SAN JUAN PROPERTY

PROPERTY OPTION AGREEMENT

Dated November 16, 2006

Between:

PETAQUILLA MINERALS LTD.

and

REVELSTOKE INDUSTRIES, INC.

 

INDEX

1.

GRANT OF FIRST OPTION

2

2.

GRANT OF SECOND OPTION

4

3.

TECHNICAL SERVICES AGREEMENT

5

4.

OPTIONS ONLY

6

5.

SHARE ISSUANCES

6

6.

TRANSFER OF TITLE

6

7.

RIGHT OF ENTRY

6

8.

REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR

6

9.

REPRESENTATIONS AND WARRANTIES OF REVELSTOKE

8

10.

COVENANTS OF THE OPTIONOR

8

11.

COVENANTS OF REVELSTOKE

9

12.

TERMINATION

10

13.

INDEPENDENT ACTIVITIES

11

14.

CONFIDENTIALITY OF INFORMATION

12

15.

ARBITRATION

12

16.

DELAYS

13

17.

ASSIGNMENT

13

18.

NOTICES

14

19.

GENERAL TERMS AND CONDITIONS

15

SCHEDULE "A":
SCHEDULE "B":
SCHEDULE "C":

The Property
Joint Venture Agreement
Technical Services Agreement

 

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SAN JUAN PROPERTY

PROPERTY OPTION AGREEMENT

THIS AGREEMENT is made as of the 10th day of November, 2006,

BETWEEN:

 

PETAQUILLA MINERALS LTD.

, a company duly incorporated under the laws of the Province of British Columbia
and having its head office at #410 - 475 West Georgia Street, Vancouver, B.C.,
V6B 4M9

(hereinafter referred to as the "Optionor")

OF THE FIRST PART,

AND:

REVELSTOKE INDUSTRIES, INC.

, a company duly incorporated under the laws of the State of Nevada and having
its head office at 1081 Kent Street, White Rock, B.C., V4B 4T2

(hereinafter referred to as "Revelstoke")

OF THE SECOND PART.

RECITALS

                         WHEREAS the Optionor, through its wholly-owned
Panamanian subsidiary, is the beneficial owner of a 100% interest in five
exploration concessions situated in the Republic of Panama, more particularly
described in Schedule "A" attached hereto and made a part hereof (hereinafter
collectively called the "Property");

                         AND WHEREAS the Optionor has agreed to grant to
Revelstoke options to purchase a 60% or a 70% undivided interest in and to the
Property;

                         AND WHEREAS Revelstoke's common shares are quoted on
the Over the Counter Bulletin Board (the "OTCBB");

                         NOW THEREFORE THIS AGREEMENT WITNESSETH that in
consideration of the mutual covenants and agreements herein contained and
subject to the terms and conditions hereafter set out, the parties hereto agree
as follows:

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1.          GRANT OF FIRST OPTION

1.01       The Optionor, in consideration of the sum of $10, the receipt and
sufficiency of which is hereby acknowledged, hereby grants to Revelstoke, on the
terms and conditions hereinafter set out, the exclusive right and option (the
"First Option") to acquire a 60% undivided interest in and to the Property by
paying to the Optionor the sum of $600,000 cash, by issuing to the Optionor
4,000,000 shares in the capital of Revelstoke and by incurring, directly or
indirectly, and paying for $6,000,000 in "Exploration Expenditures" (as
hereinafter defined), to be respectively paid and issued to the Optionor and
incurred and paid by Revelstoke as follows:

(a)       the sum of $100,000 in cash , the prior receipt of which from
Revelstoke Industries, Inc, Revelstoke's predecessor in interest, is hereby
acknowledged by the Optionor;

(b)       4,000,000 common shares of Revelstoke with a par value of $0.001 per
common share, to be issued and delivered to the Optionor within five business
days from the execution and delivery of this agreement,

(c)       an additional $200,000 in cash to be paid by wire transfer in
immediately available funds, and Exploration Expenditures of not less than
$1,000,000 to be incurred and paid, both on or before May 31, 2007;

(d)       an additional $300,000 in cash to be paid by wire transfer in
immediately available funds, and cumulative Exploration Expenditures of not less
than $3,000,000 to be incurred and paid, both on or before May 31, 2008; and

(e)       cumulative Exploration Expenditures of not less than $6,000,000 to be
incurred and paid on or before May 31, 2009.

1.02       In this agreement, "Exploration Expenditures" means all direct and
indirect costs and expenses, however denominated, incurred by Revelstoke on or
in connection with the prospecting, exploration and development of the Property
and shall include, without limiting generality:

(a)       all expenditures required to maintain the Property in good standing in
accordance with the laws of the jurisdiction in which the Property is situated;

(b)       all expenditures required to acquire and maintain insurance pursuant
to this agreement;

(c)       all expenditures made relating to reclamation, rehabilitation and
protection of the environment; and

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(d)       the management fee payable under the "Technical Services Agreement"
referred to in paragraph 3.01 hereof.

1.03       If Revelstoke fails to incur the Exploration Expenditures listed in
paragraph 1.01 by the end of the last day on which the same was due to be
incurred , Revelstoke may, at any time within 15 days of such day, make a cash
payment to the Optionor in an amount equal to the deficiency in the Exploration
Expenditures. Any cash payment so made shall be deemed to have been Exploration
Expenditures duly and properly incurred in an amount equal to the cash payment.

1.04       In this agreement, a written notice delivered by Revelstoke to the
Optionor by no later than 30 days after each of the dates listed in paragraph
1.01 on or before which Exploration Expenditures are to be incurred and paid and
accompanied by a statement of a representative of Revelstoke to the effect that
the amount of Exploration Expenditures have been incurred and paid by the
applicable date shall be conclusive evidence of the making thereof unless the
Optionor questions the accuracy of such statement in writing within 15 days of
receipt. If the Optionor questions the accuracy of the statement, the matter
shall be referred to a firm of Chartered Accountants for final determination. If
such firm determines, after having consulted with Revelstoke, that the
Exploration Expenditures incurred and paid were less than those reported by
Revelstoke, Revelstoke shall not lose any of its rights hereunder provided
Revelstoke pays to the Optionor within 15 days of the receipt of the
determination 100% of the deficiency in such Exploration Expenditures. If
Revelstoke makes such payment, it shall be deemed to have timely incurred and
paid Exploration Expenditures equal to such payment and be deemed in full
compliance with its obligations under paragraph 1.01. If the firm of Chartered
Accountants determines that the Exploration Expenditures incurred were less than
95% of those reported by Revelstoke, Revelstoke shall pay the entire cost of the
determination; it they were 95% to 105% of those reported by Revelstoke, the
cost of the determination shall be paid by Revelstoke and the Optionor equally;
if in excess of 105% of the Exploration Expenditures reported by Revelstoke, the
Optionor shall pay the entire cost of the Chartered Accountant's determination.

1.05       During the currency of this agreement, the Optionor shall be entitled
to nominate, and Revelstoke shall use its best efforts to cause to be appointed
or elected, that number of directors of Revelstoke as most closely equates to
40% of the total number of directors of Revelstoke from time to time.

1.06       As soon as practicable following the execution and delivery of this
agreement, Revelstoke shall establish a stock option plan which allocates not
less than 15% of the then issued shares in the capital of Revelstoke for the
granting of options, and shall grant to the Optionor or its nominees stock
options equal in number to not less than one-third of the number of options
allocated under such plan. Thereafter, and during the currency of this
agreement, Revelstoke shall maintain the grants to the Optionor or its nominees
of stock options equal in number to not less than one-third of the number of
options allocated under Revelstoke's stock option plan then in effect.

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1.07       During the currency of this agreement, and in the event that
Revelstoke proposes to issue shares for cash (the "Offering"), Revelstoke shall
give written notice to the Optionor containing all material details of the
Offering. Within 15 days of receipt of such notice, the Optionor shall give
notice to Revelstoke as to whether the Optionor wishes to participate in the
Offering, and shall advise Revelstoke of the number of shares of Revelstoke of
which the Optionor was the beneficial owner on the date of receipt of the notice
of the Offering. If the Optionor elects to participate in the Offering, it shall
have the right to purchase under the Offering such number of securities as will
maintain the Optionor's percentage holding of the issued shares of Revelstoke as
calculated on the date of receipt of the notice of the Offering.

2.          EXERCISE OF FIRST OPTION AND GRANT OF SECOND OPTION

2.01       Revelstoke shall be deemed to have exercised the First Option and
shall have acquired a 60% undivided interest in and to the Property, by making
aggregate cash payments to the Optionor of $600,000, by issuing to the Optionor
4,000,000 shares and by having incurred and paid for cumulative Exploration
Expenditures of $6,000,000, all in accordance with Article 1 hereof.

2.02       Subject to the prior exercise of the First Option, the Optionor
hereby grants to Revelstoke the exclusive right and option (the "Second Option")
to increase Revelstoke's undivided interest in and to the Property from 60% to
70% by incurring and paying for $3,000,000 in Exploration Expenditures during
the period between the delivery of the "Notice of Election" referred to in
paragraph 2.03 and May 31, 2010.

2.03       Within 60 days following the exercise of the First Option, Revelstoke
shall give the Optionor notice (the "Notice of Election") that either:

(a)       Revelstoke elects to accept the grant of the Second Option; or

(b)       Revelstoke elects not to accept the grant of the Second Option.

              Failure of Revelstoke to give any such notice shall be deemed to
be an election under subparagraph 2.03(a).

2.04       If Revelstoke makes the election under subparagraph 2.03(b), all
further work on and with respect to the Property, and the subsequent
relationship between the Optionor and Revelstoke in relation to the Property
shall be governed by a joint venture agreement between the parties (the "JVA"),
as attached hereto as Schedule "B". The Optionor and Revelstoke will forthwith
execute the JVA in the form attached as Schedule "B". In such circumstances,
Revelstoke and the Optionor shall have an initial "Interests" (as defined in the
JVA) of 60% and 40% respectively.

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2.05       If Revelstoke elects to be granted, but fails to exercise, the Second
Option, Revelstoke and the Optionor shall have initial Interests of 60% and 40%
respectively. .

2.06       Revelstoke shall be deemed to have exercised the Second Option and
shall have acquired a 70% undivided interest in and to the Property, by having
incurred and paid for $3,000,000 in Exploration Expenditures during the period
between the delivery of the Notice of Election and May 31, 2010, all in
accordance with paragraph 2.02 above.

2.07       The provisions of paragraphs 1.03 and 1.04 hereof shall apply mutatis
mutandis to the Exploration Expenditures incurred and paid pursuant to paragraph
2.02.

2.08       If the Second Option is exercised, the Optionor and Revelstoke will
forthwith execute the JVA in the form attached as Schedule "B", and Revelstoke
and the Optionor shall have initial "Interests" therein of 70% and 30%
respectively.

3.          TECHNICAL SERVICES AGREEMENT

3.01       During the currency of the First Option and, if applicable, the
Second Option, Revelstoke hereby engages Petaquilla Minerals Ltd., or a
subsidiary thereof (in this agreement referred to as the "Operator"), as an
independent contractor, to carry out all work on and in connection with the
Property. Upon the execution of this agreement, the parties will in good faith,
negotiate and execute a Technical Services Agreement, substantially in the form
of Schedule "C".

3.02       The Operator shall prepare draft exploration programs for each
calendar year, and shall deliver such programs to Revelstoke not fewer than 45
days prior to the anticipated date for the commencement of such program. The
first program shall cover the partial year from the date of execution of this
agreement to December 31, 2006. The Operator and Revelstoke shall review each
draft program and budget, and each shall use its best efforts to agree with the
other on the final program and budget terms and costs. However, in the event
that consensus is not reached, the matter shall be determined by an independent
"Qualified Person", as defined in National Instrument 43-101 promulgated by the
Canadian Securities Administrators, as selected by the Operator.

3.03       During the currency of the Technical Services Agreement, Revelstoke,
at its sole risk and expense, shall have access to the Property at all
reasonable times and intervals to review the Operator's operations thereon.

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4.          OPTIONS ONLY

4.01       This agreement represents the granting of options only, and except as
herein specifically provided otherwise, nothing herein contained shall be
construed as obligating Revelstoke to do any acts or make any payments
hereunder, and any act or acts or payment or payments as shall be made hereunder
shall not be construed as obligating Revelstoke to do any further act or make
any further payment or payments.

5.0          SHARE ISSUANCES

5.01       The parties acknowledge that the shares in the capital of Revelstoke
to be issued and delivered pursuant to this agreement may be subject to hold
periods and legending requirements as required by applicable securities laws and
regulation. For greater certainty, the shares of Revelstoke to be issued to the
Optionor hereunder shall be free of all restrictions on trading other than those
imposed by law or a securities regulatory body with jurisdiction over
Revelstoke.

5.02       Revelstoke has not granted or agreed to grant to the Optionor any
rights (including piggyback registration rights), to have any securities of
Revelstoke registered with the U.S. Securities and Exchange Commission or
registered or qualified with any other governmental authority.

6.          TRANSFER OF TITLE

6.01        Forthwith following the exercise of the First Option , the Optionor
shall deliver to Revelstoke confirmation satisfactory to Revelstoke that
Revelstoke is the beneficial owner of a 60% undivided interest in the Property.
In the event that Revelstoke elects not to be granted the Second Option, or if
both the First Option and Second Option are exercised, the parties' respective
interests in the Property shall be held in accordance with the terms and
conditions of the JVA.

7.          RIGHT OF ENTRY

7.01       During the currency of this agreement until the JVA comes into
effect, Revelstoke, its servants, agents and workmen and any persons duly
authorized by Revelstoke, shall have the right of access to and from and,
subject to sub-paragraph 11.01(f) hereof, the exclusive right to enter upon and
take possession of and prospect, explore and develop the Property in such manner
as Revelstoke in its sole discretion may deem advisable. Revelstoke hereby
confirms that for the currency of the Technical Services Agreement, assigns the
foregoing rights to the Operator.

8.          REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR

8.01       The Optionor hereby represents and warrants to Revelstoke that:

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(a)       the Optionor, or a wholly-owned subsidiary thereof, is the recorded
and beneficial owner of a 100% interest in and to the Property;

(b)       the exploration concessions comprising the Property have been validly
acquired and are now duly recorded and in good standing in accordance with the
laws of the Republic of Panama;

(c)       it has full corporate power and authority to enter into this
agreement;

(d)       the entering into of this agreement does not conflict with any
applicable laws or with its charter documents, nor does it conflict with, or
result in a breach of, or accelerate the performance required by any contract or
other commitment to which it is a party or by which it is bound;

(e)       the Optionor, has the exclusive right to enter into this agreement and
all necessary authority to assign to Revelstoke up to a 70% right, title and
interest in and to the Property in accordance with the terms and conditions of
this agreement;

(f)       the Optionor has the exclusive right to receive 100% of the proceeds
from the sale of minerals, metals, ores or concentrates removed from the
Property and no person, firm or corporation, other than the Government of the
Republic of Panama, is entitled to any royalty or other payment in the nature of
rent or royalty on such materials removed from the Property or is entitled to
take such materials in kind;

(g)       the Property is free and clear of all liens, charges and encumbrances,
other than those imposed by the Government of the Republic of Panama as part of
the granting of the concessions comprising the Property; and

(h)       to the best of the Optionor's knowledge, information and belief, there
are no actual, alleged or potential adverse claims, challenges, suits, actions,
prosecutions, investigations or proceedings against or to the ownership of or
title to the Property or any portion thereof, nor to the best of the Optionor's
knowledge is there any basis therefor.

