearing expenses. In determining any
matter submitted to arbitration, the arbitrators will apply the law governing
this contract.

19.
CHOICE OF LAW

This contract shall be governed by and construed in accordance with the laws of
the state of New York, United States of America, excluding any conflicts of law
provisions that would require the application of the laws of any other
jurisdiction. Each party hereby consents to such jurisdiction for all purposes
of this contract.
 
The United Nations Convention on Contracts for the International Sale of Goods
(1980) shall not apply to this contract.

20.
TAXES AND TARIFFS

Any taxes, tariffs and duties whether existing or new on the Ore or on
commercial documents relating thereto or on the cargo itself, imposed in the
country of origin shall be borne by the Seller.
 
 
 

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Any taxes, tariffs and duties whether existing or new on the Ore or on
commercial documents relating thereto or on the cargo itself, imposed in the
country of discharge and/or the importing country shall be borne by Buyer.

21.
LICENSES

Seller undertakes that all the necessary export licenses and all other
authorisations required for the Ore have been obtained (and/or will be obtained)
for the entire quantity covered by this contract. Seller furthermore guarantees
that such licenses will remain in force for the full life of this contract.

22.
ASSIGNMENT

Without the prior written consent of the other party, which shall not be
unreasonably withheld, neither party may assign or create a trust or otherwise
transfer its rights or obligations under this contract in full or in part,
except that the Buyer and its assigns may without such consent assign all or a
portion of their rights to receive and obtain payment under this contract in
connection with bank funding arrangements.

23.
THIRD PARTY RIGHTS

Any person who is not a party to this contract may not enforce any term of it.

24.
DEFAULT

If either Party (the “Defaulting Party”) (i) fails to comply with any material
obligation under this contract and such failure remains uncured for 3 (three)
Business Days after written notice thereof; (ii) makes an assignment or
arrangement for the benefit of creditors, (iii) is the subject of a petition or
proceedings which has been filed/commenced under any bankruptcy or similar law
for creditor protection, which is not withdrawn or dismissed within 30 (thirty)
days of filing; (iv) otherwise becomes bankrupt or insolvent (however evidenced)
or commits any act of bankruptcy; (vii) becomes subject to a dissolution or
winding up order or to appointment of an administrator, examiner, receiver,
custodian, liquidator, trustee or other similar official, then the other Party
(the “Non-Defaulting Party”) shall have the right to (a) terminate this contract
upon written notice to the Defaulting Party; and/or (b) suspend performance of
its obligations under this contract until such event of default is cured or the
contract is terminated; and/or (c) withhold and/or offset any payments due to
the Defaulting Party until such event of default is cured.

25.
LIMITATION OF LIABILITY

Neither the Seller nor the Buyer shall be liable, whether in contract or in tort
or otherwise, for indirect, consequential or special damages or losses of
whatsoever nature, however caused.

In the event that the Buyer is found liable, under no circumstances shall that
liability exceed the value of the Ore as at the date of shipment.

26.
INCOTERMS

Insofar as not inconsistent herewith INCOTERMS 2010 (and any later amendments
thereto) shall apply to this contract.
 
 
 

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27.
CHANGE OF CONTROL

In the event of any actual or prospective change in the organisation, control or
management of the Buyer or the Seller, including without limitation, a change to
the majority shareholding or privatisation or equivalent process, subject always
to clause 24. DEFAULT, this contract will not be changed or in any way modified
and shall continue in full force and effect.

28.
NOTICES

No notice or communication with respect to this contract shall be effective
unless it is given in the English language in writing and delivered or sent by
facsimile or electronic mail to the other party at the address set out herein,
or to such other address as each party otherwise notifies the other party.

Notices given by first class mail shall be deemed to have been delivered when
received. Notices sent by facsimile or electronic mail shall be deemed to have
been received upon completion of successful transmission if sent during normal
office hours at the place of receipt. Any facsimile or electronic mail
transmitted outside of normal office hours at the place of receipt shall be
deemed to have been received on the next Business Day.

All notices, requests and other communications hereunder shall be addressed:

If to Seller:
 
IRON MINING GROUP INC.
   
295 Madison Ave, 12th Floor
   
New York, NY 10067, USA
   
Phone:      + 1 646 389 3070
   
Fax:          + 1 310 919 3116
         
IMG IRON ORE TRADING S.A.
   
295 Madison Ave, 12th Floor
   
New York, NY 10067, USA
   
Phone:      + 1 646 389 3070
   
Fax:          + 1 310 919 3116
     
If to Buyer:
  
*

 
29.
SET OFF

Notwithstanding any other provision of this contract, if, at any time, Seller
and/or any of its Affiliates fails to make any payment due to Buyer and/or any
of its Affiliates, whether under this contract or any other contracts between
the parties, Buyer shall be entitled to withhold, set off or deduct any sum
either under this contract or any other contracts then in force; provided that
such deduction shall not exceed the aggregate value of the goods and the sums
due under the contracts. Such withholdings or deduction may be applied by Buyer
automatically in diminution of its claims against Seller in respect of any such
failure to pay or perform any part of a contract.

30.
WAIVERS

No amendment, modification or waiver of any provision of this contract or of any
right, power or remedy shall be effective unless made expressly and in writing.

No waiver of any breach of any provision of this contract shall: (a) be
considered to be a waiver of any subsequent or continuing breach of that
provision; or (b) release, discharge or prejudice the right of the waiving party
to require strict performance by the other party of any other provisions of this
contract.
 
 
 

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31.
SEVERABILITY

The invalidity, illegality or unenforceability of any one or more of the
provisions of this contract shall in no way affect or impair the validity and
enforceability of the other provisions of this contract.

32.
CONFIDENTIALITY

The existence of and terms of this contract shall be held confidential by the
parties save to the extent that such disclosure is made to a party’s banks,
accountants, auditors, legal or other professional advisers, or as may be
required by law, a competent court or a liquidator or administrator of a party,
or the other party has consented in writing to such disclosure.

33.
COUNTERPARTS

This contract may be executed in one or more counterparts but shall not be
effective until each party has executed at least one counterpart. This contract
may be delivered by facsimile or other electronic means. Each counterpart shall
constitute an original of this contract, but all the counterparts shall together
constitute but one and the same instrument.
 
 
 

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34.
ENTIRE AGREEMENT

This contract constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes any previous agreements between the
parties relating to the subject matter. Each party acknowledges and represents
that it has not relied on or been induced to enter into this contract by any
representation, warranty or undertaking other than those expressly set out in
this contract. A party is not liable to the other party for a representation,
warranty or undertaking that is not expressly set out in this contract.

IN WITNESS WHEREOF the parties have executed this document as of the respective
dates specified below with effect from the Effective Date specified on the first
page of this document.

Accepted:

/s/ Garrett K. Krause
 
*
IRON MINING GROUP INC.
 
*
(signed by fully authorised signatory)
 
(signed by fully authorised signatory)
         
Place and Date:  *,……………………….
Place and Date:  Los Angeles,
   

/s/ Garrett K. Krause
   
IMG IRON ORE TRADING S.A.
   
(signed by fully authorised signatory)
         
Place and Date: Los Angeles,
  
 

 
 
 

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