SUBSCRIPTION AGREEMENT

TO:                      APOLLO GOLD CORPORATION (the “Company”)

Linear Gold Corp. (the “Purchaser”) hereby irrevocably subscribes for and agrees
to purchase the number of common shares of the Company (the “Shares”) set out
below, at a price of $0.40 per Share, subject to the following terms and
conditions.  This agreement, which for greater certainty includes and
incorporates the attached schedule, is referred to herein as the “Subscription
Agreement”.  The Purchaser and the Company agree to be bound by the terms and
conditions set forth in the attached “Terms and Conditions of Subscription”
including without limitation the representations, warranties and covenants set
forth in the schedule attached thereto.  The Purchaser and the Company further
agree, without limitation, that the other party and its counsel may rely on the
representations, warranties and covenants contained in such documents.

Issuer:
Apollo Gold Corporation
Issue:  Common Shares

Price Per Share:  $0.40

No. of Shares Purchased:  62,500,000

Total Subscription Price:  $25,000,000

DATED this 9th day of March, 2010.

Name and Address of Purchaser
 
 
Suite 502, 2000 Barrington Street
Linear Gold Corp.
 
Halifax, Nova Scotia  B3J 3K1
(Name of Purchaser - please print)
 
(Purchaser’s Address)
       
by:
President and CEO      
 (Official Capacity or Title - please print)
            /s/ Wade Dawe  
(902) 422-1421
Authorized Signature  
(Telephone Number)
             
(902) 491-4281
(Please print name of individual whose signature appears above if different than
the name of the Purchaser printed above.)  
(Facsimile Number)

 

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Registration Instructions:
 
 
Delivery Instructions:
Name
               
Account reference, if applicable
 
Account reference, if applicable
           
Address
 
Contact Name
         
Address
                                 
Telephone Number
               
Facsimile Number

 
ACCEPTANCE
 
The foregoing is acknowledged, accepted and agreed to this 9th day of March,
2010.

APOLLO GOLD CORPORATION

Per:
/s/ R. David Russell  
Authorized Signing Officer

 
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TERMS AND CONDITIONS OF SUBSCRIPTION
 
1.           Subscription.  The Purchaser hereby tenders to the Company this
Subscription Agreement which, upon acceptance by the Company, will constitute an
irrevocable agreement of the Purchaser to purchase from the Company, and of the
Company to sell to the Purchaser, an aggregate of 62,500,000 Shares at a price
of $0.40 per Share (the “Purchase Price”), all on the terms and subject to the
conditions set out in this Subscription Agreement (the “Private
Placement”).  The Company is a public company listed on the Toronto Stock
Exchange (the “TSX”) and the NYSE Amex Equities Exchange (the “AMEX”).
 
2.           Execution.  At the Execution Time on the Execution Date, the
Company and the Purchaser shall duly execute this Subscription Agreement
pursuant to which the Purchaser shall irrevocably subscribe for, and the Company
shall irrevocably accept this subscription by the Purchaser of, 62,500,000
Shares, subject to the conditions set out in Section 11 hereof (which conditions
may be waived by the Purchaser in its sole discretion) which, for greater
certainty, include: (i) the approval of AMEX of the Private Placement (the “AMEX
Approval”); (ii) the entering into of a Support Agreement and a Lock-Up
Agreement by each of the Lenders; (iii) the receipt by the Purchaser of the
legal opinions referred to in subsections 11(i) and (k) hereof; and (iv) the
receipt by the Purchaser of the undertaking of the Company referred to in
subsection 11(l) (collectively, the “Closing Date Conditions”).  The Closing
shall occur immediately following satisfaction or waiver by the Purchaser of the
last of the Closing Date Conditions to be satisfied or waived, it being
understood that the Closing shall not occur until such time as all of the
Closing Date Conditions have either been satisfied or waived by the Purchaser.
 
3.           Definitions.  In this Subscription Agreement, unless the context
otherwise requires:
 
 
(a)
“affiliate” and “distribution” have the respective meanings ascribed to them in
the Securities Act (Ontario);

 
 
(b)
“Arrangement” means the proposed transaction pursuant to which the businesses of
the Company and the Purchaser will be combined pursuant to a plan of arrangement
to be completed under the Canada Business Corporations Act;

 
 
(c)
“Black Fox Report” means the technical report entitled “NI 43-101 Technical
Report, Apollo Gold Corporation, Black Fox Project, Timmins, Ontario, Canada”
prepared by SRK (US), Inc., AMEC Americas Limited and Samuel Engineering, Inc.
dated April 14, 2008 and filed on the Company’s SEDAR profile on April 14, 2008;

 
 
(d)
“Closing” means the completion of the issue and sale by the Company and the
purchase by the Purchaser of the Shares pursuant to the provisions of this
Subscription Agreement;

 
 
(e)
“Closing Date” means the date on which the last of the Closing Date Conditions
to be satisfied is satisfied or waived by the Purchaser or such other date as
the Company and the Purchaser may agree;

 
 
(f)
“Closing Time” means such time on the Closing Date immediately following the
satisfaction or waiver by the Purchaser of the last of the Closing Date
Conditions to be satisfied or waived or such other time as the Company and the
Purchaser may agree;

 
 
(g)
“Common Shares” means the common shares in the capital of the Company;

 
 
(h)
“Company’s Auditors” means such firm of chartered accountants as the Company may
have appointed or may from time to time appoint as auditors of the Company;

 
 
(i)
“Disclosure Documents” means all publicly available press releases, material
change reports, annual information forms, information circulars, financial
statements and other documents that have been disclosed by the Company to the
public and filed pursuant to applicable Securities Laws or otherwise posted on
SEDAR or EDGAR;

 
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(j)
“Execution Date” means March 9, 2010 or such other date as the Company and the
Purchaser may agree;

 
 
(k)
“Execution Time” means 8:00 a.m. (Toronto time) on the Execution Date or such
other time as the Company and the Purchaser may agree;

 
 
(l)
“Expenses” means the Purchaser’s fees and expenses incurred in connection with
the Private Placement, including GST and disbursements, for which the Company
shall be responsible, to a maximum of $50,000, exclusive of GST and
disbursements;

 
 
(m)
“Lenders” means, collectively, Macquarie Bank Limited and RMB Australia Holdings
Limited, being the lenders to the Company under the Project Facility Agreement;

 
 
(n)
“Lock-Up Agreement” has the meaning ascribed thereto in subsection 11(c) hereof;

 
 
(o)
“Governmental Authority” means and includes, without limitation, any national,
federal government, province, state, municipality or other political subdivision
of any of the foregoing, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
corporation or other entity owned or controlled (through stock or capital
ownership or otherwise) by any of the foregoing;

 
 
(p)
“Huizopa Report” means the technical report entitled “Report on the Geology and
Current Status of the Huizopa Gold-Silver Property, Chihuahua, Mexico” prepared
by John G. Cleary, Consulting Geologist, dated May 20, 2009 and filed on the
Company’s SEDAR profile on August 19, 2009;

 
 
(q)
“Material Adverse Effect” when used in connection with an entity means any
change (including a decision to implement such a change made by the board of
directors or by senior management who believe that confirmation of the decision
by the board of directors is probable), event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, assets
(including intangible assets), liabilities, capitalization, ownership, financial
condition or results of operations of such entity and its parent (if applicable)
or subsidiaries, taken as a whole;

 
 
(r)
“NI 45-102” means National Instrument 45-102 Resale of Securities as such
instrument is in effect at Closing in the Province of Nova Scotia in which the
Purchaser resides;

 
 
(s)
“NI 45-106” means National Instrument 45-106 Prospectus and Registration
Exemptions as such instrument is in effect at Closing in the Province of Nova
Scotia in which the Purchaser resides;

 
 
(t)
“person” means an individual, firm, corporation, syndicate, partnership, trust,
association, unincorporated organization, joint venture, investment club,
government or agency or political subdivision thereof and every other form of
legal or business entity of whatsoever nature or kind;

 
 
(u)
“Personal Information” means any information about a Purchaser disclosed by the
Purchaser in this Subscription Agreement and the Schedules hereto;

 
 
(v)
“Project Facility Agreement” means the agreement among the Company, the Lenders
and RMB Resources Inc. dated February 20, 2009, as amended, relating to the
Company’s credit facility in respect of the Company’s Black Fox project;

 
 
(w)
“Properties” means, collectively, the properties of the Company that are the
subject of the Black Fox Report and the Huizopa Report;

 
 
(x)
“Purchaser” means Linear Gold Corp.;

 
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(y)
“Qualifying Jurisdiction” means the Province of Nova Scotia;

 
 
(z)
“Reporting Provinces” means, collectively, the provinces of British Columbia,
Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince
Edward Island, Newfoundland;

 
 
(aa)
“SEC” means the U.S. Securities and Exchange Commission;

 
 
(bb)
“Securities Commission” means the Nova Scotia Securities Commission;

 
 
(cc)
“Securities Laws” means, unless the context otherwise requires, all applicable
securities laws in the Qualifying Jurisdiction and the United States and the
respective regulations made thereunder, together with applicable published fee
schedules, prescribed forms, policy statements, national or multilateral
instruments, orders, blanket rulings and other regulatory instruments of the
securities regulatory authorities in such jurisdictions;

 
 
(dd)
“Support Agreement” has the meaning ascribed thereto in subsection 11(b) hereof;

 
 
(ee)
“United States” means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia;

 
 
(ff)
“U.S. Person” means a U.S. person as defined in Rule 902(k) of Regulation S
under the U.S. Securities Act; and

 
 
(gg)
“U.S. Securities Act” means the United States Securities Act of 1933, as
amended.

