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EXHIBIT 10.2

TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND
MINE OPERATING AGREEMENT

By and Between Participants

Raven Gold Alaska Inc.
and
Terra Gold Corporation

Effective Date: September 15, 2010

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 

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Using Form 5A as a Base
Copyright 81996 All Rights Reserved
Rocky Mountain Mineral Law Foundation

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
 

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TABLE OF CONTENTS

 Page

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES
2

 
1.1
Definitions
2

 
1.2
Cross-References
2

ARTICLE II
NAME, PURPOSES AND TERM
3

 
2.1
General
3

 
2.2
Name
3

 
2.3
Purposes
3

 
2.4
Limitation
3

 
2.5
Term
3

ARTICLE III
REPRESENTATIONS AND WARRANTIES; TITLE TO ASSETS; INDEMNITIES
4

 
3.1
Representations and Warranties of Both Participants
4

 
3.2
Representations and Warranties of RAVEN
4

 
3.3
Disclosures
6

 
3.4
Record Title
6

 
3.5
Loss of Title
6

 
3.6
Royalties, Production Taxes and Other Payments Based on Production
7

 
3.7
Indemnities/Limitation of Liability
7

ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS
8

 
4.1
No Partnership
8

 
4.2
Federal Tax Elections and Allocations
8

 
4.3
State Income Tax
9

 
4.4
Tax Returns
9

 
4.5
Other Business Opportunities
9

 
4.6
Waiver of Rights to Partition or Other Division of Assets
9

 
4.7
Transfer or Termination of Rights to Properties
9

 
4.8
Implied Covenants
9

 
4.9
No Third Party Beneficiary Rights
9

 
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ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS
10

 
5.1
Participants' Initial Contributions
10

 
5.2
Failure to Make Initial Contribution
14

 
5.3
Additional Contributions
15

 
5.4
Failure to Complete a Secondary Contribution
 16

 
5.5
Pro Rata Funding
 16

 
ARTICLE VI
INTERESTS OF PARTICIPANTS
17

 
6.1
Initial Interests in the Business and Participating Interests
17

 
6.2
Changes in Participating Interests
17

 
6.3
Elimination of Minority Interest
18

 
6.4
Continuing Liabilities Upon Adjustments of Participating Interests
19

 
6.5
Documentation of Adjustments to Participating Interests
19

 
6.6
Grant of Lien and Security Interest
  20

 
6.7
Subordination of Interests
20

 
ARTICLE VII
MANAGEMENT COMMITTEE
20

 
7.1
Organization and Composition
20

 
7.2
Decisions
22

 
7.3
Meetings
22

 
7.4
Action Without Meeting in Person
22

 
7.5
Matters Requiring Approval
22

ARTICLE VIII
MANAGER
22

 
8.1
Appointment
22

 
8.2
Powers and Duties of Manager
22

 
8.3
Standard of Care
26

 
8.4
Resignation; Deemed Offer to Resign
26

 
8.5
Payments To Manager
27

 
8.6
Transactions With Affiliates
27

 
8.7
Activities During Deadlock
27

ARTICLE IX
PROGRAMS AND BUDGETS
28

 
9.1
Initial Program and Budget
28

 
9.2
Operations Pursuant to Programs and Budgets
28

 
9.3
Presentation of Programs and Budgets
28

 
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9.4
Review and Adoption of Proposed Programs and Budgets
28

 
9.5
Election to Participate
29

 
9.6
Recalculation or Restoration of Reduced Interest Based on Actual Expenditures
30

 
9.7
Pre-Feasibility Study Program and Budgets
31

 
9.8
Completion of Pre-Feasibility Studies and Selection of Approved Alternatives
32

 
9.9
Programs and Budgets for Feasibility Study
33

 
9.10
Development Programs and Budgets; Project Financing
34

 
9.11
Expansion or Modification Programs and Budgets
34

 
9.12
Budget Overruns; Program Changes
34

 
9.13
Emergency or Unexpected Expenditures
35

ARTICLE X
ACCOUNTS AND SETTLEMENTS
35

 
10.1
Quarterly Statements
36

 
10.2
Cash Calls
35

 
10.3
Failure to Meet Cash Calls
35

 
10.4
Cover Payment
36

 
10.5
Remedies
36

 
10.6
Audits
37

ARTICLE XI
DISPOSITION OF PRODUCTION
38

 
11.1
Taking In Kind
38

 
11.2
Failure of Participant to Take In Kind
39

 
11.3
Hedging
39

ARTICLE XII
WITHDRAWAL AND TERMINATION
39

 
12.1
Termination by Expiration or Agreement
39

 
12.2
Termination by Deadlock
29

 
12.3
Withdrawal
39

 
12.4
Continuing Obligations and Environmental Liabilities
40

 
12.5
Disposition of Assets on Termination
40

 
12.6
Non-Compete Covenants
40

 
12.7
Right to Data After Termination
40

 
12.8
Continuing Authority
40

 
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ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST
41

 
13.1
General
41

 
13.2
Notice to Non-Acquiring Participant
41

 
13.3
Option Exercised
42

 
13.4
Option Not Exercised
42

ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTIES
42

ARTICLE XV
SUPPLEMENTAL BUSINESS AGREEMENT
43

ARTICLE XVI
TRANSFER OF INTEREST; PREEMPTIVE RIGHT
43

 
16.1
General
43

 
16.2
Limitations on Free Transferability
43

 
16.3
Preemptive Right
45

ARTICLE XVII
DISPUTES
47

 
17.1
Governing Law
47

 
17.2
Venue
47

 
17.3
Dispute Resolution
47

 
17.4
Fees and Costs
47

ARTICLE XVIII
CONFIDENTIALITY, OWNERSHIP, USE AND DISCLOSURE OF INFORMATION
47

 
18.1
Business Information
47

 
18.2
Participant Information
48

 
18.3
Permitted Disclosure of Confidential Business Information
48

 
18.4
Disclosure Required By Law
48

 
18.5
Public Announcements
49

ARTICLE XIX
GENERAL PROVISIONS
49

 
19.1
Notices
50

 
19.2
Gender
51

 
19.3
Currency
51

 
19.4
Headings
51

 
19.5
Waiver
51

 
19.6
Modification
51

 
19.7
Force Majeure
51

 
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19.8
Rule Against Perpetuities
52

 
19.9
Further Assurances
52

 
19.10
Entire Agreement; Successors and Assigns
52

 
19.11
Memorandum
52

 
19.12
Counterparts
52

EXHIBIT A                                ASSETS AND AREA OF INTEREST
EXHIBIT B                                ACCOUNTING PROCEDURES
EXHIBIT C                                TAX MATTERS
EXHIBIT D                                DEFINITIONS
EXHIBIT E                                NET SMELTER RETURNS CALCULATION
EXHIBIT F                                INSURANCE
EXHIBIT G                                INITIAL PROGRAM AND BUDGET
EXHIBIT H                                FORM OF MEMORANDUM OF AGREEMENT

 
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TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

This Exploration, Development and Mine Operating Agreement is made effective as
of September 15 , 2010 ("Effective Date") between and among Raven Gold Alaska
Inc., an Alaska corporation ("RAVEN"); International Tower Hill Mines Ltd., a
British Columbia corporation (“ITH”); Terra Gold Corporation, an Alaska
corporation ("TERRA"); and Terra Mining Corporation, a British Columbia
corporation (“TMC”). RAVEN, ITH, TERRA and TMC, are each a “Party” and
collectively, whether two or more, are “Parties” to this Agreement.

RECITALS

 
A.
In February of 2010, ITH and American Mining Corporation entered into a Letter
of Intent (“LOI”) concerning a possible joint venture concerning mining
properties located in the Mt. McKinley Recording District, State of Alaska
(collectively the Terra Gold Project), and American Mining Corporation paid a
deposit in the amount of Ten Thousand Dollars ($10,000) to be applied to its
initial contribution to that joint venture if and when applicable.

 
B.
Under the joint venture contemplated by the LOI, ITH would contribute the Terra
Gold Project properties and related assets to the joint venture, and American
Mining Corporation could earn a majority interest in those properties over a
three year period by making option payments, funding operations at or above
agreed upon levels, and issuing an agreed upon number of shares to ITH.

 
C.
In May of 2010, TMC succeeded to American Mining Corporation’s interest in the
LOI, as amended.

 
D.
During the summer of 2010, ITH and TMC undertook the prior steps needed to form
a joint venture for the purposes of exploration, evaluation, and if appropriate
the development and mining of mineral resources within the Terra Gold Project,
acting through their respective Alaska subsidiaries during that time, RAVEN and
TERRA, with RAVEN and TERRA designated as the Participants to the Terra Gold
Project joint venture.

 
E.
Prior to the Effective Date, TMC and TERRA in good faith undertook actions and
expenditures to benefit the contemplated Terra Gold Project joint venture with
the understanding that such expenditures would be applied towards TERRA’s
initial earn-in funding milestone.

 
F.
Prior to the Effective Date, ITH spun off RAVEN, such that RAVEN was no longer a
wholly owned subsidiary of ITH, and has agreed hereunder to convey to RAVEN all
of its right, title and interest in the Terra Gold Project properties and
assets.  As between   ITH and Raven, ITH has retained the right to receive
option payments and shares received from TMC in furtherance of Terra’s Initial
Contribution (as defined herein) and earn-in of interest in the Terra Gold
Project.

 
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G.
On or about the same time, TMC entered into a reverse merger agreement and
simultaneous private placement to secure funding for TERRA’s Initial
Contribution and earn-in under the joint venture, with TMC to issue the share
consideration under this Agreement to ITH following the closing of TMC’s reverse
merger.

 
H.
RAVEN desires to contribute all right title and interest in the Terra Gold
Project properties and assets that it will receive from ITH (as described in
Exhibit A), except for reserving unto itself a sliding scale Net Smelter Returns
royalty interest on Production (as described specifically in Exhibit A and as
defined in Exhibit E) of precious metals or base metals established on the
properties contributed as RAVEN’s Initial Contribution under the joint venture.

 
I.
TERRA wishes to participate with RAVEN in the exploration, evaluation, and if
justified the development and mining of mineral resources within the Terra Gold
Project in accordance with this Agreement, and RAVEN is willing to grant such
rights to TERRA.

NOW THEREFORE, in consideration of the covenants and conditions contained
herein, the Parties agree as follows:

ARTICLE I
DEFINITIONS AND CROSS-REFERENCES

1.1           Definitions. The terms defined in Exhibit D and elsewhere shall
have the defined meaning wherever used in this Agreement, including in Exhibits.

1.2           Cross-References. References to "Exhibits," "Articles," "Sections"
and "Subsections" refer to Exhibits, Articles, Sections and Subsections of this
Agreement. References to "Paragraphs" and "Subparagraphs" refer to paragraphs
and subparagraphs of the referenced Exhibits.

 
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ARTICLE II
NAME, PURPOSES AND TERM

2.1           General. RAVEN and TERRA hereby enter into this Agreement for the
purposes hereinafter stated. All of the rights and obligations of the
Participants in connection with the Assets or the Area of Interest and all
Operations shall be subject to and governed by this Agreement.

2.2           Name. The Assets shall be managed and operated by the Participants
under the name of Terra Gold Project Joint Venture. The Manager shall accomplish
any registration required by applicable assumed or fictitious name statutes and
similar statutes.

2.3           Purposes. This Agreement is entered into for the following
purposes and for no others, and shall serve as the exclusive means by which each
of the Participants accomplishes such purposes:

 
(a)
to conduct Exploration within the Area of Interest on an as-needed basis,

 
(b)
to acquire additional real property and other interests within the Area of
Interest on an as-needed basis,

 
(c)
to evaluate the possible Development and Mining of the Properties, and, if
determined by the Participants to be justified, to engage in Development and
Mining,

 
(d)
to engage in Operations on the Properties,

 
(e)
to engage in marketing Products, to the extent provided by Article XI,

 
(f)
to complete and satisfy all Environmental Compliance obligations and Continuing
Obligations affecting the Properties, and

 
(g)
to perform any other activity necessary, appropriate, or incidental to any of
the foregoing.

2.4           Limitation. Unless the Participants otherwise agree in writing,
the Operations shall be limited to the purposes described in Section 2.3, and
nothing in this Agreement shall be construed to enlarge such purposes or to
change the relationships of the Participants as set forth in Section 4.

2.5           Term. The term of this Agreement shall be for twenty (20) years
from the Effective Date and for so long thereafter as Products are produced from
the Properties on a continuous basis, and thereafter until all materials,
supplies, equipment and infrastructure have been salvaged and disposed of, any
required Environmental Compliance is completed and accepted and the Participants
have agreed to a final accounting, unless the Business is earlier terminated as
herein provided. For purposes hereof, Products shall be deemed to be produced
from the Properties on a "continuous basis" so long as production in commercial
quantities is not halted for more than one year for reasons other than Force
Majeure as provided for in Section 19.7.

 
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ARTICLE III
REPRESENTATIONS AND WARRANTIES;
TITLE TO ASSETS; INDEMNITIES

3.1           Representations and Warranties of Both Participants. Except as
expressly stated otherwise, as of the Effective Date each Participant warrants
and represents to the other that:

(a)           it is a corporation duly organized and in good standing in its
state of incorporation and is qualified to do business and is in good standing
in those states where necessary in order to carry out the purposes of this
Agreement;

(b)           it has the capacity to enter into and perform this Agreement and
all transactions contemplated herein and that all applicable corporate actions
(i.e., authorizations and approvals by such board of directors and such
shareholders) as may be required and third party consents (except for the
consent of Ben Porterfield under Section XII.D of the Porterfield Lease, which
RAVEN shall warrant and represent it has obtained as of the date RAVEN completes
its Initial Contribution hereunder pursuant to Section 5.01(a)) as may be
required to authorize and enable it to enter into and perform this Agreement
have been properly taken;

(c)           it will not breach any other agreement or arrangement by entering
into or performing this Agreement;

(d)           it is not subject to any governmental order, judgment, decree,
debarment, sanction or Laws that would preclude the permitting or implementation
of all Operations under this Agreement; and

(e)           this Agreement has been duly executed and delivered by it and is
valid and binding upon it in accordance with its terms.

