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

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

 
NORTHERN DYNASTY MINERALS LTD.
 
15th Floor, 1040 West Georgia St, Vancouver, BC  V6E 4H1
Telephone: 604-684-6365 / Facsimile:  604-684-8092
 
November 13, 2012
 
Liberty Star Uranium & Metals Corp.
Big Chunk Corp.
5610 E. Sutler Lane
Tucson, AZ  85712
 
Attention:  James Briscoe, President and Director
 
Dear Mr. Briscoe
 
RE:           Loan Settlement by Mining Claims Sale and Transfer
 
This letter agreement when signed by Liberty Star Uranium & Metals Corp. and Big
Chunk Corp. (together herein for convenience “Liberty Star” or “you”), will
constitute our agreement to settle the loan owing by Liberty Star to Northern
Dynasty in the principal amount of $3,730,174 plus all accrued interest thereon
(collectively the “Loan”).  As of November 13, 2012, interest in the amount of
$872,543 has accrued on the principal amount of the Loan.  The Loan will be
settled in consideration for the transfer by you to U5 Resources Inc. or such
other subsidiary or affiliate of Northern Dynasty as Northern Dynasty may direct
(“NDM Subsidiary”), of the Alaska mining claims described on Schedule A hereto
(the “Settlement Claims”).  The Loan was advanced by a letter agreement dated
June 29, 2010, as amended on July 15, 2010, September 8, 2011 and November 14,
2011, and upon Closing (as defined below) of this letter agreement, those
agreements and all negotiations between us will terminate.  This letter
agreement is binding on each of us upon timely acceptance hereof by you.  All
dollar amounts herein are United States dollars.
 
1.  
Closing of Loan Settlement by Purchase and Transfer of Settlement Claims

 
On the completion date of the transactions described herein (the “Closing”),
which is to be November 16, 2012 or such other date prior to December 1, 2012 as
determined by Northern Dynasty (the “Closing Date”), Northern Dynasty will
release and discharge the Loan (including all accrued interest on the Loan to
the Closing Date) and all Security for the Loan against delivery to Northern
Dynasty of registerable claim transfers for all of the Settlement Claims.  The
Closing will occur at 11:00 a.m. (Vancouver time) on the Closing Date at our
offices unless we otherwise agree in writing.  At Closing, Liberty Star will
deliver:
 
(a)  
such registerable mining claim transfers, deeds and quitclaims (“Transfers”) as
may be required by Northern Dynasty to convey good title to the Settlement
Claims to NDM Subsidiary;

 
 
 

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

 
(b)  
an opinion of its counsel stating that Liberty Star has taken all necessary
corporate actions and proceedings to deliver the Transfers and transfer the
Settlement Claims to NDM Subsidiary; and

 
(c)  
copies of all filings evidencing the filing and application by Liberty Star of
sufficient assessment work conducted by it during 2012 against the Settlement
Claims in order to maintain the Settlement Claims in good standing until
September 1, 2013, such filings to have been completed and filed to the
satisfaction of Northern Dynasty acting reasonably.

 
Upon Closing, Northern Dynasty will deliver to Liberty Star a general release of
the Loan and related security and will attend to discharge the UCC filings
against Liberty Star and/or its assets.
 
2.  
Liberty Star Representations

 
Northern Dynasty’s obligation to accept the Settlement Claims in satisfaction of
the Loan is subject to the following representations of Liberty Star being true
on the date hereof and at Closing:
 
(a)  
Liberty Star shall have all necessary corporate power and shall have taken all
necessary corporate and other actions and proceedings to execute and deliver
this letter agreement as a legal binding obligation.  No third party consents
shall be required to deliver title to the Settlement Claims hereunder;

 
(b)  
no shareholder or regulatory approvals are required in order for it to enter
into, and complete, the transactions contemplated under this letter agreement;

 
(c)  
this letter agreement and the obligations assumed by Liberty Star herein do not
conflict with any agreement, law, court judgement or order or governmental order
to which Liberty Star is subject;

 
(d)  
the Settlement Claims duly located, validly recorded and registered in the name
of Big Chunk Corp., Big Chunk Corp. is the registered and beneficial owner of a
100% of the Settlement Claims, no third party has any financial or legal
interest in the Settlement Claims whatsoever, and there are no royalty, lien, or
other interests reserved in the Settlement Claims to Liberty Star or any other
person;

 
(e)  
there are no existing environmental remediation obligations relating to any of
the Settlement Claims and no operations have taken place on them which were
contrary to environmental or other applicable laws; and

 
(f)  
Liberty Star has provided Northern Dynasty with a copy of all information about
the Settlement Claims that is in its possession;

 
(g)  
there are no tangible assets belonging to Liberty Star located on the Settlement
Claims;

 
(h)  
Liberty star has neither committed an act of bankruptcy, nor has been alleged to
be insolvent by any creditor and is now and will be under no legal impediment
from dealing with the Settlement Claims; and

 
 
2

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

 
(i)  
no litigation or other proceeding or inquiry exists, or is pending or threatened
against Liberty Star or which may affect the Settlement Claims, no party has
alleged any basis to sue Liberty Star, and no party has threatened to do so.