 
4.           Delivery and Payment.  The Purchaser agrees that the following
shall be delivered:
 
 
(a)
to the Company at the Execution Time, a completed and duly signed copy of this
Subscription Agreement together with a duly completed and executed copy of the
Accredited Investor Status Certificate in the form attached hereto as Schedule
A; and

 
 
(b)
at the Closing Time, a certified cheque or bank draft made payable on or before
the Closing Date in same day freely transferable Canadian funds at par in
Toronto, Ontario to “Fogler, Rubinoff LLP, in Trust” representing the aggregate
Purchase Price payable by the Purchaser for the Shares, less the Expenses, or
such other method of payment of the same amount against delivery of the Shares
as the Company may accept.

 
The Purchaser acknowledges and agrees that any document referred to in this
Section 4, when executed and delivered by the Purchaser, will form part of and
will be incorporated into this Subscription Agreement with the same effect as if
each constituted a representation and warranty or covenant of the Purchaser
hereunder in favour of the Company.  The Purchaser consents to the filing of
such documents as may be required to be filed with the Securities Commission,
the SEC, the TSX and AMEX in connection with the transactions contemplated
hereby.

5.           Closing.  The transactions contemplated hereby will be completed at
the offices of Fogler, Rubinoff LLP, counsel to the Company, in Toronto, Ontario
on the Closing Date at the Closing Time or such other date or time as the
Purchaser and the Company may agree upon.  At or prior to the Closing Time, the
Company shall duly and validly deliver to the Purchaser one or more certificates
in definitive form representing the Shares registered as directed by the
Purchaser in writing, against payment at the direction of the Company, in lawful
money of Canada by certified cheque, banker’s draft or wire transfer payable at
par in the City of Toronto, of an amount equal to the aggregate purchase price
for the Shares being issued and sold hereunder, less the Expenses.

 
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6.           Covenants of the Company.  The Company hereby covenants to the
Purchaser and its permitted assigns, and acknowledges that the Purchaser is
relying on such covenants in purchasing the Shares, that the Company shall:
 
 
(a)
allow the Purchaser and its representatives to conduct all due diligence
regarding the Company which the Purchaser may reasonably require to be conducted
prior to the Closing Date.  Without limiting the generality of the foregoing,
the Company shall make available its directors, senior management, audit
committee, auditors, technical advisors, legal counsel and other experts to any
questions the Purchaser may have;

 
(b)
use its best efforts to fulfill, at or before the Closing Date, each of the
conditions set out in Section 11;

 
(c)
duly execute and deliver this Subscription Agreement at the Execution Time, and
comply with and satisfy all terms, conditions and covenants herein contained to
be complied with or satisfied by the Company;

 
(d)
ensure that at the Closing Time the Shares are duly issued as fully paid and
non-assessable shares in the capital of the Company on payment of the purchase
price therefor;

 
(e)
use US$10,000,000 of the net proceeds of the Private Placement to repay
indebtedness under the Project Facility Agreement and use the balance of the net
proceeds for working capital purposes;

 
(f)
subject to compliance with applicable Securities Laws, obtain the prior approval
of the Purchaser as to the content and form of any press release relating to the
Private Placement or the Arrangement;

 
(g)
execute and file with the Securities Commission and the SEC all forms, notices
and certificates relating to the Private Placement required to be filed by it
pursuant to the Securities Laws in the time required by applicable Securities
Laws;

 
(h)
execute and file with the TSX and AMEX all necessary documents and use its
commercially reasonable efforts to ensure that the Shares have been approved for
listing and trading on the TSX and AMEX as of their date of issuance;

 
(i)
ensure that the Shares shall not be subject to a restricted period or statutory
hold period under applicable Securities Laws or to the resale restriction under
the policies of the TSX which extends beyond four months and one day after the
Closing Date; provided, however, that the Shares shall be “restricted
securities” under the U.S. Securities Act;

 
(j)
for a period of five (5) years following the Closing Date, use commercially
reasonable efforts to maintain its status as a “reporting issuer” under the
Securities Laws of at least one jurisdiction in Canada not in default of any
requirement of such Securities Laws, unless during such period the Company is
acquired by another entity through a formal takeover bid, plan of arrangement or
other form of merger, reorganization or business combination;

 
(k)
for a period of five (5) years following the Closing Date, use commercially
reasonable efforts to maintain the listing of the Common Shares on the TSX and
AMEX, or such other recognized stock exchange or quotation system as the
Purchaser may approve, acting reasonably, unless during such period the Company
is acquired by another entity through a formal takeover bid, plan of arrangement
or other form of merger, reorganization or business combination;

 
(l)
in the event the Arrangement is not completed for any reason: (i) upon the
request of the Purchaser, file a registration statement with the SEC in respect
of the Shares to register the resale of the Shares by the Purchaser in the
United States, which registration statement shall be filed as soon as
practicable following the request of the Purchaser and in any event within 30
days of such request; and (ii) use its commercially reasonable best efforts to
resolve all comments of the SEC (if any) and to take all necessary steps in
order to have such registration statement declared effective by the SEC as
expeditiously as possible following the date of such filing;

 
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(m)
during the period between the Execution Time and the Closing Time, not do or
cause, permit or suffer to be done any act or thing which would have the effect
of making untrue any representation or warranty of the Company contained in this
Subscription Agreement, nor fail or omit to do or fail or omit to cause to be
done any act or thing the non-performance of which would have the effect of
making untrue any representation or warranty contained in this Subscription
Agreement; and

 
(n)
during the period between the Execution Time and the Closing Time, not do or
cause, permit or suffer to be done any act or thing which would reasonably be
regarded as being directed towards or likely to prevent or delay the successful
completion of the transactions contemplated in this Subscription Agreement.

7.           Representations and Warranties of the Company.  The Company
represents and warrants to the Purchaser and its permitted assigns, and
acknowledges that the Purchaser is relying upon such representations and
warranties in connection with the execution of this Subscription Agreement and
the completion of the Private Placement, that:

 
(i)
the Company and each of the Subsidiaries (as hereinafter defined) is a
corporation duly incorporated, continued or amalgamated and validly existing
under the laws of the jurisdiction in which it was incorporated, continued or
amalgamated, as the case may be, has all requisite corporate power and authority
and is duly qualified and holds all necessary material permits, licences and
authorizations necessary or required to carry on its business as now conducted
and to own, lease or operate its properties and assets and no steps or
proceedings have been taken by any person, voluntary or otherwise, requiring or
authorizing its dissolution or winding up, and the Company has all requisite
power and authority to enter into this Subscription Agreement and to carry out
its obligations hereunder;

 
(ii)
the Company has no subsidiaries other than the following (the “Subsidiaries” and
each a “Subsidiary”) nor any investment or proposed investment in any person
which, for the financial year ended December 31, 2009 accounted for more than
five percent of the consolidated assets or consolidated revenues of the Company
or would otherwise be material to the business and affairs of the Company on a
consolidated basis:

Subsidiaries
 
Corporate
Jurisdiction
 
Percentage
Ownership
             
Apollo Gold, Inc.
 
Delaware
    100 %              
Mine Development Finance, Inc.
 
Delaware
    100 %              
Minera Sol de ORO S.A. de C.V.
 
Mexico
    100 %              
Minas de Argonautas S de R.L. de C.V.
 
Mexico
    100 %

 
(iii)
the Company owns, directly or indirectly, the percentage of issued and
outstanding shares of each of the Subsidiaries set out in subsection 7(ii)
above, all of the issued and outstanding shares of the Subsidiaries are issued
as fully paid and non-assessable shares, in each case, other than as disclosed
in the Disclosure Documents, free and clear of all mortgages, liens, charges,
pledges, security interests, encumbrances, claims or demands whatsoever and no
person, firm or corporation has any agreement, option, right or privilege
(whether pre-emptive or contractual) capable of becoming an agreement, for the
purchase from the Company or any of the Subsidiaries of any interest in any of
the shares in the capital of any of the Subsidiaries;

 
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(iv)
other than as disclosed in the Disclosure Documents, the Company and each of the
Subsidiaries holds all requisite licences, registrations, qualifications,
permits and consents necessary or appropriate for carrying on its business as
currently carried on and all such licences, registrations, qualifications,
permits and consents are valid and subsisting and in good standing in all
material respects except where the failure to hold such licences, registrations,
qualifications, permits and consents would not have a Material Adverse Effect on
the Company or any Subsidiary.  In particular, without limiting the generality
of the foregoing, neither the Company nor any of the Subsidiaries has received
any notice of proceedings relating to the revocation or adverse modification of
any material mining or exploration permit or licence, nor have any of them
received notice of the revocation or cancellation of, or any intention to revoke
or cancel, any mining claims, groups of claims, exploration rights, concessions
or leases with respect to any of the resource properties described in the
Disclosure Documents where such revocation or cancellation would have a Material
Adverse Effect on the Company or any Subsidiary;

 
(v)
except as disclosed in the Disclosure Documents, (a) the Company and the
Subsidiaries are the absolute legal and beneficial owners of, and have good and
marketable title to, all of the material property or assets thereof as described
in the Disclosure Documents, and no other Mining Rights (as hereinafter defined)
are necessary for the conduct of the business of the Company or any Subsidiary
as currently conducted, (b) none of the Company or any Subsidiary knows of any
claim or the basis for any claim that might or could materially and adversely
affect the right thereof to use, transfer or otherwise exploit such Mining
Rights and, (c) none of the Company or any Subsidiary has any responsibility or
obligation to pay any material commission, royalty, licence fee or similar
payment to any person with respect to the Mining Rights thereof;