8.02       The representations and warranties hereinbefore set out are
conditions upon which Revelstoke has relied in entering into this agreement and
shall survive the exercise of the First Option or Second Option, as the case may
be, and the Optionor hereby forever indemnifies and saves Revelstoke harmless
from all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation or warranty made by it and contained in
this agreement.

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8

9.       REPRESENTATIONS AND WARRANTIES OF REVELSTOKE

9.01       Revelstoke represents and warrants to the Optionor that:

(a)       it has full corporate power and authority to enter into this
agreement;

(b)       the entering into of this agreement does not conflict with any
applicable laws or with its charter documents nor does it conflict with, or
result in a breach of, or accelerate the performance required by any contract or
other commitment to which it is party or by which it is bound;

(c)       it is a company in good standing pursuant to the laws of the State of
Nevada;

(d)       its authorized share capital consists of 50,000,000 common shares with
a par value of $0.001 per common share, of which 37,200,000 common shares are
issued and outstanding as of the date of this agreement;

(e)       the price of its common shares is or will be quoted on the OTCBB;

(f)       the shares issued to the Optionor pursuant to this agreement will,
when issued, be fully paid and non-assessable shares in the capital of
Revelstoke, free and clear of all charges, liens and encumbrances, and shall be
free of all restrictions on trading other than those required by law or by any
securities regulatory body having jurisdiction over Revelstoke;

(g)       it will use its best efforts to raise not less than $2,000,000 by the
sale of shares at a price of not less than $1.00 per share, on or before
November 16, 2007; and

(h)       it will incorporate a subsidiary under the laws of the Republic of
Panama as soon as is necessary or desirable in order to carry out its
obligations hereunder or to hold title to its interest in the Property.

9.02       The representations and warranties hereinbefore set out are
conditions upon which the Optionor has relied in entering into this agreement
and shall survive the exercise of the First Option or the Second Option, as the
case may be, and Revelstoke hereby indemnifies and saves the Optionor harmless
from all loss, damage, costs, actions and suits arising out of or in connection
with any breach of any representation or warranty made by it and contained in
this agreement.

10.         COVENANTS OF THE OPTIONOR

10.01     The Optionor hereby covenants with and to Revelstoke that:

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(a)       it will, within 30 days following the execution and delivery of this
agreement, provide Revelstoke with all of the data and information in its
possession or under its control relating to the Optionor's exploration
activities on and in the vicinity of the Property; and

(b)       until such time as the First Option, or the Second Option as the case
may be, is exercised or otherwise terminates, it will not deal, or attempt to
deal with its right, title and interest in and to the Property in any way that
would adversely affect the right of Revelstoke to become absolutely vested in up
to a 70% undivided interest in and to the Property, free and clear of any liens,
charges and encumbrances.

11.         COVENANTS OF REVELSTOKE

11.01     Revelstoke covenants and agrees with the Optionor that until the First
Option or the Second Option, as the case may be, is exercised or otherwise
terminates it shall:

(a)       carry out and record or cause to be carried out and recorded all such
work upon the Property as may be required in order to maintain the Property in
good standing at all times;

(b)       keep the Property clear of liens and other charges arising from its
operations thereon;

(c)       in the absence of an executed Technical Services Agreement, carry on
all operations on the Property in compliance with all applicable governmental
regulations and restrictions;

(d)       pay or cause to be paid any rates, taxes, duties, royalties,
assessments or fees levied with respect to the Property or Revelstoke's
operations thereon;

(e)       in the absence of an executed Technical Services Agreement, indemnify
and hold the Optionor harmless from and against any and all liabilities, costs,
damages or charges arising from the failure of Revelstoke to comply with the
covenants contained in this article or otherwise arising from its operations on
the Property;

(f)       allow the Optionor or any duly authorized agent or representative of
the Optionor to inspect the Property upon giving Revelstoke 48 hours written
notice; PROVIDED HOWEVER that it is agreed and understood that the Optionor or
any such agent or representative shall not interfere with Revelstoke's
activities on the Property and shall be at his own risk and that Revelstoke
shall not be liable for any loss, damage or injury incurred by the Optionor or
its agent or representative arising from its inspection of the Property, however
caused;

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10

(g)       in the absence of an executed Technical Services Agreement, allow the
Optionor access at all reasonable times and intervals to all factual maps,
reports, assay results and other factual technical data prepared or obtained by
Revelstoke in connection with its operations on the Property;

(h)       during the currency of the First Option and the Second Option, as the
case may be, and in the absence of an executed Technical Services Agreement,
prepare and deliver to the Optionor on or before January 31, a comprehensive
annual report, setting out the work performed during each 12-month period ending
the preceding December 31, together with copies of all material assay results
and reports of sub-contractors;

(i)       provide the Optionor with copies of any and all documents filed by
Revelstoke with the Government of the Republic of Panama with respect to the
Property;

(j)       in the absence of an executed Technical Services Agreement, obtain and
maintain or cause any contractor engaged by it hereunder to obtain and maintain,
during any period in which active work is carried out hereunder, reasonably
adequate insurance; and

(k)       indemnify and save the Optionor, its directors, officers, employees
and agents, harmless from and against any claim made with respect to an interest
in the Property or an interest in this agreement by Eurogold Mining, Inc.

12.         TERMINATION

12.01     Revelstoke, at any time after it has paid the Optionor $100,000, has
issued and delivered 4,000,000 shares to the Optionor and has incurred and paid
for Exploration Expenditures of not less than $1,000,000, may terminate this
agreement at any time upon giving 30 days' written notice thereof to the
Optionor.

12.02     Notwithstanding paragraph 12.01, if Revelstoke fails to make any
payment or fails to do any thing on or before the last day provided for such
payment or performance under this agreement, the Optionor may terminate this
agreement but only if:

(a)       it shall have first given to Revelstoke written notice of the failure
containing particulars of the payment which Revelstoke has not made or the act
which Revelstoke has not performed; and

(b)       if the notice relates to a cash payment to the Optionor, Revelstoke
has not made such payment within five business days following delivery of the
Optionor's notice; or

(c)       in every other case, Revelstoke has not within 30 days following
delivery of the Optionor's notice given notice to the Optionor that it has cured
such failure or commenced proceedings to cure such failure by appropriate
performance (Revelstoke hereby agreeing that should it so commence to cure any
failure it will prosecute the same to completion without undue delay).

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12.03     Should Revelstoke fail to make the payment contemplated in
sub-paragraph 12.02(b) within the said five business days, this agreement shall
be deemed to have terminated on the day following the last day provided for the
payment the failure of which by Revelstoke caused the Optionor to issue the
notice referred to in subparagraph 12.02(a) hereof.

12.04     Should Revelstoke fail to deliver the notice provided for in
sub-paragraph 12.02(c) within the said 30 days, this agreement shall be deemed
to have terminated on the day following the last day provided for the
performance the failure of which by Revelstoke caused the Optionor to issue the
notice referred to in subparagraph 12.02(a) hereof.

12.05     Upon termination of this agreement under this article 12, Revelstoke:

(a)       shall cause the Property to be maintained in good standing for a
period of at least 12 months from the date of termination;

(b)       shall deliver to the Optionor, within 60 days of the effective date of
termination, copies of all factual maps, reports, assay results and other
factual data and documentation in its possession relating to its operations on
the Property;

(c)       forfeits any and all interest in the Property hereunder and shall
cease to be liable to the Optionor in debt, damages or otherwise save for the
performance of those of its obligations which were not satisfied on the
effective date of termination and which otherwise survive the termination of
this agreement; and

(d)       shall vacate the Property within a reasonable time after such
termin-ation, but shall have the right of access to the Property for a period of
six months thereafter for the purpose of removing its chattels, machinery,
equipment and fixtures therefrom.

13.         INDEPENDENT ACTIVITIES

13.01     Except as expressly provided herein, each party shall have the free
and unrestricted right to independently engage in and receive the full benefit
of any and all business endeavours of any sort whatsoever, whether or not
competitive with the endeavours contemplated herein without consulting the other
or inviting or allowing the other to participate therein. No party shall be
under any fiduciary or other duty to the other which will prevent it from
engaging in or enjoying the benefits of competing endeavours within the general
scope of the endeavours contemplated herein. The legal doctrines of "corporate
opportunity" sometimes applied to persons engaged in a joint venture or having
fiduciary status shall not apply in the case of any party. In particular,
without limiting the foregoing, no party shall have an obligation to any other
party as to:

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12

(a)       any opportunity to acquire, explore and develop any mining property,
interest or right presently owned by it or offered to it outside the Property at
any time; and

(b)       the erection of any mining plant, mill, smelter or refinery, whether
or not such mining plant, mill, smelter or refinery treats ores or concentrates
from the Property.

14.         CONFIDENTIALITY OF INFORMATION

14.01     Except as otherwise provided in this paragraph, both parties shall
treat all data, reports, records and other information relating to this
agreement and the Property as confidential. The text of any news release or any
other public statements, other than those required by law or regulatory bodies
or stock exchanges, which a party desires to make shall be sent to the other
party for its comments prior to publication and shall not include references to
the other party unless such party has given its prior consent in writing, such
consent not to be unreasonably withheld. The text of any disclosure which a
party is required to make by law, by regulatory bodies or stock exchanges shall
be sent to the other party prior to filing in order that the other party may
have the opportunity to comment thereon. For all public disclosure, whether
required to be made or not, any reasonable changes requested by the
non-disclosing party shall be incorporated into the disclosure document.

15.         ARBITRATION

15.01     If there is any disagreement, dispute or controversy (hereinafter
collectively called a "dispute") between the parties with respect to any matter
arising under this agreement or the construction hereof, then the dispute shall
be determined by arbitration in accordance with the following procedures:

(a)       the parties to the dispute shall appoint a single mutually acceptable
arbitrator. If the parties cannot agree upon a single arbitrator, then the party
on one side of the dispute shall name an arbitrator, and give notice thereof to
the party on the other side of the dispute;

(b)       the party on the other side of the dispute shall within 14 days of the
receipt of notice, name an arbitrator; and

(c)       the two arbitrators so named shall, within seven days of the naming of
the later of them, name a third arbitrator.

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If the party on either side of the dispute fails to name its arbitrator within
the allotted time, then the arbitrator named may make a determination of the
dispute. Except as expressly provided in this paragraph, the arbitration shall
be conducted in Vancouver, B.C. and in accordance with the Commercial
Arbitration Act (British Columbia). The decision shall be made within 30 days
following the naming of the latest of them, shall be based exclusively on the
advancement of exploration, development and production work on the Property and
not on the financial circumstances of the parties, and shall be conclusive and
binding upon the parties. The costs of arbitration shall be borne equally by the
parties to the dispute unless otherwise determined by the arbitrator(s) in the
award.

16.         DELAYS

16.01     If any party should be delayed in or prevented from performing any of
the terms, covenants or conditions of this agreement by reason of a cause beyond
the control of such party, whether or not foreseeable, including fires, floods,
earthquakes, subsidence, ground collapse or landslides, interruptions or delays
in transportation or power supplies, First Nations land claims and blockades,
strikes, lockouts, wars, acts of God, government regulation (including currency
control) or interference or the inability to secure on reasonable terms any
private or public permits or authorizations, then any such failure on the part
of such party to so perform shall not be deemed to be a breach of this agreement
and the time within which such party is obliged to comply with any such term,
covenant or condition of this agreement shall be extended by the total period of
all such delays. In order that the provisions of this article may become
operative, such party shall give notice in writing to the other party, forthwith
and for each new cause of delay or prevention and shall set out in such notice
particulars of the cause thereof, and the day upon which the same arose, and
shall take all reasonable steps to remove the cause of such delay or prevention,
and shall give like notice forthwith following the date that such cause ceased
to subsist.

17.         ASSIGNMENT

17.01     Either party may at any time dispose of all or any part of its
interest in and to the Property and this agreement to any third party (the
"Assignee") provided that the Assignee shall, prior to and as a condition
precedent to such disposition, deliver to the non-assigning party its covenant
with and to the non-assigning party that:

(a)       to the extent of the disposition, the Assignee agrees to be bound by
the terms and conditions of this agreement as if it had been an original party
hereto; and

(b)       it will subject any further disposition of the interest acquired to
the restrictions contained in this paragraph;

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14

AND FURTHER PROVIDED THAT the non-assigning party shall have given its prior
written consent to such disposition, such consent not to be unreasonably
withheld or delayed.

18.         NOTICES

18.01     Any notice, election, consent or other writing required or permitted
to be given hereunder shall be deemed to be sufficiently given if delivered or
if mailed by registered air mail or by fax, addressed as follows:

In the case of the Optionor:

PETAQUILLA MINERALS LTD.
#410 - 475 W. Georgia Street
Vancouver, B.C. V6B 4M9
Attention: President

Fax No: (604) 694-0063

With a copy to:

VECTOR CORPORATE FINANCE LAWYERS
Barristers and Solicitors
Suite 1040, 999 West Hastings Street
Vancouver, BC V6C 2W2
Attention: Graham H. Scott
Fax No: (604) 683-2643

In the case of Revelstoke:

REVELSTOKE INDUSTRIES, INC.
1081 Kent Street
White Rock, BC V4B 4T2
Attention: President
Fax No: (604) §

With a copy to:

Lang Michener LLP
Suite 1500, 1055 West Georgia Street
Vancouver, BC V6E 4N7
Attention: Thomas J. Deutsch
Fax No: (604) 893-2679

and any such notice given as aforesaid shall be deemed to have been given to the
parties hereto if delivered, when delivered, or if mailed, on the third business
day following the date of mailing, or, if faxed, on the next succeeding business
day following the faxing thereof PROVIDED HOWEVER that during the period of any
postal interruption in either the country of mailing or the country of delivery,
any notice given hereunder by mail shall be deemed to have been given only as of
the date of actual delivery of the same. Any party may from time to time by
notice in writing change its address for the purpose of this paragraph.

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15

19.         GENERAL TERMS AND CONDITIONS

19.01     The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this agreement, including the execution of such agreements as may be
necessary to comply with the applicable laws of the Republic of Panama.

19.02     This agreement shall represent the entire understanding between the
parties with respect to the subject matter hereof and replaces and supersedes
all prior agreements and understandings between them with respect to the
Property. In particular, upon the execution and delivery of this agreement, that
agreement dated May 8, 2006, between the Optionor and Revelstoke's predecessor
in interest shall automatically terminate. No representations or inducements
have been made save as herein set forth. No changes, alterations, or
modifications of this agreement shall be binding upon either party until and
unless a memorandum in writing to such effect shall have been signed by both
parties hereto.

19.03     The titles to the articles to this agreement shall not be deemed to
form part of this agreement but shall be regarded as having been used for
convenience of reference only.

19.04     The schedules to this agreement shall be construed with and form an
integral part of this agreement to the same extent as if they were set forth
verbatim herein.