3.2           Representations and Warranties of RAVEN. As of the date RAVEN
makes its Initial Contribution hereunder pursuant to Section 5.01(a), RAVEN
makes the following representations and warranties to TERRA:

(a)           RAVEN has delivered to or made available for inspection by TERRA
all Existing Data in its possession or control, and true and correct copies of
all leases or other contracts relating to the Properties.

 
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(b)           With respect to unpatented state mining locations not located by
RAVEN but which are included within the Properties, except as provided in
Paragraph 1.1 of Exhibit A and subject to the paramount titles of the United
States (if any such title remains) and the State of Alaska: (i) all assessment
work required to hold the unpatented state mining locations has been performed
and all Governmental Fees have been paid in a manner consistent with that
required of the Manager pursuant to Subsection 8.2(k) through the assessment
year ending September 1, 2009, and through the rental year commencing on
September 1, 2009 (for which rental was required to be paid on or before
November 30, 2009); (ii) all affidavits of assessment work, evidence of payment
of Governmental Fees, and other filings required to maintain said locations in
good standing have been properly and timely recorded or filed with appropriate
governmental agencies; (iii) said locations are free and clear of Encumbrances
or defects in title; and (iv) RAVEN has no knowledge of conflicting mining
claims. Nothing in this Subsection, however, shall be deemed to be a
representation or a warranty that any of the unpatented state mining locations
contains a valuable discovery of locatable minerals.

(c)           With respect to those Properties in which RAVEN holds an interest
(as successor to the interest of lessee AngloGold Ashanti (USA) Exploration
Inc.) under the Porterfield Lease, except as provided therein and subject to the
rights of lessor Ben Porterfield thereunder (including but not limited to the
right of lessor to conduct simultaneous operations under Section II.I
thereunder), and except as provided in Paragraph 1.1 of Exhibit A: (i) RAVEN is
in exclusive possession of such Properties; (ii) RAVEN has not received any
notice of default of any of the terms or provisions of such lease; (iii) RAVEN
has the authority under such lease to perform fully its obligations under this
Agreement; (iv) to RAVEN's knowledge, such lease is valid and is in good
standing; (v) RAVEN has no knowledge of any act or omission or any condition on
the Properties which could be considered or construed as a default under such
lease; and (vi) to RAVEN's knowledge, such Properties are free and clear of all
Encumbrances or defects in title except for those specifically identified in
Paragraph 1.1 of Exhibit A.

(d)           With respect to the Properties, to RAVEN's knowledge, there are no
pending or threatened actions, suits, claims or proceedings, and there have been
no previous transactions affecting its interests in the Properties which have
not been for fair consideration.

(e)           Except as to matters otherwise disclosed in writing to TERRA prior
to the Effective Date,

(i)           to RAVEN's knowledge, the conditions existing on or with respect
to the Properties and its ownership and operation of the Properties are not in
violation of any Laws (including without limitation any Environmental Laws), nor
causing or permitting any damage (including Environmental Damage, as defined
below) or impairment to the health, safety, or enjoyment of any person at or on
the Properties or in the general vicinity of the Properties;

(ii)           to RAVEN's knowledge, there have been no past violations by it or
by any of its predecessors in title of any Environmental Laws or other Laws
affecting or pertaining to the Properties, nor any past creation of damage or
threatened damage to the air, soil, surface waters, groundwater, flora, fauna,
or other natural resources on, about or in the general vicinity of the
Properties ("Environmental Damage"); and

 
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(iii)           RAVEN has not received inquiry from or notice of a pending
investigation from any governmental agency or of any administrative or judicial
proceeding concerning the violation of any Laws.

The representations and warranties set forth above shall survive the execution
and delivery of any documents of Transfer provided under this Agreement. For a
representation or warranty made to a Participant's "knowledge," the term
"knowledge" shall mean actual knowledge on the part of the officers, employees,
and agents of the representing Participant or of facts that would reasonably
lead to the indicated conclusions.

3.3           Disclosures. Each of the Participants represents and warrants that
it is unaware of any material facts or circumstances that have not been
disclosed in this Agreement, which should be disclosed to the other Participant
in order to prevent the representations and warranties in this Article from
being materially misleading. RAVEN has disclosed to TERRA all information it
believes to be relevant concerning the Assets and has provided to or made
available for inspection by TERRA all such information, but does not make any
representation or warranty, express or implied, as to the accuracy or
completeness of the information (except as provided in Section 3.2) or as to the
boundaries or value of the Assets. Each Participant represents to the other that
in negotiating and entering into this Agreement it has relied solely on its own
appraisals and estimates as to the value of the Assets and upon its own geologic
and engineering interpretations related thereto.

3.4           Record Title. Title to the Assets contributed by RAVEN as its
Initial Contribution pursuant to Section 5.1 shall be held by RAVEN, subject to
this Agreement and to the Raven Royalty, until TERRA completes its Initial
Contribution at which time, RAVEN shall convey a fifty-one percent (51%)
undivided interest in the Assets into TERRA or TERRA’s designee, subject to this
Agreement and to the Raven Royalty. The Participants agree to make such further
conveyances of record title from time to time, as their Participating Interests
are determined or recalculated pursuant to this Agreement.

3.5           Loss of Title. Following RAVEN’s completion of its Initial
Contribution, any failure or loss of title to the Assets, and all costs of
defending title, shall be charged to the Business Account, except that all costs
and losses arising out of or resulting from breach of the representations and
warranties of RAVEN or TERRA as to title shall be charged to RAVEN or TERRA, as
the case may be.

 
6

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3.6           Royalties, Production Taxes and Other Payments Based on
Production. All required payments of production royalties, taxes based on
production of Products or on the gross or net income derived therefrom, and
other payments out of production to private parties and governmental entities
shall be determined and made by each Participant in proportion to its
Participating Interest, and each Participant undertakes to make such payments
timely and otherwise in accordance with applicable laws and agreements. If
separate payment is not permitted, each Participant shall determine and pay its
proportionate share in advance to the Participant obligated to make such payment
and such Participant shall timely make such payment. Each Participant shall
furnish to the other Participant evidence of timely payment for all such
required payments. In the event that either Participant fails to make any such
required payment, the other Participant shall have the right to make such
payment and shall thereby become subrogated to the rights of such third party;
provided, however, that the making of any such payment on behalf of the other
Participant shall not constitute acceptance by the paying Participant of any
liability to such third party for the underlying obligation.

3.7           Indemnities/Limitation of Liability.

(a)           Each Participant shall indemnify the other Participant, its
directors, officers, employees, agents and attorneys, or Affiliates
(collectively "Indemnified Participant") from and against the entire amount of
any Material Loss. A "Material Loss" shall mean all costs, expenses, damages or
liabilities, including attorneys' fees and other costs of dispute resolution
(either threatened or pending) arising out of or based on a breach by a
Participant ("Indemnifying Participant") of any representation, warranty or
covenant contained in this Agreement, including without limitation:

(i)           any failure by a Participant to determine accurately and make
timely payment of its proportionate share of required royalties, production
taxes and other payments out of production to third parties as required by
Section 3.6;

(ii)           any action taken for or obligation or responsibility assumed on
behalf of the other Participant, its directors, officers, employees, agents and
attorneys, or Affiliates by a Participant, any of its directors, officers,
employees, agents and attorneys, or Affiliates, in violation of Section 4.1;

(iii)           failure of a Participant or its Affiliates to comply with the
non-compete or Area of Interest provisions of Section 12.6 or Article XIII;

(iv)           any Transfer that causes termination of the tax partnership
established by Section 4.2, against which the transferring Participant shall
indemnify the non-transferring Participant as provided in Article V of
Exhibit C; and

(v)           failure of a Participant or its Affiliates to comply with the
preemptive right under Section 16.3.

A Material Loss shall not be deemed to have occurred until, in the aggregate, an
Indemnified Participant incurs losses, costs, damages or liabilities in excess
of Two Hundred Thousand Dollars ($200,000) relating to breaches of warranties,
representations and covenants contained in this Agreement. RAVEN's aggregate
liability to all Indemnified Participants under this Section for breaches of the
representations in Subsection 3.2(g) shall not, however, exceed the total value
of TERRA’s Initial Contribution described in Subsection 5.1(b) below.

 
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(b)           If any claim or demand is asserted against an Indemnified
Participant in respect of which such Indemnified Participant may be entitled to
indemnification under this Agreement, written notice of such claim or demand
shall promptly be given to the Indemnifying Participant. The Indemnifying
Participant shall have the right, but not the obligation, by notifying the
Indemnified Participant within thirty (30) days after its receipt of the notice
of the claim or demand, to assume the entire control of (subject to the right of
the Indemnified Participant to participate, at the Indemnified Participant's
expense and with counsel of the Indemnified Participant's choice), the defense,
compromise, or settlement of the matter, including, at the Indemnifying
Participant's expense, employment of counsel of the Indemnifying Participant's
choice. Any damages to the assets or business of the Indemnified Participant
caused by a failure by the Indemnifying Participant to defend, compromise, or
settle a claim or demand in a reasonable and expeditious manner requested by the
Indemnified Participant, after the Indemnifying Participant has given notice
that it will assume control of the defense, compromise, or settlement of the
matter, shall be included in the damages for which the Indemnifying Participant
shall be obligated to indemnify the Indemnified Participant. Any settlement or
compromise of a matter by the Indemnifying Participant shall include a full
release of claims against the Indemnified Participant which has arisen out of
the indemnified claim or demand.

ARTICLE IV
RELATIONSHIP OF THE PARTICIPANTS

4.1           No Partnership. Nothing contained in this Agreement shall be
deemed to constitute either Participant the partner or the venturer of the other
or, except as otherwise herein expressly provided, to constitute either
Participant the agent or legal representative of the other or to create any
fiduciary relationship between them. The Participants do not intend to create,
and this Agreement shall not be construed to create, any mining, commercial or
other partnership or joint venture. Neither Participant or any Affiliate
thereof, nor any of the directors, officers, employees, agents or attorneys of
said Participant or Affiliate, shall act for or assume any obligation or
responsibility on behalf of the other Participant, except as otherwise expressly
provided herein, and any such action or assumption by a Participant, any
Affiliate thereof, or said Participant’s or any of the directors, officers,
employees, agents or attorneys of said Participant or Affiliate shall be a
breach by such Participant of this Agreement. The rights, duties, obligations
and liabilities of the Participants shall be several and not joint or
collective. Each Participant shall be responsible only for its obligations as
herein set out and shall be liable only for its share of the costs and expenses
as provided herein, and it is the express purpose and intention of the
Participants that their ownership of Assets and the rights acquired hereunder
shall be as tenants in common.

4.2           Federal Tax Elections and Allocations. Without changing the effect
of Section 4.1, the relationship of the Participants shall constitute a tax
partnership within the meaning of Section 761(a) of the United States Internal
Revenue Code of 1986, as amended. Tax elections and allocations shall be made as
set forth in Exhibit C.

 
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4.3           State Income Tax. To the extent permissible under applicable law,
the relationship of the Participants shall be treated for state income tax
purposes in the same manner as it is for federal income tax purposes.

4.4           Tax Returns. After approval of the Management Committee, any tax
returns or other required tax forms shall be filed in accordance with Exhibit C.

4.5           Other Business Opportunities. Except as expressly provided in this
Agreement, each Participant shall have the right to engage in and receive full
benefits from any independent business activities or operations, whether or not
competitive with this Business, without consulting with, or obligation to, the
other Participant. The doctrines of "corporate opportunity" or "business
opportunity" shall not be applied to this Business nor to any other activity or
operation of either Participant. Neither Participant shall have any obligation
to the other with respect to any opportunity to acquire any property outside the
Area of Interest at any time or, except as otherwise provided in Section 12.6,
within the Area of Interest after the termination of the Business. Unless
otherwise agreed in writing, neither Participant shall have any obligation to
mill, beneficiate or otherwise treat any Products in any facility owned or
controlled by such Participant.

4.6           Waiver of Rights to Partition or Other Division of Assets. The
Participants hereby waive and release all rights of partition, or of sale in
lieu thereof, or other division of Assets, including any such rights provided by
Law.

4.7           Transfer or Termination of Rights to Properties. Except as
otherwise provided in this Agreement, neither Participant shall Transfer all or
any part of its interest in the Assets or this Agreement or otherwise permit or
cause such interests to terminate.

4.8           Implied Covenants. There are no implied covenants contained in
this Agreement other than those of good faith and fair dealing.

4.9           No Third Party Beneficiary Rights. Except for third parties
indemnified under this Agreement, this Agreement shall be construed to benefit
the Parties and their respective successors and assigns only, and shall not be
construed to create third party beneficiary rights in any other party or in any
governmental organization or agency, except to the extent required by Project
Financing and as provided in Subsection 3.7(a).

 
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ARTICLE V
CONTRIBUTIONS BY PARTICIPANTS

5.1           Participants' Initial Contributions.

(a)           Subject to RAVEN’s right of withdrawal as set forth in
Section 5.2, RAVEN’s Initial Contribution shall consist of the following two
components described below in this Subsection 5.1(a) to be satisfied on or
before October 14, 2010:

(1)           ITH hereby agrees to cause Talon Gold Alaska Inc. (“Talon”) to
convey and assign unto RAVEN, all of Talon’s right, title and interest in and to
the Assets described in Exhibit A. In addition, ITH and Raven agree to use their
best efforts to obtain from Ben Porterfield the following:

 
(A)
his written consent to

 
(i)
the conveyance and assignment by Talon to Raven of all rights, titles, and
interests of the “Lessee” under the Porterfield Lease, and

 
 
(ii)
the contribution by Raven of said rights, titles, and interests (excluding and
subject to the Raven Royalty) to the Terra Gold Project Joint Venture formed
under this Agreement, and

 
(B)
his written agreement as follows:

 
(i)
In light of Section II.F of the Porterfield Lease (which provides that
Porterfield shall be entitled to receive royalty under the Porterfield Lease on
any and all mineral products recovered by Lessee from Porterfield’s tailings),
Porterfield agrees to amend the Porterfield Lease to delete from the Porterfield
Lease the last bulleted point set out in Section II.I of the Porterfield Lease
(set out on page 9 of 38, immediately prior to the commencement of Section III
of the Porterfield Lease); and

 
 
(ii)
the “area of interest” referred to in Section II.G of the Porterfield Lease is
agreed to comprise all lands within the geographic area made subject to that
Lease as described by sections and quarter-sections.