 
(vi)
the Company and the Subsidiaries hold either freehold title, mining leases,
mining concessions, mining claims or participating interests or other
conventional property or proprietary interests or rights, recognized in the
jurisdiction in which a particular property is located (collectively, “Mining
Rights”), in respect of the ore bodies and minerals located in properties in
which the Company and the Subsidiaries have an interest as described in the
Disclosure Documents under valid, subsisting and enforceable title documents or
other recognized and enforceable agreements or instruments, sufficient to permit
the Company or the applicable Subsidiary to explore the minerals relating
thereto; all property, leases or claims in which the Company or any Subsidiary
has an interest or right have been validly located and recorded in accordance in
all material respects with all applicable laws and are valid and subsisting
except where the failure to be so would not have a Material Adverse Effect on
the Company or any Subsidiary; the Company and the Subsidiaries have all
necessary surface rights, access rights and other necessary rights and interests
relating to the properties in which the Company and the Subsidiaries have an
interest as described in the Disclosure Documents granting the Company or the
applicable Subsidiary the right and ability to explore for minerals, ore and
metals for development purposes as are appropriate in view of the rights and
interest therein of the Company or the applicable Subsidiary, with only such
exceptions as do not interfere with the use made by the Company or the
applicable Subsidiary of the rights or interest so held; and each of the
proprietary interests or rights and each of the documents, agreements and
instruments and obligations relating thereto referred to above is currently in
good standing in the name of the Company or a Subsidiary except where the
failure to be so would not have a Material Adverse Effect on the Company or any
Subsidiary. The Mining Rights in respect of the Company’s properties, as
disclosed in the Disclosure Documents, constitute a description of all material
Mining Rights held by the Company and the Subsidiaries;

 
(vii)
the Company has made available to the respective authors thereof, prior to the
issuance of the Black Fox Report and the Huizopa Report for the purpose of
preparing the Black Fox Report and the Huizopa Report, respectively, all
information requested, and to the knowledge and belief of the Company, no such
information contains any material misrepresentation. The Company does not have
any knowledge of a material adverse change in any production, cost, price,
reserves or other relevant information provided since the dates that such
information was so provided;

 
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(viii)
to the best of the knowledge of the Company, the Black Fox Report and the
Huizopa Report, as supplemented by the disclosure in respect of such properties
in the Disclosure Documents, accurately and completely set forth all material
facts relating to the properties that are subject thereto. Since the date of
preparation of the the Black Fox Report and the Huizopa Report, respectively,
there has been no change of which the Company is aware that would disaffirm any
aspect of such reports in any material respect;

 
(ix)
the Company is a reporting issuer under the Securities Laws of each of the
Reporting Provinces, is not in default of any requirement of such Securities
Laws and the Company is not included on a list of defaulting reporting issuers
maintained by the securities regulatory authorities of such provinces;

 
(x)
at the Execution Time, all consents, approvals, permits, authorizations or
filings as may be required to be made or obtained by the Company under the
Securities Laws necessary for the execution and delivery of this Subscription
Agreement, and the consummation of the transactions contemplated herein, will
have been made or obtained, as applicable (other than the AMEX Approval);

 
(xi)
at the Closing Time, the AMEX Approval will have been obtained and other than
the filing of reports required under applicable Securities Laws within the
prescribed time periods and the filing of standard documents with the SEC, TSX
and AMEX, which documents shall be filed as soon as practicable after the
Closing Date, no consents, approvals, permits, authorizations or filings will be
required by the Company under the Securities Laws necessary for the consummation
of the transactions contemplated herein;

 
(xii)
the Shares will not be subject to a restricted period or to a statutory hold
period under the Securities Laws in Canada or to any resale restriction under
the policies of the TSX which extends beyond four months and one day after the
Closing Date;

 
(xiii)
the execution and delivery of this Subscription Agreement, the performance by
the Company of its obligations hereunder, the issue and sale of the Shares
hereunder and the consummation of the transactions contemplated in this
Subscription Agreement, do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, (whether after notice or lapse of time or both), (A) any statute, rule or
regulation applicable to the Company including, without limitation, the
Securities Laws, the policies, rules and regulations of the TSX and, subject to
the receipt of the AMEX Approval, the policies, rules and regulations of the
AMEX; (B) the constating documents, by-laws or resolutions of the Company which
are in effect at the date hereof; (C) any mortgage, note, indenture, contract,
agreement, joint venture, partnership, instrument, lease or other document to
which the Company is a party or by which it is bound; or (D) any judgment,
decree or order binding the Company, any Subsidiary or the property or assets
thereof;

 
(xiv)
the Company is in compliance in all material respects with its timely and
continuous disclosure obligations under the Securities Laws and the rules and
regulations of the TSX and AMEX and, without limiting the generality of the
foregoing, there has not occurred any material adverse change, financial or
otherwise, in the assets, liabilities (contingent or otherwise), business,
financial condition, capital or prospects of the Company and the Subsidiaries
(taken as a whole) since September 30, 2009, which has not been publicly
disclosed on a non-confidential basis and all the statements set forth in the
Disclosure Documents were true, correct and complete in all material respects
and did not contain any misrepresentation as of the date of such statements and
the Company has not filed any confidential material change reports since the
date of such statements which remains confidential as at the date hereof;

 
(xv)
except as disclosed in the Disclosure Documents, neither the Company nor any
Subsidiary has approved, or has entered into any agreement in respect of, or has
any knowledge of:

 
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(A)
the purchase of any material property or assets or any interest therein or the
sale, transfer or other disposition of any material property or assets or any
interest therein currently owned, directly or indirectly, by the Company or any
Subsidiary whether by asset sale, transfer of shares or otherwise;

 
 
(B)
the change in control (by sale, transfer or other disposition of shares or sale,
transfer, lease or other disposition of all or substantially all of the property
and assets of the Company) of the Company or any Subsidiary; or

 
 
(C)
a proposed or planned disposition of shares by any shareholder who owns,
directly or indirectly, 10% or more of the outstanding shares of the Company or
any Subsidiary;

 
(xvi)
the audited consolidated financial statements of the Company as at and for the
year ended December 31, 2008 (the “Audited Financial Statements”) and
consolidated comparative financial statements for the nine months ended
September 30, 2009 have been prepared in accordance with generally accepted
accounting principles in Canada and present fully, fairly and correctly in all
material respects, the consolidated financial condition of the Company as at the
date thereof and the results of the operations and the changes in the financial
position of the Company for the periods then ended and contain and reflect
adequate provisions or allowance for all reasonably anticipated liabilities,
expenses and losses of the Company and, except as disclosed in the Disclosure
Documents, there has been no change in accounting policies or practices of the
Company since September 30, 2009;

 
(xvii)
all taxes (including income tax, capital tax, payroll taxes, employer health
tax, workers’ compensation payments, property taxes, custom and land transfer
taxes), duties, royalties, levies, imposts, assessments, deductions, charges or
withholdings and all liabilities with respect thereto including any penalty and
interest payable with respect thereto (collectively, “Taxes”) due and payable by
the Company and the Subsidiaries have been paid, except where the failure to pay
such taxes would not constitute an adverse material fact in respect of the
Company or any Subsidiary or have a Material Adverse Effect on the Company or
any Subsidiary.  All tax returns, declarations, remittances and filings required
to be filed by the Company and the Subsidiaries have been filed with all
appropriate Governmental Authorities and all such returns, declarations,
remittances and filings are complete and accurate and no material fact or facts
have been omitted therefrom which would make any of them misleading, except
where the failure to file such documents would not constitute an adverse
material fact in respect of the Company or have a Material Adverse Effect on the
Company or any Subsidiary.  To the best of the knowledge of the Company, no
examination of any tax return of the Company or any Subsidiary is currently in
progress and there are no issues or disputes outstanding with any Governmental
Authority respecting any taxes that have been paid, or may be payable, by the
Company or any Subsidiary, in any case, except where such examinations, issues
or disputes would not constitute an adverse material fact in respect of the
Company or have a Material Adverse Effect on the Company or any Subsidiary;

(xviii)
the Company’s Auditors who audited the Audited Financial Statements and who
provided their audit report thereon are independent public accountants as
required under applicable Securities Laws and there has never been a reportable
event (within the meaning of National Instrument 51-102 Continuous Disclosure
Obligations) between the Company and the Company’s Auditors or, to the knowledge
of the Company, any former auditors of the Company;

 
(xix)
other than: (i) 11,594,371 Common Shares issuable pursuant to outstanding stock
options of the Company and an additional 100,000 Common Shares issuable pursuant
to stock options of the Company to be granted after public announcement of the
Arrangement; (ii) 104,138,178 Common Shares issuable pursuant to outstanding
common share purchase warrants of the Company; (iii) 800,000 Common Shares
issuable to RAB Special Situations (Master) Fund Limited (“RAB”) pursuant to the
Third Amending Agreement dated February 26, 2010 between the Company and RAB;
(iv) 1,592,733 Common Shares issuable to Duane Duffy, Glenn Duffy, Luke Garvey
and James Ober pursuant to a letter of intent dated February 22, 2010 among the
Company, Calais Resources, Inc.; (v) 8,580,000 Common Shares issuable pursuant
to convertible debentures and (vi) 2,448,390 Common Shares issuable pursuant to
agents’ compensation units, and the foregoing persons, no person, firm or
corporation has or will have at the effective date of the Arrangement any
agreement or option, or right or privilege (whether pre-emptive or contractual)
capable of becoming an agreement or option, for the purchase of any unissued
shares or securities of the Company or of any of the Subsidiaries;