19.05     All references to dollar amounts contained in this agreement are
references to United States funds.

19.06     This agreement will be exclusively governed by, and interpreted and
construed in accordance with, the laws prevailing in the Province of British
Columbia, without reference to its jurisprudence regarding conflict of laws. To
the extent that any party to this agreement seeks a remedy from a court, the
parties irrevocably and unconditionally attorn to the exclusive jurisdiction of
the courts of the Province of British Columbia and all courts having appellate
jurisdiction thereover.

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16

19.07     This agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.

19.08     This agreement may be signed by the parties hereto in as many
counterparts as may be necessary and, if required, by facsimile, each of which
so signed being deemed to be an original, and such counterparts together shall
constitute one and the same instrument and notwithstanding the date of execution
will be deemed to bear the date as set forth on the front page of this
agreement.

               IN WITNESS WHEREOF this agreement has been executed by the
parties hereto as of the day and year first above written.

 

The COMMON SEAL of PETAQUILLA MINERALS LTD. was hereunto affixed in the presence
of:

/s/ Michael Levy         
MICHAEL LEVY

                                                                          

)
)
)
)
)
)
)
)
)

c/s

 

The COMMON SEAL of REVELSTOKE INDUSTRIES, INC. was hereunto affixed in the
presence of:

/s/ Marcus Johnson         
MARCUS JOHNSON
                                                                          

)
)
)
)
)
)
)
)
)

c/s

This is page 16 of that certain agreement dated November 16, 2006, between
PETAQUILLA MINERALS LTD. of the first part and REVELSTOKE INDUSTRIES, INC. of
the second part.

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SCHEDULE "A"

TO THAT PROPERTY OPTION AGREEMENT MADE AS OF NOVEMBER 16, 2006, BETWEEN
PETAQUILLA MINERALS LTD. OF THE FIRST PART AND REVELSTOKE INDUSTRIES, INC. OF
THE SECOND PART

 

THE "PROPERTY"

NAME OF CONCESSION

AREA (SQ. KM.)

EXPIRY DATE

San Juan Zona 1

24

 

San Juan Zona 2

12

 

San Juan Zona 3

10

 

San Juan Zona 4

12

 

San Juan Zona 5

54

 

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

SCHEDULE "B"

TO THAT CERTAIN AGREEMENT MADE AS OF NOVEMBER 16, 2006, BETWEEN PETAQUILLA
MINERALS LTD. OF THE FIRST PART AND REVELSTOKE INDUSTRIES, INC. OF THE SECOND
PART

 

 

SAN JUAN PROPERTY

JOINT VENTURE AGREEMENT

I N D E X

Item

Heading

Page

1.

INTERPRETATION

1

2.

FORMATION OF THE JOINT VENTURE

6

3.

INTERESTS

6

4.

MANAGEMENT COMMITTEE

7

5.

OPERATOR

9

6.

RIGHTS, DUTIES AND STATUS OF OPERATOR

10

7.

EXPLORATION PROGRAMS

12

8.

FEASIBILITY REPORT

16

9.

PRODUCTION NOTICE

16

10.

ELECTION TO CONTRIBUTE

17

11.

OPERATOR'S FEE

19

12.

MINE FINANCING

19

13.

CONSTRUCTION

19

14.

OPERATION OF THE MINE

19

15.

PAYMENT OF MINE COSTS

20

16.

DISTRIBUTION IN KIND

21

17.

SURRENDER OF INTEREST

22

18.

TERMINATION OF MINING OPERATIONS

23

19.

THE PROPERTY

25

20.

AREA OF COMMON INTEREST

25

21.

INFORMATION AND DATA

26

22.

LIABILITY OF THE OPERATOR

27

23.

INSURANCE

27

24.

RELATIONSHIP OF PARTIES

28

25.

PARTITION

28

26.

TAXATION

28

27.

FORCE MAJEURE

28

28.

NOTICE

29

29.

WAIVER

29

30.

AMENDMENTS

29

31.

TERM

30

32.

TIME OF ESSENCE

30

33.

ASSIGNMENT RIGHT OF FIRST REFUSAL

30

34.

SUCCESSORS AND ASSIGNS

31

35.

GOVERNING LAW

31

APPENDIX I:
APPENDIX II

Accounting Procedure
Net Proceeds of Production

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THIS AGREEMENT made the ____ day of _____________, 20__,

BETWEEN:

 

PETAQUILLA MINERALS LTD.

, a company duly incorporated under the laws of the Province of British Columbia
and having its head office at 410-475 West Georgia Street, Vancouver, B.C., V6B
4M9

(hereinafter referred to as "Petaquilla")

OF THE FIRST PART,

AND:

REVELSTOKE INDUSTRIES, INC.

, a company duly incorporated under the laws of the State of Nevada and having
its head office at 1081 Kent Street, White Rock, B.C., V4B 4T2

(hereinafter referred to as "Revelstoke")

OF THE SECOND PART.

1.                    INTERPRETATION

1.01                    In this Agreement the following words, phrases and
expressions shall have the following meanings:

(a)       "Accounting Procedure" means the procedure attached to this Agreement
as Appendix I.

(b)       "Affiliate" shall have the meaning attributed to it in the Canada
Business Corporations Act, as amended.

(c)       "Assets" means all tangible and intangible goods, chattels,
improvements or other items including, without limiting generality, land,
buildings, and equipment but excluding the Property, acquired for or made to the
Property under the Head Agreement or this Agreement in connection with the
Mining Operations.

(d)       "Completion Date" means the date determined by the Management
Committee on which it is demonstrated to the satisfaction of the Management
Committee that the preparing and equipping of the Mine is complete and is the
date on which commercial production commences.

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2

(e)       "Construction" means every kind of work carried out during the
Construction Period by the Operator in accordance with the Feasibility Report
and Production Notice related thereto, as approved by the Management Committee.

(f)       "Construction Period" means, unless the Production Notice is
subsequently withdrawn, the period beginning on the date a Production Notice is
given and ending on the Completion Date.

(g)       "Costs" means, except as to Prior Exploration Costs, all items of
outlay and expense whatsoever, direct or indirect, with respect to Mining
Operations, recorded by the Operator in accordance with this Agreement and shall
include all obligations and liabilities incurred or to be incurred with respect
to the protection of the environment such as future decommissioning, reclamation
and long-term care and monitoring, even if not then due and payable so long as
the amounts can be estimated with reasonable accuracy, and whether or not a mine
reclamation trust fund has been established. Without limiting generality, the
following categories of Costs shall have the following meanings:

(i)       "Construction Costs" means those Costs recorded by the Operator during
the Construction Period, including, without limiting generality, the Operator's
fee contemplated in article 11;

(ii)      "Exploration Costs" means those Costs recorded by the Operator during
the Exploration Period, including, without limiting generality, the Operator's
fee contemplated in article 11;

(iii)     "Mine Costs" means Construction Costs and Operating Costs;

(iv)      "Operating Costs" means those Costs recorded by the Operator
subsequent to the Completion Date, including, without limiting generality, the
Operator's fee contemplated in article 11; and

(v)       "Prior Exploration Costs" means the deemed Expenditures of the parties
under paragraph 7.09.

(h)       "Exploration Period" means the period beginning the Operative Date and
ending the date a Production Notice is given and Construction Costs are fully
committed.

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3

(i)       "Feasibility Report" means a detailed report, in form and substance
sufficient for presentation to arm's length institutional lenders considering
project financing, showing the feasibility of placing any part of the Property
into commercial production as a Mine and shall include a reasonable assessment
of the various categories of ore reserves and their amenability to metallurgical
treatment, a complete description of the work, equipment and supplies required
to bring such part of the Property into commercial production and the estimated
cost thereof, a description of the mining methods to be employed and a financial
appraisal of the proposed operations and including at least the following:

(i)       a description of that part of the Property to be covered by the
proposed Mine;

(ii)      the estimated recoverable reserves of Minerals and the estimated
composition and content thereof;

(iii)      the proposed procedure for development, mining and production;

(iv)       results of ore amenability treatment tests (if any);

(v)       the nature and extent of the facilities proposed to be acquired, which
may include mill facilities if the size, extent and location of the ore body
makes such mill facilities feasible, in which event the study shall also include
a preliminary design for such mill;

(vi)      the total costs, including capital budget, which are reasonably
required to purchase, construct and install all structures, machinery and
equipment required for the proposed Mine, including a schedule of timing of such
requirements;

(vii)     all environmental impact studies and costs of implementation;

(viii)    the period in which it is proposed the Property shall be brought to
commercial production; and

(ix)      such other data and information as are reasonably necessary to
substantiate the existence of an ore deposit of sufficient size and grade to
justify development of a mine, taking into account all relevant business, tax
and other economic considerations including a cost comparison between purchasing
or leasing and renting of facilities and equipment required for the operation of
the Property as a Mine.

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4

(j)       "Head Agreement" means the property option agreement between
Petaquilla and Revelstoke, dated November 16, 2006.

(k)       "Interest" means an undivided beneficial percentage interest in the
Property, the Assets and any Mine, calculated, during the Exploration Period,
according to article 7 and subsequent to the Exploration Period according to
article 10.

(l)       "Joint Operation" shall have the meaning attributed to it in paragraph
2.01.

(m)       "Management Committee" means the committee established pursuant to
article 4.

(n)       "Mine" means the workings established and Assets acquired, including,
without limiting generality, development headings, plant and concentrator
installations, infrastructure, housing, airport and other facilities in order to
bring the Property into commercial production in accordance with the Production
Notice.

(o)       "Minerals" means any and all ores (and concentrates derived therefrom)
and minerals, precious and base, metallic and non-metallic, in, on or under the
Property which may lawfully be explored for, mined and sold.

(p)       "Mining Operations" means every kind of work done by the Operator:

(i)       on or in respect of the Property in accordance with a Program or
Production Notice or Operating Plan; or

(ii)       if not provided for in a Program or Production Notice or Operating
Plan, unilaterally and in good faith to maintain the Property in good standing,
to prevent waste or to otherwise discharge any obligation which is imposed upon
it pursuant to this Agreement and in respect of which the Management Committee
has not given it directions;

including, without limiting generality, investigating, prospecting, exploring,
developing, property maintenance, preparing reports, estimates and studies,
designing, equipping, improving, surveying, construction and mining, milling,
concentrating, rehabilitation, reclamation, and environmental protection.

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

5

(q)       "Net Proceeds of Production" shall have the meaning attributed to it
in Appendix II.

(r)       "Operating Plan" means the annual plan of Mining Operations submitted
pursuant to paragraph 14.02.

(s)       "Operative Date" means the date upon which this Agreement becomes
effective.

(t)       "Operator" means the party appointed as the Operator in accordance
with article 5.

(u)       "Participant" means a party that is contributing to Exploration Costs
or Mine Costs, as the case may be.

(v)       "party" or "parties" means the parties to this Agreement and their
respective successors and permitted assigns which become parties pursuant to
this Agreement.

(w)       "Prime Rate" means the rate of interest stated by the ________ Bank,
Main Branch, Vancouver, British Columbia, as being charged by it on Canadian
Dollar demand loans to its most creditworthy domestic commercial customers.

(x)       "Production Notice" means a notice which is given to each of the
parties pursuant to paragraph 9.02.

(y)       "Program" means the work plan and budget of Mining Operations
conducted during the Exploration Period and adopted pursuant to paragraph 7.02.

(z)       "Property" means the mineral properties that become subject to this
Agreement on the Operative Date, any additional mineral properties that become
part of the Property pursuant to this Agreement, the Minerals thereon, all
information obtained from Mining Operations and those rights and benefits
appurtenant to the Property that are acquired for the purpose of conducting
Mining Operations.

(aa)     "Proportionate Share" means that share which is equal to a party's
percentage Interest.

(bb)     "Simple Majority" means a decision made by the Management Committee by
more than 50 percent of the votes represented and entitled to be cast at a
meeting thereof.

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6

(cc)     "Special Majority" means a decision made by the Management Committee by
more than 75 percent of the votes represented and entitled to be cast at a
meeting thereof.

(dd)     "$" means United States Dollars.

1.02                    The words "article", "paragraph", "subparagraph",
"herein" and "hereunder" refer to this Agreement. The words "this Agreement"
include every Schedule or Appendix attached hereto but exclude the Head
Agreement.

1.03                    The captions and the emphases of the defined terms have
been inserted for convenience and do not define the scope of any provision.

2.                    FORMATION OF THE JOINT VENTURE

2.01                    The parties hereby agree to associate and participate in
a joint operation (herein called the "Joint Operation") for the purpose of
exploring the Property and, if deemed warranted, bringing the Property or a
portion thereof into commercial production by establishing and operating a Mine.

2.02                    Except as expressly provided in this Agreement, each
party shall have the right independently to engage in and receive full benefits
from business activities, whether or not competitive with the Joint Operation,
without consulting any other party. The doctrines of "corporate opportunity" or
"business opportunity" shall not be applied to any other activity, venture or
operation of any party and no party shall have any obligation to another party
with respect to any opportunity to acquire any assets outside of the Property at
any time, or within the Property after the termination of this Agreement. Unless
otherwise agreed in writing, no party shall have any obligation to mill,
beneficiate or otherwise treat any Minerals or any other party's share of
Minerals in any facility owned or controlled by such party.

3.                    INTERESTS

3.01                    Except as otherwise provided herein, the parties shall
bear all Costs and all liabilities arising under this Agreement and shall own
the Property, the Assets and any Mine all in proportion to their respective
Interests.

3.02       On the Operative Date the respective Interests of the parties shall
be as follows:

(a)       If Revelstoke has exercised only the First Option under the Head
Agreement:

Petaquilla                 40%

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7

Revelstoke               60%;

(b)       If Revelstoke has exercised both the First Option and the Second
Option under the Head Agreement:

Petaquilla                 30%

Revelstoke               70%.

4.                    MANAGEMENT COMMITTEE

4.01                    A Management Committee shall be established on or
forthwith after the Operative Date. Except as herein otherwise provided, the
Management Committee shall make all decisions in respect of Mining Operations.

4.02                    Each party owning an Interest shall forthwith appoint
one representative and one alternate representative to the Management Committee.
The alternate representative may act for a party's representative in his
absence.

4.03                    The Operator shall call a Management Committee meeting
at least once every 12 months, and, in any event within 14 days of being
requested to do so by any representative.

4.04                    The Operator shall give notice, specifying the time and
place of, and the agenda for, the meeting to all representatives at least seven
days before the time appointed for the meeting. Unless otherwise agreed to by
the Management Committee, all meetings of the Management Committee shall be held
in Vancouver, British Columbia. Each agenda for a meeting shall include the
consideration and approval of the minutes of the immediately preceding meeting
of the Management Committee.

4.05                    Notice of a meeting shall not be required if
representatives of all of the parties are present and unanimously agree upon the
agenda.

4.06                    A quorum for any Management Committee meeting shall be
present if a representative of each of the parties holding an Interest is
present. If a quorum is present at the meeting, the Management Committee shall
be competent to exercise all of the authorities, powers and discretions herein
bestowed upon it hereunder. The Management Committee shall not transact any
business at a meeting unless a quorum is present at the commencement of the
meeting. If a quorum is not present within 30 minutes following the time
appointed for the commencement of the Management Committee meeting, the meeting
shall be automatically re-scheduled for the same time of day and at the same
place five business days later, and the Operator shall be under no obligation to
give any party notice thereof. A quorum shall be deemed to be present at such
re-scheduled meeting for all purposes under this Agreement if at least one
representative is present, and a party or parties holding not less than 25% in
Interest is or are represented. A representative may attend and vote at a
meeting of the Management Committee by telephone conference call in which each
representative may hear, and be heard by, the other representatives.