 
3.  
Liberty Star Covenants

 
Liberty Star agrees from execution hereof that:
 
(a)  
it will not encumber the Settlement Claims in any way and will forthwith execute
registerable transfer forms for the Settlement Claims;

 
(b)  
it shall take all necessary steps to convey good title to the Settlement Claims
to NDM Subsidiary on Closing and following Closing; and

 
(c)  
it shall duly observe the terms of this letter agreement.

 
4.  
Northern Dynasty Conditions to Closing

 
The conditions to which Northern Dynasty’s obligations hereunder are subject are
as follows (each of which may be waived by Northern Dynasty in whole or in
part):
 
(a)  
as of acceptance hereof by Liberty Star and as of Closing, all of the
representations of Liberty Star will be true and all of its covenants shall have
been fulfilled;

 
(b)  
Liberty Star shall have applied against the Settlement Claims all assessment
work conducted by it during 2012 on the Settlement Claims, and Northern Dynasty
shall have been provided with copies of all filings evidencing the application
of such work, completed and filed to Northern Dynasty’s satisfaction acting
reasonably;

 
(c)  
Northern Dynasty shall have been provided with valid Transfers for the
Settlement Claims; and

 
(d)  
no litigation shall have been initiated or threatened by any person or
governmental authority to enjoin or inhibit the transactions contemplated hereby
or which may, in the opinion of Northern Dynasty acting in its sole discretion,
affect the Settlement Claims.

 
5.  
General and Miscellaneous

 
 
(a)  
This letter agreement will be deemed to have been made in British Columbia and
will be enforceable in the Courts of British Columbia.

 
(b)  
This letter agreement shall enure to the benefit of and shall be binding upon
the parties hereto and their successors according to law.

 
(c)  
Northern Dynasty may assign its rights under this letter agreement in whole or
in part and from time to time provided that Northern Dynasty shall remain liable
for its obligations hereunder.

 
 
3

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

 
(d)  
This letter agreement may be executed in counterpart and by electronic
transmission of a recognizable manual signature.

 
(e)  
Each party shall both before and after Closing, execute such further documents
and assurances and do such further acts, as may reasonably be required by the
other party to effect the terms hereof and to ensure the valid transfer of good
title to the Settlement Claims and the due extinguishment of the Loan and
security related thereto.

 
6.  
Execution

 
If the foregoing reflects your agreement, please execute this letter agreement
where indicated below and return a copy to us by 5:00 p.m. PST on November 13,
2012.
 
Yours truly,
 
Northern Dynasty Minerals Ltd.
 
Per:
 
/s/ signed                                                           
Authorized Signatory
 

 
The foregoing is agreed this 13th day of November, 2012.
 
 
Liberty Star Uranium & Metals Corp.
 
/s/ James Briscoe                                                           
Authorized Signatory
 
Big Chunk Corp.
 
/s/ James Briscoe                                                           
Authorized Signatory
 
cc Bernard Pinsky
 
cc Bernhard Zinkhofer
 

 
4

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

 