 
– 10 –

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(xx)
to the Company’s knowledge, there is no agreement in force or effect which in
any manner affects or will affect the voting or control of any of the securities
of the Company or of the Subsidiaries;

 
(xxi)
except as disclosed in the Disclosure Documents, none of the officers or
employees of the Company or of any Subsidiary, any person who owns, directly or
indirectly, more than 10% of any class of securities of the Company or
securities of any person exchangeable for more than 10% of any class of
securities of the Company, or any associate or affiliate of any of the
foregoing, had or has any material interest, direct or indirect, in any
transaction or any proposed transaction (including, without limitation, any loan
made to or by any such person) with the  Company or any of the Subsidiaries
which, as the case may be, materially affects, is material to or will materially
affect the Company on a consolidated basis;

 
(xxii)
except as disclosed in the Disclosure Documents, no legal or governmental
proceedings or inquiries are pending to which the Company or any Subsidiary is a
party or to which its property is subject that would result in the revocation or
modification of any material certificate, authority, permit or license necessary
to conduct the business now owned or operated by the Company and the
Subsidiaries which, if the subject of an unfavourable decision, ruling or
finding would have a Material Adverse Effect on the Company or any Subsidiary
and, to the knowledge of the Company, no such legal or governmental proceedings
or inquiries have been threatened against or are contemplated with respect to
the Company or with respect to its properties;

(xxiii)
except as disclosed in the Disclosure Documents, there are no actions, suits,
judgments, investigations or proceedings of any kind whatsoever outstanding,
pending or, to the best of the Company’s knowledge, threatened against or
affecting the Company, the Subsidiaries, or their respective directors, officers
or employees, at law or in equity or before or by any commission, board, bureau
or agency of any kind whatsoever and, to the best of the Company’s knowledge,
there is no basis therefor and neither the Company nor any Subsidiary is subject
to any judgment, order, writ, injunction, decree, award, rule, policy or
regulation of any governmental authority, which, either separately or in the
aggregate, may have a Material Adverse Effect on the Company or any Subsidiary
or that would adversely affect the ability of the Company to perform its
obligations under this Subscription Agreement;

(xxiv)
no approval, authorization, consent or other order of, and no filing,
registration or recording with, any Governmental Authority or other person is
required of the Company in connection with the execution and delivery of or with
the performance by the Company of this Subscription Agreement except in
compliance with the Securities Laws with regard to the distribution of the
Shares in the Qualifying Jurisdiction and other routine filings with the SEC;

 
(xxv)
none of the Company nor any of the Subsidiaries is in violation of its
constating documents or in default of the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, trust deed, mortgage, loan agreement, note, lease or other agreement
or instrument to which it is a party or by which it or its property may be
bound;

(xxvi)
the Company and each of the Subsidiaries owns or has the right to use under
licence, sub-licence or otherwise all material intellectual property used by the
Company and the Subsidiaries in its business, including copyrights, industrial
designs, trade marks, trade secrets, know how and proprietary rights, free and
clear of any and all encumbrances;

 
– 11 –

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(xxvii)
except as disclosed in the Disclosure Documents, any and all of the agreements
and other documents and instruments pursuant to which the Company and the
Subsidiaries hold the property and assets thereof (including any interest in, or
right to earn an interest in, any property) are valid and subsisting agreements,
documents or instruments in full force and effect, enforceable in accordance
with terms thereof, neither the Company nor any Subsidiary is in default of any
of the material provisions of any such agreements, documents or instruments nor
has any such default been alleged and such properties and assets are in good
standing under the applicable statutes and regulations of the jurisdictions in
which they are situated, all material leases, licences and other agreements
pursuant to which the Company or any Subsidiary derives the interests thereof in
such property and assets are in good standing and there has been no material
default under any such lease, licence or agreement.  None of the properties (or
any interest in, or right to earn an interest in, any property) of the Company
or any Subsidiary is subject to any right of first refusal or purchase or
acquisition right which is not disclosed in the Disclosure Documents;

(xxviii)
subject to the receipt by the Company of the AMEX Approval, all actions required
to be taken by or on behalf of the Company, including the passing of all
requisite resolutions of its directors, necessary to carry out its obligations
under this Subscription Agreement, have been or will, by the Execution Time, be
completed;

(xxix)
at the Execution Time, this Subscription Agreement shall have been duly
authorized and executed and delivered by the Company and upon such execution and
delivery each shall constitute a valid and binding obligation of the Company and
shall be enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting the rights of creditors
generally and except as limited by the application of equitable principles when
equitable remedies are sought, and by the fact that rights to indemnity,
contribution and waiver, and the ability to sever unenforceable terms, may be
limited by applicable law;

 
(xxx)
at the Closing Time, all necessary corporate action will have been taken by the
Company to allot and authorize the issuance of the Shares as fully paid and
non-assessable shares of the Company;

(xxxi)
the Common Shares are listed and posted for trading on the TSX and all necessary
notices and filings will have been made before the Execution Time with and all
necessary consents, approvals and authorizations obtained by the Company from
the TSX to ensure that, subject to fulfilling the conditions contained in a
letter from the TSX dated March 5, 2010 in connection with the conditional
acceptance of the Private Placement, the Shares will be listed and posted for
trading on the TSX upon their issuance;

(xxxii)
the Common Shares are listed and posted for trading on the AMEX and all
necessary notices and filings will have been made before the Execution Time
with the AMEX to ensure that, subject to receipt of the AMEX Approval, the
Shares will be listed and posted for trading on the AMEX upon their issuance;

(xxxiii)
no order, ruling or determination having the effect of suspending the sale or
ceasing the trading in any securities of the Company (including the Shares) has
been issued by any regulatory authority and is continuing in effect and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are pending, contemplated or threatened by any regulatory authority;

(xxxiv)
the authorized capital of the Company consists of an unlimited number of Common
Shares, of which, as at the close of business on March 5, 2010, 273,081,000
Common Shares were issued and outstanding as fully paid and non-assessable
shares of the Company;

(xxxv)
other than as set out in the Disclosure Documents, neither the Company nor any
of the Subsidiaries has made any loans to or guaranteed the obligations of any
person;

 
– 12 –

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(xxxvi)
with respect to each premises of the Company or the Subsidiaries which is
material to the Company and the Subsidiaries on a consolidated basis and which
the Company or any of the Subsidiaries occupies as tenant (the “Leased
Premises”), the Company or such Subsidiary occupies the Leased Premises and has
the exclusive right to occupy and use the Leased Premises and each of the leases
pursuant to which the Company and/or the Subsidiaries occupies the Leased
Premises is in good standing and in full force and effect;

(xxxvii)
the assets of the Company and the Subsidiaries and their business and operations
are insured against loss or damage with responsible insurers on a basis
consistent with insurance obtained by reasonably prudent participants in
comparable businesses, and such coverage is in full force and effect, and the
Company has not failed to promptly give any notice of any material claim
thereunder;

(xxxviii)
the Company and each of the Subsidiaries is in compliance with all laws
respecting employment and employment practices, terms and conditions of
employment, pay equity and wages, except where non-compliance with such laws
could not reasonably be expected to have a Material Adverse Effect on the
Company or any Subsidiary, and has not and is not engaged in any unfair labour
practice;

(xxxix)
there has not been in the last two years and there is not currently any labour
disruption, grievance, arbitration proceeding or other conflict which could
reasonably be expected to have a Material Adverse Effect on the Company’s or any
of the Subsidiaries’ business, taken as a whole, and the Company and each of the
Subsidiaries is in compliance with all provisions of all federal, provincial,
local and foreign laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and hours, except where
non-compliance with any such provisions would not have a Material Adverse Effect
on the Company or any of the Subsidiaries;

 
(xl)
no union has been accredited or otherwise designated to represent any employees
of the Company or any of the Subsidiaries and, to the knowledge of the Company,
no accreditation request or other representation question is pending with
respect to the employees of the Company or any of the Subsidiaries and no
collective agreement or collective bargaining agreement or modification thereof
has expired or is in effect in any of the Company’s facilities and none is
currently being negotiated by the Company or any Subsidiary;

 
(xli)
the Disclosure Documents disclose, to the extent required by applicable
Securities Laws, each material plan for retirement, bonus, stock purchase,
profit sharing, stock option, deferred compensation, severance or termination
pay, insurance, medical, hospital, dental, vision care, drug, sick leave,
disability, salary continuation, legal benefits, unemployment benefits,
vacation, incentive or otherwise contributed to, or required to be contributed
to, by the Company for the benefit of any current or former director, officer,
employee or consultant of the Company (the “Employee Plans”), each of which has
been maintained in all material respects with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Employee Plans;

 
(xlii)
the Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance
with management’s general or specific authorization, and (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with Canadian generally accepted accounting principles and to
maintain accountability for assets;

 
(xliii)
except as disclosed in the Disclosure Documents, none of the directors, officers
or employees of the Company or any associate or affiliate of any of the
foregoing had or has any material interest, direct or indirect, in any material
transaction or any proposed material transaction with the Company or its
Subsidiaries which materially affects, is material to or will materially affect
the Company or any Subsidiary;