(2)           RAVEN hereby agrees to contribute all of its right, title and
interest in and to the Assets described in Exhibit A (except for and subject to
the Raven Royalty) to the purposes of this Agreement. The amount of Dollars to
be credited to RAVEN's Equity Account with respect to and upon the completion of
RAVEN’s Initial Contribution shall be equal to Five Million Seven Hundred Sixty
Four Thousand Seven Hundred Five Dollars and Eighty-Eight Cents ($5,764,705.88
[49/51 times $6,000,000]).

 
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(b)           Subject to TERRA's right of withdrawal as set forth in
Section 5.2, TERRA’s Initial Contribution shall consist of the four components
described below in this Subsection 5.1(b) to be satisfied on or before December
31, 2013. Upon completion of TERRA’s Initial Contribution, TERRA shall be
deemed, automatically and without further act required by TERRA, to have earned
an undivided fifty-one percent (51%) Participating Interest and RAVEN shall take
all steps and execute all documents as necessary to convey to the Participants,
as tenants in common, the following undivided interests in, to, and respecting
the Assets (with the Properties being subject to the Raven Royalty), and to
record evidence of the same:

TERRA:                      Fifty-one percent (51%);
RAVEN:                     Forty-nine percent (49%).

(i)           First, TERRA shall pay or cause to be paid directly to ITH an
option payment equal to Three Hundred Thousand Dollars ($300,000), of which

 
(A)
Ten Thousand Dollars ($10,000) already has been paid prior to this Agreement as
a deposit under the LOI,

 
(B)
Forty Thousand Dollars ($40,000) must be paid on or before execution of this
Agreement,

 
(C)
One Hundred Thousand Dollars ($100,000) must be paid on or before December 31,
2011, and

 
(D)
One Hundred Fifty Thousand Dollars ($150,000) must be paid on or before December
31, 2012.

Payment of the amounts described in (C) and (D) of this Subsection is not an
obligation of TERRA, but failure to make such payments timely shall - after
notice to ITH and RAVEN and an opportunity to cure as provided in
Subsection 5.2(b) - be deemed to constitute a withdrawal by TERRA from the
Business, and the provisions of Subsection 5.2(b) shall apply.

(ii)           Second, TERRA shall fund or cause to be funded Operations under
Subsection 5.1(c) totaling Six Million Dollars ($6,000,000) on or before
December 31, 2013, of which

 
(A)
a total of One Million Dollars ($1,000,000) must be expended on or before
December 31, 2011 (which amount must include a payment to the order of RAVEN in
the amount of One Hundred Thousand Dollars ($100,000) as described below),

 
(B)
an additional Two Million Five Hundred Dollars ($2,500,000) (for a total of
Three Million Five Hundred Thousand Dollars ($3,500,000) equaling  the
$1,000,000 described in (A) plus this additional $2,500,000) must be expended on
or before December 31, 2012 (which amount must include a second payment made to
the order of RAVEN in the amount of One Hundred Thousand Dollars ($100,000) as
described below (i.e., a total paid to RAVEN of $200,000 equaling the $100,000
described in (A) plus an additional $100,000)), and

 
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(C)
an additional Two Million Five Hundred Thousand Dollars (for a total of Six
Million Dollars ($6,000,000) equaling the $3,500,000 described in (B) plus this
additional $2,500,000) must be expended on or before December 31, 2013.

In determining whether such funding obligation has been met, only costs
(including costs incurred by TERRA both before and after the Effective Date so
long as such costs otherwise are properly chargeable to the Business Account,
but excluding any costs incurred to buy down the royalty interest of  Ben
Porterfield under the Porterfield Lease) that are properly chargeable to the
Business Account under Exhibit B shall be included ("Qualifying Expenses");
provided, however, TERRA shall be entitled to an Administrative Charge, as
described in Section 8.2, on all Qualifying Expenses other than $100,000
payments paid to the order of RAVEN as described in (A) and (B) and below)
during the time it is making Qualifying Expenses, which Administrative Charge
shall be included in Qualifying Expenses. The Participants agree that TERRA’s
total payment to RAVEN of  Two Hundred Thousand Dollars ($200,000) as described
in (A) and (B) of this Subsection shall constitute TERRA’s share of the cost of
constructing the 20-man camp for the Properties. Expenditure of the amounts
described in (A), (B) and (C) of this Subsection is not an obligation of TERRA,
but failure to expend such amounts timely, or to make timely either of the
payments to RAVEN as described in (A) and (B), shall—after notice to RAVEN and
an opportunity to cure as provided in Subsection 5.2(b)—be deemed to constitute
a withdrawal by TERRA from the Business, and the provisions of Subsection 5.2(b)
shall apply.

(iii)           Third, promptly upon completion of its reverse merger but no
later than the first anniversary of the Effective Date, TMC shall tender to ITH
Two Hundred and Fifty Thousand (250,000) common shares (adjusted for any splits,
reverse splits, exchanges upon merger or consolidation, or similar corporate
transactions occurring after the Effective Date) of its stock, with a total of
an additional Five Hundred Thousand (500,000) common shares (adjusted for any
splits, reverse splits, exchanges upon merger or consolidation, or similar
corporate transactions occurring after the Effective Date) of its stock to be
delivered  to ITH as follows:  Two Hundred and Fifty Thousand (250,000) shares
to be tendered to ITH on or before December 31 of each of 2011 and 2012.  At its
election, at any time prior to December 31, 2011 or 2012, as applicable, TMC may
issue such additional shares into escrow prior to tender to ITH.  All shares
shall be subject to a two (2) year lock up sale restriction. Issuance of such
common shares is subject to approval of any applicable stock exchange. Should
TMC not have such approval within one year of the Effective Date, the common
shares shall be issued from TMC’s treasury shares. For purposes of valuation,
the TMC shares shall be equal to the then current market price at the time they
are issued, either directly to ITH or into escrow. If TMC is a publicly traded
company trading on any Canadian or United States stock exchange at the date of
tender, the then current market price shall equal the thirty (30) day trailing
average price of TMC common shares sold on the stock exchange on which TMC is
traded on the date five (5) business days prior to tender. If TMC is not a
publicly traded company at the date of tender, the then current market price
shall equal the price of the most recent private placement completed for
ownership in TMC. Tender to ITH of stock as described in this paragraph is not
an obligation of TERRA, but failure to tender to ITH timely the number of shares
required to be tendered shall—after notice to ITH and RAVEN and an opportunity
to cure as provided in Subsection 5.2(b)—be deemed to constitute a withdrawal by
TERRA from the Business, and the provisions of Subsection 5.2(b) shall apply.

 
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(iv)           As the fourth and final component of its Initial Contribution,
TERRA shall contribute sample and survey data, laboratory analyses, written
reports and interpretations, if any, obtained during its due diligence
investigation of the Assets and conduct of Operations during the making of its
Initial Contribution. Failure to satisfy this fourth requirement on or before
December 31, 2013 shall—after notice and an opportunity to cure as provided in
Subsection 5.2(b)—be deemed to constitute a withdrawal by TERRA from the
Business, and the provisions of Section 5.2(b) shall apply.

(v)           Any performance by TERRA in excess of the stated amounts for each
year shall be credited towards TERRA’s subsequent year(s) commitment to the
Initial Contribution.

(vi)           Upon completion of its Initial Contribution, the amount of
Dollars to be credited to TERRA's Equity Account shall be equal to Six Million
Dollars ($6,000,000).

(c)           Subject only to the provisions of Section 9.1, until TERRA has
completed its Initial Contribution and until TERRA has completed its Secondary
Contribution if Terra has elected to make a Secondary Contribution under
Subsection 5.3 TERRA shall have the sole right to determine the nature, timing,
scope, extent and method of all Operations without any obligation to hold
meetings of the Management Committee, to prepare Programs and Budgets for
review, comment or approval by RAVEN, or to obtain the approval or consent of
RAVEN or the Management Committee. In conducting such Operations, TERRA shall be
entitled, but shall not be obligated (except (i) for or with respect to
Environmental Compliance and (ii) to the extent necessary to maintain the
Properties (including but not limited to the Porterfield Lease) in good standing
through the end of each calendar year during which this Agreement is in effect
on June 1 of said calendar year), to exercise any of the applicable powers of
the Manager in Section 8.2, except that until TERRA has completed its Initial
Contribution it shall not be entitled or required to perform the activities
described in Subsections 8.2(g), (i), (l) and (s) that would otherwise require
consent of the Management Committee or of RAVEN. For all such Operations, TERRA
shall provide for accrual of reasonably anticipated Environmental Compliance
expenses, which shall constitute Qualifying Expenses, and upon completion of its
Initial Contribution, TERRA shall transfer any accrued but unexpended amounts to
the Environmental Compliance Fund established under Paragraph 2.14 of Exhibit B.
Prior to completion of its Initial Contribution and its Secondary Contribution
if it has elected to make a Secondary Contribution under Subsection 5.3, TERRA,
in lieu of any reporting requirements under this Agreement, shall:

 
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(i)           keep RAVEN generally informed concerning all material Operations
and other material activities affecting the Properties;

(ii)           within thirty (30) days after the end of each calendar quarter,
furnish to RAVEN a reasonably detailed written report of all Operations
conducted on or for the benefit of the Properties during the preceding quarter;

(iii)           make available for inspection and copying by RAVEN all factual
and interpretive reports, studies and analyses concerning the Properties, and
make all core and other samples available for inspection by RAVEN; and

(iv)           on or before each December 15 immediately following each
anniversary of the Effective Date, submit to RAVEN a statement of Qualifying
Expenses incurred during the preceding year.

TERRA makes no representation or warranty, express or implied, as to the
accuracy or completeness of the data and information provided to RAVEN in
accordance with (i) through (iv) above.

(d)           RAVEN shall provide TERRA with written notice of any exceptions it
may have to the statement of Qualifying Expenses submitted to it as provided
above within three (3) months after receipt of the statement. Failure to provide
such notice within the three (3) month period shall constitute acceptance by
RAVEN of the stated Qualifying Expenses.

5.2           Failure to Make Initial Contribution.

(a)           RAVEN’s failure to make its Initial Contribution in accordance
with the provisions of this Article, if not cured within ninety (90) days after
notice by TERRA of such failure, shall be deemed to be a withdrawal of RAVEN
from the Business. Upon such event, RAVEN and ITH shall immediately refund all
funds received hereunder or under the LOI from TERRA, TMC, their Affiliates or
their predecessors in interest, as well as reimburse TERRA for any Qualifying
Expenses TERRA funded towards Operations prior to RAVEN’s default as well as one
hundred percent (100%) of the amount needed to satisfy TERRA's contractual
obligations to third parties made on behalf of the Business prior to RAVEN’s
default. Nor shall such withdrawal relieve RAVEN of its responsibility to fund
and satisfy RAVEN’s share of liabilities to third persons (regardless of whether
such liabilities accrue before or after such withdrawal), including
Environmental Liabilities, Continuing Obligations and Environmental Compliance,
arising prior to RAVEN’s withdrawal, which responsibility shall be based on
RAVEN’s initial Participating Interest.

 
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(b)           TERRA's failure to make its Initial Contribution in accordance
with the provisions of this Article, if not cured where permitted within ninety
(90) days (or in the case of any failure to pay cash, within thirty (30) days)
after notice by RAVEN or ITH of such failure, shall be deemed to be a withdrawal
of TERRA from the Business, the termination of all of its rights and interests
hereunder and a transfer of all of said rights and interests and of its Capital
Account to RAVEN. Upon such event, TERRA shall have no further right, title or
interest in the Assets and it shall take such actions as are necessary to ensure
that all Assets are free and clear of any Encumbrances arising by, through or
under it, except for such Encumbrances to which the Participants may have
agreed. Subject to Subsection 5.2(c) below, TERRA's withdrawal shall be
effective upon such failure, but such withdrawal shall not relieve TERRA of its
obligation to RAVEN to fund Operations up to the amount of TERRA's contractual
obligations to third parties, nor shall such withdrawal relieve TERRA of its
responsibility to fund and satisfy TERRA's share of liabilities to third persons
(regardless of whether such liabilities accrue before or after such withdrawal),
including Environmental Liabilities, Continuing Obligations and Environmental
Compliance, arising prior to TERRA's withdrawal, which responsibility shall be
based on the initial Participating Interest that TERRA would have earned had it
completed its Initial Contribution.

(c)           Notwithstanding Subsection 5.2(b) above, in the event TERRA,
within one year after the Effective Date, determines that conditions existed on
the Properties as of the Effective Date which may, in TERRA's judgment, result
in violation of Environmental Laws, TERRA shall have the right to withdraw from
the Business by giving written notice to RAVEN of such withdrawal. TERRA's
withdrawal shall be effective upon receipt by RAVEN of such notice. Such
withdrawal shall relieve TERRA of its responsibility to fund and satisfy TERRA's
share of liabilities to third parties (regardless of whether such liabilities
accrue before or after such withdrawal), including Environmental Liabilities,
Continuing Obligations and Environmental Compliance, other than those arising
out of Operations conducted by TERRA after the Effective Date and prior to its
withdrawal. TERRA shall fund and satisfy one hundred percent (100%) of such
liabilities only until it has contributed the full amount of its agreed
contribution to the then currently adopted Program and Budget.  Except as
provided in this Subsection and except as may be otherwise expressly provided
herein, TERRA's withdrawal shall relieve TERRA from any other obligation to make
contributions hereunder.

5.3           Additional Contributions. At such time as TERRA has completed its
Initial Contribution, TERRA may elect, at its sole discretion, to earn an
additional twenty-nine percent (29%) Participating Interest, for a total
Participating Interest of eighty percent (80%), by completing a secondary
contribution consisting of undertaking, or causing TMC to undertake, as the case
may be, the following three actions (“Secondary Contribution”):

(a)           First, TERRA shall pay or cause to be paid directly to ITH an
additional option payment equal to One Hundred Fifty Thousand Dollars
($150,000), payable on or before December 31, 2013.