 
SCHEDULE A
 
SETTLEMENT CLAIMS
 

CLAIM NAME
ADL NO.
TOWN-SHIP
RANGE
SECTION
QUARTER
SECTION
QUARTER-QUARTER
SECTION
BC 338
642826
3S
35W
6
SW
 
BC 339
642827
3S
35W
6
SE
 
BC 351
642839
3S
35W
6
NW
 
BC 352
642840
3S
35W
6
NE
 
BC 353
642841
3S
35W
4
NW
 
BC 354
642842
3S
35W
3
NE
 
BC 355
642843
3S
35W
3
NW
 
BC 367
642855
2S
35W
31
SW
 
BC 368
642856
2S
35W
31
SE
 
BC 369
642857
2S
35W
32
SW
 
BC 370
642858
2S
35W
32
SE
 
BC 371
642859
2S
35W
33
SW
 
BC 372
642860
2S
35W
33
SE
 
BC 373
642861
2S
35W
34
SW
 
BC 374
642862
2S
35W
34
SE
 
BC 386
642874
2S
35W
31
NW
 
BC 387
642875
2S
35W
31
NE
 
BC 388
642876
2S
35W
32
NW
 
BC 389
642877
2S
35W
32
NE
 
BC 390
642878
2S
35W
33
NW
 
BC 391
642879
2S
35W
33
NE
 
BC 392
642880
2S
35W
34
NW
 
BC 393
642881
2S
35W
34
NE
 
BC 405
642893
2S
35W
30
SW
 
BC 406
642894
2S
35W
30
SE
 
BC 407
642895
2S
35W
29
SW
 
BC 408
642896
2S
35W
29
SE
 
BC 409
642897
2S
35W
28
SW
 
BC 410
642898
2S
35W
28
SE
 
BC 411
642899
2S
35W
27
SW
 
BC 412
642900
2S
35W
27
SE
 
BC 424
642912
2S
35W
30
NW
 
BC 425
642913
2S
35W
30
NE
 
BC 426
642914
2S
35W
29
NW
 
BC 427
642915
2S
35W
29
NE
 
BC 428
642916
2S
35W
28
NW
 
BC 429
642917
2S
35W
28
NE
 
BC 430
642918
2S
35W
27
NW
 
BC 431
642919
2S
35W
27
NE
 
BC 444
642932
2S
35W
19
SW
 
BC 445
642933
2S
35W
19
SE
 
BC 446
642934
2S
35W
20
SW
 
BC 447
642935
2S
35W
20
SE
 
BC 448
642936
2S
35W
21
SW
 
BC 449
642937
2S
35W
21
SE
 
BC 450
642938
2S
35W
22
SW
 
BC 451
642939
2S
35W
22
SE
 
BC 459
642947
2S
38W
24
NW
 
BC 460
642948
2S
38W
24
NE
 
BC 461
642949
2S
37W
19
NW
 
BC 462
642950
2S
37W
19
NE
 
BC 463
642951
2S
37W
20
NW
 
BC 464
642952
2S
37W
20
NE
 
BC 465
642953
2S
35W
19
NW
 
BC 466
642954
2S
35W
19
NE
 
BC 467
642955
2S
35W
20
NW
 
BC 468
642956
2S
35W
20
NE
 
BC 469
642957
2S
35W
21
NW
 
BC 470
642958
2S
35W
21
NE
 
BC 471
642959
2S
35W
22
NW
 
BC 472
642960
2S
35W
22
NE
 
BC 476
642964
2S
38W
15
SE
 
BC 477
642965
2S
38W
14
SW
 
BC 478
642966
2S
38W
14
SE
 
BC 479
642967
2S
38W
13
SW
 
BC 480
642968
2S
38W
13
SE
 
BC 481
642969
2S
37W
18
SW
 
BC 482
642970
2S
37W
18
SE
 
BC 483
642971
2S
37W
17
SW
 
BC 484
642972
2S
37W
17
SE
 
BC 485
642973
2S
37W
16
SW
 
BC 486
642974
2S
37W
16
SE
 
BC 487
642975
2S
37W
15
SW
 
BC 488
642976
2S
35W
18
SW
 
BC 489
642977
2S
35W
18
SE
 
BC 490
642978
2S
35W
17
SW
 
BC 491
642979
2S
35W
17
SE
 
BC 492
642980
2S
35W
16
SW
 
BC 493
642981
2S
35W
16
SE
 
BC 494
642982
2S
35W
15
SW
 
BC 495
642983
2S
35W
15
SE
 
BC 499
642987
2S
38W
15
NE
 
BC 500
642988
2S
38W
14
NW
 
BC 501
642989
2S
38W
14
NE
 
BC 502
642990
2S
38W
13
NW
 
BC 503
642991
2S
38W
13
NE
 
BC 504
642992
2S
37W
18
NW
 
BC 505
642993
2S
37W
18
NE
 
BC 506
642994
2S
37W
17
NW
 
BC 507
642995
2S
37W
17
NE
 
BC 508
642996
2S
37W
16
NW
 
BC 509
642997
2S
37W
16
NE
 
BC 510
642998
2S
37W
15
NW
 
BC 511
642999
2S
35W
18
NW
 
BC 512
643000
2S
35W
18
NE
 
BC 513
643001
2S
35W
17
NW
 
BC 514
643002
2S
35W
17
NE
 
BC 515
643003
2S
35W
16
NW
 
BC 516
643004
