Memorandum of Understanding
 
 
This Memorandum of Understanding is executed by and among the following parties:
 

Party A:
C3 Capital, Limited, a commercial company registered and established under the
BVI Business Companies Act 2004 on October 25th 2007. Its registration number is
1439706.

 

Party B:
Gao Zhigang, citizen of People’s Republic of China, whose domicile is Renmin
Street No.138, Changchun City, Jilin Province. ID Number: 130721197009125215.

 

Party C:
Li Ping, citizen of People’s Republic of China, whose domicile is No. 401, Unit
2, Hei Longjiang Road No.57, Buck Sand District, Urumqi City. ID Number:
650103197603051323.

 

 
Whereas:
 

1.
According to the laws of People’s Republic of China, Party B and Party C propose
to establish Xinjiang Paragon Master Mining Co., Ltd (hereinafter referred to as
“the Object Company”). The Object Company plans to register with the
Administration Bureau for Industry and Commerce of Xinjiang Uygur Autonomous
Region. Up until the execution date of this memorandum of understanding
(hereinafter referred to as this MOU), Party B and Party C have completed the
company’s name pre-approval procedure with Administration Bureau for Industry
and Commerce of Xinjiang Uygur Autonomous Region. Other procedures for the
incorporation of the company are in process.

 

2.
Party B and Party C have confirmed that the registered capital for the Object
Company is RMB 3.2 Million Yuan, among which, the investment by Party B is RMB
2.88 Million Yuan, taking up 90 %, and the investment by Party C is RMB 0.32
Million Yuan, taking up 10%.

 

3.
Party B and Party C have confirmed that, after the completion of registration
and incorporation procedure for the Object Company, they will transfer the
shares of the Object Company held respectively by them to Party A, and Party A
will make the payment of the equity interest transfer price.

 

 
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Through friendly consultation among Party A, Party B and Party C, regarding the
equity interest transfer of the Object Company, the following agreement has been
reached:

Article 1
 
Party B and Party C, respectively, grant Party A the irrevocable right to
purchase the equity interest of the Object Company (“the purchase right”). The
purchase right becomes effective upon the completion of industrial and
commercial registration for the Object company (taking the date on which the
Corporate Business License is issued as final) until the date when Party A makes
it clear to abandon the purchase right (referred to as “the purchase right
exercise period”). However, if, within eighteen months upon all the conditions
as agreed in Article 2 of this MOU have been satisfied, Party A does not conduct
the procedure for initiating the purchase right, the purchase right becomes void
automatically.
 
Article 2
 
After the establishment of the Object Company, Party B and Party C shall conduct
relevant procedures in time in order to obtain the permissions, approvals or
filing documents for the Object Company’s operation. In addition, Party B and
Party C shall obtain the quartz mine exploration and mining right as described
in Article 3 of this MOU according to Chinese laws and regulations.
 
Article 3
 
Party B and Party C shall make the Object Company legally obtain the exploration
and mining right for the quartz mine of the mining area in Wenquan County
Xinjiang. Party B and Party C confirm that: the reconnaissance geological survey
procedure for the before mentioned quartz mine and the procedure of defining the
limits of the mining areas shall be conducted by Wenquan County Branch for Xing
Tao Da Bei Mining Co. Ltd, Xinjiang. The mining area is situated 14 KM southeast
of Wenquan County and its geographical coordinates are east longitude 80 56 36,
north latitude 44 56 06. Through geology examination, the standard of the
quartzite is 333 + 334 and the geological reserves are 1.1 million tons. The
applied mining depth is from 1450 meters to 1420 meters. The defined mining area
applying for is 0.266 square kilometers.
 
Article 4
 
As confirmed by Party A, Party B and Party C, Party A will purchase the equity
interest of the Object Company and shall pay the equity interest purchase price,
in aggregate, USD $50,000. The foregoing equity interest transfer price shall be
paid to Party B and Party C respectively according to the ratio of investments
of the Object Company by Party B and Party C.
 