 
– 13 –

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(xliv)
CIBC Mellon Trust Company, at its office in the City of Toronto, Ontario has
been duly appointed as registrar and transfer agent for the Common Shares;

 
(xlv)
the minute books and records of the Company and the Subsidiaries made available
to the Purchaser and its counsel in connection with their due diligence
investigation of the Company for the periods from January 2002 to the date
hereof are all of the minute books and records of the Company and the
Subsidiaries and contain copies of all material proceedings (or certified copies
thereof or drafts thereof pending approval) of the shareholders, the directors
and all committees of directors of the Company and the Subsidiaries to the date
of review of such corporate records and minute books and there have been no
other meetings, resolutions or proceedings of the shareholders, directors or any
committees of the directors of the Company or any of its Subsidiaries to the
date hereof not reflected in such minute books and other records;

 
(xlvi)
neither the Company nor any of its Subsidiaries has been in violation of, in
connection with the ownership, use, maintenance or operation of its property and
assets, including the Leased Premises, any applicable federal, provincial,
state, municipal or local laws, by-laws, regulations, orders, policies, permits,
licences, certificates or approvals having the force of law, domestic or
foreign, relating to environmental, health or safety matters (collectively the
“Environmental Laws”) which would have a Material Adverse Effect on the Company
or any of its Subsidiaries;

(xlvii)
without limiting the generality of the immediately preceding paragraph, the
Company and each of its Subsidiaries do not have any knowledge of, and have not
received any notice of, any material claim, judicial or administrative
proceeding, pending or threatened against, or which may affect, either the
Company or any Subsidiary or any of the property, assets or operations thereof,
relating to, or alleging any violation of any Environmental Laws, the Company is
not aware of any facts which could give rise to any such claim or judicial or
administrative proceeding and neither the Company, nor any Subsidiary nor any of
the property, assets or operations thereof is the subject of any investigation,
evaluation, audit or review by any Governmental Authority to determine whether
any violation of any Environmental Laws has occurred or is occurring or whether
any remedial action is needed in connection with a release of any contaminant
into the environment, except for compliance investigations conducted in the
normal course by any Governmental Authority, in each case which could reasonably
be expected to have a Material Adverse Effect on the Company or any of its
Subsidiaries;

(xlviii)
there are no orders, rulings or directives issued, pending or, to the best of
the Company’s knowledge reasonably held, being based on due direction and
enquiry of its personnel and advisors, threatened against the Company or any of
its Subsidiaries under or pursuant to any Environmental Laws requiring any work,
repairs, construction or capital expenditures with respect to the property or
assets of the Company or any of its Subsidiaries (including the Leased Premises)
which would have a Material Adverse Effect on the Company or any of its
Subsidiaries;

 
(xlix)
the Company and the Subsidiaries are not subject to any contingent or other
liability relating to the restoration or rehabilitation of land, water or any
other part of the environment (except for those derived from normal exploration
activities) or non-compliance with Environmental Laws which could reasonably be
expected to have a Material Adverse Effect on the Company or any of the
Subsidiaries;

 
(l)
all information which has been prepared by the Company and the Subsidiaries
relating to the Company and the Subsidiaries and the business, property and
liabilities thereof and either publicly disclosed, provided or made available to
the Purchaser, including all financial, marketing, sales and operational
information provided to the Purchaser is, as of the date of such information,
true and correct in all material respects, taken as a whole, and no fact or
facts have been omitted therefrom which would make such information materially
misleading;

 
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(li)
the Company is not aware of any circumstances presently existing under which
liability is or could reasonably be expected to be incurred under Part XXIII –
Civil Liability for Secondary Market Disclosure of the Securities Act (Ontario);
and

 
(lii)
there is no person acting or purporting to act at the request  of or on behalf
of the Company that is entitled to any brokerage or finder’s fee or other
compensation in connection with the transactions contemplated by this
Subscription Agreement.

 
8.           Purchaser’s Representations and Warranties.  The Purchaser
represents and warrants to the Company as follows and acknowledges that the
Company is relying on such representations and warranties in connection with the
transactions contemplated in this Subscription Agreement:
 
 
(i)
the Purchaser is duly incorporated and is a valid and existing corporation, has
the necessary corporate capacity and authority to execute and deliver this
Subscription Agreement, to subscribe for the Shares and to observe and perform
its covenants and obligations hereunder and has taken all necessary corporate
action in respect thereof and upon acceptance by the Company, this Subscription
Agreement will constitute a legal, valid and binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms and will not
result in a violation of or create a state of facts which, after notice, lapse
of time or both, would constitute a default or breach of any of the Purchaser’s
constating documents, by-laws or authorizing resolutions (if applicable), any
agreement to which the Purchaser is a party or by which the Purchaser is bound
or any law applicable to the Purchaser or any judgment, decree, order, statute,
rule or regulation applicable to the Purchaser;

 
 
(ii)
the Purchaser was offered the Shares in, and is a resident of, the Qualifying
Jurisdiction, intends that the Securities Laws of that jurisdiction do and shall
govern any transaction involving the Shares subscribed for by the Purchaser and
that such addresses of the Purchaser as set out on the face page of this
Subscription Agreement was not created and are not used solely for the purpose
of acquiring the Shares;

 
 
(iii)
the Purchaser has properly completed, executed and delivered to the Company the
certificate (dated as of the date hereof) set forth in Schedule A attached
hereto and the information contained therein is true and correct as of the
Execution Time and the representations, warranties and covenants contained in
the schedule attached hereto will be true and correct as at the Closing Time;

 
 
(iv)
as of the Execution Time, the Purchaser will not beneficially own any Common
Shares or securities convertible into Common Shares;

 
 
(v)
the Purchaser is purchasing the Shares as principal (as defined in all
applicable Securities Laws) for its own account, and not for the benefit of any
other person;

 
 
(vi)
the Purchaser is purchasing the Shares for investment only and not with a view
to resale or distribution of all or any of the Shares;

 
 
(vii)
there is no person acting or purporting to act in connection with the
transactions contemplated herein who is entitled to any brokerage or finder’s
fee and if any person establishes a claim that any fee or other compensation is
payable in connection with this subscription for the Shares;

 
 
(viii)
none of the funds being used to purchase the Shares are to the Purchaser’s
knowledge proceeds obtained or derived directly or indirectly as a result of
illegal activities.  The funds being used to purchase the Shares which will be
advanced by the Purchaser to the Escrow Agent hereunder will not represent
proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering)
Act (Canada) (the “PCMLA”) and the Purchaser acknowledges that the Company may
in the future be required by law to disclose the Purchaser’s and other
information relating to this Subscription Agreement and the Purchaser's
subscription hereunder, on a confidential basis, pursuant to the PCMLA. To the
best of its knowledge (i) none of the funds to be provided by the Purchaser are
being tendered on behalf of a person or entity who has not been identified to
the Purchaser, and (ii) it shall promptly notify the Company if the Purchaser
discovers that any of such representations cease to be true, and to provide the
Company with appropriate information in connection therewith;

 
 
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(ix)
the Purchaser was not created or being used solely to permit purchases of or to
hold securities without a prospectus in reliance on a prospectus exemption;

 
 
(x)
the Purchaser acknowledges that this Subscription Agreement requires the
Purchaser to provide certain Personal Information to the Company.  Such
information is being collected and will be used by the Company for the purposes
of completing the proposed Private Placement which includes, without limitation,
determining the Purchaser’s eligibility to purchase the Shares under applicable
Securities Laws and completing filings required by the SEC, the Securities
Commission and/or the TSX or AMEX. The Purchaser agrees that the Purchaser’s
Personal Information may be disclosed by the Company to: (a) stock exchanges and
applicable securities regulatory authorities, (b) the Company’s registrar and
transfer agent, and (c) any of the other parties involved in the proposed
Private Placement, including legal counsel, and may be included in record books
in connection with the Private Placement.  By executing this Subscription
Agreement, the Purchaser consents to the foregoing collection, use and
disclosure of the Purchaser’s Personal Information. The Purchaser also consents
to the filing of copies or originals of any of the Purchaser’s documents
described in Section 4 hereof as may be required to be filed with any stock
exchange or securities regulatory authority in connection with the transactions
contemplated hereby;

 
 
(xi)
the Purchaser is not a “U.S. Person” (as that term is defined by Regulation S
under the U.S. Securities Act, which definition includes, but is not limited to,
an individual resident in the United States, an estate or trust of which any
executor or administrator or trustee, respectively, is a U.S. Person and any
partnership or company organized or incorporated under the laws of the United
States (or any State thereof)) and is not acquiring the Shares for the account
or benefit of a U.S. Person or a person in the United States;

 
 
(xii)
the Shares have not been offered to the Purchaser in the United States, and the
individuals making the order to purchase the Shares and executing and delivering
this Subscription Agreement on behalf of the Purchaser were not in the United
States when the order was placed and this Subscription Agreement was executed
and delivered;

 
 
(xiii)
the Purchaser undertakes and agrees that it will not offer or sell the Shares in
the United States unless such shares are registered under the U.S. Securities
Act and the securities laws of all applicable states of the United States or
another exemption from such registration requirements is available, and further
that it will not resell the Shares except in accordance with the provisions of
applicable securities legislation, regulations, rules, policies and orders and
stock exchange rules;

 
 
(xiv)
the Purchaser will not engage in hedging transactions with regard to the Shares
unless conducted in compliance with the U.S. Securities Act; and

 
 
(xv)
the Purchaser acknowledges that the Company and its transfer agent will refuse
to register any transfer of any of the Shares not made in accordance with the
provisions of Regulation S of the U.S. Securities Act, pursuant to an available
exemption from registration under the U.S. Securities Act or under an effective
registration statement under the U.S. Securities Act.