(b)           Second, TERRA shall fund or cause to be funded Operations under
Subsection 5.1(c) totaling an additional Three Million Fifty Thousand Dollars
($3,050,000) on or before December 31, 2014. In determining whether such funding
obligation has been met, only Qualifying Expenses that are properly chargeable
to the Business Account under Exhibit B shall be included.
 

 
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(c)           Third, TMC shall tender an additional Two Hundred Fifty Thousand
(250,000) common shares (adjusted for any splits, reverse splits, exchanges upon
merger or consolidation, or similar corporate transactions occurring after the
Effective Date) of its stock to ITH on or before December 31, 2014. All shares
shall be subject to a two (2) year lock up sale restriction. At its election, at
any time prior to December 31, 2014, TMC may issue such shares into escrow prior
to tender to ITH. Issuance of such common shares is subject to approval of any
applicable stock exchange. Should TMC not have such approval, the common shares
shall be issued from TMC’s treasury shares. For purposes of valuation, the TMC
shares shall be equal to the then current market price at the time they are
issued to ITH or into escrow. If TMC is a publicly traded company trading on any
Canadian or United States stock exchange at the date of tender, the then current
market price shall equal the thirty (30) day trailing average price of TMC
common shares sold on the stock exchange on which TMC is traded on the date five
(5) business days prior to tender. If TMC is not a publicly traded company at
the date of tender, the then current market price shall equal the price of the
most recent private placement completed for ownership in TMC.

Upon completion of TERRA’s Secondary Contribution, TERRA shall be deemed,
automatically and without further act required by TERRA, to have earned an
additional undivided twenty-nine percent (29%) Participating Interest and RAVEN
shall take all steps and execute all documents as necessary to convey to TERRA
an additional undivided twenty-nine percent (29%) interest in the Assets
(subject to the Raven Royalty) out of RAVEN’s undivided forty-nine percent (49%)
interest therein, and to record evidence of the same, after which conveyance
RAVEN shall have the remaining undivided twenty percent (20%) interest in the
Assets and a total Participating Interest hereunder of twenty percent (20%).

The total amount of Dollars deemed to be in TERRA’s Equity Account on the date
it completes its Secondary Contribution, if at all, is Nine Million Fifty
Thousand Dollars ($9,050,000 [$6,000,000 plus $3,050,000]), and the total amount
of Dollars deemed to be in RAVEN's Equity Account on said date shall be equal to
Two Million Two Hundred Sixty-Two Thousand Five Hundred Dollars  ($2,262,500
[20% of $9,050,000 + $ 2,262,500]).

5.4           Failure to Complete a Secondary Contribution. Making and
completing the Secondary Contribution is solely at TERRA’s discretion. Should
TERRA undertake but fail to complete a Secondary Contribution under
Subsection 5.3 above, TERRA shall not earn an additional twenty-nine percent
(29%) Participating Interest, but otherwise shall not be subject to any
dilution, deemed withdrawal, termination, transfer of Participating Interest or
Capital Account, or penalty, and the Equity Accounts of both TERRA and RAVEN
shall remain as provided in Section 5.1.

5.5           Pro Rata Funding. During periods of sole funding by TERRA, RAVEN
shall have no obligation to fund its pro rata share of expenditures, except in
the event the Participants mutually agree to buy down the royalty interest of
Ben Porterfield under the Porterfield Lease, which costs shall be borne pro rata
by the Participants in proportion to their respective interests in the Business.
Upon TERRA’s completion of its Secondary Contribution or upon TERRA’s completion
of its Initial Contribution if TERRA does not elect to make, or does not
complete, a Secondary Contribution, the Participants, subject to any election
permitted by Subsection 9.5(a), shall be obligated to contribute funds to
adopted Programs and Budgets in proportion to their respective Participating
Interests.

 
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ARTICLE VI
INTERESTS OF PARTICIPANTS

6.1           Initial Interests in the Business and Participating Interests.

Upon RAVEN’s completion of its Initial Contribution under Section 5.1(a) and
prior to TERRA’s completion of its Initial Contribution under Section 5.1(b),
the Participants shall have the following Participating Interests:

RAVEN                      -     100% 
TERRA                      -     0%;

provided, however, that as of the Effective Date the Participants shall have the
following initial interests in the Business (which initial interests shall equal
each Participant’s respective share of any Products produced and sold from the
Properties and of any costs incurred in connection with matters requiring pro
rata funding, but which initial interests in the Business do not correspond to
or constitute the Participating Interests of the Participants until such time as
TERRA has completed its Initial Contribution):

RAVEN                      -           49% 
TERRA                      -           51%.

Upon TERRA’s completion of its Initial Contribution under Section 5.1(b), the
Participants shall have the following Participating Interests which shall equal
the interests of each Participant in the Business:

RAVEN                      -           49% 
TERRA                      -           51%.

6.2           Changes in Participating Interests.  Following the Participants’
completion of their respective Initial Contributions, the Participating
Interests shall be eliminated or changed as follows:

(a)           (i)           Upon the satisfactory making by TERRA of its
Secondary Contribution as provided in Section 5.3; or

(ii)           upon withdrawal or deemed withdrawal as provided in Sections 5.2,
6.3, and Article XII;

 
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(b)           Upon an election by either Participant pursuant to Section 9.5 to
contribute less to an adopted Program and Budget than the percentage equal to
its Participating Interest, or to contribute nothing to an adopted Program and
Budget;

(c)           In the event of default by either Participant in making its agreed
upon contribution to an adopted Program and Budget, followed by an election by
the other Participant to invoke any of the remedies in Section 10.5;

(d)           Upon Transfer by either Participant of part or all of its
Participating Interest in accordance with Article XVI; or

(e)           Upon acquisition by either Participant of part or all of the
Participating Interest of the other Participant, however arising.

6.3           Elimination of Minority Interest.

(a)           A Reduced Participant whose Recalculated Participating Interest
becomes less than ten percent (10%) shall be deemed to have withdrawn from the
Business and shall relinquish its entire Participating Interest free and clear
of any Encumbrances arising by, through or under the Reduced Participant, except
any such Encumbrances listed in Paragraph 1.1 of Exhibit A or to which the
Participants have agreed. Such relinquished Participating Interest shall be
deemed to have accrued automatically to the other Participant, and the Reduced
Participant's Capital Account shall be transferred to the remaining Participant.
In such event, the Reduced Participant shall execute and deliver to the
remaining Participant an appropriate conveyance of all of the Reduced
Participant’s right, title and interest in the Assets, subject to any
Encumbrances described in Paragraph 1.1 of Exhibit A or to which the
Participants have agreed, and the Remaining Participant shall execute and
deliver to the Reduced Participant an additional conveyance of a one percent
(1%) interest in Net Smelter Returns, as defined in Exhibit E, on all Products,
if any, realized after the effective date of the withdrawal. Upon receipt of
such conveyance, and subject to Section 6.4 and any Encumbrances described in
Paragraph 1.1 of Exhibit A or to which the Participants have agreed, the Reduced
Participant shall thereafter have no other right, title, or interest in the
Assets or under this Agreement, and the tax partnership established by Exhibit C
shall dissolve pursuant to Paragraph 4.2 of Exhibit C.

 
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(b)           The relinquishment, withdrawal and entitlements for which this
Section provides shall be effective as of the effective date of the
recalculation under Sections 9.5 or 10.5. However, if the final adjustment
provided under Section 9.6 for any recalculation under Section 9.5 results in a
Recalculated Participating Interest of ten percent (10%) or more: (i) the
Recalculated Participating Interest shall be deemed, effective retroactively as
of the first day of the Program Period, to have automatically revested; (ii) the
Reduced Participant shall be reinstated as a Participant, with all of the rights
and obligations pertaining thereto; (iii) the right to any Net Smelter Returns
interest arising under Subsection 6.3(a) shall terminate; and (iv) the Manager,
on behalf of the Participants, shall make any necessary reimbursements,
reallocations of Products, contributions and other adjustments as

 provided in Subsection 9.6(d). Similarly, if such final adjustment under
Section 9.6 results in a Recalculated Participating Interest for either
Participant of less than ten percent (10%) for a Program Period as to which the
provisional calculation under Section 9.5 had not resulted in a Participating
Interest of less than ten percent (10%), then such Participant, at its election
within thirty (30) days after notice of the final adjustment, may contribute an
amount resulting in a revised final adjustment and resultant Recalculated
Participating Interest of ten percent (10%). If no such election is made, such
Participant shall be deemed to have withdrawn under the terms of
Subsection 6.3(a) as of the beginning of such Program Period, and the Manager,
on behalf of the Participants, shall make any necessary reimbursements,
reallocations of Products, contributions and other adjustments as provided in
Subsection 9.6(d), including of any Net Smelter Returns interest arising under
Subsection 6.3(a) to which such Participant may be entitled for such Program
Period.

6.4           Continuing Liabilities Upon Adjustments of Participating
Interests. Any reduction or elimination of either Participant's Participating
Interest under Section 6.2 shall not relieve such Participant of its share of
any liability, including, without limitation, Continuing Obligations,
Environmental Liabilities and Environmental Compliance, whether arising, before
or after such reduction or elimination, out of acts or omissions occurring or
conditions existing prior to the Effective Date or out of Operations conducted
during the term of this Agreement but prior to such reduction or elimination,
regardless of when any funds may be expended to satisfy such liability. For
purposes of this Section, such Participant's share of such liability shall be
equal to its Participating Interest at the time the act or omission giving rise
to the liability occurred, after first taking into account any reduction,
readjustment and restoration of Participating Interests under Sections 6.3, 9.5,
9.6 and 10.5 (or, as to such liability arising out of acts or omissions
occurring or conditions existing prior to the Effective Date, equal to such
Participant's initial Participating Interest). Should the cumulative cost of
satisfying Continuing Obligations be in excess of cumulative amounts accrued or
otherwise charged to the Environmental Compliance Fund as described in
Exhibit B, each of the Participants shall be liable for its proportionate share
(i.e., Participating Interest at the time of the act or omission giving rise to
such liability occurred), after first taking into account any reduction,
readjustment and restoration of Participating Interests under Sections 6.3, 9.5,
9.6 and 10.5, of the cost of satisfying such Continuing Obligations,
notwithstanding that either Participant has previously withdrawn from the
Business or that its Participating Interest has been reduced or converted to a
Net Smelter Returns interest pursuant to Subsection 6.3(a).

6.5           Documentation of Adjustments to Participating Interests.
Adjustments to the Participating Interests need not be evidenced during the term
of this Agreement by the execution and recording of appropriate instruments, but
each Participant's Participating Interest and related Equity Account balance
shall be shown in the accounting records of the Manager, and any adjustments
thereto, including any reduction, readjustment, and restoration of Participating
Interests under Sections 6.3, 9.5, 9.6 and 10.5, shall be made quarterly.
However, either Participant, at any time upon the request of the other
Participant, shall execute and acknowledge instruments necessary to evidence
such adjustments in form sufficient for filing and recording in the jurisdiction
where the Properties are located.

 
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6.6           Grant of Lien and Security Interest.

(a)           Subject to Section 6.7, each Participant grants to the other
Participant a lien upon and a security interest in its Participating Interest,
including all of its right, title and interest in the Assets, whenever acquired
or arising, and the proceeds from and accessions to the foregoing.

(b)           The liens and security interests granted by Subsection 6.6(a)
shall secure every obligation or liability of the Participant granting such lien
or security interest created under this Agreement, including the obligation to
repay a Cover Payment in accordance with Section 10.4. Each Participant hereby
agrees to take all action necessary to perfect such lien and security interest
and hereby appoints the other Participant its attorney-in-fact to execute, file
and record all financing statements and other documents necessary to perfect or
maintain such lien and security interest.

6.7           Subordination of Interests. Each Participant shall, from time to
time, take all necessary actions, including execution of appropriate agreements,
to pledge and subordinate its Participating Interest, any liens it may hold
which are created under this Agreement other than those created pursuant to
Section 6.6 hereof, and any other right or interest it holds with respect to the
Assets (excluding (a) any Encumbrances described in Paragraph 1.1 of Exhibit A
held by a Participant and not contributed hereunder and (b)  any statutory lien
of the Manager) to any secured borrowings for Operations approved by the
Management Committee, including any secured borrowings relating to Project
Financing, and any modifications or renewals thereof.

ARTICLE VII
MANAGEMENT COMMITTEE

7.1           Organization and Composition. The Participants hereby establish a
Management Committee to determine overall policies, objectives, procedures,
methods and actions under this Agreement. The Management Committee initially
shall consist of two (2) members appointed by RAVEN and two(2) members appointed
by TERRA. Upon TERRA’s completion of a Secondary Contribution under
Subsection 5.3 above such that it has a eighty percent (80%) Participating
Interest or either Participant otherwise acquiring a Participating Interest of
sixty percent (60%) or greater, the Management Committee shall consist of five
(5) members, with each Participant allowed to appoint a member to the Management
Committee for each twenty percent (20%) Participating Interest it holds. Each
Participant may appoint one or more alternates to act in the absence of a
regular member. Any alternate so acting shall be deemed a member. Appointments
by a Participant shall be made or changed by notice to the other members. For so
long as TERRA remains Manager, TERRA shall designate one of its members to serve
as the chair of the Management Committee.

7.2           Decisions. After TERRA has completed its Initial Contribution and
its Secondary Contribution if it has elected to make a Secondary Contribution,
each Participant, acting through its appointed member(s) in attendance at the
meeting, shall have the votes on the Management Committee in proportion to its
Participating Interest. Unless otherwise provided in this Agreement, the vote of
the Participant with a Participating Interest over fifty percent (50%) shall
determine the decisions of the Management Committee.

 
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7.3           Meetings.

(a)           After TERRA has completed its Initial Contribution and its
Secondary Contribution if it has elected to make a Secondary Contribution, the
Management Committee shall hold regular meetings at least annually in Anchorage,
or at other agreed places. The Manager shall give fourteen (14) days notice to
the Participants of such meetings. Additionally, either Participant may call a
special meeting upon seven (7) days notice to the other Participant. In case of
an emergency, reasonable notice of a special meeting shall suffice. There shall
be a quorum if at least one member representing each Participant is present;
provided, however, that if a Participant fails to attend two consecutive
properly called meetings, then a quorum shall exist at the second meeting if the
other Participant is represented by at least one appointed member, and a vote of
such Participant shall be considered the vote required for the purposes of the
conduct of all business properly noticed even if such vote would otherwise
require unanimity.