Article 5
 
Within the purchase right exercise period as agreed in Article 1, Party B and
Party C shall not transfer their equity interest of the Object Company to any
party other than Party A or the third party appointed by Party A. Party B and
Party C also shall not hypothecate or enact other restrictive right upon the
equity interest of the Object Company.

 
 
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Article 6
 
When Party A exercises the purchase right, it shall send to Party B and Party C
written notices respectively. Within thirty days upon Party B and Party C
receive the written notices, they shall complete the execution of the equity
interest transfer contract of the Object Company with Party A according to the
material conditions as agreed in this MOU (hereinafter referred to as “equity
interest transfer contract”).
 
Article 7
 
Party A, Party B and Party C shall, after the execution of the equity interest
transfer contract, cooperate promptly in order to complete all the approval
procedures as required by the equity interest transfer of the Object Company.
 
Article 8
 
As the substantial incentive for Party B and Party C to execute this MOU, Party
A promises that, Party A will, at the time as agreed in the equity interest
transfer contract, make the payment to Party B and Party C of the transfer price
of the equity interest held by Party B and Party C.
 
Article 9
As the substantial incentive for Party A to execute this MOU, Party B and Party
C promise to Party A that:

 

 
(1)
By November 30th, 2008, Party B and Party C will complete the company
incorporation procedure for the Object Company and make the Object Company
obtain all the permissions, approvals or filing documents for legal operation;

 

 
(2)
By December 31st 2008, Party B and Party C will, on behalf of the Object
Company, obtain the exploration right for quartz mine as defined in Article 3 of
this MOU. They also guarantee to obtain the mining license for the Object
Company;

 

 
(3)
When Party A decides to purchase the equity interest of the Object Company,
conduct the Due Diligence Investigation, Party B and Party C shall cooperate
fully and settle in time all the problems of the Object company as required by
Party A according to laws.

Article 10
Within three days upon Party A makes the payment of the equity transfer price
according to the equity interest transfer contract, Party B and Party C shall
make payment, without any consideration, to the Object Company of RMB of equal
value of US $50,000, for the purpose of daily operation of the Object Company.

 
 
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Article 11
 
Party A, Party B and Party C shall bear all the costs and taxes as required by
laws for the purpose of completion of the issues as agreed in this MOU.
 
Article 12
 
Party A, Party B and Party C confirm that Party B shall be responsible for the
performance arrangement of the obligations and related liabilities of Party B
and Party C under the equity interest transfer contract. Party B shall also take
joint liability for the obligations and related liabilities of Party C.
 
Article 13
 
If any party to this MOU violates the obligations under this MOU, or its
representation, statement or warranty is untrue, it will constitute a breach of
this MOU. The party in breach shall compensate the non-breaching party all the
losses resulting from the execution and performance of this MOU.
 
Article 14
 
Any disputes arising from construing, performing or relating to this MOU shall
be settled by means of friendly negotiation. In case that the disputes cannot be
settled through negotiation, any party has the right to submit the disputes to
China International Economic and Trade Arbitration Commission (“CIETAC”)
arbitration in Beijing subject to the prevailing arbitration rules of CIETAC.
The arbitration award is final and legally binding on the parties.
 
Article 15
 
This MOU is written in Chinese and English and the two versions equally valid.
In case of any discrepancy between the two versions, the Chinese version will
prevail.
 
Article 16
 
Party A, Party B and Party C will execute this MOU in six originals and each
party shall keep two originals.
 
Article 17
 
The effectiveness, construction, and performance of this MOU shall be governed
by the prevailing laws and regulations of People’s Republic of China.
 
Article 18
 
This MOU shall become effective upon the signatures and seals by Party A, Party
B and Party C.
 

 
(no text and execution page follows)
 
 
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(no text, for signatures only)
 

 
Party A: C3 Capital, Limited
 
Authorized Representative:
 
Date:
 

 

 

 
Party B:
 
Date:
 

 

 

 
Party C:
 
Date:
 

 
 
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