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8

4.07                    The Management Committee shall decide every question
submitted to it by a vote with each representative being entitled to cast that
number of votes which is equal to its party's Interest percentage. Other than as
is expressly set out herein to the contrary, the Management Committee shall make
decisions by Simple Majority. In the event of a tied vote, the chairman shall
have a casting vote in addition to the votes to which the chairman is entitled
to cast as the representative of a party.

4.08                    The representative and alternate representative of the
Operator shall be the chairman and secretary, respectively, of the Manage-ment
Committee meeting.

4.09                    The secretary of the Management Committee meeting shall
take minutes of that meeting and circulate copies thereof to each
represent-ative within a reasonable time following the termination of the
meeting, and in any event no later than the time of delivery of the notice of
the next following meeting of the Management Committee.

4.10                  The Management Committee may make decisions by obtaining
the consent in writing of the representatives of all parties. Any decision so
made shall be as valid as a decision made at a duly called and held meeting of
the Management Committee.

4.11                  Management Committee decisions made in accordance with
this Agreement shall be binding upon all of the parties.

4.12                  Each party shall bear the expenses incurred by its
representative and alternate representative in attending meetings of the
Management Committee.

4.13                  The Management Committee may, by agreement of the
representatives of all the parties, establish such other rules of procedure, not
inconsistent with this Agreement, as the Management Committee deems fit.

4.14                  Reference in this section to the "parties" shall apply
during the Exploration Period. After the date of a Production Notice this
section shall be read as if the word "Participant" appeared wherever the word
"party" appears.

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9

5.                    OPERATOR

5.01                    Petaquilla shall act as Operator for so long as its
Interest is 30% or more. If Petaquilla's Interest is less than 30%, the
Management Committee shall select a party, if such party so consents, to be the
Operator.

5.02                    The party acting as Operator may resign as Operator on
at least 90 days' notice to all the parties.

5.03                    The Management Committee may, by Special Majority,
remove the party acting as Operator, effective the date designated by the
Management Committee if:

(a)       that party makes an assignment for the benefit of its creditors, or
consents to the appointment of a receiver for all or substantially all of its
property, or files a petition in bankruptcy or is adjudicated bankrupt or
insolvent; or

(b)       a court order is entered without that party's consent:

(i)       appointing a receiver or trustee for all or substantially all of its
property; or

(ii)       approving a petition in bankruptcy or for a reorganization pursuant
to the applicable bankruptcy legislation or for any other judicial modification
or alteration of the rights of creditors; or

(c)       the Operator is in default under this Agreement and fails to cure such
default, or to commence bona fide curative measures, within 30 days of receiving
notice of the default from a non-Operator;

(d)       the Operator fails to meet any of its obligations pursuant to
paragraph 6.04; or

(e)       the Operator undergoes a change in "Control" (as hereinafter defined).

5.04                    In paragraph 5.03, "Control" means the ability, directly
or indirectly through one or more intermediaries, to direct or cause the
direction of the management and policies of the Operator through (i) the legal
or beneficial ownership of voting securities; (ii) the right to appoint
managers, directors or corporate management; (iii) contract; (iv) operating
agreement; (v) voting trust; or otherwise.

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10

5.05                    If a party resigns or is removed as Operator, the
Management Committee (the representative of the former Operator not being
entitled to vote on the resolution) shall thereupon select another party to
become the Operator effective the date established by the Management Committee.

5.06                    The new Operator shall assume all of the rights, duties,
liabilities and status of the previous Operator as provided in this Agreement.
The new Operator shall have no obligation to hire any employees of the former
Operator resulting from this change of Operator.

5.07                    Upon ceasing to be Operator, the former Operator shall
forth-with deliver to the new Operator custody of all Assets, Property, books,
records, and other property both real and personal which it prepared or
maintained in its capacity as Operator.

5.08                    If the Operator resigns or is removed and no other party
consents to act as Operator, the Joint Operation shall be terminated and the
party which was the Operator may, if it consents to act, continue to act as
Operator to effect the termination and the other parties shall be obligated to
fund their respective Proportionate Shares of the Costs incurred.

6.                    RIGHTS, DUTIES AND STATUS OF OPERATOR

6.01                    The Operator in its operations hereunder shall be deemed
to be an independent contractor. The Operator shall not act or hold itself out
as agent for any of the parties nor make any commitments on behalf of any of the
parties unless specifically permitted by this Agreement or directed in writing
by a party.

6.02                    Subject to any specific provision of this Agreement and
subject to it having the right to reject any direction on reasonable grounds by
virtue of its status as an independent contractor, the Operator shall perform
its duties hereunder in accordance with the directions of the Management
Committee and in accordance with this Agreement.

6.03                    The Operator shall manage and carry out Mining
Operations substantially in accordance with Programs, Feasibility Reports and
Production Notices, Operating Plans, Mine Maintenance Plans and Mine Closure
Plans adopted by the Management Committee and in connection therewith shall, in
advance if reasonably possible, notify the Manage-ment Committee of any change
in Mining Operations which the Operator considers material and if it is not
reasonably possible, the Operator shall notify the Management Committee so soon
thereafter as is reason-ably possible.

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11

6.04                    The Operator shall have the sole and exclusive right and
authority to manage and carry out all Mining Operations in accordance herewith
and to incur the Costs required for that purpose. In so doing the Operator
shall:

(a)       comply with the provisions of all agreements or instruments of title
under which the Property or Assets are held;

(b)       pay all Costs properly incurred promptly as and when due;

(c)       keep the Property and Assets free of all liens and encum-brances
(other than those, if any, in effect on the Operative Date, those the creation
of which is permitted pursuant to this Agreement, or builder's or mechanic's
liens) arising out of the Mining Operations and, in the event of any lien being
filed as aforesaid, proceed with diligence to contest or discharge the same;

(d)       with the approval of the Management Committee prosecute claims and,
where a defence is available, defend litigation arising out of the Mining
Operations, provided that any Participant may join in the prosecution or defence
at its own expense;

(e)       subject to paragraph 20.06, perform such assessment work or make
payments in lieu thereof and pay such rentals, taxes or other payments and do
all such other things as may be necessary to maintain the Property in good
standing, including, without limiting generality, staking and restaking mining
claims, and applying for licenses, leases, grants, concessions, permits, patents
and other rights to and interests in the Minerals;

(f)       maintain books of account in accordance with the Accounting Procedure,
provided that the judgment of the Operator as to matters related to the
accounting, for which provision is not made in the Accounting Procedure, shall
govern if the Operator's accounting practices are in accordance with accounting
principles generally accepted in the mining industry in Canada;

(g)       perform its duties and obligations hereunder in a sound and
workmanlike manner, in accordance with sound mining and engineering practices
and other practices customary in the Canadian mining industry, and in
substantial compliance with all applicable federal, provincial, Territorial and
municipal laws, by-laws, ordinances, rules and regulations and this Agreement;

(h)       prepare and deliver the reports provided for in paragraph 21.02; and

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(i)       have such additional duties and obligations as the Management
Committee may from time to time determine.

7.                    EXPLORATION PROGRAMS

7.01                    The Operator shall prepare draft Programs for
consideration by the Management Committee. Unless otherwise agreed to by a
Special Majority, each Program shall cover a calendar year. The draft Program
shall contain a state-ment in reasonable detail of the proposed Mining
Operations, estimates of all Exploration Costs to be incurred and an estimate of
the time when they will be incurred, and shall be delivered to each Participant
by no later than 60 days prior to the period to which the draft Program relates.
Each draft Program shall be accompanied by such reports and data as are
reasonably necessary for each party to evaluate and assess the results from the
Program for the then current year and, to the extent not previously delivered,
from earlier Programs.

7.02                    The Management Committee shall review the draft Program
prepared and, if it deems fit, adopt the Program with such modifications, if
any, as the Management Committee deems necessary. The Operator shall be entitled
to an allowance for a Cost overrun of 10 percent in addition to any budgeted
Exploration Costs and any Costs so incurred shall be deemed to be included in
the Program, as adopted.

7.03                    The Operator shall forthwith submit the adopted Program
to the parties. Each party may, within 30 days of receipt of the Program, give
notice to the Operator committing to contribute its Proportionate Share of the
Exploration Costs for that Program. A party which fails to give that notice
within the 30 day period shall be deemed to have elected not to contribute to
that Program.

7.04                    If any party elected not to contribute to a Program, the
amounts to be contributed by the parties who elected to contribute shall be
increased pro rata, subject to the right of any of them to elect, prior to the
commencement of the Program, not to contribute more than its Proportionate
Share. If one or more party so elects to contribute no more than its
Proportionate Share and the other parties do not elect to contribute pro rata to
the resulting shortfall, the Operator shall in good faith revise the Program and
Budget such that the technical objectives of the original Program are retained
to the extent that is reasonably practicable given the reduced contributions to
Costs. The Operator shall, within 15 days following the end of the 30-day period
set out in paragraph 7.03, deliver to each party a copy of the said revised
Program which, if the budget contemplates Costs of at least 80% of those
contemplated in the original adopted Program, shall then be deemed for all
purposes under this Agreement to be the adopted Program . If the budget for the
revised Program contemplates Costs of less than 80% of those contemplated in the
original adopted Program, the revised Program shall be re-submitted to the
Management Committee as a draft Program pursuant to paragraph 7.01, and the
procedure set out in paragraph 7.01 to 7.04 inclusive shall be repeated.

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7.05                    The Operator shall be entitled to invoice each
Participant:

(a)       no more frequently than monthly, for its Proportionate Share of
Exploration Costs incurred and paid by the Operator in carrying out a Program;
or

(b)       not more than 60 days in advance of requirements, for an advance of
that Participant's Proportionate Share of Exploration Costs estimated to be
incurred and paid by the Operator in carrying out a Program.

Each invoice shall be signed by a financial officer of the Operator. Each
Participant shall pay to the Operator the amount invoiced within 30 days of
receipt of the invoice. If a Participant protests the correctness of an invoice
it shall nevertheless be required to make the payment.

7.06                    If any Participant, after having committed to contribute
pursuant to paragraph 7.03, fails to pay an invoice within the 30-day period
referred to in paragraph 7.05 the Operator may by notice demand payment. If no
payment is made within the period of 30 days next succeeding the receipt of the
demand notice, that Participant shall be deemed to have forfeited its right to
contribute to any further Costs under this Agreement and it shall be deemed to
have elected not to contribute to each Program subsequently conducted and to any
Production Notice, and accordingly, shall have its Interest reduced in the
manner contemplated in paragraphs 7.09 and 10.02(b).

7.07                    The Operator shall expend all monies advanced by a
Parti-cipant ratably with the advances of the other Participants. If the
Operator suspends or prematurely terminates a Program, any funds advanced by a
Participant in excess of that Participant's Proportionate Share of Exploration
Costs incurred prior to the suspension or premature termination shall be
refunded within 60 days of the suspension or premature termination. Unless
approved unanimously by the Management Committee, the Operator shall be
exclusively liable for the payment of all Costs incurred in excess of 110
percent of any budgeted Exploration Costs.

7.08                    Unless otherwise directed by the Management Committee,
the Operator may suspend or terminate prematurely any Program when the Operator,
in good faith, considers that conditions are not suitable for the proper
continuation or completion of the Program or the results obtained to that time
eliminate or substantially impair the technical rationale on which the Program
was based. If any Program is altered, suspended or terminated premature-ly so
that the Exploration Costs incurred on that Program as altered, suspended or
terminated are less than 80 percent of the Exploration Costs set out in the
adopted Program, any party which elected not to contribute to that Program shall
be given notice of the alteration, suspension or termination by the Operator and
shall be entitled to contribute its Proportionate Share of the Exploration Costs
incurred on that Program by payment thereof to the Operator within 30 days after
receipt of the notice, but shall not be entitled to review the results of the
Program until it has made full payment. If payment is not made by that party
within the 30 days afore-said it shall forfeit its right to contribute to that
Program without a demand for payment being required to be made thereafter by the
Manage-ment Committee. If payment is made by that party within the 30 days as
aforesaid, the Operator shall distribute the payment to the original
Participants pro rata according to their respective contributions to the
Program, and shall deliver to the new Participant copies of all data previously
delivered to the other Participants with respect to that Program

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7.09                    If a party elected not to contribute to the Exploration
Costs of any Program the Interest of that party shall be decreased on a
straight-line basis and the Interest of each Participant contributing in excess
of its Proportionate Share of the Exploration Costs shall be increased so that,
subject to paragraph 7.10, at all times during the Exploration Period the
Interest of each party will be that percentage which is equivalent to its
Exploration Costs and Prior Exploration Costs expressed as a percentage of the
Exploration Costs and Prior Exploration Costs of all parties. Notwithstanding
the foregoing but subject to paragraph 7.10 hereof, the party whose Interest has
been reduced (other than a party who has forfeited the right to contribute
pursuant to paragraph 7.06) shall be entitled to receive details of and to
contribute to future Programs to the extent of its then Interest. On the
Operative Date, the parties' respective Interests and Prior Exploration Costs
shall be deemed to be as follows:

(a)       if Revelstoke has exercised only the First Option under the Head
Agreement:

 

Prior Exploration Costs

Interest

Petaquilla

US$4,000,000

40%

Revelstoke

US$6,000,000

60%

(b)       if Revelstoke has exercised both the First Option and the Second
Option under the Head Agreement:

 

Prior Exploration Costs

Interest

Petaquilla

US$3,857,143

30%

Revelstoke

US$9,000,000

70%

7.10                    If the effect of the application of paragraph 7.09 is to
reduce the Interest of any party to less than 10%, such party shall then be
deemed to have assigned and conveyed its Interest to the Participants, if more
than one then in proportion to their respective Interests, and shall be entitled
to receive as its sole remuneration and benefit in consideration of that
assignment and conveyance, by way of royalty, 5% of Net Proceeds of Production,
subject to adjustment as provided in paragraph 7.12.

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7.11                    If the Operator fails to submit a draft Program or a
revised Program by the date set out in this Agreement, the following shall
apply:

(a)       the Operator shall not be entitled to submit a draft Program or
revised Program for the subject period;

(b)       any Participant other than the Operator whose Interest is not less
than 20% may, within 15 days following the date by which the Operator's draft
Program or revised Program was due, submit a draft Program (the "Non-Operator's
Program") for the subject period for consideration by the Management Committee;

(c)       the Management Committee shall review the Non-Operator's Program and,
if it deems fit (the Operator not being entitled to vote with respect thereto),
adopt the Non-Operator's Program with such modifications, if any, as the
Management Committee deems necessary; the adopted Program shall then be
submitted to the parties pursuant to paragraph 7.03;

(d)       If the Operator is a party and elects to contribute to the
Non-Operator's Program, it shall remain as the Operator for the duration of the
Non-Operator's Program.

(e)       if the Operator is a party and elects not to contribute to the
Non-Operator's Program, it shall cease to be the Operator for the duration of
the Non-Operator's Program, and the Management Committee shall appoint another
party as Operator (the former Operator not being entitled to vote with respect
thereto);

(f)       following the completion of the Non-Operator's Program the former
Operator shall, subject to the provisions of paragraph 5.01, automatically
become the Operator.