 
9.           Purchaser’s Acknowledgements.  The Purchaser acknowledges and
agrees, and without in any way limiting the foregoing that:

 
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(a)
(i) no agency, securities commission, governmental authority, regulatory body,
stock exchange or other entity has reviewed or passed on, made any finding or
determination as to the merit for investment of, nor have any such agencies,
securities commissions or governmental authorities made any recommendation or
endorsement with respect to the Shares or the Private Placement; (ii) there is
no government or other insurance covering the Shares; and (iii) there are risks
associated with the purchase of the Shares;

 
(b)
the purchase of the Shares has not been or will not be (as applicable) made
through, or as a result of, and the distribution of the Shares is not being
accompanied by, a general solicitation or advertisement including articles,
notices or other communications published in any newspaper, magazine or similar
media or broadcast over radio or television, or any seminar or meeting whose
attendees have been invited by general solicitation or general advertising;

 
(c)
no prospectus or other offering document has been filed by the Company with a
securities commission or other securities regulatory authority in any province
of Canada, or any other jurisdiction in or outside of Canada (including the
United States) in connection with the issuance of the Shares and such issuance
is exempt from the prospectus requirements otherwise applicable under the
provisions of Securities Laws and, as a result, in connection with its purchase
of the Shares hereunder, as applicable:

 
 
(i)
the Company has advised the Purchaser that the Company is relying on an
exemption from the requirements to provide the Purchaser with a prospectus and
to sell the Shares through a person registered to sell securities under the
Securities Laws and that the Purchaser is restricted from using most of the
protections, rights and remedies available under Securities Laws including,
without limitation, statutory rights of rescission or damages;

 
 
(ii)
the Purchaser will not receive information that may otherwise be required to be
provided to the Purchaser under applicable Securities Laws or contained in a
prospectus prepared in accordance with applicable Securities Laws;

 
 
(iii)
the Company is relieved from certain obligations that would otherwise apply
under such applicable Securities Laws; and

 
 
(iv)
there are restrictions on the Purchaser’s ability to resell the Shares and it is
the responsibility of the Purchaser to find out what these restrictions are and
to comply with them before reselling such securities.

 
(d)
the Shares will be subject to certain resale restrictions under the Securities
Laws and the Purchaser agrees to comply with such restrictions.  The Purchaser
also acknowledges that it has been advised to consult its own legal advisors
with respect to applicable resale restrictions and that it is solely responsible
(and the Company is not in any manner responsible) for complying with such
restrictions.  For purposes of complying with the Securities Laws and NI 45-102,
the Purchaser understands and acknowledges that upon the issuance of the Shares,
all the certificates representing the Shares shall bear a legends substantially
in the following form:

 
“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST
NOT TRADE THE SECURITY BEFORE [THE DATE THAT IS FOUR MONTHS PLUS ONE DAY FROM
THE CLOSING DATE].”;

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE, HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES
OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT 'GOOD DELIVERY' IN SETTLEMENT OF
TRANSACTIONS ON THE TORONTO STOCK EXCHANGE”;

In addition, the certificate(s) representing the Shares will also bear a legend
substantially in the following form as required by the U.S. Securities Act:

 
– 17 –

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“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S ADOPTED
UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER OR A SUBSIDIARY
THEREOF; (B) TO PERSONS OTHER THAN U.S. PERSONS OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (C) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE SECURITIES
ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT (IF AVAILABLE); OR
(D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (3) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY, FURNISH TO
THE ISSUER OR ISSUER'S COUNSEL SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED BY THE ISSUER TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE HOLDER HEREOF
WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD
TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.”;

provided that in the event that the Purchaser proposes to sell, transfer or
assign the Shares, the Company and the Purchaser shall cooperate and use their
mutual commercially reasonable best efforts to deliver and provide or cause to
be delivered and provided all such information and documents (including
declarations and, if necessary, legal opinions, in customary form) as may be
required to remove the U.S. Securities Act legend set forth above (if a basis
for removal exists under the Securities Laws).

(e)
no person has made any written or oral representations: (i) that any person will
resell or repurchase the Shares; (ii) that any person will refund the Purchase
Price; or (iii) as to the future price or value of the Shares .

 
10.         Conditions of Closing in Favour of the Company.  The Purchaser
acknowledges that the Company’s obligation to sell the Shares to the Purchaser
at the Closing Time shall be conditional upon the fulfilment of the following
conditions:
 
(a)
the Purchaser executing and returning to the Company all documents required by
applicable Securities Laws for delivery on behalf of the Purchaser including,
without limitation, Schedule A attached hereto, by no later than the Closing
Time;

 
(b)
the Company having obtained all required regulatory approvals (including those
that may be required under Securities Laws) to permit the completion of the
transactions contemplated hereby, including the AMEX Approval;

 
(c)
the offer, issue, sale and delivery of the Shares being exempt from the
requirements to file a prospectus or deliver an offering memorandum (as defined
in applicable Securities Laws, including Ontario Securities Commission Rule
14-501 Definitions) or any similar document under applicable Securities Laws and
other applicable securities laws relating to the sale of the Shares, or the
Company having received such orders, consents or approvals as may be required to
permit such sale without the requirement of filing a prospectus or delivering an
offering memorandum or any similar document;

 
– 18 –

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(d)
the representations and warranties set out herein, including in the Schedules
attached hereto, of the Purchaser being true and correct as at the Closing Time;
and

 
(e)
at the Closing Time, the Company shall have received a certificate, dated as of
the Closing Date, signed by the Chief Executive Officer and the Chief Financial
Officer of the Purchaser, or such other officers or directors of the Purchaser
as the Company may agree, certifying for and on behalf of the Purchaser, to the
best of the knowledge, information and belief of the persons so signing, that:

 
 
(i)
the Purchaser has complied with all the covenants and satisfied all the terms
and conditions of this Subscription Agreement on its part to be complied with
and satisfied up to the Closing Time; and

 
(ii)
the representations and warranties of the Purchaser contained in this
Subscription Agreement are true and correct as of the Closing Time, with the
same force and effect as if made at and as of the Closing Time after giving
effect to the transactions contemplated by this Subscription Agreement.

11.        Conditions of Closing in Favour of the Purchaser.  The Company
acknowledges that the Purchaser’s obligation to purchase the Shares at the
Closing Time shall be conditional upon the fulfilment of the following
conditions:

(a)         at the Closing Time, the Purchaser shall have received a
certificate, dated as of the Closing Date, signed by the Chief Executive Officer
and the Chief Financial Officer of the Company, or such other officers or
directors of the Company as the Purchaser may agree, certifying for and on
behalf of the Company, to the best of the knowledge, information and belief of
the persons so signing, that:

 
(i)
no order, ruling or determination having the effect of suspending the sale or
ceasing the trading in any securities of the Company has been issued by any
regulatory authority and is continuing in effect and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of such
officers, contemplated or threatened by any regulatory authority;

 
(ii)
since September 30, 2009, (A) there has been no material adverse change (actual,
proposed or prospective, whether financial or otherwise) in the business,
business prospects, affairs, operations, assets, liabilities (contingent or
otherwise) or capital of the Company or any of its Subsidiaries as of the date
of this Subscription Agreement that has not been generally disclosed, and (B) no
material transactions have been entered into by the Company or any of the
Subsidiaries other than in the ordinary course of business, except as has been
disclosed in the Disclosure Documents;

 
(iii)
the Company has complied with all the covenants and satisfied all the terms and
conditions of this Subscription Agreement on its part to be complied with and
satisfied up to the Closing Time; and

 
(iv)
the representations and warranties of the Company contained in this Subscription
Agreement are true and correct as of the Closing Time, with the same force and
effect as if made at and as of the Closing Time after giving effect to the
transactions contemplated by this Subscription Agreement;

(b)         at or before the Closing Time, each of the Lenders shall have
entered into a support agreement, in form and substance satisfactory to the
Purchaser , pursuant to which each Lender agrees, among other things,  to
support and vote in favour of the Arrangement (a “Support Agreement”);

(c)         at or before the Closing Time, each of the Lenders shall have
entered into a lock-up agreement, in form and substance satisfactory to the
Purchaser, pursuant to which each Lender agrees, among other things, not to,
directly or indirectly, exercise or offer, sell, contract to sell, lend, swap,
or enter into any other agreement to transfer the economic consequences of any
of the Common Shares or common share purchase warrants of the Company held by
them until December 31, 2010 (a “Lock-Up Agreement”);

 
– 19 –

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(d)          the Purchaser shall have received at the Execution Time a
certificate dated the Closing Date, signed by an appropriate officer or officers
of the Company addressed to the Purchaser and its counsel, with respect to the
articles and by-laws of the Company, all resolutions of the Company’s board of
directors relating to this Subscription Agreement and the transactions
contemplated hereby, the incumbency and specimen signatures of signing officers
and such other matters as the Purchaser may reasonably request;

(e)          the Purchaser shall have received evidence on or before the
Execution Time that all requisite regulatory approvals, including the approval
of the TSX, have been obtained by the Company in order to complete the Private
Placement, other than the AMEX Approval;