(b)           If business cannot be conducted at a regular or special meeting
due to the lack of a quorum, either Participant may call the next meeting upon
fourteen (14) days notice to the other Participant.

(c)           Each notice of a meeting shall include an itemized agenda prepared
by the Manager in the case of a regular meeting or by the Participant calling
the meeting in the case of a special meeting, but any matters may be considered
if either Participant adds the matter to the agenda at least seven (7) days
before the meeting or with the consent of the other Participant. The Manager
shall prepare minutes of all meetings and shall distribute copies of such
minutes to the other Participant within thirty (30) days after the meeting.
Either Participant may electronically record the proceedings of a meeting with
the consent of the other Participant. The other Participant shall sign and
return or object to the minutes prepared by the Manager within thirty (30) days
after receipt, and failure to do either shall be deemed acceptance of the
minutes as prepared by the Manager. The minutes, when signed or deemed accepted
by both Participants, shall be the official record of the decisions made by the
Management Committee. Decisions made at a Management Committee meeting shall be
implemented in accordance with adopted Programs and Budgets. If a Participant
timely objects to minutes proposed by the Manager, the members of the Management
Committee shall seek, for a period not to exceed thirty (30) days from receipt
by the Manager of notice of the objections, to agree upon minutes acceptable to
both Participants. If the Management Committee does not reach agreement on the
minutes of the meeting within such thirty (30) day period, the minutes of the
meeting as prepared by the Manager together with the other Participant's
proposed changes shall collectively constitute the record of the meeting. If
personnel employed in Operations are required to attend a Management Committee
meeting, reasonable costs incurred in connection with such attendance shall be
charged to the Business Account. All other costs shall be paid by the
Participants individually.

 
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7.4           Action Without Meeting in Person. In lieu of meetings in person,
the Management Committee may conduct meetings by telephone or video conference,
so long as minutes of such meetings are prepared in accordance with
Subsection 7.3(c). The Management Committee may also take actions in writing
signed by all members.

7.5           Matters Requiring Approval. Except as provided in
Subsection 5.1(c) and as otherwise delegated to the Manager in Section 8.2, the
Management Committee shall have exclusive authority to determine all matters
related to overall policies, objectives, procedures, methods and actions under
this Agreement.

ARTICLE VIII
MANAGER

8.1           Appointment. The Participants hereby appoint TERRA as the Manager
with overall management responsibility for Operations. TERRA hereby agrees to
serve until it resigns as provided in Section 8.4.

8.2           Powers and Duties of Manager. Subject to the terms and provisions
of this Agreement, the Manager shall have the following powers and duties, which
shall be discharged in accordance with adopted Programs and Budgets. Beginning
as of the Effective Date, the Manager shall be entitled to receive a management
fee, which fee may be adjusted from time to time but except to the extent
specifically provided otherwise in Exhibit B shall never be less than eight
percent (8%) (“Administrative Charge”) for its performance of the following
powers and duties:

(a)           The Manager shall manage, direct and control Operations, and shall
prepare and present to the Management Committee proposed Programs and Budgets as
provided in Article IX.

(b)           The Manager shall implement the decisions of the Management
Committee, shall make all expenditures necessary to carry out adopted Programs,
and shall promptly advise the Management Committee if it lacks sufficient funds
to carry out its responsibilities under this Agreement.

(c)           The Manager shall use reasonable efforts to: (i) purchase or
otherwise acquire all material, supplies, equipment, water, utility and
transportation services required for Operations, such purchases and acquisitions
to be made to the extent reasonably possible on the best terms available, taking
into account all of the circumstances; (ii) obtain such customary warranties and
guarantees as are available in connection with such purchases and acquisitions;
and (iii) keep the Assets free and clear of all Encumbrances, except any such
Encumbrances listed in Paragraph 1.1 of Exhibit A and those existing at the time
of, or created concurrent with, the acquisition of such Assets, or mechanic's or
materialmen's liens (which shall be contested, released or discharged in a
diligent matter) or Encumbrances specifically approved by the Management
Committee.

 
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(d)           The Manager may conduct such title examinations of the Properties
and undertake to cure such title defects pertaining to the Properties as may be
advisable in its reasonable judgment. The Participants agree to use good faith
efforts to promptly assist the Manager in curing any title defects relating to
the Properties.

(e)           The Manager shall: (i) make or arrange for all payments required
by leases, licenses, permits, contracts and other agreements related to the
Assets; (ii) pay all taxes, assessments and like charges on Operations and
Assets except taxes determined or measured by a Participant's sales revenue or
net income and taxes, including production taxes, attributable to a
Participant's share of Products, and shall otherwise promptly pay and discharge
expenses incurred in Operations; provided, however, that if authorized by the
Management Committee, the Manager shall have the right to contest (in the courts
or otherwise) the validity or amount of any taxes, assessments or charges if the
Manager deems them to be unlawful, unjust, unequal or excessive, or to undertake
such other steps or proceedings as the Manager may deem reasonably necessary to
secure a cancellation, reduction, readjustment or equalization thereof before
the Manager shall be required to pay them, but in no event shall the Manager
permit or allow title to the Assets to be lost as the result of the nonpayment
of any taxes, assessments or like charges; and (iii) do all other acts
reasonably necessary to maintain the Assets.

(f)           The Manager shall: (i) apply for all necessary permits, licenses
and approvals; (ii) comply with all Laws; (iii) notify promptly the Management
Committee of any allegations of substantial violation thereof; and (iv) prepare
and file all reports or notices required for or as a result of Operations. The
Manager shall not be in breach of this provision if a violation has occurred in
spite of the Manager's good faith efforts to comply consistent with its standard
of care under Section 8.3. In the event of any such violation, the Manager shall
timely cure or dispose of such violation on behalf of both Participants through
performance, payment of fines and penalties, or both, and the cost thereof shall
be charged to the Business Account.

(g)           The Manager shall prosecute and defend, but shall not initiate
without consent of the Management Committee, all litigation or administrative
proceedings arising out of Operations. The non-managing Participant shall have
the right to participate, at its own expense, in such litigation or
administrative proceedings. The non-managing Participant shall approve in
advance any settlement involving payments, commitments or obliga­tions in excess
of One Hundred Thousand Dollars ($100,000) in cash or value.

(h)           The Manager shall provide insurance for the benefit of the
Participants as provided in Exhibit F or as may otherwise be determined from
time to time by the Management Committee.

 
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(i)           The Manager may dispose of Assets, whether by abandonment,
surrender, or Transfer in the ordinary course of business, except that
Properties may be abandoned or surrendered only as provided in Article XIV.
Without prior authorization from the Management Committee, however, the Manager
shall not: (i) dispose of Assets in any one transaction (or in any series of
related transactions) having a value in excess of Twenty-five Thousand Dollars
($25,000); (ii) enter into any sales contracts or commitments for Product,
except as permitted in Section 11.2; (iii) begin a liquidation of the Business;
or (iv) dispose of all or a substantial part of the Assets necessary to achieve
the purposes of the Business.

(j)           The Manager shall have the right to carry out its responsibilities
hereunder through agents, Affiliates or independent contractors.

(k)           The Manager shall perform or cause to be performed all assessment
and other work, and shall pay all Governmental Fees required by Law in order to
maintain the unpatented federal or state mining locations included within the
Properties. The Manager shall have the right to perform the assessment work
required hereunder pursuant to a common plan of exploration and continued actual
occupancy of all such locations shall not be required. The Manager shall not be
liable on account of any determination by any court or governmental agency that
the work performed by the Manager does not constitute the required annual
assessment work or occupancy for the purposes of preserving or maintaining
ownership of the locations, provided that the work done is pursuant to an
adopted Program and Budget and is performed in accordance with the Manager's
standard of care under Section 8.3. The Manager shall timely record with the
appropriate recording district and file with the appropriate federal or state
agency any required affidavits, notices of intent to hold and other documents in
proper form attesting to the payment of Governmental Fees, the performance of
assessment work or intent to hold the locations, in each case in sufficient
detail to reflect compliance with the requirements applicable to each location.
The Manager shall not be liable on account of any determination by any court or
governmental agency that any such document submitted by the Manager does not
comply with applicable requirements, provided that such document is prepared and
recorded or filed in accordance with the Manager's standard of care under
Section 8.3.

(l)           If authorized by the Management Committee, the Manager may:
(i) locate, amend or relocate any unpatented federal or state mining location,
(ii) locate any fractions resulting from such amendment or relocation,
(iii) apply for patents or mining leases or millsite leases or other forms of
mineral or surface tenure for any such unpatented locations, (iv) abandon any
unpatented federal or state mining locations for the purpose of locating or
otherwise acquiring from the United States or the State of Alaska mineral or
surface rights to the ground covered thereby, (v) exchange with or convey to the
United States or the State of Alaska or any other landowner or mineral owner any
of the Properties for the purpose of acquiring rights to the ground covered
thereby or adjacent ground, and (vi) convert any unpatented federal or state
mining locations into one or more leases or other forms of mineral tenure
pursuant to any Law hereafter enacted.

(m)           The Manager shall keep and maintain all required accounting and
financial records pursuant to the procedures described in Exhibit B and in
accordance with customary cost accounting practices in the mining industry, and
shall ensure appropriate separation of accounts unless otherwise agreed by the
Participants.

 
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(n)           The Manager shall maintain Equity Accounts for each Participant.
Each Participant's Equity Account shall be credited with the deemed value of
such Participant's contributions under Subsections 5.1(a) and 5.1(b) and under
Section 5.3, and shall be credited with amounts contributed by each Participant
under Section 5.5. Each Participant's Equity Account shall be charged with the
cash and the fair market value of property distributed to such Participant (net
of liabilities assumed by such Participant and liabilities to which such
distributed property is subject). Contributions and distributions shall include
all cash contributions or distributions plus the agreed value (expressed in
dollars) of all in-kind contributions or distributions. Solely for purposes of
determining the Equity Account balances of the Participants, the Manager shall
reasonably estimate the fair market value of all Products distributed to the
Participants, and such estimated value shall be used regardless of the actual
amount received by each Participant upon disposition of such Products.

(o)           Subject to Subsection 5.1(c), the Manager shall keep the
Management Committee advised of all Operations by submitting in writing to the
members of the Management Committee: (i) quarterly progress reports that include
statements of expenditures and comparisons of such expenditures to the adopted
Budget; (ii) periodic summaries of data acquired; (iii) copies of reports
concerning Operations; (iv) a detailed final report within thirty (30) days
after completion of each Program and Budget, which shall include comparisons
between actual and budgeted expenditures and comparisons between the objectives
and results of Programs; and (v) such other reports as any member of the
Management Committee may reasonably request. Subject to Article XVIII, at all
reasonable times the Manager shall provide the Management Committee, or other
representative of a Participant upon the request of such Participant’s member of
the Management Committee, access to, and the right to inspect and, at such
Participant's cost and expense, copies of the Existing Data and all maps, drill
logs and other drilling data, core, pulps, reports, surveys, assays, analyses,
production reports, operations, technical, accounting and financial records, and
other Business Information, to the extent preserved or kept by the Manager,
subject to Article XVIII. In addition, the Manager shall allow the non-managing
Participant, at the latter's sole risk, cost and expense, and subject to
reasonable safety regulations, to inspect the Assets and Operations at all
reasonable times, so long as the non-managing Participant does not unreasonably
interfere with Operations.

(p)           The Manager shall prepare an Environmental Compliance plan for all
Operations consistent with the requirements of any applicable Laws or
contractual obligations and shall include in each Program and Budget sufficient
funding to implement the Environmental Compliance plan and to satisfy the
financial assurance requirements of any applicable Law or contractual obligation
pertaining to Environmental Compliance. To the extent practical, the
Environmental Compliance plan shall incorporate concurrent reclamation of
Properties disturbed by Operations.

 
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(q)           The Manager shall undertake to perform Continuing Obligations when
and as economic and appropriate, whether before or after termination of the
Business. The Manager shall have the right to delegate performance of Continuing
Obligations to persons having demonstrated skill and experience in relevant
disciplines. As part of each Program and Budget submittal, the Manager shall
specify in such Program and Budget the measures to be taken for performance of
Continuing Obligations and the cost of such measures. The Manager shall keep the
other Participant reasonably informed about the Manager's efforts to discharge
Continuing Obligations. Authorized representatives of each Participant shall
have the right from time to time to enter the Properties to inspect work
directed toward satisfaction of Continuing Obligations and audit books, records,
and accounts related thereto.

(r)           The funds that are to be deposited into the Environmental
Compliance Fund shall be maintained by the Manager in a separate, interest
bearing cash management account, which may include, but is not limited to, money
market investments and money market funds, and/or in longer term investments if
approved by the Management Committee. Such funds shall be used solely for
Environmental Compliance and Continuing Obligations, including the committing of
such funds, interests in property, insurance or bond policies, or other security
to satisfy Laws regarding financial assurance for the reclamation or restoration
of the Properties, and for other Environmental Compliance requirements.

(s)           If Participating Interests are adjusted in accordance with this
Agreement the Manager shall propose from time to time one or more methods for
fairly allocating costs for Continuing Obligations.

(t)           The Manager shall undertake all other activities reasonably
necessary to fulfill the foregoing, and to implement the policies, objectives,
procedures, methods and actions determined by the Management Committee pursuant
to Section 7.1.

8.3           Standard of Care. The Manager shall discharge its duties under
Section 8.2 and conduct all Operations in a good, workmanlike and efficient
manner, in accordance with sound mining and other applicable industry standards
and practices, and in accordance with Laws and with the terms and provisions of
leases, licenses, permits, contracts and other agreements pertaining to the
Assets. The Manager shall not be liable to the other Participant for any act or
omission resulting in damage or loss except to the extent caused by or
attributable to the Manager's willful misconduct or gross negligence. The
Manager shall not be in default of any of its duties under Section 8.2 if its
inability or failure to perform results from the failure of the other
Participant to perform acts or to contribute amounts required of it by this
Agreement.