7.12                    Each of Revelstoke and Petaquilla hereby agree that the
maximum royalty to which it and its assigns shall be collectively entitled
pursuant to this Agreement is 5% of Net Proceeds of Production. For example, if:

(a)       Petaquilla assigns a part of its Interest to a third party pursuant to
this Agreement, and

(b)       Petaquilla then becomes entitled to receive 5% of Net Proceeds of
Production pursuant to paragraph 7.10 or subparagraph 10.02(b); and

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(c)       the said third party then also becomes entitled to receive 5% Net
Proceeds of Production pursuant to paragraph 7.10 or subparagraph 10.02(b),

then Petaquilla and such third party shall collectively be entitled to receive 5
% of Net Proceeds of Production, allocated between them on a proportionate basis
based upon the respective Prior Exploration Costs and Exploration Costs of each
of Petaquilla and such third party at the time that the assignment and
conveyance of its Interest took place.

8.                    FEASIBILITY REPORT

8.01                    Except as provided in paragraph 8.02, a Feasibility
Report shall only be prepared with the approval of the Management Committee. The
Operator shall provide copies of the completed Feasibility Report to each of the
parties forthwith upon receipt, together with copies of all of the latest
technical data and information generated or received by the Operator from the
immediately preceding Program and not contained in the Feasibility Report.

8.02                    Notwithstanding the provisions of paragraph 8.01, if a
party (the "Proponent") is of the view that a Feasibility Report should be
prepared, such party shall give notice thereof to the Operator and the Operator
shall call a Management Committee meeting to consider the matter. If the
Management Committee fails to approve the preparation of the Feasibility Report
supported by the Proponent, the Proponent may, either alone or with other
parties, at its or their sole cost, prepare a Feasibility Report. If such
Feasibility Report indicates that production from the Property would be
profitable to the Proponent, the Proponent shall deliver the Feasibility Report
to the Operator who shall then call a Management Committee meeting to consider
the Proponent's Feasibility Report. If the Management Committee adopts the
Feasibility Report, the non-contributing parties may either pay the Proponent an
amount equal to 150% of their respective proportionate costs of the preparation
of the Feasibility Report, or shall suffer reduction of their respective
Interests pursuant to paragraph 7.09. Upon the adoption by the Management
Committee of the Proponent's Feasibility Report, it shall become a Feasibility
Report for all purposes hereunder.

8.03                    The parties shall meet at reasonable intervals and times
to review the Feasibility Report and discuss whether the establishing and
bringing of a Mine into commercial production in conformity with the Feasibility
Report is feasible or desirable.

9.                    PRODUCTION NOTICE

9.01                    The Operator shall call a Management Committee meeting
to consider the Feasibility Report for a date no sooner than three months and no
later than six months after the Feasibility Report was provided to each of the
parties.

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9.02                    The Management Committee shall consider the Feasibility
Report prepared and may by Special Majority, approve the Feasibility Report,
with such modi-fications, if any, as it considers necessary or desirable,
together with an estimate of Construction Costs. If a Feasibility Report is
approved as aforesaid the Management Committee shall forthwith cause a
Production Notice to be given to each of the parties by the Operator stating
that the Management Committee has approved that a Mine be established and
brought into production in conformity with the Feasibility Report and estimated
Construction Costs as so approved.

10.                    ELECTION TO CONTRIBUTE

10.01                  Each party with an Interest may, within 60 days of the
receipt of the Production Notice, give the Operator notice committing to
contribute its Proportionate Share of Construction Costs. A party which fails to
give that notice within the 60-day period shall be deemed to have elected not to
contribute to Construction Costs.

10.02                  If any party elects not to contribute to Construction
Costs that party, subject to its rights under paragraph 10.04, shall forfeit the
right to contribute to any further Costs under this Agreement, and those parties
which elected to contribute as aforesaid may thereupon elect to increase their
contribution to Construction Costs, if more than one party then in proportion to
their respective Interests, by the amount which any party has declined to
contribute. If elections are made so that Construction Costs are fully
committed:

(a)       the Interest of each Participant shall be increased and that of each
non-Participant shall be decreased as Costs are incurred so that the Interest of
each party at all times is that percentage which is equivalent to

(i)       the sum of its Exploration Costs, its Prior Exploration Costs and its
contribution to Construction Costs;

divided by

(ii)      the sum of the total Exploration Costs, total Prior Exploration Costs
and the total Construction Costs of all the parties;

multiplied by

(iii)     100;

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(b)       then, at the Completion Date, each non-Participant shall be deemed to
have assigned and conveyed its Interest to the Participants, if more than one
then in proportion to their respective Interests, and shall be entitled to
receive as its sole remuneration and benefit in consideration of that assignment
and conveyance, by way of royalty, subject to adjustment as provided in
paragraph 7.12, that percent of the Net Proceeds of Production, as and when
available, which is equivalent to the Interest, calculated at the Completion
Date.

(c)       each Participant shall severally calculate and cause to be paid to
each non-Participant any Net Proceeds of Production derived from the Property in
the manner provided in Appendix II; and

(d)       notwithstanding the provisions of subparagraphs 10.02(b) and (c), if
the effect of the application of subparagraph 10.02(a) reduces any party's
Interest to less than one percent it shall forfeit its Interest to the
Participants, if more than one then in proportion to their respective Interests,
and that party shall have no further right or interest under this Agreement. 

10.03                  If, after the operation of paragraph 10.02, Construction
Costs are not fully committed the Production Notice shall be deemed to be
with-drawn, and shall not be resubmitted, either in the same or a revised form,
for a period of at least six months following such withdrawal.

10.04                  If, after the operation of paragraph 10.02, Construction
Costs are fully committed, the Participants shall diligently proceed with
bringing a Mine into production in substantial conformity with the Feasibility
Report. If the Participants fail to commence the implementation of the
Feasibility Report within twelve months of Construction Costs being fully
committed, for reasons other than general economic conditions in the mining
industry, any party which forfeited the right to contribute to Construction
Costs pursuant to paragraph 10.02 shall have the right, exercisable in the 30
days following the expiration of such twelve month period, to reacquire from the
Participants not less than all of its Interest as last held, by paying its
Proportionate Share of Construction Costs incurred to the end of such twelve
month period (together with interest at the Prime Rate plus 3%) to the
Participants in proportion to their respective Interests.

10.05                  During the twelve-month period referred to in paragraph
10.04, neither the Operator nor any Participant shall be obliged to provide any
non-Participant with the results of any work carried out on the Property, the
Participants' sole obligation during such period being to provide any
non-Participant, on the written request of such non-Participant made only once
during the said twelve months, with a summary of the nature of the work carried
out and the total Costs thereof.

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11.                   OPERATOR'S FEE

11.01                    The Operator may charge 2.5% of all Costs in
consideration of acting as the Operator and in return for its head office
overhead functions which are not charged directly.

12.                   MINE FINANCING

12.01                  The contributions of the Participants toward the Mine
Costs shall be individually and separately provided by them.

12.02                  Any party may pledge, mortgage, charge or otherwise
encumber its Interest in order to secure moneys borrowed and used by that party
for the sole purpose of enabling it to finance its participation under this
Agreement or in order to secure by way of floating charge as a part of the
general corporate assets of that party moneys borrowed for its general corporate
purposes, provided that the pledgee, mortgagee, holder of the charge or
encumbrance (in this subsection called the "Chargee") shall hold the same
subject to the provisions of this Agreement and that if the Chargee realizes
upon any of its security it will comply with this Agreement. The Agreement
between the party hereto, as borrower, and the Chargee shall contain specific
provisions to the same effect as the provisions of this paragraph.

13.                   CONSTRUCTION

13.01                  Subject to paragraphs 10.02 and 10.03, the Management
Committee shall cause the Operator to, and the Operator shall, proceed with
Construction with all reasonable dispatch after a Production Notice has been
given. Construction shall be substantially in accordance with the Feasibility
Report subject to any variations proposed in the Produc-tion Notice, and subject
also to the right of the Management Committee to cause such other reasonable
variations in Construction to be made as the Management Committee, by Special
Majority, deems necessary and advisable.

14.                   OPERATION OF THE MINE

14.01                  Commencing on the Completion Date, all Mining Operations
shall be planned and conducted and all estimates, reports and statements shall
be prepared and made on the basis of a calendar year.

14.02                  With the exception of the year in which the Completion
Date occurs, an Operating Plan for each calendar year shall be submitted by the
Operator to the Participants not later than November 1 in the year immediately
preceding the calendar year to which the Operating Plan relates. Each Operating
Plan shall contain the following:

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20

(a)       a description of the proposed Mining Operations;

(b)       a detailed estimate of all Mine Costs plus a reasonable allowance for
contingencies;

(c)       an estimate of the quantity and quality of the ore to be mined and the
concentrates or metals or other products and by-products to be produced; and

(d)       such other facts as may be necessary to reasonably illustrate the
results intended to be achieved by the Operating Plan.

Upon request of any Participant the Operator shall meet with that Participant to
discuss the Operating Plan and shall provide such additional or supplemental
information as that Participant may reasonably require with respect thereto.

14.03                  The Management Committee shall adopt each Operating Plan,
with such changes as it deems necessary, by November 30 in the year immediately
preceding the calendar year to which the Operating Plan relates; provided,
however, that the Management Committee, by Special Majority, may from time to
time and any time amend any Operating Plan.

14.04                  The Operator shall include in the estimate of Mine Costs
referred to in subparagraph 14.02(b) hereof the establishment of a trust or
escrow fund providing for the reasonably estimated costs of satisfying
continuing obligations that may remain after the permanent termination of Mining
Operations, in excess of amounts actually expended. Such continuing obligations
are or will be incurred as a result of the Joint Operation and shall include
such things as monitoring, stabilization, reclamation or restoration
obligations, severance and other employee benefit costs and all other
obligations incurred or imposed as a result of the Joint Operation which
continue or arise after the permanent termination of Mining Operations and the
termination of this Agreement and settlement of all accounts. The payment of
such continuing obligations shall be made on the basis of units of production,
and shall be in amounts reasonably estimated to provide over the lifetime of
proven and probable reserves funds adequate to pay for such reclamation and long
term care and monitoring. The Participants shall contribute to the trust or
escrow fund cash (or provide letters of credit or other forms of security
readily convertible to cash in form approved by the Management Committee). The
amount contributed from time to time for the satisfaction of such continuing
obligations shall be classified as Costs hereunder but shall be segregated into
a separate account.

15.                   PAYMENT OF MINE COSTS

15.01                  The Operator may invoice each Participant, from time to
time, for that Participant's Proportionate Share of Construction Costs or
Operating Costs incurred to the date of the invoice, or at the beginning of each
month for an advance equal to that Participant's Proportionate Share of the
estimated cash disbursements to be made during the month. Each Participant shall
pay its Proportionate Share of the Construction Costs or Operating Costs or the
estimated cash disbursements aforesaid to the Operator within 30 days after
receipt of the invoice. If the payment or advance requested is not so made, the
amount of the payment or advance shall bear interest calculated monthly not in
advance from the 30th day after the date of receipt of the invoice thereof by
that Participant at a rate equivalent to the weighted average Prime Rate for the
month plus 3% until paid. The Operator shall have a lien on each Participant's
Interest in order to secure that payment or advance together with interest which
has accrued thereon.

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15.02                  If any Participant fails to pay an invoice contemplated
in paragraph 15.01 within the 30-day period aforesaid, the Operator may, by
notice, demand payment. If no payment is made within 30 days of the Operator's
demand notice, the Operator may, without limiting its other rights at law,
enforce the lien created by paragraph 15.01 by taking possession of all or any
part of that Participant's Interest. The Operator may sell and dispose of the
Interest which it has so taken into its possession by:

(a)       first offering that Interest to the other Participants, if more than
one then in proportion to the respective Interests of the Participants who wish
to accept that offer, for that price which is the fair market value stated in
the lower of two appraisals obtained by the Operator from independent, well
recognized appraisers competent in the appraisal of mining properties; and

(b)       if the Participants have not purchased all or part of that Interest as
aforesaid, then by selling the balance, if any, either in whole or in part or in
separate parcels at public auction or by private tender (the Participants being
entitled to bid) at a time and on whatever terms the Operator shall arrange,
having first given notice to the defaulting Participant of the time and place of
the sale.

As a condition of the sale as contemplated in subparagraph 15.02(b), the
purchaser shall agree to be bound by this Agreement and, prior to acquiring the
Interest, shall deliver notice to that effect to the parties, in form acceptable
to the Operator. The proceeds of the sale shall be applied by the Operator in
payment of the amount due from the defaulting Participant and interest as
aforesaid, and the balance remaining, if any, shall be paid to the defaulting
Participant after deducting reasonable costs of the sale. Any sale or disposal
made as aforesaid shall be a perpetual bar both at law and in equity by the
defaulting Participant and its successors and assigns against all other
Participants.

16.                   DISTRIBUTION IN KIND

16.01                  It is expressly intended that, upon implementation of any
Production Notice hereunder, the association of the parties hereto shall be
limited to the efficient production of Minerals from the Property and related
activities, and that each of the parties shall be entitled to use, dispose of or
other-wise deal with its Proportionate Share of Minerals as it sees fit. Each
Participant shall take in kind, f.o.b. truck or railcar on the Property, and
separately dispose of its Proportionate Share of the Minerals produced from the
Mine. From the time of delivery, each Participant shall have ownership of and
title to its Proportionate Share of Minerals separate from, and not as tenant in
common with, the other Participants, and shall bear all risk of loss of
Minerals. Extra costs and expenses incurred by reason of the Participants taking
in kind and making separate dispositions shall be paid by each Participant
directly and not through the Operator or Management Committee.

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16.02                  Each Participant shall construct, operate and maintain,
all at its own cost and expense, any and all facilities which may be necessary
to receive and store and dispose of its Proportionate Share of the Minerals at
the rate the same are produced.

16.03                  If a Participant has not made the necessary arrangements
to take in kind and store its share of production as aforesaid the Operator
shall, at the sole cost and risk of that Participant store, in any location
where it will not interfere with Mining Operations, the production owned by that
Participant. The Operator and the other parties shall be under no responsibility
with respect thereto. All of the Costs involved in arranging and providing
storage shall be billed directly to, and be the sole responsibility of the
Participant whose share of production is so stored. The Operator's charges for
such assistance and any other related matters shall be billed directly to and be
the sole responsibility of the Participant. All such billings shall be subject
to the provisions of paragraphs 15.01 and 15.02 hereof.

17.                   SURRENDER OF INTEREST

17.01                  Any party not in default hereunder may, at any time upon
notice, surrender its entire Interest to the other parties by giving those
parties notice of surrender.

The notice of surrender shall:

(a)       indicate a date for surrender not less than three months after the
date on which the notice is given; and

(b)       contain an undertaking that the surrendering party will:

(i)       satisfy its Proportionate Share, based on its then Interest, of all
obligations and liabilities which arose at any time prior to the date of
surrender;

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23

(ii)      if the Operator has not included in Mine Costs the costs of continuing
obligations as set out in paragraph 14.04 hereof, pay on the date of surrender
its reasonably estimated Proportionate Share, based on the surrendering party's
then Interest, of the Costs of rehabilitating the Mine site and of reclamation
based on the Mining Operations completed as at the date of surrender; and

(iii)     will hold in confidence, for a period of two years from the date of
surrender, all information and data which it acquired pursuant to this
Agreement.