2S
35W
16
NE
 
BC 517
643005
2S
35W
15
NW
 
BC 518
643006
2S
35W
15
NE
 
BC 520
643008
2S
38W
10
SE
 
BC 521
643009
2S
38W
11
SW
 
BC 522
643010
2S
38W
11
SE
 
BC 523
643011
2S
38W
12
SW
 
BC 524
643012
2S
38W
12
SE
 
BC 525
643013
2S
37W
7
SW
 
BC 526
643014
2S
37W
7
SE
 
BC 527
643015
2S
37W
8
SW
 
BC 528
643016
2S
37W
8
SE
 
BC 529
643017
2S
37W
9
SW
 
BC 530
643018
2S
37W
9
SE
 
BC 531
643019
2S
37W
10
SW
 
BC 532
643020
2S
37W
10
SE
 
BC 533
643021
2S
37W
11
SW
 
BC 534
643022
2S
37W
11
SE
 
BC 535
643023
2S
37W
12
SW
 
BC 536
643024
2S
37W
12
SE
 
BC 537
643025
2S
36W
7
SW
 
BC 538
643026
2S
36W
7
SE
 
BC 539
643027
2S
36W
8
SW
 
BC 540
643028
2S
36W
8
SE
 
BC 541
643029
2S
36W
9
SW
 
BC 542
643030
2S
36W
9
SE
 
BC 543
643031
2S
36W
10
SW
 
BC 544
643032
2S
36W
10
SE
 
BC 545
643033
2S
36W
11
SW
 
BC 546
643034
2S
36W
11
SE
 
BC 547
643035
2S
36W
12
SW
 
BC 548
643036
2S
36W
12
SE
 
BC 549
643037
2S
35W
7
SW
 
BC 550
643038
2S
35W
7
SE
 
BC 551
643039
2S
35W
8
SW
 
BC 552
643040
2S
35W
8
SE
 
BC 553
643041
2S
35W
9
SW
 
BC 554
643042
2S
35W
9
SE
 
BC 555
643043
2S
35W
10
SW
 
BC 556
643044
2S
35W
10
SE
 
BC 558
643046
2S
38W
10
NE
 
BC 559
643047
2S
38W
11
NW
 
BC 560
643048
2S
38W
11
NE
 
BC 561
643049
2S
38W
12
NW
 
BC 562
643050
2S
38W
12
NE
 
BC 563
643051
2S
37W
7
NW
 
BC 564
643052
2S
37W
7
NE
 
BC 565
643053
2S
37W
8
NW
 
BC 566
643054
2S
37W
8
NE
 
BC 567
643055
2S
37W
9
NW
 
BC 568
643056
2S
37W
9
NE
 
BC 569
643057
2S
37W
10
NW
 
BC 570
643058
2S
37W
10
NE
 
BC 571
643059
2S
37W
11
NW
 
BC 572
643060
2S
37W
11
NE
 
BC 573
643061
2S
37W
12
NW
 
BC 574
643062
2S
37W
12
NE
 
BC 575
643063
2S
36W
7
NW
 
BC 576
643064
2S
36W
7
NE
 
BC 577
643065
2S
36W
8
NW
 
BC 578
643066
2S
36W
8
NE
 
BC 579
643067
2S
36W
9
NW
 
BC 580
643068
2S
36W
9
NE
 
BC 581
643069
2S
36W
10
NW
 
BC 582
643070
2S
36W
10
NE
 
BC 583
643071
2S
36W
11
NW
 
BC 584
643072
2S
36W
11
NE
 
BC 585
643073
2S
36W
12
NW
 
BC 586
643074
2S
36W
12
NE
 
BC 587
643075
2S
35W
7
NW
 
BC 588
643076
2S
35W
7
NE
 
BC 589
643077
2S
35W
8
NW
 
BC 590
643078
2S
35W
8
NE
 
BC 591
643079
2S
35W
9
NW
 
BC 592
643080
2S
35W
9
NE
 
BC 593
643081
2S
35W
10
NW
 
BC 594
643082
2S
35W
10
NE
 
BC 1171
649923
2S
37W
15
NE
 
BC 1172
649924
2S
37W
14
NW
 
BC 1173
649925
2S
37W
14
NE
 
BC 1174
649926
2S
37W
13
NW
 
BC 1175
649927
2S
37W
13
NE
 
BC 1176
649928
2S
37W
15
SE
 
BC 1177
649929
2S
37W
14
SW
 
BC 1178
649930
2S
37W
14
SE
 
BC 1179
649931
2S
37W
13
SW
 
BC 1180
649932
2S
37W
13
SE
 
BC 1187
649939
2S
37W
24
NW
 
BC 1188
649940
2S
37W
24
NE
 
BC 1196
649948
2S
37W
24
SW
 
BC 1197
649949
2S
37W
24
SE
 
BC 1001
643432
3S
35W
7
NW
NW
BC 1002
643433
3S
35W
7
NW
NE
BC 1003
643434
3S
35W
7
NE
NW
BC 1004
643435
3S
35W
7
NE
NE
BC 1005
643436
3S
35W
4
SE
NW
BC 1006
643437
3S
35W
4
SE
NE
BC 1007
643438
3S
35W
3
SW
NW
BC 1008
643439
3S
35W
3
SW
NE
BC 1009
643440
3S
35W
3
SE
NW
BC 1010
643441
3S
35W
3
SE
NE

 

 
5

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