8.4           Resignation; Deemed Offer to Resign. The Manager may resign upon
not less than three (3) months' prior notice to the other Participant, in which
case the other Participant may elect to become the new Manager by notice to the
resigning Participant within thirty (30) days after the notice of resignation.
If any of the following shall occur, the Manager shall be deemed to have
resigned upon the occurrence of the event described in each of the following
Subsections, with the successor Manager to be appointed by the other Participant
at a subsequently called meeting of the Management Committee, at which the
Manager shall not be entitled to vote. The other Participant may appoint itself
or a third party as the Manager.

 
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(a)           The aggregate Participating Interest of the Manager and its
Affiliates becomes less than fifty percent (50%);

(b)           The Manager fails to perform a material obligation imposed upon it
under this Agreement and such failure continues for a period of sixty (60) days
after notice from the other Participant demanding performance;

(c)           The Manager fails to pay or contest in good faith its bills and
Business debts as such obligations become due;

(d)           A receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for a substantial part of its assets is appointed and such
appointment is neither made ineffective nor discharged within sixty (60) days
after the making thereof, or such appointment is consented to, requested by, or
acquiesced in by the Manager;

(e)           The Manager commences a voluntary case under any applicable
bankruptcy, insolvency or similar law now or hereafter in effect; or consents to
the entry of an order for relief in an involuntary case under any such law or to
the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of any substantial
part of its assets; or makes a general assignment for the benefit of creditors;
or takes corporate or other action in furtherance of any of the foregoing; or

(f)           Entry is made against the Manager of a judgment, decree or order
for relief affecting its ability to serve as Manager, or a substantial part of
its Participating Interest or its other assets by a court of competent
jurisdiction in an involuntary case commenced under any applicable bankruptcy,
insolvency or other similar law of any jurisdiction now or hereafter in effect.

Under Subsections (d), (e) or (f) above, the appointment of a successor Manager
shall be deemed to pre-date the event causing a deemed resignation.

8.5           Payments To Manager. The Manager shall be compensated for its
services and reimbursed for its costs hereunder in accordance with Exhibit B.

8.6           Transactions With Affiliates. If the Manager engages Affiliates to
provide services hereunder, it shall do so on terms no less favorable than would
be the case in arm's-length transactions with unrelated persons.

8.7           Activities During Deadlock. If the Management Committee for any
reason fails to adopt an Exploration, Pre-Feasibility Study, Feasibility Study
or Development Program and Budget, the Manager shall continue Operations at
levels sufficient to maintain the Properties. If the Management Committee for
any reason fails to adopt an initial Mining Program and Budget or any Expansion
or Modification Programs and Budgets, the Manager shall continue Operations at
levels sufficient to maintain the then current Operations and Properties. If the
Management Committee for any reason fails to adopt Mining Programs and Budgets
subsequent to the initial Mining Program and Budget, subject to the contrary
direction of the Management Committee and receipt of necessary funds, the
Manager shall continue Operations at levels comparable with the last adopted
Mining Program and Budget. All of the foregoing shall be subject to the contrary
direction of the Management Committee and the receipt of necessary funds.

 
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ARTICLE IX
PROGRAMS AND BUDGETS

9.1           Initial Program and Budget. A preliminary draft Initial Program
and Budget is attached as Exhibit G.  On or before October 14, 2010, the
Participants shall agree to a final Initial Program and Budget which shall
supersede and replace such preliminary draft as Exhibit G.

9.2           Operations Pursuant to Programs and Budgets. Except as otherwise
provided in Subsection 5.1(c), Section 9.13, and Article XIII, Operations shall
be conducted, expenses shall be incurred, and Assets shall be acquired only
pursuant to adopted Programs and Budgets. Every Program and Budget adopted
pursuant to this Agreement shall provide for accrual of reasonably anticipated
Environmental Compliance expenses for all Operations contemplated under the
Program and Budget.

9.3           Presentation of Programs and Budgets. Proposed Programs and
Budgets shall be prepared by the Manager for a period of one (1) year or any
other period as approved by the Management Committee, and shall be submitted to
the Management Committee for review and consideration. All proposed Programs and
Budgets may include Exploration, Pre-Feasibility Studies, Feasibility Study,
Development, Mining and Expansion or Modification Operations components, or any
combination thereof, and shall be reviewed and adopted upon a vote of the
Management Committee in accordance with Sections 7.2 and 9.4. Each Program and
Budget adopted by the Management Committee, regardless of length, shall be
reviewed at least once a year at a meeting of the Management Committee. During
the period encompassed by any Program and Budget, and at least two (2) months
prior to its expiration, a proposed Program and Budget for the succeeding period
shall be prepared by the Manager and submitted to the Management Committee for
review and consideration.

9.4           Review and Adoption of Proposed Programs and Budgets. Unless the
Management Committee approves a longer period for response, within thirty (30)
days after submission of a proposed Program and Budget, each Participant shall
submit in writing to the Management Committee:

(a)           Notice that the Participant approves any or all of the components
of the proposed Program and Budget;

 
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(b)           Modifications proposed by the Participant to the components of the
proposed Program and Budget; or

(c)           Notice that the Participant rejects any or all of the components
of the proposed Program and Budget.

If a Participant fails to give any of the foregoing responses within the
allotted time, the failure shall be deemed to be a vote by the Participant for
adoption of the Manager's proposed Program and Budget. If a Participant makes a
timely submission to the Management Committee pursuant to Subsections 9.4(a),
(b) or (c), then the Manager working with the other Participant shall seek for a
period of time not to exceed twenty (20) days to develop a complete Program and
Budget acceptable to both Participants. The Manager shall then call a Management
Committee meeting in accordance with Section 7.3 for purposes of reviewing and
voting upon the proposed Program and Budget.

9.5           Election to Participate.

(a)           By notice to the Management Committee within twenty (20) days
after the final vote adopting a Program and Budget, and notwithstanding its vote
concerning adoption of a Program and Budget, a Participant may elect to
participate in the approved Program and Budget: (i) in proportion to its
respective Participating Interest, (ii) in some lesser amount than its
respective Participating Interest, or (iii) not at all. In case of an election
under Subsection 9.5(a)(ii) or (iii), its Participating Interest shall be
recalculated as provided in Subsection 9.5(b) below, with dilution effective as
of the first day of the Program Period for the adopted Program and Budget. If a
Participant fails to so notify the Management Committee of the extent to which
it elects to participate, the Participant shall be deemed to have elected to
contribute to such Program and Budget in proportion to its respective
Participating Interest as of the beginning of the Program Period.

(b)           If a Participant elects to contribute to an adopted Program and
Budget some lesser amount than in proportion to its respective Participating
Interest, or not at all, and the other Participant elects to fund all or any
portion of the deficiency, the Participating Interest of the Reduced Participant
shall be reduced as provisionally recalculated by dividing: (A) the sum of
(1) the amount credited to the Reduced Participant's Equity Account with respect
to its Initial Contribution under Section 5.1 and any completed Secondary
Contribution under Section 5.3, (2) the total of all of the Reduced
Participant's contributions under Section 5.5, and (3) the amount, if any, the
Reduced Participant elects to contribute to the adopted Program and Budget; by
(B) the sum of (1), (2) and (3) above for both Participants; and then
multiplying the result by one hundred. The Participating Interest of the other
Participant shall be increased by the amount of the reduction in the
Participating Interest of the Reduced Participant, and if the other Participant
elects not to fund the entire deficiency, the Manager shall adjust the Program
and Budget to reflect the funds available.

 
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(c)           Whenever the Participating Interests are recalculated pursuant to
this Subsection 9.5, (i) the Equity Accounts of both Participants shall be
revised to bear the same ratio to each other as their recalculated Participating
Interests; and (ii) the portion of Capital Account attributable to the reduced
Participating Interest of the Reduced Participant shall be transferred to the
other Participant.

 
9.6
Recalculation or Restoration of Reduced Interest Based on Actual Expenditures.

(a)           If a Participant makes an election under Subsection 9.5(a)(ii)
or (iii), then within thirty (30) days after the conclusion of such Program and
Budget, the Manager shall report the total amount of money expended plus the
total obligations incurred by the Manager for such Budget.

(b)           If the Manager expended or incurred obligations that were more or
less than the adopted Budget, the Participating Interests shall be recalculated
pursuant to Subsection 9.5(b) by substituting each Participant's actual
contribution to the adopted Budget for that Participant's estimated contribution
at the time of the Reduced Participant's election under Subsection 9.5(a).

(c)           If the Manager expended or incurred obligations of less than
eighty percent (80%) of the adopted Budget, within fourteen (14) days of
receiving the Manager's report on expenditures, the Reduced Participant may
notify the other Participant of its election to reimburse the other Participant
for the difference between any amount contributed by the Reduced Participant to
such adopted Program and Budget and the Reduced Participant's proportionate
share (at the Reduced Participant's former Participating Interest) of the actual
amount expended or incurred for the Program, plus interest on the difference
accruing at the rate described in Section 10.3 plus three (3) percentage points.
The Reduced Participant shall deliver the appropriate amount (including
interest) to the other Participant with such notice, whereupon the Reduced
Participant’s former Participating Interest shall be restored. Failure of the
Reduced Participant to so notify and tender such amount shall result in dilution
occurring in accordance with this Article IX and shall bar the Reduced
Participant from its rights under this Subsection 9.6(c) concerning the relevant
adopted Program and Budget.

(d)           All recalculations under this Section IX shall be effective as of
the first day of the Program Period for the Program and Budget. The Manager, on
behalf of both Participants, shall make such reimbursements, reallocations of
Products, contributions and other adjustments as are necessary so that, to the
extent possible, each Participant will be placed in the position it would have
been in had its Participating Interest as recalculated under this Section been
in effect throughout the Program Period for such Program and Budget. If the
Participants are required to make contributions, reimbursements or other
adjustments pursuant to this Section, the Manager shall have the right to
purchase or sell a Participant's share of Products in the same manner as under
Section 11.2 and to apply the proceeds of such sale to satisfy that
Participant's obligation to make such contributions, reimbursements or
adjustments.

 
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(e)           Whenever the Participating Interests are recalculated pursuant to
this Section, (i) the Participants’ Equity Accounts shall be revised to bear the
same ratio to each other as their Recalculated Participating Interests; and
(ii) the portion of Capital Account attributable to the reduced Participating
Interest of the Reduced Participant shall be transferred to the other
Participant.

9.7           Pre-Feasibility Study Program and Budgets.

(a)           At such time as either Participant is of the good faith and
reasonable opinion that economically viable Mining Operations may be possible on
the Properties, the Participant may propose to the Management Committee that a
Pre-Feasibility Study Program and Budget, or a Program and Budget that includes
Pre-Feasibility Studies, be prepared. Such proposal shall be made in writing to
the other Participant, shall reference the data upon which the proposing
Participant bases its opinion, and shall call a meeting of the Management
Committee pursuant to Section 7.3. If such proposal is adopted by the Management
Committee, the Manager shall prepare or have prepared a Pre-Feasibility Study
Program and Budget as approved by the Management Committee and shall submit the
same to the Management Committee within thirty (30) days following adoption of
the proposal.

(b)           Pre-Feasibility Studies may be conducted by the Manager,
Feasibility Contractors, or both, or may be conducted by the Manager and audited
by Feasibility Contractors, as the Management Committee determines. A
Pre-Feasibility Study Program shall include the work necessary to prepare and
complete the Pre-Feasibility Study approved in the proposal adopted by the
Management Committee, which may include some or all of the following:

(i)           analyses of various alternatives for mining, processing and
beneficiation of Products;

(ii)           analyses of alternative mining, milling, and production rates;

(iii)           analyses of alternative sites for placement of facilities (i.e.,
water supply facilities, transport facilities, reagent storage, offices, shops,
warehouses, stock yards, explosives storage, handling facilities, housing,
public facilities);

(iv)           analyses of alternatives for waste treatment and handling
(including a description of each alternative of the method of tailings disposal
and the location of the proposed disposal site);

(v)           estimates of recoverable proven and probable reserves of Products
and of related substances, in terms of technical and economic constraints
(extraction and treatment of Products), including the effect of grade, losses,
and impurities, and the estimated mineral composition and content thereof, and
review of mining rates commensurate with such reserves;

 
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(vi)           analyses of environmental impacts of the various alternatives,
including an analysis of the permitting, environmental liability and other
Environmental Law implications of each alternative, and costs of Environmental
Compliance for each alternative;

(vii)           conduct of appropriate metallurgical tests to determine the
efficiency of alternative extraction, recovery and processing techniques,
including an estimate of water, power, and reagent consumption requirements;

(viii)           conduct of hydrology and other studies related to any required
dewatering; and

(ix)           conduct of other studies and analyses approved by the Management
Committee.

(c)           The Manager shall have the discretion to base its and any
Feasibility Contractors‘ Pre-Feasibility Study on the cumulative results of each
discipline studied, so that if a particular portion of the work would result in
the conclusion that further work based on these results would be unwarranted for
a particular alternative, the Manager shall have no obligation to continue
expenditures on other Pre-Feasibility Studies related solely to such
alternative.