17.02                  Upon the surrender of its entire Interest as contemplated
in paragraph 17.01 and upon delivery of a release in writing, in form acceptable
to counsel for the Operator, releasing the other parties from all claims and
demands hereunder, the surrendering party shall be relieved of all obligations
or liabilities hereunder except for those which arose or accrued or were
accruing due on or before the date of the surrender.

17.03                  A party to whom a notice of surrender has been given as
contemplated in paragraph 17.01 may elect, by notice within 90 days to the party
which first gave the notice to accept the surrender, in which case paragraphs
17.01 and 17.02 shall apply, or to join in the surrender. If all of the parties
join in the surrender the Joint Operation shall be terminated in accordance with
article 18.

18.                   TERMINATION OF MINING OPERATIONS

18.01                  The Operator may, at any time subsequent to the
Completion Date, on at least 30 days notice to all Participants, recommend that
the Management Committee approve that the Mining Operations be suspended. The
Operator's recommendation shall include a plan and budget (in this article 18
called the "Mine Maintenance Plan"), in reasonable detail, of the activities to
be performed to maintain the Assets and Property during the period of suspension
and the Costs to be incurred. The Management Committee may, by Special Majority,
at any time subsequent to the Completion Date, cause the Operator to suspend
Mining Operations in accordance with the Operator's recommendation with such
changes to the Mine Maintenance Plan as the Management Committee deems
necessary. The Participants shall be committed to contribute their Proportionate
Share of the Costs incurred in connection with the Mine Maintenance Plan. The
Management Committee, by Special Majority, may cause Mining Operations to be
resumed at any time.

18.02                  The Operator may, at any time following a period of at
least 90 days during which Mining Operations have been suspended, upon at least
30 days notice to all Participants, or in the events described in paragraph
18.01, recommend that the Management Committee approve the permanent termination
of Mining Operations. The Operator's recommendation shall include a plan and
budget (in this article 18 called the "Mine Closure Plan"), in reasonable
detail, of the activities to be performed to close the Mine and reclaim and
rehabilitate the Property, as required by applicable law, regulation or contract
by reason of this Agreement. The Management Committee may, by unanimous approval
of the representatives of all Participants, approve the Operator's
recommendation with such changes to the Mine Closure Plan as the Management
Committee deems necessary.

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18.03                  If the Management Committee approves the Operator's
recommendation as aforesaid, it shall cause the Operator to:

(a)       implement the Mine Closure Plan, whereupon the Participants shall be
committed to pay, in proportion to their respective Interests, such Costs as may
be required to implement that Mine Closure Plan;

(b)       remove, sell and dispose of such Assets as may reasonably be removed
and disposed of profitably and such other Assets as the Operator may be required
to remove pursuant to applicable environmental and mining laws; and

(c)       sell, abandon or otherwise dispose of the Assets and the Property.

The disposal price for the Assets and the Property shall be the best price
reasonably obtainable and the net revenues, if any, from the removal and sale
shall be credited to the Participants in proportion to their respective
Interests.

18.04                  If the Management Committee does not approve the
Operator's recommendation contemplated in paragraph 18.02, the Operator shall
maintain Mining Operations in accordance with the Mine Maintenance Plan as
pursuant to paragraph 18.01.

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19.                   THE PROPERTY

19.01                  Title to the Property shall be held in the name of the
Operator in trust for the parties in proportion to their respective Interests as
adjusted from time to time. Each of the parties shall have the right to receive,
forthwith upon making demand therefor from the Operator, such documents as it
may reasonably require to confirm its Interest.

19.02                  This Agreement, or a memorandum of this Agreement, shall,
upon the written request of any party, be recorded in the office of any
governmental agency so requested, in order to give notice to third parties of
the respective interests of the parties in the Property and this Agreement. Each
party hereby covenants and agrees with the requesting party to execute such
documents as may be necessary to perfect such recording.

20.                   AREA OF COMMON INTEREST

20.01                  The area of common interest shall be deemed to comprise
that area which is included within the outermost boundary of the mineral
properties which constitute the Property as at the Operative Date.

20.02                  If at any time during the subsistence of this Agreement
any party or the Affiliate of any party (in this section only called in each
case the "Acquiring Party") stakes or otherwise acquires, directly or
indirectly, any right to or interest in any mining claim, licence, lease, grant,
concession, permit, patent, or other mineral property located wholly or partly
within the area of interest referred to in subparagraph 20.01, the Acquiring
Party shall forthwith give notice to the other parties of that staking or
acquisition, the total cost thereof and all details in the possession of that
party with respect to the details of the acquisition, the nature of the property
and the known mineralization.

20.03                  The Management Committee (the representative of the
Acquiring Party not being entitled to vote with respect thereto) may, within 30
days of receipt of the Acquiring Party's notice, elect, by notice to the
Acquiring Party, to require that the mineral properties and the right or
interest acquired be included in and thereafter form part of the Property for
all purposes of this Agreement.

20.04                  If the election aforesaid is made, all the other parties
shall reimburse the Acquiring Party for that portion of the cost of acquisition
which is equivalent to their respective Interests.

20.05                  If the Management Committee does not make the election
aforesaid within that period of 30 days, the right or interest acquired shall
not form part of the Property and the Acquiring Party shall be solely entitled
thereto.

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20.06                  Notwithstanding subparagraph 6.04(e), the Operator shall
be entitled, at any time and from time to time to surrender all or any part of
the Property or to permit the same to lapse, but only upon first either
obtaining the unanimous consent of the Management Committee, or giving 60 days
notice of its intention to do so to the other parties. In this latter event, the
parties, other than the Operator, shall be entitled to receive from the
Operator, on request prior to the date of the surrender or lapse, pro rata in
accordance with their respective Interests, a conveyance of that portion of the
Property intended for surrender or lapse, together with copies of any plans,
assay maps, diamond drill records and factual engineering data in the Operator's
possession and relevant thereto. Any part of the Property so acquired shall
cease to be subject to this Agreement and shall not be subject to paragraph
20.02. Any part of the Property which has not been so acquired by any of the
parties shall remain subject to paragraph 20.02.

21.                   INFORMATION AND DATA

21.01                  At all times during the subsistence of this Agreement the
duly authorized representatives of each Participant shall, at its and their sole
risk and expense and at reasonable intervals and times, have access to the
Property and to all technical records and other factual engineering data and
information relating to the Property which is in the possession of the Operator.

21.02                  During the Exploration Period while Programs are being
carried out, the Operator shall furnish the Participants with monthly progress
reports and with a final report within 60 days following the conclusion of each
Program. The final report shall show the Mining Operations performed and the
results obtained and shall be accompanied by a statement of Costs and copies of
pertinent plans, assay maps, diamond drill records and other factual engineering
data. During the Construction Period and during the implementation of an
Operating Plan the Operator shall provide monthly progress reports to the
Participants, which report shall include information on any changes or
developments affecting the Mine that the Operator considers are material.

21.03                  All information and data concerning or derived from the
Mining Operations shall be kept confidential and, except to the extent required
by law or by regulation of any Securities Commission or Stock Exchange, shall
not be disclosed to any person other than an Affiliate without the prior consent
of all the Participants, which consent shall not unreasonably be withheld.

21.04                  The text of any news releases or other public statements
which a party intends to make with respect to the Property or this Agreement
shall, to the extent practicable, be made available to the other parties prior
to publication and the other parties shall have the right to make suggestions
for changes therein.

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22.                   LIABILITY OF THE OPERATOR

22.01                  Subject to paragraph 22.02, each party shall indemnify
and save the Operator harmless from and against any loss, liability, claim,
demand, damage, expense, injury or death (including, without limiting the
generality of the foregoing, legal fees) resulting from any acts or omissions of
the Operator or its officers, employees or agents.

22.02                  Notwithstanding paragraph 22.01, the Operator shall not
be indemnified nor held harmless by any of the parties for any loss, liability,
claim, damage, expense, injury or death, (including, without limiting the
generality of the foregoing, legal fees) resulting from the negligence or
willful misconduct of the Operator or its officers, employees or agents.

22.03                  An act or omission of the Operator or its officers,
employees or agents done or omitted to be done:

(a)       at the direction of, or with the concurrence of, the Management
Committee; or

(b)       unilaterally and in good faith by the Operator to protect life or
property

shall be deemed not to be negligence or willful misconduct.

22.04                  The obligation of each party to indemnify and save the
Operator harmless pursuant to paragraph 22.01 shall be in proportion to its
Interest as at the date that the loss, liability, claim, demand, damage,
expense, injury or death occurred or arose.

22.05                  The Operator shall not be liable to any other party nor
shall any party be liable to the Operator in contract, tort or otherwise for
special or consequential damages, including, without limiting the generality of
the foregoing, loss of profits or revenues.

23.                   INSURANCE

23.01                  Commencing on the Operative Date, the Management
Committee shall cause the Operator to place and maintain with a reputable
insurer or insurers such insurance, if any, as the Management Committee in its
discretion deems advisable in order to protect the parties together with such
other insurance as any Participant may by notice reasonably request. The
Operator shall, upon the written request of any Parti-cipant, provide it with
evidence of that insurance.

23.02                  Paragraph 23.01 shall not preclude any party from
placing, for its own account insurance for greater or other coverage than that
placed by the Operator.

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24.                   RELATIONSHIP OF PARTIES

24.01                  The rights, duties, obligations and liabilities of the
parties shall be several and not joint nor joint and several, it being the
express purpose and intention of the parties that their respective Interests
shall be held as tenants in common.

24.02                  Nothing herein contained shall be construed as creating a
partnership of any kind or as imposing upon any party any partnership duty,
obligation or liability to any other party hereto.

24.03                  No party shall, except when required by this Agreement or
by any law, by-law, ordinance, rule, order or regulation, use, suffer or permit
to be used, directly or indirectly, the name of any other party for any purpose
related to the Property or this Agreement.

25.                   PARTITION

25.01                  Each of the parties hereto waives, during the term of
this Agreement, any right to partition of the Property or the Assets or any part
thereof and no party shall seek to be entitled to partition of the Property or
the Assets whether by way of physical partition, judicial sale or otherwise
during the term of this Agreement.

26.                   TAXATION

26.01                  All Costs incurred hereunder shall be for the account of
the party or parties making or incurring the same, if more than one then in
proportion to their respective Interests, and each party on whose behalf any
Costs have been incurred shall be entitled to claim all tax benefits,
write-offs, and deductions with respect thereto.

27.                   FORCE MAJEURE

27.01                  Notwithstanding anything herein contained to the
contrary, if any Participant is prevented from or delayed in performing any
obligation under this Agreement, and such failure is occasioned by any cause
beyond its reasonable control, excluding only lack of finances, then, subject to
paragraph 27.02, the time for the observance of the condition or performance of
the obligation in question shall be extended for a period equivalent to the
total period the cause of the prevention or delay persists or remains in effect
regardless of the length of such total period.

27.02                  Any party hereto claiming suspension of its obligations
as aforesaid shall promptly notify the other parties to that effect and shall
take all reasonable steps to remove or remedy the cause and effect of the force
majeure described in the said notice insofar as it is reasonably able so to do
and as soon as possible; provided that the terms of settlement of any labour
disturbance or dispute, strike or lockout shall be wholly in the discretion of
the party claiming suspension of its obligations by reason thereof, and that
party shall not be required to accede to the demands of its opponents in any
such labour disturbance or dispute, strike, or lockout solely to remedy or
remove the force majeure thereby constituted. The party claiming suspension of
its obligations shall promptly notify the other parties when the cause of the
Force Majeure has been removed.

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29

27.03                  The extension of time for the observance of conditions or
performance of obligations as a result of force majeure shall not relieve the
Operator from its obligations to keep the Property in good standing pursuant to
sub-paragraphs 6.04(a) and 6.04(e).

28.                   NOTICE

28.01                  All invoices, notices, consents and demands under this
Agree-ment shall be in writing and may be delivered personally, transmitted by
fax (with transmission confirmed in writing), or may be forwarded by first class
prepaid registered mail to the address for each party specified in this
Agreement or to such addresses as each party may from time to time specify by
notice. Any notice delivered or sent by fax shall be deemed to have been given
and received on the business day next following the date of delivery or
transmission. Any notice mailed as aforesaid shall be deemed to have been given
and received on the fifth business day following the date it is posted, provided
that if between the time of mailing and the actual receipt of the notice there
shall be a mail strike, slowdown or other labour dispute which affects delivery
of the notice by mails, then the notice shall be effective only if actually
delivered.

29.                   WAIVER

29.01                  No waiver of any breach of this Agreement shall be
binding unless evidenced in writing executed by the party against whom charged.
Any waiver shall extend only to the particular breach so waived and shall not
limit any rights with respect to any future breach.

30.                   AMENDMENTS

30.01                  Except for those provisions, if any, of the Head
Agreement specifically incorporated herein by reference, this Agreement
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof. An amendment or variation of this Agree-ment shall only
be binding upon a party if evidenced in writing executed by that party.

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30

31.                   TERM

31.01                  Unless earlier terminated by agreement of all parties
having an Interest or as a result of one party acquiring both a 100 percent
Interest and a 100 percent interest in the Net Proceeds of Production, the Joint
Operation and this Agreement shall remain in full force and effect for so long
as any party has any right, title or interest in the Property. Termination of
this Agreement shall not, however, relieve any party from any obligations
theretofore accrued but unsatisfied, nor from its obligations with respect to
rehabilitation of the Mine site and reclamation.

32.                   TIME OF ESSENCE

32.01                  Time is of the essence of this Agreement.

33.                   ASSIGNMENT - RIGHT OF FIRST REFUSAL

33.01                  If a party (hereinafter in this paragraph referred to as
the "Owner"):

(a)       receives a bona fide offer from an independent third party (the
"Proposed Purchaser") dealing at arm's length with the Owner to purchase all or
any part all of the Owner's Interest or its interest in this Agreement (which
for certainty shall include the Owner's right to receive Net Proceeds of
Production), which offer the Owner desires to accept,

(b)       or if the Owner intends to sell all or any part of its Interest or its
interest in this Agreement,

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31

then, the Owner shall first offer (the "Offer") such interest in writing to the
other party upon terms no less favourable than those offered by the Proposed
Purchaser or intended to be offered by the Owner, as the case may be. The Offer
shall specify the price and terms and conditions of such sale, the name of the
Proposed Purchaser (which term shall, in the case of an intended offer by the
Owner, mean the person or persons to whom the Owner intends to offer its
interest) and, if the offer received by the Owner from the Proposed Purchaser
provides for any consideration payable to the Owner otherwise than in cash, the
Offer shall include the Owner's good faith estimate of the cash equiv-alent of
the non-cash consideration. If within a period of 60 days of the receipt of the
Offer, the other party notifies the Owner in writing that it will accept the
same, the Owner shall be bound to sell such interest to the other party (subject
as hereinafter provided with respect to price) on the terms and conditions of
the Offer. If the Offer so accepted by the other party contains the Owner's good
faith estimate of the cash equiv-alent consideration as aforesaid, and if the
other party disagrees with the Owner's best estimate, the other party shall so
notify the Owner at the time of acceptance and the other party shall, in such
notice, specify what it considers, in good faith, the fair cash equivalent to be
and the resulting total purchase price. If the other party so notifies the
Owner, the acceptance by the other party shall be effective and binding upon the
Owner and the other party and the cash equivalent of any such non-cash
consideration shall be determined by binding arbitration under the Commercial
Arbitration Act (British Columbia) and shall be payable by the other party,
subject to prepayment as hereinafter provided, within 60 days following its
determination by arbitration. The other party shall in such case pay to the
Owner, against receipt of an absolute transfer of clear and unencumbered title
to the interest of the Owner being sold, the total purchase price which it
specified in its notice to the Owner and such amount shall be credited to the
amount determined following arbitration of the cash equivalent of any non-cash
consideration. If the other party fails to notify the Owner before the
expiration of the time limited therefor that it will purchase the interest
offered, the Owner may sell and transfer such interest to the Proposed Purchaser
at the price and on the terms and conditions specified in the Offer for a period
of 60 days, provided that the terms of this paragraph shall again apply to such
interest if the sale to the Proposed Purchaser is not completed within the said
60 days. Any sale hereunder shall be conditional upon the Proposed Purchaser
delivering a written undertaking to the other party, in form and content
satisfactory to its counsel, to be bound by the terms and conditions of this
Agreement.