(f)           the Purchaser shall have received evidence on or before the
Closing Time that the AMEX Approval has been obtained;

(g)          the Shares shall have been conditionally approved for listing on
the TSX and AMEX;

(h)          the Purchaser shall have received a certificate from CIBC Mellon
Trust Company as to the number of Common Shares issued and outstanding as at a
date no more than two Business Days prior to the Closing Date;

(i)           at or before the Closing Time, the Purchaser shall have received
favourable legal opinions addressed to the Purchaser, in form and substance
satisfactory to the Purchaser, acting reasonably, dated as of the Closing Date,
from Fogler, Rubinoff LLP, counsel for the Company, and where appropriate, other
local counsel of the Company, which counsel in turn may rely, as to matters of
fact, on certificates of auditors, public officials and officers of the Company,
as appropriate, with respect to the following matters:

 
(i)
as to the valid existence of the Company under the laws of the Yukon and as to
the corporate power of the Company to carry out its obligations under this
Subscription Agreement and to issue the Shares;

 
(ii)
the Company is a reporting issuer not on the list of defaulting reporting
issuers maintained pursuant to the applicable Securities Laws of the Qualifying
Jurisdiction;

 
(iii)
as to the authorized capital of the Company;

 
(iv)
the Company has all requisite corporate power and authority under the laws of
Canada to carry on its business as presently carried on and to own, lease and
operate its properties and assets;

 
(v)
none of the execution and delivery of this Subscription Agreement, the
performance by the Company of its obligations hereunder, or the sale or issuance
of the Shares, will conflict with or result in any breach of the constating
documents or by-laws of the Company, the provisions of any law, statute, rule or
regulation to which the Company is subject or any resolutions of the directors
or shareholders of the Company;

 
(vi)
this Subscription Agreement has been duly authorized and executed and delivered
by the Company, and constitutes a valid and legally binding agreement of the
Company enforceable against it in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, liquidation,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and except as limited by the application of equitable principals when
equitable remedies are sought, and the qualification that the enforceability of
rights of indemnity, contribution and waiver and the ability to sever
unenforceable terms may be limited by applicable law;

 
(vii)
the Shares have been authorized and allotted for issuance and will be validly
issued as fully paid and non-assessable securities of the Company;

 
(viii)
the offering, issue, sale and delivery of the Shares to the Purchaser in the
Qualifying Jurisdiction in accordance with this Subscription Agreement is exempt
from the prospectus and registration requirements of applicable Securities Laws
and no prospectus will be required to be filed, no other document will be
required to be filed, no proceeding taken and no approval, permit, consent or
authorization of the Securities Commission will be required to be obtained under
applicable Securities Laws to permit the offering, issue, sale and delivery of
the Shares to the Purchaser, subject to the completion of filings required to be
made after the completion of the Private Placement;

 
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(ix)
other than a trade that is otherwise exempt from the prospectus and registration
requirements of the Securities Laws, the first trade by the Purchaser in the
Qualifying Jurisdiction of the Shares is a distribution unless at the time of
such trade:

 
 
(a)
the Company is and has been a reporting issuer in a jurisdiction of Canada for
the four months immediately preceding the trade;

 
 
(b)
at least four months have elapsed from the “distribution date” (as defined under
the National Instrument) of the Shares;

 
 
(c)
the certificate representing the Shares carries a legend stating “Unless
permitted under securities legislation, the holder of this security must not
trade the security before the date that is four months and a day after the
Closing Date”;

 
 
(d)
such trade is not a “control distribution” (as defined in the NI 45-102);

 
 
(e)
no unusual effort is made to prepare the market or to create a demand for the
securities that are the subject of such trade;

 
 
(f)
no extraordinary commission or consideration is paid to a person or company in
respect of such trade; and

 
 
(g)
if the selling securityholder is an insider or officer of the Company, the
selling securityholder has no reasonable grounds to believe that the Company is
in default of “securities legislation” (as defined in National Instrument 14-101
– Definitions and Interpretation); and

 
(x)
the TSX has conditionally accepted the listing of the Shares subject to
compliance with its conditions outlined in such conditional acceptance.

(j)           at the Closing Time, the Purchaser shall have received a
certificate of compliance with respect to the Company and a reporting issuer
certificate for the Company from the Securities Commission;

(k)          at the Closing Time, the Purchaser shall have received a favourable
legal opinion addressed to the Purchaser from counsel to the Company, in form
and substance satisfactory to the Purchaser, acting reasonably, dated as of the
Closing Date, with respect to title and other Mining Rights in regards to each
of the Properties (the “Title Opinion”);

(l)           at the Closing Time, the Purchaser shall have received an
undertaking of the Company to deliver to the Purchaser with 10 business days
following the Closing Date an updated Title Opinion in form and substance
satisfactory to the Purchaser, acting reasonably, which Title Opinion shall
include reference to the results of customary off-title reviews, searches and
enquiries in regards to each of the Properties; and

(m)         the Purchaser shall have completed and be satisfied, in its sole
discretion, with the results of its due diligence investigations regarding the
Company, the Subsidiaries and their respective business.

12.         Survival of Representations and Warranties. All terms, warranties,
representations, covenants, indemnities and agreements herein contained or
contained in any documents delivered pursuant to this Subscription Agreement and
in connection with the transactions herein contemplated shall survive the
purchase and sale of the Shares and continue in full force and effect for the
benefit of the Purchaser and/or the Company, as the case may be, regardless of
the Closing of the Private Placement and regardless of any investigations which
may be carried out by the Purchaser or on its behalf and shall not be limited or
prejudiced by any investigation made by or on behalf of the Purchaser in
connection with the purchase and sale of the Shares or otherwise.

 
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13.           Indemnity.  (a) The Purchaser agrees to indemnify and hold
harmless the Company and its directors, officers, employees, agents, advisers
and shareholders from and against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all fees, costs and
expenses whatsoever reasonably incurred in investigating, preparing or defending
against any claim, lawsuit, administrative proceeding or investigation whether
commenced or threatened) arising out of or based upon any representation or
warranty of the Purchaser contained herein or in any document furnished by the
Purchaser to the Company in connection herewith being untrue in any material
respect or any breach or failure by the Purchaser to comply with any covenant or
agreement made by the Purchaser herein or in any document furnished by the
Purchaser to the Company in connection herewith.
 
(b)           The Company agrees to indemnify and hold harmless the Purchaser
and its directors, officers, employees, agents, advisers and shareholders from
and against any and all loss, liability, claim, damage and expense whatsoever
(including, but not limited to, any and all fees, costs and expenses whatsoever
reasonably incurred in investigating, preparing or defending against any claim,
lawsuit, administrative proceeding or investigation whether commenced or
threatened) arising out of or based upon any representation or warranty of the
Company contained herein or in any document furnished by the Company to the
Purchaser in connection herewith being untrue in any material respect or any
breach or failure by the Company to comply with any covenant or agreement made
by the Company herein or in any document furnished by the Company to the
Purchaser in connection herewith.
 
14.           Modification.  Subject to the terms hereof, neither this
Subscription Agreement nor any provision hereof shall be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom any waiver, change, discharge or termination is sought.
 
15.           Assignment.  The terms and provisions of this Subscription
Agreement shall be binding upon and enure to the benefit of the Purchaser, the
Company and their respective successors and assigns; provided that this
Subscription Agreement shall not be assignable by any party without the prior
written consent of the other party.
 
16.           Miscellaneous and Counterparts.  This Subscription Agreement may
be executed in any number of counterparts, each of which when delivered, either
in original or facsimile form, shall be deemed to be an original and all of
which together shall constitute one and the same document.
 
17.           Governing Law.  This Subscription Agreement shall be governed by
and construed in accordance with the laws of the Province of Ontario and the
federal laws of Canada applicable therein. The Purchaser and the Company hereby
irrevocably attorn to the jurisdiction of the courts of the Province of
Ontario with respect to any matters arising out of this Subscription Agreement.
 
18.           Facsimile Subscriptions.  The Company and the Purchaser shall be
entitled to rely on delivery by facsimile machine or other electronic means of
an executed copy of this Subscription Agreement, including the completed
Schedules hereto, and acceptance by the Company and the Purchaser of such
facsimile copy shall be legally effective to create a valid and binding
agreement between the Purchaser and the Company in accordance with the terms
hereof.
 
19.           Entire Agreement.  This Subscription Agreement (including the
Schedules hereto) contains the entire agreement of the parties hereto relating
to the subject matter hereof and there are no representations, covenants or
other agreements relating to the subject matter hereof except as stated or
referred to herein.  This Subscription Agreement may be amended or modified in
any respect by written instrument only.
 
20.           Time of Essence.  Time shall be of the essence of this
Subscription Agreement.
 
21.           Currency.  Unless otherwise specified herein, all dollar amounts
referred to in this Subscription Agreement are in Canadian dollars.

 
– 22 –

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22.           Further Assurances.  Each of the parties hereto shall do or cause
to be done all such acts and things and shall execute or cause to be executed
all such documents, agreements and other instruments as may reasonably be
necessary or desirable for the purpose of carrying out the provisions and intent
of this Subscription Agreement.
 
23.           Singular and Plural, etc.  Where the context so requires, words
importing the singular number include the plural and vice versa, and words
importing gender shall include the masculine, feminine and neuter genders.
 
24.           Headings.  The headings contained herein are for convenience only
and shall not affect the meaning or interpretation hereof.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 
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SCHEDULE A

ACCREDITED INVESTOR STATUS CERTIFICATE

The categories listed herein contain certain specifically defined terms.  If you
are unsure as to the meanings of those terms, or are unsure as to the
applicability of any category below, please contact your broker and/or legal
advisor before completing this certificate.