9.8           Completion of Pre-Feasibility Studies and Selection of Approved
Alternatives. As soon as reasonably practical following completion of all
Pre-Feasibility Studies required to evaluate fully the alternatives studied
pursuant to Pre-Feasibility Programs, the Manager shall prepare a report
summarizing all Pre-Feasibility Studies and shall submit the same to the
Management Committee. Such report shall incorporate the following:

(a)           the results of the analyses of the alternatives and other matters
evaluated in the conduct of the Pre-Feasibility Programs;

(b)           reasonable estimates of capital costs for the Development and
start-up of the mine, mill and other processing and ancillary facilities
required by the Development and Mining alternatives evaluated (based on
flowsheets, piping and instrumentation diagrams, and other major engineering
diagrams), which cost estimates shall include reasonable estimates of:

(i)           capitalized pre-stripping expenditures, if an open pit or surface
mine is proposed;

(ii)           expenditures required to purchase, construct and install all
machinery, equipment and other facilities and infrastructure (including
contingencies) required to bring a mine into commercial production, including an
analysis of costs of equipment or supply contracts in lieu of Development costs
for each Development and Mining alternative evaluated;

 
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(iii)           expenditures required to perform all other related work required
to commence commercial production of Products and, if applicable, process
Products (including reasonable estimates of working capital requirements); and

(iv)           all other direct and indirect costs and general and
administrative expenses that may be required for a proper evaluation of the
Development and Mining alternatives and annual production levels evaluated. The
capital cost estimates shall include a schedule of the timing of the estimated
capital requirements for each alternative;

(c)           a reasonable estimate of the annual expenditures required for the
first year of Operations after completion of the capital program described in
Subsection 9.8(b) for each Development alternative evaluated, and for subsequent
years of Operations, including estimates of annual production, processing,
administrative, operating and maintenance expenditures, taxes (other than income
taxes), working capital requirements, royalty and purchase obligations,
equipment leasing or supply contract expenditures, work commitments,
Environmental Compliance costs, post-Operations Environmental Compliance and
Continuing Obligations funding requirements and all other anticipated costs of
such Operations. This analysis shall also include an estimate of the number of
employees required to conduct such Operations for each alternative;

(d)           a review of the nature, extent and rated capacity of the mine,
machinery, equipment and other facilities preliminarily estimated to be required
for the purpose of producing and marketing Products under each Development and
Mining alternative analyzed;

(e)           an analysis (and sensitivity analyses reasonably requested by
either Participant), based on various target rates of return and price
assumptions requested by either Participant, of whether it is technically,
environmentally, and economically feasible to place a prospective ore body or
deposit within the Properties into commercial production for each of the
Development and Mining alternatives analyzed (including a discounted cash flow
rate of return investment analysis for each alternative and net present value
estimate using various discount rates requested by either Participant); and

(f)           such other information as the Management Committee deems
appropriate.

Within sixty (60) days after delivery of the Pre-Feasibility Study summary to
the Participants, a Management Committee meeting shall be convened for the
purposes of reviewing the Pre-Feasibility Study summary and selecting one or
more Approved Alternatives, if any.

9.9           Programs and Budgets for Feasibility Study. Within thirty (30)
days following the selection of an Approved Alternative, the Manager shall
submit to the Management Committee a Program and a Budget, which shall include
necessary Operations, for the preparation of a Feasibility Study. A Feasibility
Study may be prepared by the Manager, Feasibility Contractors, or both, or may
be prepared by the Manager and audited by Feasibility Contractors, as the
Management Committee determines.

 
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9.10           Development Programs and Budgets; Project Financing.

(a)           Unless otherwise determined by the Management Committee, the
Manager shall not submit to the Management Committee a Program and Budget
including Development of the mine described in a completed Feasibility Study
until sixty (60) days following the receipt by Manager of the Feasibility Study.
The Program and Budget, which includes Development of the mine described in the
completed Feasibility Study, shall be based on the estimated cost of Development
described in the Feasibility Study for the Approved Alternative, unless
otherwise directed by the Management Committee.

(b)           Promptly following adoption of the Program and Budget, which
includes Development as described in a completed Feasibility Study, but in no
event more than sixty (60) days thereafter, the Manager shall submit to the
Management Committee a report on material bids received for Development work
("Bid Report"). If bids described in the Bid Report result in the aggregate cost
of Development work exceeding one hundred twenty percent (120%) of the
Development cost estimates that formed the basis of the Development component of
the adopted Program and Budget, the Program and Budget, which includes relevant
Development, shall be deemed to have been resubmitted to the Management
Committee based on the aggregate costs as described in the Bid Report on the
date of receipt of the Bid Report and shall be reviewed and adopted in
accordance with Sections 7.2 and 9.4.

(c)           If the Management Committee approves the Development of the mine
described in a Feasibility Study and also decides to seek Project Financing for
such mine, each Participant shall, at its own cost, cooperate in seeking to
obtain Project Financing for such mine; provided, however, that all fees,
charges and costs (including attorneys and technical consultants fees) paid to
the Project Financing lenders shall be borne by the Participants in proportion
to their Participating Interests, unless such fees are capitalized as a part of
the Project Financing.

9.11           Expansion or Modification Programs and Budgets. Any Program and
Budget proposed by the Manager involving Expansion or Modification shall be
based on a Feasibility Study prepared by the Manager, Feasibility Contractors,
or both, or prepared by the Manager and audited by Feasibility Contractors, as
the Management Committee determines. The Program and Budget, which include
Expansion or Modification, shall be submitted for review and approval by the
Management Committee within sixty (60) days following receipt by the Manager of
such Feasibility Study.

9.12           Budget Overruns; Program Changes. For Programs and Budgets
adopted after completion of TERRA's Initial Contribution and Secondary
Contribution if TERRA has elected to make and complete a Secondary Contribution,
the Manager shall immediately notify the Management Committee of any material
departure from an adopted Program and Budget. If the Manager exceeds an adopted
Budget by more than twenty percent (20%) in the aggregate, then the excess over
fifteen percent (15%), unless directly caused by an emergency or unexpected
expenditure made pursuant to Section 9.13 or unless otherwise authorized or
ratified by the Management Committee, shall be for the sole account of the
Manager and such excess shall not be included in the calculations of the
Participating Interests nor deemed a contribution under this Agreement. Budget
overruns of twenty percent (20%) or less in the aggregate shall be borne by the
Participants in proportion to their respective Participating Interests.

 
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9.13           Emergency or Unexpected Expenditures. In case of emergency, the
Manager may take any reasonable action it deems necessary to protect life or
property, to protect the Assets or to comply with Laws. The Manager may make
reasonable expenditures on behalf of the Participants for unexpected events that
are beyond its reasonable control and that do not result from a breach by it of
its standard of care. The Manager shall promptly notify the Participants of the
emergency or unexpected expenditure, and the Manager shall be reimbursed for all
resulting costs by the Participants in proportion to their respective
Participating Interests.

ARTICLE X
ACCOUNTS AND SETTLEMENTS

10.1           Quarterly Statements. After completion of TERRA's Initial
Contribution, and Secondary Contribution if TERRA has elected to make and
complete a Secondary Contribution, the Manager shall promptly submit to the
Management Committee quarterly statements of account reflecting in reasonable
detail the charges and credits to the Business Account during the preceding
calendar quarter.

10.2           Cash Calls. On the basis of each adopted Program and Budget, the
Manager shall submit prior to the last day of each calendar quarter a billing
for estimated cash requirements for the next calendar quarter. Within ten (10)
days after receipt of each billing, or a billing made pursuant to Section 9.13
or 12.4, each Participant shall advance its proportionate share of such cash
requirements. The Manager shall record all funds received in the Business
Account. The Manager shall at all times maintain a cash balance approximately
equal to the rate of disbursement for up to ninety (90) days. All funds in
excess of immediate cash requirements shall be invested by the Manager for the
benefit of the Business in cash management accounts and investments selected at
the discretion of the Manager, which accounts may include, but are not limited
to, money market investments and money market funds.

10.3           Failure to Meet Cash Calls. A Participant that fails to meet cash
calls in the amount and at the times specified in Section 10.2 shall be in
default, and the amounts of the defaulted cash call shall bear interest from the
date due at an annual rate equal to two (2) percentage points over the Interest
Rate, but in no event shall the annual rate exceed the maximum permitted by Law.
Such interest shall accrue to the benefit of and be payable to the
non-defaulting Participant, but shall not be deemed as amounts contributed by
the non-defaulting Participant in the event dilution occurs in accordance with
Article VI. In addition to any other rights and remedies available to it by Law,
the non-defaulting Participant shall have those other rights, remedies, and
elections specified in Sections 10.4 and 10.5.

 
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10.4           Cover Payment. If a Participant defaults in making a contribution
or cash call required by an adopted Program and Budget, the non-defaulting
Participant may, but shall not be obligated to, advance some portion or all of
the amount in default on behalf of the defaulting Participant (a "Cover
Payment"). Each and every Cover Payment shall constitute a demand loan bearing
interest from the date of the advance at the rate provided in Section 10.3. If
more than one Cover Payment is made, the Cover Payments shall be aggregated and
the rights and remedies described herein pertaining to an individual Cover
Payment shall apply to the aggregated Cover Payments. The failure to repay such
loan upon demand shall be a default.

10.5           Remedies. The Participants acknowledge that if either Participant
defaults in making a contribution required by Article V or a cash call, or in
repaying a loan, as required under Sections 10.2, 10.3 or 10.4, whether or not a
Cover Payment is made, it will be difficult to measure the damages resulting
from such default (it being hereby understood and agreed that the Participants
have attempted to determine such damages in advance and determined that the
calculation of such damages cannot be ascertained with reasonable certainty).
Both Participants acknowledge and recognize that the damage to the
non-defaulting Participant could be significant. In the event of such default,
as reasonable liquidated damages, the non-defaulting Participant may, with
respect to any such default not cured within thirty (30) days after notice to
the defaulting Participant of such default, elect any of the following remedies
by giving notice to the defaulting Participant. Such election may be made with
respect to each failure to meet a cash call relating to a Program and Budget,
regardless of the frequency of such cash calls, provided such cash calls are
made in accordance with Section 10.2.

(a)           The defaulting Participant grants to the non-defaulting
Participant a power of sale as to all or any portion of its interest in any
Assets or in its Participating Interest that is subject to the lien and security
interest granted in Section 6.6 (whether or not such lien and security interest
has been perfected), upon a default under Sections 10.3 or 10.4. Such power
shall be exercised in the manner provided by applicable Law or otherwise in a
commercially reasonable manner and upon reasonable notice. If the non-defaulting
Participant elects to enforce the lien or security interest pursuant to the
terms of this Subsection, the defaulting Participant shall be deemed to have
waived any available right of redemption, any required valuation or appraisal of
the secured property prior to sale, any available right to stay execution or to
require a marshaling of assets, and any required bond in the event a receiver is
appointed, and the defaulting Participant shall be liable for any deficiency.

(b)           The non-defaulting Participant may elect to have the defaulting
Participant’s Participating Interest diluted, or eliminated subject to Section
6.3, as follows:

 
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(i)           For a default relating to a Program and Budget, the Reduced
Participant's Participating Interest shall be reduced by an amount equal to two
and one-half (2.5) times the amount of the reduction that would have been made
pursuant to Section 9.5(b) had the defaulting Participant not defaulted but
instead elected not to contribute the amount that the defaulting Participant
failed to contribute, and the Participating Interest of the other Participant
shall be increased by the amount of the reduction in the Participating Interest
of the Reduced Participant made pursuant to this Subsection. For example, if a
Participant would have had its Participating Interest reduced from 40% to 30%
pursuant to Section 9.5(b), then the reduction that that Participant—as a
defaulting Participant subject to this Section 10.5(b)(i)—shall suffer is 2.5
times 10%, or 25%, such that the defaulting Participant’s Participating Interest
would become 40% minus 25%, or 15%, and the non-defaulting Participant’s
Participating Interest would become 60% plus 25%, or 85%..

(ii)           For a default resulting in the Reduced Participant’s Recalculated
Participating Interest being less than ten percent (10%), the defaulting
Participant shall be deemed to have withdrawn and to have automatically
relinquished its interest in the Assets to the non-defaulting Participant
pursuant to Section 6.3(a) and the defaulting Participant shall thereafter have
no right, title or interest in the Assets except for the interest in Net Smelter
Returns required to be conveyed to the Reduced Participant pursuant to Section
6.3(a), but shall remain liable to the extent provided in Section 6.4.

(iii)           Dilution under this Subsection 10.5(b) shall be effective as of
the date of the original default, and Section 9.6 shall not apply. The amount of
any Cover Payment under Section 10.4 and interest thereon, or any interest
accrued in accordance with Section 10.3, shall be deemed to be amounts
contributed by the non-defaulting Participant, and not as amounts contributed by
the defaulting Participant.

(iv)           Whenever the Participating Interests are recalculated pursuant to
this Subsection 10.5(b), (A) the Equity Accounts of both Participants shall be
adjusted to bear the same ratio to each other as their recalculated
Participating Interests; and (B) the portion of Capital Account attributable to
the reduced Participating Interest of the Reduced Participant shall be
transferred to the other Participant.

10.6           Audits.

(a)           After completion of TERRA’s Initial Contribution and Secondary
Contribution if TERRA has elected to make and complete a Secondary Contribution,
within one hundred eighty days (180) days after the end of each calendar year,
at the request of a Participant, an audit shall be completed by certified public
accountants selected by, and independent of, the Manager. The audit shall be
conducted in accordance with generally accepted United States auditing standards
and shall cover all books and records maintained by the Manager pursuant to this
Agreement, all Assets and Encumbrances, and all transactions and Operations
conducted during such calendar year, including production and inventory records
and all costs for which the Manager sought reimbursement under this Agreement,
together with all other matters customarily included in such audits. All written
exceptions to and claims upon the Manager for discrepancies disclosed by such
audit shall be made not more than three (3) months after receipt of the audit
report, unless either Participant elects to conduct an independent audit
pursuant to Subsection 10.6(b) which is ongoing at the end of such three (3)
month period, in which case such exceptions and claims may be made within the
period provided in Subsection 10.6(b). Failure to make any such exception or
claim within such period shall mean the audit is deemed to be correct and
binding upon the Participants. The cost of all audits under this Subsection
shall be charged to the Business Account.

 
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(b)           Notwithstanding the annual audit conducted by certified public
accountants selected by the Manager, each Participant shall have the right to
have an independent audit of all Business books, records and accounts, including
all charges to the Business Account. This audit shall review all issues raised
by the requesting Participant, with all costs borne by the requesting
Participant. The requesting Participant shall give the other Participant thirty
(30) days prior notice of such audit. Any audit conducted on behalf of either
Participant shall be made during the Manager's normal business hours and shall
not interfere with Operations. Neither Participant shall have the right to audit
records and accounts of the Business relating to transactions or Operations more
than twenty-four (24) months after the calendar year during which such
transactions, or transactions related to such Operations, were charged to the
Business Account. Only written exceptions to and claims upon the Manager for
discrepancies disclosed by such audit made within three (3) months after receipt
of the audit by a Participant shall be deemed valid audit claims, qualifying for
further review and resolution.