34.                   SUCCESSORS AND ASSIGNS

34.01                  This Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.

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35.                   GOVERNING LAW

35.01                  This Agreement will be exclusively governed by, and
interpreted and construed in accordance with, the laws prevailing in the
Province of British Columbia, without reference to its jurisprudence regarding
conflict of laws. To the extent that any party to this Agreement seeks a remedy
from a court, the parties irrevocably and unconditionally attorn to the
exclusive jurisdiction of the courts of the Province of British Columbia and all
courts having appellate jurisdiction thereover.

                         

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.

 

The COMMON SEAL of PETAQUILLA MINERALS LTD. was hereunto affixed in the presence
of:

_________________________________ [signature]
_________________________________ [print name]
Authorized signatory

_________________________________ [signature]
_________________________________ [print name]
Authorized signatory

)
)
)
)
)
)
)
)

c/s

 

The COMMON SEAL of REVELSTOKE INDUSTRIES, INC. was hereunto affixed in the
presence of:

_________________________________ [signature]
_________________________________ [print name]
Authorized signatory

_________________________________ [signature]
_________________________________ [print name]
Authorized signatory

)
)
)
)
)
)
)
)

c/s

 

 

This is page 32 to an agreement made the _____ day of ________________, 200_
between PETAQUILLA MINERALS LTD of the first part and REVELSTOKE INDUSTRIES,
INC. of the second part.

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THIS IS APPENDIX I TO THAT CERTAIN AGREEMENT BETWEEN PETAQUILLA MINERALS LTD.
AND REVELSTOKE INDUSTRIES, INC. MADE AS OF THE ____ DAY OF ___________, 20__.

 

ACCOUNTING PROCEDURE

1.                         INTERPRETATION

1.01                    Terms defined in the Agreement shall, subject to any
contrary intention, have the same meanings herein. In this Appendix the
following words, phrases and expressions shall have the following meanings:

(a)       "Agreement" means the Agreement to which this Accounting Procedure is
attached as Appendix I.

(b)       "Count" means a physical inventory count.

(c)       "Employee" means those employees of the Operator who are assigned to
and directly engaged in the conduct of Mining Operations, whether on a full-time
or part-time basis.

(d)       "Employee Benefits" means the Operator's cost of holi-day, vacation,
sickness, disability benefits, field bonuses, amounts paid to and the Operator's
costs of established plans for employee's group life insurance, hospitalisation,
pension, retirement and other custom-ary plans maintained for the benefit of
Employees and Personnel, as the case may be, which costs may be charged as a
percentage assessment on the salaries and wages of Employees or Personnel, as
the case may be, on a basis consistent with the Operator's cost experience.

(e)       "Field Offices" means the necessary sub-office or sub-offices in each
place where a Program or Construction is being conducted or a Mine is being
operated.

(f)       "Government Contributions" means the cost or contribu-tions made by
the Operator pursuant to assessments imposed by governmental authority which are
applicable to the salaries or wages of Employees or Personnel, as the case may
be.

(g)       "Joint Account" means the books of account maintained by the Operator
to record all assets, liabilities, costs, expenses, credits and other
transactions arising out of or in connection with the Mining Operations.

(h)       "Material" means the personal property, equipment and supplies
acquired or held, at the direction or with the approval of the Management
Committee, for use in the Mining Operations and, without limiting the
generality, more particularly "Controllable Material" means such Material which
is ordinarily classified as Controllable Material, as that classification is
determined or approved by the Management Committee, and controlled in mining
operations.

(i)       "Personnel" means those management, supervisory, administrative,
clerical or other personnel of the Operator normally associated with the
Supervision Offices whose salaries and wages are charged directly to the
Supervision Office in question.

(j)       "Reasonable Expenses" means the reasonable expenses of Employees or
Personnel, as the case may be, for which those Employees or Personnel may be
reimbursed under the Operator's usual expense account practice, as accepted by
the Management Committee; including without limiting generality, any relocation
expenses necessarily incurred in order to properly staff the Mining Operations
if the relocation is approved by the Management Committee.

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2

(k)       "Supervision Offices" means the Operator's offices or department
within the Operator's offices from which the Mining Operations are generally
supervised.

2.                         STATEMENTS AND BILLINGS

2.01                    The Operator shall, by invoice, charge each Participant
with its Proportionate Share of Exploration Costs and Mine Costs in the manner
provided in sections 7 and 15 of the Agreement respectively.

2.02                    The Operator shall deliver, with each invoice rendered
for Costs incurred a statement indicating:

(a)       all charges or credits to the Joint Account relating to Controllable
Material ; and

(b)       all other charges and credits to the Joint Account summarised by
appropriate classification indicative of the nature of the charges and credits.

2.03                    The Operator shall deliver with each invoice for an
advance of Costs a statement indicating:

(a)       the estimated Exploration Costs or, in the case of Mine Costs the
estimated cash disbursements, to be made during the next succeeding month;

(b)       the addition thereto or subtraction therefrom, as the case may be,
made in respect of Exploration Costs or Mine Costs actually having been incurred
in an amount greater or lesser than the advance which was made by each
Participant for the penultimate month preceding the month of the invoice; and

(c)       the advances made by each Participant to date and the Exploration
Costs or Mine Costs incurred to the end of the penultimate month preceding the
month of the invoice.

3.                         DIRECT CHARGES

3.01                    The Operator shall charge the Joint Account with the
following items:

(a)       Contractor's Charges:

All costs directly relating to the Mining Operations incurred under contracts
entered into by the Operator with third parties.

(b)       Labour Charges:

(i)       The salaries and wages of Employees in an amount calculated by taking
the full salary or wage of each Employee multiplied by that fraction which has
as its numerator the total time for the month that the Employees were directly
engaged in the conduct of Mining Operations and as its denominator the total
normal working time for the month of the Employee;

(ii)      the Reasonable Expenses of the Employees; and

(iii)     Employee Benefits and Government Contributions in respect of the
Employees in an amount proportionate to the charge made to the Joint Account in
respect to their salaries and wages.

(c)       Office Maintenance:

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3

(i)       The cost or a pro rata portion of the costs, as the case may be, of
maintaining and operating the Field Offices and the Supervision Offices. The
basis for charging the Joint Account for such maintenance costs shall be as
follows:

(A)       the expense of maintaining and operating Field Offices, less any
revenue therefrom; and

(B)       that portion of maintaining and operating the Supervision Offices
which is equal to

(1)       the anticipated total operating expenses of the Supervision Offices

divided by

(2)       the anticipated total staff man days for the Employees whether in
connection with the Mining Operations or not;

multiplied by

(3)       the actual total time spent on the Mining Operations by the Employee
expressed in man days.

(ii)      Without limiting generality, the anticipated total operating expenses
of the Supervision Offices shall include:

(A)       the salaries and wages of the Operator's Personnel which have been
directly charged to the Supervision Offices;

(B)       the Reasonable Expense of the Personnel; and

(C)      Employee Benefits.

(iii)     The Operator shall make an adjustment in respect of the Office
Maintenance cost forthwith after the end of each Operating Year upon having
determined the actual operating expenses and actual total staff man days
referred to in clause 3.01(c)(i)(B) of this Appendix I.

(d)       Material:

Material purchased or furnished by the Operator for use on the Property as
provided under section 4 of this Appendix I.

(e)       Transportation Charges:

The cost of transporting Employees and Material necessary for the Mining
Operations.

(f)       Service Charges:

(i)       The cost of services and utilities procured from outside sources other
than services covered by paragraph 3.01(h). The cost of consultant services
shall not be charged to the Joint Account unless the retaining of the consultant
is approved in advance by the Management Committee; and

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4

(ii)      Use and service of equipment and facilities furnished by the Operator
as provided in sub-section 4.04 of this Appendix I.

(g)       Damages and Losses to Joint Property:

All costs necessary for the repair or replacement of Assets made necessary
because of damages or losses by fire, flood, storms, theft, accident or other
cause. If the damage or loss is estimated by the Operator to exceed $10,000, the
Operator shall furnish each Participant with written particulars of the damages
or losses incurred as soon as practicable after the damage or loss has been
discovered. The proceeds, if any, received on claims against any policies of
insurance in respect of those damages or losses shall be credited to the Joint
Account.

(h)       Legal Expense:

All costs of handling, investigating and settling litigation or recovering the
Assets, including, without limiting generality, attorney's fees, court costs,
costs of investigation or procuring evidence and amounts paid in settlement or
satisfaction of any litigation or claims; provided, however, that, unless
otherwise approved in advance by the Management Committee, no charge shall be
made for the services of the Operator's legal staff or the fees and expenses of
outside solicitors.

(i)       Taxes:

All taxes, duties or assessments of every kind and nature (except income taxes)
assessed or levied upon or in connection with the Property, the Mining
Operations thereon, or the production therefrom, which have been paid by the
Operator for the benefit of the parties.

(j)       Insurance:

Net premiums paid for

(i)       such policies of insurance on or in connection with Mining Operations
as may be required to be carried by law; and

(ii)      such other policies of insurance as the Operator may carry for the
protection of the parties in accordance with the Agreement; and

the applicable deductibles in event of an insured loss.

(k)       Rentals:

Fees, rentals and other similar charges required to be paid for acquiring,
recording and maintaining permits, mineral claims and mining leases and rentals
and royal-ties which are paid as a consequence of the Mining Operations.

(l)       Permits:

Permit costs, fees and other similar charges which are assessed by various
governmental agencies.

(m)     Other Expenditures:

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5

Such other costs and expenses which are not covered or dealt with in the
foregoing provisions of this sub-section 3.01 of this Appendix I as are incurred
with the approval of the Management Committee for Mining Operations or as may be
contemplated in the Agreement.

4.                         PURCHASE OF MATERIAL

4.01                    Subject to subsection 4.04 of this Appendix I the
Operator shall purchase all Materials and procure all services required in the
Mining Operations.

4.02                    Materials purchased and services procured by the
Operator directly for the Mining Operations shall be charged to the Joint
Account at the price paid by the Operator less all discounts actually received.

4.03                    Any Participant may sell Material or services required
in the Mining Operations to the Operator for such price and upon such terms and
conditions as the Management Committee may approve.

4.04                    Notwithstanding the foregoing provisions of this section
4, the Operator, after having obtained the prior approval of the Management
Committee, shall be entitled to supply for use in connection with the Mining
Operations equipment and facilities which are owned by the Operator and to
charge the Joint Account with such reasonable costs as are commensurate with the
ownership and use thereof.

5.                         DISPOSAL OF MATERIAL

5.01                    The Operator, with the approval of the Management
Committee may, from time to time, sell any Material which has become surplus to
the foreseeable needs of the Mining Operations for the best price and upon the
most favourable terms and condi-tions available.

5.02                    Any Participant may purchase from the Operator any
Material which may from time to time become surplus to the fore-seeable need of
the Mining Operations for such price and upon such terms and conditions as the
Management Committee may approve.

5.03                    Upon termination of the Agreement, the Management
Committee may approve the division of any Material held by the Operator at that
date, which Material may be taken by the Participants in kind or be taken by a
Participant in lieu of a portion of its Proportion-ate Share of the net revenues
received from the disposal of the Assets and Property. If the division to a
Participant be in lieu, it shall be for such price and on such terms and
conditions as the Management Committee may approve.

5.04                    The net revenues received from the sale of any Material
to third parties or to a Participant shall be credited to the Joint Account.

6.                         INVENTORIES

6.01                    The Operator shall maintain records of Material in
reasonable detail and records of Controllable Material in detail.

6.02                    The Operator shall perform Counts from time to time at
reasonable intervals, and in any event at the end of each calendar year. The
independent external auditor of the Operator shall be given reasonable notice of
each Count, and shall be given the opportunity to attend the Count.

6.03                    Forthwith after performing a Count, the Operator shall
reconcile the inventory with the Joint Account. The Operator shall not be held
accountable for any shortages of inventory except such shortages as may have
arisen due to a lack of diligence on the part of the Operator.

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7.                         ADJUSTMENTS

7.01                    Payment of any invoice by a Participant shall not
prejudice the right of that Participant to protest the correct-ness of the
statement supporting the payment; provided, however, that all invoices and
statements presented to each Participant by the Operator during any calendar
year shall conclusively be presumed to be true and correct upon the expiration
of 12 months following the end of the calendar year to which the invoice or
statement relates, unless within that 12 month period that Participant gives
notice to the Operator making claim on the Operator for an adjustment to the
invoice or statement.

7.02                    The Operator shall not adjust any invoice or statement
in favour of itself after the expiration of 12 months following the end of the
calendar year to which the invoice or statement relates.

7.03                    Notwithstanding subsections 7.01 and 7.02 of this
Appendix I, the Operator may make adjustments to an invoice or statement which
arise out of a Count of Material or Assets within 60 days of the completion of
the Count.

7.04                    A Participant shall be entitled upon notice to the
Operator to request that the independent external auditor of the Operator
provide that Participant with its opinion that any invoice or statement
delivered pursuant to the Agreement in respect of the period referred to in
subsection 7.01 of this Appendix I has been prepared in accordance with this
Agreement.

7.05                    The time for giving the audit opinion contemplated in
subsection 7.04 of this Appendix I shall not extend the time for the taking of
exception to and making claims on the Operator for adjustment as provided in
subsection 7.01 of this Appendix I.

7.06                    The cost of the auditor's opinion referred to in
sub-section 7.04 of this Appendix I shall be solely for the account of the
Participant requesting the auditor's opinion, unless the audit disclosed a
material error adverse to that Participant, in which case the cost shall be
solely for the account of the Operator.

7.07                    Upon not less than 10 business days' notice to the
Operator, and no more frequently than twice during the currency of each
Operating Plan, a Participant shall be entitled to inspect the Joint Account ,
at the location(s) where such records are normally kept. All costs incurred in
carrying out such inspection shall be borne by the Participant. All
disagreements or discrepancies identified by the Participant shall be referred
to the independent external auditor for final resolution.