In connection with the purchase by the undersigned Purchaser of the Shares, the
Purchaser hereby represents, warrants, covenants and certifies to the Company
(and acknowledges that the Company and its counsel are relying thereon) that:

 
(a)
the Purchaser is purchasing the Shares as principal for its own account and not
for the benefit of any other person;

 
(b)
the Purchaser is an “accredited investor” within the meaning of NI 45-106 on the
basis that the undersigned fits within the category of an “accredited investor”
reproduced below beside which the undersigned has indicated the undersigned
belongs to such category; and

 
(c)
upon execution of this Schedule A by the Purchaser, this Schedule A shall be
incorporated into and form a part of the Subscription Agreement.

(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)
 

o (a)
a Canadian financial institution, or a Schedule III bank;
     
¨
(b)
the Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);

¨
(c)
a subsidiary of any person referred to in paragraphs (a) or (b), if the person
owns all of the voting securities of the subsidiary, except the voting
securities required by law to be owned by directors of that subsidiary;

¨
(d)
a person registered under the securities legislation of a jurisdiction of Canada
as an adviser or dealer, other than a person registered solely as a limited
market dealer under one or both of the Securities Act (Ontario) or the
Securities Act (Newfoundland and Labrador);

¨
(e)
an individual registered or formerly registered under the securities legislation
of a jurisdiction of Canada as a representative of a person referred to in
paragraph (d);

¨
(f)
the Government of Canada or a jurisdiction of Canada, or any crown corporation,
agency or wholly owned entity of the Government of Canada or a jurisdiction of
Canada;

¨
(g)
a municipality, public board or commission in Canada and a metropolitan
community, school board, the Comité de gestion de la taxe scolaire de l’île de
Montréal or an intermunicipal management board in Québec;

¨
(h)
any national, federal, state, provincial, territorial or municipal government of
or in any foreign jurisdiction, or any agency of that government;

¨
(i)
a pension fund that is regulated by either the Office of the Superintendent of
Financial Institutions (Canada) or a pension commission or similar regulatory
authority of a jurisdiction of Canada;

 
A-1

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¨
(j)
an individual who, either alone or with a spouse, beneficially owns financial
assets having an aggregate realizable value that before taxes, but net of any
related liabilities, exceeds $1,000,000;

¨
(k)
an individual whose net income before taxes exceeded $200,000 in each of the two
most recent calendar years or whose net income before taxes combined with that
of a spouse exceeded $300,000 in each of the two most recent calendar years and
who, in either case, reasonably expects to exceed that net income level in the
current calendar year;

¨
(l)
an individual who, either alone or with a spouse, has net assets of at least
$5,000,000;

x
(m)
a person, other than an individual or investment fund, that has net assets of at
least $5,000,000 as shown on its most recently prepared financial statements;

¨
(n)
an investment fund that distributes or has distributed its securities only to
(i) a person that is or was an accredited investor at the time of the
distribution, (ii) a person that acquires or acquired securities in the
circumstances referred to in sections 2.10 [Minimum amount investment] and 2.19
[Additional investment in investment funds] of NI 45-106, or (iii) a person
described in paragraph (i) or (ii) that acquires or acquired securities under
section 2.18 [Investment fund reinvestment] of NI 45-106;

¨
(o)
an investment fund that distributes or has distributed securities under a
prospectus in a jurisdiction of Canada for which the regulator or, in Québec,
the securities regulatory authority, has issued a receipt;

¨
(p)
a trust company or trust corporation registered or authorized to carry on
business under the Trust and Loan Companies Act (Canada) or under comparable
legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on
behalf of a fully managed account managed by the trust company or trust
corporation, as the case may be;

¨
(q)
a person acting on behalf of a fully managed account managed by that person, if
that person (i) is registered or authorized to carry on business as an adviser
or the equivalent under the securities legislation of a jurisdiction of Canada
or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is
not a security of an investment fund;

¨
(r)
a registered charity under the Income Tax Act (Canada) that, in regard to the
trade, has obtained advice from an eligibility adviser or an adviser registered
under the securities legislation of the jurisdiction of the registered charity
to give advice on the securities being traded;

¨
(s)
an entity organized in a foreign jurisdiction that is analogous to any of the
entities referred to in paragraphs (a) to (d) or paragraph (i) in form and
function;

¨
(t)
a person in respect of which all of the owners of interests, direct, indirect or
beneficial, except the voting securities required by law to be owned by
directors, are persons that are accredited investors;

¨
(u)
an investment fund that is advised by a person registered as an adviser or a
person that is exempt from registration as an adviser, or

¨
(v)
a person that is recognized or designated by the securities regulatory authority
or, except in Ontario and Québec, the regulator as (i) an accredited investor,
or (ii) an exempt purchaser in Alberta or British Columbia.

 
 
A–2

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For the purposes hereof, the following definitions are included for convenience:

 
(a)
“Canadian financial institution” means (i) an association governed by the
Cooperative Credit Associations Act (Canada) or a central cooperative credit
society for which an order has been made under section 473(1) of that Act, or
(ii) a bank, loan corporation, trust company, trust corporation, insurance
company, treasury branch, credit union, caisse populaire, financial services
cooperative, or league that, in each case, is authorized by an enactment of
Canada or a jurisdiction of Canada to carry on business in Canada or a
jurisdiction of Canada;

 
(b)
“control person” has the same meaning as in securities legislation except in
Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia,
Nunavut, Ontario, Prince Edward Island and Quebéc where control person means any
person that holds or is one of a combination of persons that holds (i) a
sufficient number of any of the securities of an issuer so as to affect
materially the control of the issuer, or (ii) more than 20% of the outstanding
voting securities of an issuer except where there is evidence showing that the
holding of those securities does not affect materially the control of the
issuer;

 
(c)
“entity” means a company, syndicate, partnership, trust or unincorporated
organization;

 
(d)
“financial assets” means cash, securities, or a contract of insurance, a deposit
or an evidence of a deposit that is not a security for the purposes of
securities legislation;

 
(e)
“founder” means, in respect of an issuer, a person who, (i) acting alone, in
conjunction, or in concert with one or more persons, directly or indirectly,
takes the initiative in founding, organizing or substantially reorganizing the
business of the issuer, and (ii) at the time of the trade is actively involved
in the business of the issuer;

 
(f)
“fully managed account” means an account of a client for which a person makes
the investment decisions if that person has full discretion to trade in
securities for the account without requiring the client’s express consent to a
transaction;

 
(g)
“investment fund” means a mutual fund or a non-redeemable investment fund, and,
for greater certainty in British Columbia, includes an employee venture capital
corporation that does not have a restricted constitution, and is registered
under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c.
112, and whose business objective is making multiple investments and a venture
capital corporation registered under Part 1 of the Small Business Venture
Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is
making multiple investments;

 
 
(h)
“related liabilities” means liabilities incurred or assumed for the purpose of
financing the acquisition or ownership of financial assets and liabilities that
are secured by financial assets;

 
 
(i)
“Schedule III bank” means an authorized foreign bank named in Schedule III of
the Bank Act (Canada);

 
(j)
“spouse” means an individual who(i)is married to another individual and is not
living separate and apart within the meaning of the Divorce Act (Canada), from
the other individual, (ii) is living with another individual in a marriage-like
relationship, including a marriage-like relationship between individuals of the
same gender, or (iii) in Alberta, is an individual referred to in paragraph (i)
or (ii), or is an adult interdependent partner within the meaning of the Adult
Interdependent Relationships Act (Alberta); and

 
(k)
“subsidiary” means an issuer that is controlled directly or indirectly by
another issuer and includes a subsidiary of that subsidiary.

 
In NI 45-106 a person or company is considered to be an affiliated entity of
another person or company if one is a subsidiary entity of the other, or if both
are subsidiary entities of the same person or company, or if each of them is
controlled by the same person or company.

 
A–3

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In NI 45-106 a person (first person) is considered to control another person
(second person) if (a) the first person,   directly or indirectly, beneficially
owns or exercises control or direction over securities of the second person
carrying votes which, if exercised, would entitle the first person to elect a
majority of the directors of the second person, unless that first person holds
the voting securities only to secure an obligation, (b) the second person is a
partnership, other than a limited partnership, and the first person holds more
than 50% of the interests of the partnership, or (c) the second person is a
limited partnership and the general partner of the limited partnership is the
first person.

In NI 45-106 a trust company or trust corporation described in paragraph (p)
above of the definition of “accredited investor” (other than in respect of a
trust company or trust corporation registered under the laws of Prince Edward
Island that is not registered or authorized under the Trust and Loan Companies
Act (Canada) or under comparable legislation in another jurisdiction of Canada)
is deemed to be purchasing as principal.

In NI 45-106 a person described in paragraph (q) above of the definition of
“accredited investor” is deemed to be purchasing as principal.

The foregoing representations contained in this certificate are true and
accurate as of the date of this certificate and will be true and accurate as of
the Closing Time.  If any such representations shall not be true and accurate
prior to the Closing Time, the undersigned shall give immediate written notice
of such fact to the Company prior to the Closing Time.
 

 
 Dated:
March 9, 2010  
Signed:
/s/ Wade Dawe                  
Linear Gold Corp.
     
Print the name of Purchaser
                     
Print name and title of Authorized Signing Officer

 
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