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APPENDIX II

TO THAT CERTAIN AGREEMENT (THE "AGREEMENT") MADE AS OF ______________, 20__
BETWEEN PETAQUILLA MINERALS LTD., OF THE FIRST PART AND REVELSTOKE INDUSTRIES,
INC..

NET PROCEEDS OF PRODUCTION

 

1.                         OBLIGATION

1.01                    If any non-Participant becomes entitled to a royalty
pursuant to paragraph 7.12 or subparagraph 10.02(b) of the Agreement, each
Participant shall separately calculate, as at the end of each calendar quarter
subsequent to the Completion Date, the Net Proceeds of Production.

1.02                    Each Participant shall within 60 days of the end of each
calendar quarter, as and when any Net Proceeds of Production are available for
distribution:

(a)       severally pay or cause to be paid to each non-Partici-pant that
percentage of the Net Proceeds of Production to which that non-Participant is
entitled under paragraph 7.12 or subparagraph 10.02(b) of the Agreement;

(b)       deliver to each non-Participant a statement indicating:

(i)       the Gross Receipts during the calendar quarter;

(ii)      the deductions therefrom made in the order itemized in subsection 3.01
of this Appendix II;

(iii)     the amount of Net Proceeds of Production remaining; and

(iv)      the amount of those Net Proceeds of Production to which that
non-Participant is entitled;

provided, however, that until such time as there are Net Proceeds of Production
available, each Participant shall deliver to each non-Participant, within 60
days of the end of each calendar quarter commencing with the first calendar
quarter following the Completion Date, a statement indicating the Gross Receipts
during the calendar quarter less the deductions therefrom made in the order
itemized in subsection 3.01 of this Appendix II.

1.03                    Nothing contained in the Agreement or this Appendix II
shall be construed as:

(a)       imposing on a Participant any obligation with respect to the payments
of royalty due hereunder to a non-Participant from any other Participant; or

(b)       conferring on any non-Participant any right to or interest in any
Property or Assets except the right to receive royalty payments from each
Participant as and when due.

1.04                    The Participants agree that on the request of any
non-Participant they will execute and deliver such documents as may be necessary
to permit that non-Participant to record its royalty right against the Property.

2.                         DEFINITIONS

2.01                    Terms defined in the Agreement shall, subject to any
contrary intention, bear the same meaning herein.

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2.02                    In addition to the definitions of the classes of Costs
provided in paragraph 1.01(g) of the Agreement and without limiting the
generality thereof:

(a)       "Distribution Costs" means all costs of:

(i)       transporting ore or concentrates from a Mine or a concentrating plant
to a smelter, refinery or other place of delivery designated by the purchaser
and, in the case of concentrates tolled, of transporting the concentrate or
metal from a smelter or refinery to the place of delivery designated by the
purchaser;

(ii)      handling, warehousing and insuring the concentrates and metal; and

(iii)     in the case of concentrates tolled, of smelting and refining,
including any penalties thereon or in connection therewith.

(b)       "Interest Costs" means interest computed each calendar quarter and
calculated as follows:

(i)       the average of the opening and closing monthly outstanding balances
for each month during the quarter of the net unrecovered amounts of all costs in
the classes enumerated in subparagraphs 1.01(g)(i), (ii), (iv) and (v) of the
Agreement, and in paragraphs 2.02 (a), (b), (c) and (d) of this Appendix II;

multiplied by:

(ii)      the Prime Rate plus two percent;

multiplied by:

(iii)     the number of days in the quarter;

divided by:

(iv)      the number of days in the Year;

(c)       "Marketing Costs" means such reasonable charge for marketing of
diamonds, ores and concentrates sold or of concentrates tolled as is consistent
with generally accepted industry marketing practices including, without
limitation, costs of market analysis, preparation of diamonds for sale,
collection of sale proceeds and the costs of all associated activities; and

(d)       "Taxes and Royalties" means all taxes (other than income taxes),
royalties or other charges or imposts provided for pursuant to any law or legal
obligation imposed by any government in connection with a Participant's
involvement in the Joint Operation if paid by the Participant.

2.03                    Wherever used in this Appendix II, "Gross Receipts"
means the aggregate of all receipts, recoveries or amounts received by or
credited to a Participant in connection with its participation under the
Agreement including, without limiting the generality of the foregoing:

(a)       the receipts from the sale of that Participant's propor-tionate share
of the concentrates derived from the Mineral produced from the Mine;

(b)       all proceeds received from the sale of the Property or Assets
subsequent to the Operative Date;

(c)       all insurance recoveries (including amounts received to settle claims)
in respect of loss of, or damage to any portion of the Property or Assets
subsequent to the Operative Date;

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3

(d)       all amounts received as compensation for the expropriation or
forceable taking of any portion of the Property or Assets subsequent to the
Operative Date;

(e)       the fair market value, at the Property, of those Assets, if any,
purchased for the Joint Account, that are transferred from the Property for use
by a Participant elsewhere subsequent to the Operative Date; and

(f)       the amount of any negative balance remaining after the reallocation of
negative balances pursuant to subsection 3.03 of this Appendix II;

to the extent that those receipts, recoveries or amounts have not been applied
by the Participant as a recovery of any of the classes of Costs itemized in
subsection 3.01 of this Appendix II.

3.                         NET PROCEEDS OF PRODUCTION

3.01                    "Net Proceeds of Production" means the Gross Receipts
minus deductions therefrom, to the extent of but not exceeding the amount of
those Gross Receipts, of the then net unrecovered amounts of the following
classes of Costs made in the following itemized order:

(a)       Marketing Costs;

(b)       Distribution Costs;

(c)       Operating Costs;

(d)       Taxes and Royalties;

(e)       Interest Costs;

(f)       Construction Costs;

(g)       Exploration Costs; and

(h)       Prior Exploration Costs;

it being understood that the deductions in respect of the Costs referred to in
paragraphs 3.01(a), (b), (d) and (e) of this Appendix II shall be based on those
Costs as recorded by that Participant and the deductions in respect of the Costs
referred to in paragraphs 3.01(c), (f), (g) and (h) of this Appendix II shall be
based on that Participant's Proportionate Share of those Costs as recorded by
the Operator.

3.02                    Any amount by which the aggregate of the Costs set out
in paragraphs 3.01(a) to (h) inclusive in any quarter exceeds Gross Receipts for
such quarter shall, together with any negative balance carried forward from the
previous quarter, be carried forward for deduction from Gross Receipts in the
immediately succeeding quarter.

4.                         ADJUSTMENTS AND VERIFICATION

4.01                    Payment of any Net Proceeds of Production by a
Participant shall not prejudice the right of that Participant to adjust its own
statement supporting the payment; provided, however, that all statements
presented to the non-Participant by that Participant for any quarter shall
conclusive-ly be presumed to be true and correct upon the expiration of 12
months following the end of the quarter to which the statement relates, unless
within that 12 month period that Participant gives notice to the non-Participant
making claim on the non-Participant for an adjustment to the statement which
will be reflected in subsequent payment of Net Proceeds of Production.

4.02                    The Participant shall not adjust any statement in favour
of itself after the expiration of 12 months following the end of the quarter to
which the statement relates.

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4

4.03                    The non-Participant shall be entitled upon notice to any
Participant to request that the auditor of that Participant provide the
non-Participant with its opinion that any statement delivered pursuant to
subsection 1.01 of this Appendix II in respect of any quarterly period falling
within the 12 month period immediately preceding the date of the
non-Participant's notice has been prepared in accordance with this Agreement.

4.04                    The time for giving the audit opinion contemplated in
subsection 4.03 of this Appendix II shall not extend the time for the taking of
exception to and making claim on the non-Partici-pant for adjustment as provided
in subsection 4.01 of this Appendix II.

4.05                    The cost of the auditor's opinion referred to in
subsection 4.03 of this Appendix II shall be solely for the account of the
non-Participant requesting the auditor's opinion, except where the said opinion
is to the effect that the statement has not been prepared substantially in
accordance with this Agreement, in which case the cost shall be solely for the
account of the Participant.

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

SCHEDULE "C"

TO THAT CERTAIN AGREEMENT MADE AS OF NOVEMBER 16, 2006, BETWEEN PETAQUILLA
MINERALS LTD. OF THE FIRST PART AND REVELSTOKE INDUSTRIES, INC. OF THE

SECOND PART

 

THE "TECHNICAL SERVICES AGREEMENT"

Revelstoke Industries, Inc

1801 Kent Street,
White Rock, British Columbia,
Canada, V4B 4T2

 

November 16th, 2006

Attention: Michael Levy, President

PETAQUILLA MINERALS LTD.
Suite 410 - 475 West Georgia Street
Vancouver, B.C. V6B 4M9

Dear Sirs:

          Re:          San Juan Property, Panama

 

          This letter will confirm our agreement relating to work to be
undertaken by Petaquilla Minerals Ltd. ("Petaquilla") in the capacity of an
independent contractor on the San Juan Property (the "Property") located in
Panama, as more fully described in Schedule "A" attached hereto. The parties
acknowledge that Revelstoke Industries, Inc. ("Revelstoke") has the exclusive
right to acquire an interest in the Property from Petaquilla, as Optionor,
pursuant to the agreement (the "Option Agreement") dated November 16h, 2006,
between Revelstoke and Petaquilla. The parties further acknowledge that this
agreement does not, and is not intended to, amend in any way the terms of the
Option Agreement. The current program contemplates ¨ and related exploration
activities as outlined in Schedule "B" hereto.

          Kindly sign and return the enclosed duplicate copy of this letter
confirming our agreement. The terms set forth below shall then form a contract
binding upon both of us.

1.

          Description of Work

Revelstoke Minerals Ltd. ("Revelstoke") hereby retains Petaquilla to manage and
implement exploration work on the Property in accordance with the budget as
presented in Schedule "B". Petaquilla will commence field work in ¨ , 2006, with
planning and organizational work having been started in ¨ , 2006.

2.

          Payment

Revelstoke, in consideration of Petaquilla acting as the Operator in accordance
with the Option Agreement, will pay to Petaquilla 2.5% of all costs incurred.
Petaquilla will use its best efforts to complete the work in accordance with the
budget as presented in Schedule "B".

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2

Petaquilla shall be entitled to invoice Revelstoke, no more frequently than
monthly, and no more than two months in advance, for the exploration
expenditures reasonably anticipated to be incurred in any calendar month. Each
monthly statement shall include a reconciliation of invoices and actual
expenditures incurred from the month for which advance cash calls were made.
Terms shall be 30 days net. Petaquilla shall have no obligation to provide its
services hereunder unless it is in receipt of funds from Revelstoke.

3.          Changes to Work

Site conditions, fieldwork and weather may necessitate changes to the
exploration program. All changes to the scope of the work will require the
written authorization from Revelstoke, and any such changes shall not be binding
upon Revelstoke until such authorization has been given. Notwithstanding the
foregoing, Revelstoke has the right to change the scope of the work program at
any time upon giving notice to Petaquilla, provided that such changes do not
result in Revelstoke being in default of its expenditure commitments under the
Option Agreement.

4.

          Force Majeure

In the event of fires, floods, storms, slides, transportation disruptions (e.g.
in air or highway transport), ordered work stoppages or closures, adverse
weather, political or social instability or unsafe conditions, or a similar
event beyond the control of Petaquilla (a "Force Majeure Event"), and Petaquilla
is delayed or prevented from performing the work as a result of the Force
Majeure Event, Petaquilla will use its reasonable efforts to resume work with
the least possible delay. However, in the event such failure is caused by a
Force Majeure Event, then during the period of the Force Majeure Event
Petaquilla shall not be liable to Revelstoke for failing to perform the work,
and Revelstoke shall not be liable to Petaquilla (in its capacity as Optionor)
under the Option Agreement.

5.          Stop Work

In the event:

that the nature of the Force Majeure Event is such that the work cannot be
continued or has been or will be delayed for an excessive period of time; or

Revelstoke fails to comply with its payment obligations or is otherwise in
default under the terms of this agreement;

Petaquilla shall have the right to terminate completion of the work and
Revelstoke shall be responsible for payment of the work performed to the date of
termination together with all reasonable costs for demobilization of field
personnel and equipment.

6.          Obligations

Subject to the terms of this agreement it shall be the responsibility of
Petaquilla to complete the work in a competent manner and in accordance with
accepted geological practice in Panama and to have in force public liability
insurance in an amount that is customary for operators carrying out like
operation in the vicinity of the Property. It shall also be the responsibility
of Petaquilla:

to ensure that Petaquilla and any subcontractors have full right and all
permissions necessary (from property owners or governmental authorities, etc.)
prior to commencement of the work;

to ensure that the work contemplated to be performed by Petaquilla will not
contravene any laws, ordinances, by-laws (including, without limitation,
environmental and other laws) or other restrictions affecting the site.

It shall be the responsibility of Revelstoke:

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3

to obtain any bonds, in Petaquilla's name, with respect to reclamation work
which may be required following the work to be performed by Petaquilla; and

to remit payments in accordance with paragraph 2.

7.

          Indemnity

Petaquilla shall conduct all work on the site in a good and workmanlike manner
and shall adhere to all regulations and practices to protect human life and
health, and the environment. Furthermore, Petaquilla shall indemnify Revelstoke
from all liability of whatsoever nature, including death and injury of any
person, resulting from it or its subcontractors, activities in and in connection
with the Property; excepting that Petaquilla shall not be responsible for any
such liability resulting from the acts of Revelstoke, its employees or
contractors.

8.

          Sub-Contracts

Petaquilla shall not enter into a service contract with any party involving
expenditures in excess of $50,000 without first consulting Revelstoke and
obtaining its approval of the contract documents, such approval not to be
unreasonably withheld.

9.

          Entire Agreement

Subject to the acknowledgment regarding the Option Agreement contained in the
introductory paragraph of this agreement, the foregoing is the entire agreement
between the parties and supersedes any prior understanding whether written or
oral. Any amendment to this agreement shall be in writing and signed by the
parties hereto.

10.

         Applicable Law

This agreement shall be governed by and interpreted in accordance with the laws
in effect in British Columbia, and is subject to the exclusive jurisdiction of
the Courts of British Columbia.

          If you are in agreement with the foregoing, please acknowledge receipt
and confirm your agreement with above terms by signing below and returning the
signed copy to us as soon as possible.

Yours very truly,

Revelstoke Industries, Inc

Per:
_____________________
Marcus Johnson, President

ACKNOWLEDGMENT AND AGREEMENT

Petaquilla Minerals Ltd. hereby acknowledges receipt of this letter and confirms
its agreement with the terms set out above. By the signature of its authorized
officer below, Petaquilla Minerals Ltd. acknowledges a binding agreement between
Revelstoke Industries, Inc and Petaquilla Minerals Ltd.

____________________________
Michael Levy, President
Petaquilla Minerals Ltd.

_________________________
Date

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Dated:

November 16, 2006

___________________________________________________________________________________________

 

BETWEEN:

PETAQUILLA MINERALS LTD.

OF THE FIRST PART

AND:

REVELSTOKE INDUSTRIES, INC.

OF THE SECOND PART

___________________________________________________________________________________________

 

SAN JUAN PROPERTY
PROPERTY OPTION AGREEMENT

___________________________________________________________________________________________

VEC

TOR Corporate Finance Lawyers
Barristers & Solicitors
Suite 1040, 999 West Hastings Street
Vancouver, B.C. V6C 2W2

(604) 683-1102

GHS