ARTICLE XI
DISPOSITION OF PRODUCTION

11.1           Taking In Kind. Once RAVEN completes its Initial Contribution
under Section 5.1(a) and continuing until TERRA completes its Initial
Contribution under Section 5.1(b), each Participant shall take in kind or
separately dispose of its share of all Products in proportion to its interest in
the Business (51% for TERRA and 49% for RAVEN during TERRA’s period for
completing its Initial Contribution), without adjustments being made to the
Participants’ respective Equity Accounts for the value of any such Products
taken in kind or separately disposed of during such period. Upon TERRA’s
completion of its Initial Contribution, if TERRA has elected to make a Secondary
Contribution, each Participant shall take in kind or separately dispose of its
share of all Products in proportion to its interest in the Business (80% for
TERRA and 20% for RAVEN during TERRA’s period for completing its Secondary
Contribution), without adjustments being made to the Participants’ respective
Equity Accounts for the value of any such Products taken in kind or separately
disposed of during such period.  Otherwise, if TERRA has completed its Initial
Contribution but has not elected to make a Secondary Contribution, or if the
period for TERRA to complete a Secondary Contribution has run without Terra
having completed its Secondary Contribution, each Participant shall take in kind
or separately dispose of its share of all Products in proportion to its
Participating Interest, with the Participants’ Equity Accounts adjusted on an
ongoing basis pursuant to Section 8.2(n). Any extra expenditure incurred in the
taking in kind or separate disposition by either Participant of its
proportionate share of Products shall be borne by such Participant. Nothing in
this Agreement shall be construed as providing, directly or indirectly, for any
joint or cooperative marketing or selling of Products or permitting the
processing of Products owned by any third party at any processing facilities
constructed by the Participants pursuant to this Agreement. The Manager shall
give notice in advance of the anticipated delivery date upon which Products will
be available.  A Participant shall have the right (but not the obligation) to
concentrate, mill, smelt, refine, upgrade or otherwise process or beneficiate
its share of Products.

 
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11.2           Failure of Participant to Take In Kind. If a Participant fails to
take its proportionate share of Products in kind, the Manager shall have the
right, but not the obligation, for a period of time consistent with the minimum
needs of the industry, but not to exceed one (1) year from the notice date
described in Section 11.1, to purchase the Participant's share for its own
account or to sell such share as agent for the Participant at not less than the
prevailing market price in the area. Subject to the terms of any such contracts
of sale then outstanding, during any period that the Manager is purchasing or
selling a Participant's share of production, the Participant may elect by notice
to the Manager to take in kind. The Manager shall be entitled to deduct from
proceeds of any sale by it for the account of a Participant reasonable expenses
incurred in such a sale.

11.3           Hedging. Neither Participant shall have any obligation to account
to the other Participant for, nor have any interest or right of participation in
any profits or proceeds nor have any obligation to share in any losses from,
futures contracts, forward sales, trading in puts, calls, options or any similar
hedging, price protection or marketing mechanism employed by a Participant with
respect to its proportionate share of any Products produced or to be produced
from the Properties.

ARTICLE XII
WITHDRAWAL AND TERMINATION

12.1           Termination by Expiration or Agreement. This Agreement shall
terminate as expressly provided herein, unless earlier terminated by written
agreement.

12.2           Termination by Deadlock. If the Management Committee fails to
adopt a Program and Budget for six (6) months after the expiration of the latest
adopted Program and Budget, either Participant may elect to terminate the
Business by giving ninety (90) days notice of termination to the other
Participant.

12.3           Withdrawal. A Participant may elect to withdraw from the Business
by (i) failing to complete its Initial Contributions as required by
Subsection 5.1, or (ii) giving notice to the other Participant of the effective
date of withdrawal, which shall be the later of the end of the then current
Program Period or thirty (30) days after the date of the notice whereby the
Business shall terminate, and the withdrawing Participant shall be deemed to
have transferred to the remaining Participant all of its Participating Interest,
including all of its interest in the Assets, without cost and free and clear of
all Encumbrances arising by, through or under such withdrawing Participant,
except those described in Paragraph 1.1 of Exhibit A and those to which both
Participants have agreed. The withdrawing Participant shall execute and deliver
all instruments as may be necessary in the reasonable judgment of the other
Participant to effect the transfer of its interests in the Assets to the other
Participant. If within a sixty (60) day period both Participants elect to
withdraw, then the Business shall instead be deemed to have been terminated by
the consent of the Participants pursuant to Section 12.1.

 
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12.4           Continuing Obligations and Environmental Liabilities. On
termination of the Business under Sections 12.1, 12.2 or 12.3, each Participant
shall remain liable for its respective share of liabilities to third persons
(whether such arises before or after such withdrawal), including Environmental
Liabilities and Continuing Obligations. The withdrawing Participant's share of
such liabilities shall be equal to its Participating Interest at the time such
liability was incurred, after first taking into account any reduction,
readjustment, and restoration of Participating Interests under Sections 6.3,
9.5, 9.6 and 10.5 (or, as to liabilities arising prior to the Effective Date,
its initial Participating Interest).

12.5           Disposition of Assets on Termination. Promptly after termination
under Sections 12.1 or 12.2, the Manager shall take all action necessary to wind
up the activities of the Business, in accordance with Exhibit C. All costs and
expenses incurred in connection with the termination of the Business shall be
expenses chargeable to the Business Account.

12.6           Non-Compete Covenants. Neither a Participant that withdraws
pursuant to Section 12.3, or is deemed to have withdrawn pursuant to
Sections 5.2, 6.3 or 10.5, nor any Affiliate of such a Participant, shall
directly or indirectly acquire any interest or right to explore or mine, or
both, on any property any part of which is within the Area of Interest for two
(2) years after the effective date of withdrawal. If a withdrawing Participant,
or an Affiliate of a withdrawing Participant, breaches this Section 12.6, such
Participant shall be obligated to offer to convey to the non-withdrawing
Participant, without cost, any such property or interest so acquired (or ensure
its Affiliate offers to convey the property or interest to the non-withdrawing
Participant, if the acquiring party is the withdrawing Participant's Affiliate).
Such offer shall be made in writing and can be accepted by the non-withdrawing
Participant at any time within ten (10) days after the offer is received by such
non-withdrawing Participant. Failure of a Participant’s Affiliate to comply with
this Section 12.6 shall be a breach by such Participant of this Agreement.

12.7           Right to Data After Termination. After termination of the
Business pursuant to Sections 12.1 or 12.2, each Participant shall be entitled
to make copies of all applicable information acquired hereunder before the
effective date of termination not previously furnished to it, but a terminating
or withdrawing Participant shall not be entitled to any such copies after any
other termination or withdrawal.

12.8           Continuing Authority. On termination of the Business under
Sections 12.1, 12.2 or 12.3 or the deemed withdrawal of either Participant
pursuant to Sections 5.2 or 10.5, the Participant which was the Manager prior to
such termination or withdrawal (or the other Participant in the event of a
withdrawal by the Manager) shall have the power and authority to do all things
on behalf of both Participants which are reasonably necessary or convenient to:
(a) wind up Operations and (b) complete any transaction and satisfy any
obligation, unfinished or unsatisfied, at the time of such termination or
withdrawal, if the transaction or obligation arises out of Operations prior to
such termination or withdrawal. The Manager shall have the power and authority
to grant or receive extensions of time or change the method of payment of an
already existing liability or obligation, prosecute and defend actions on behalf
of both Participants and the Business, encumber Assets, and take any other
reasonable action in any matter with respect to which the former Participants
continue to have, or appear or are alleged to have, a common interest or a
common liability.

 
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ARTICLE XIII
ACQUISITIONS WITHIN AREA OF INTEREST

13.1           General. Any interest or right to acquire any interest in real
property or water rights related thereto within the Area of Interest either
acquired or proposed to be acquired during the term of this Agreement by or on
behalf of either Participant ("Acquiring Participant") or any Affiliate of such
Participant shall be subject to the terms and provisions of this Agreement
except that unless expressly agreed to by the Participants, no interest acquired
or proposed to be required shall be made subject to an Encumbrance existing upon
the Assets. Moreover, unless expressly agreed to by the Participants, any
acquisition or proposed acquisition of interest within the Area of Interest
during the term of this Agreement shall not burden or encumber the existing
Assets, including for purposes of illustration by subjecting the Assets to area
of interest restrictions, royalty obligations, or pre-emptive rights. RAVEN and
TERRA and their respective Affiliates for their separate account shall be free
to acquire lands and interests in lands outside the Area of Interest and to
locate mining claims or mining locations outside the Area of Interest. Failure
of any Affiliate of either Participant to comply with this Article XIII shall be
a breach by such Participant of this Agreement.

13.2           Notice to Non-Acquiring Participant. Within thirty (30) days
after the acquisition or proposed acquisition, as the case may be, of any
interest or the right to acquire any interest in real property or water rights
wholly or partially within the Area of Interest (except real property acquired
by the Manager pursuant to a Program), the Acquiring Participant shall notify
the other Participant of such acquisition by it or its Affiliate; provided
further that if the acquisition of any interest or right to acquire any interest
pertains to real property or water rights partially within the Area of Interest,
then all such real property (i.e., the part within the Area of Interest and the
part outside the Area of Interest) shall be subject to this Article XIII. The
Acquiring Participant's notice shall describe in detail the acquisition, the
acquiring party if that party is an Affiliate, the lands and minerals covered
thereby, any burdens or encumbrances upon the lands and minerals covered by the
acquisition, any water rights related thereto, the cost thereof, and the reasons
why the Acquiring Participant believes that the acquisition (or proposed
acquisition) of the interest is in the best interests of the Participants under
this Agreement. In addition to such notice, the Acquiring Participant shall make
any and all information concerning the relevant interest available for
inspection by the other Participant.

 
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13.3           Option Exercised. Within thirty (30) days after receiving the
Acquiring Participant's notice, the other Participant may notify the Acquiring
Participant of its election to accept a proportionate interest in the acquired
interest equal to its Participating Interest. Promptly upon such notice, the
Acquiring Participant shall convey or cause its Affiliate to convey to the
Participants, in proportion to their respective Participating Interests, by
special warranty deed with title held as described in Section 3.4, all of the
Acquiring Participant's (or its Affiliate's) interest in such acquired interest,
free and clear of all Encumbrances arising by, through or under the Acquiring
Participant (or its Affiliate) other than those to which both Participants have
agreed. The acquired interests shall become a part of the Properties for all
purposes of this Agreement immediately upon such notice. The other Participant
shall promptly pay to the Acquiring Participant its proportionate share of the
latter's actual out-of-pocket acquisition costs.

13.4           Option Not Exercised. If the other Participant does not give such
notice within the thirty (30) day period set forth in Section 13.3, it shall
have no interest in the acquired interests, and the acquired interests shall not
be a part of the Assets or continue to be subject to this Agreement.

ARTICLE XIV
ABANDONMENT AND SURRENDER OF PROPERTIES

Either Participant may request the Management Committee to authorize the Manager
to surrender or abandon part or all of the Properties. If the Management
Committee does not authorize such surrender or abandonment, or authorizes any
such surrender or abandonment over the objection of either Participant, the
Participant that desires to surrender or abandon shall assign to the objecting
Participant, by special warranty deed and without cost to the objecting
Participant, all of the abandoning Participant's interest in the Properties
sought to be abandoned or surrendered, free and clear of all Encumbrances
created by, through or under the abandoning Participant other than those to
which both Participants have agreed. Upon the assignment, such properties shall
cease to be part of the Properties. The Participant that desires to abandon or
surrender shall remain liable for its share (determined by its Participating
Interest as of the date of such abandonment, after first taking into account any
reduction, readjustment, and restoration of Participating Interests under
Sections 6.3, 9.5, 9.6 and 10.5) of any liability with respect to such
Properties, including, without limitation, Continuing Obligations, Environmental
Liabilities and Environmental Compliance, whether accruing before or after such
abandonment, arising out of activities prior to the Effective Date and out of
Operations conducted prior to the date of such abandonment, regardless of when
any funds may be expended to satisfy such liability.

 
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ARTICLE XV
SUPPLEMENTAL BUSINESS AGREEMENT

At any time during the term of this Agreement, the Management Committee may
determine by unanimous vote of both Participants that it is appropriate to
segregate the Area of Interest into areas subject to separate Programs and
Budgets for purposes of conducting further Exploration, Pre-Feasibility or
Feasibility Studies, Development, or Mining. At such time, the Management
Committee shall designate which portion of the Properties will comprise an area
of interest under a separate business arrangement ("Supplemental Business"), and
the Participants shall enter into a new agreement ("Supplemental Business
Agreement") for the purpose of further exploring, analyzing, developing, and
mining such portion of the Properties. The Supplemental Business Agreement shall
be in substantially the same form as this Agreement, with rights and interests
of the Participants in the Supplemental Business identical to the rights and
interests of the Participants in this Business at the time of the designation,
unless otherwise agreed by the Participants, and with the Participants agreeing
to new Capital and Equity Accounts and other terms necessary for the
Supplemental Business Agreement to comply with the nature and purpose of the
designation. Following execution of the Supplemental Business Agreement, this
Agreement shall terminate insofar as it affects the Properties covered by the
Supplemental Business Agreement.

ARTICLE XVI
TRANSFER OF INTEREST; PREEMPTIVE RIGHT

16.1           General. A Participant shall have the right to Transfer to a
third party an interest in its Participating Interest, including an interest in
this Agreement or the Assets, solely as provided in this Article XVI.

16.2           Limitations on Free Transferability. Any Transfer by either
Participant under Section 16.1 shall be subject to the following limitations:

(a)           Neither Participant shall Transfer any interest in this Agreement
or the Assets (including, but not limited to, any royalty, profits, or other
interest in the Products) except in conjunction with the Transfer of part or all
of its Participating Interest;

(b)           No transferee of all or any part of a Participant's Participating
Interest shall have the rights of a Participant unless and until the
transferring Participant has provided to the other Participant notice of the
Transfer, and, except as provided in Subsections 16.2(g) and 16.2(h), the
transferee, as of the effective date of the Transfer, has committed in writing
to assume and be bound by this Agreement to the same extent as the transferring
Participant;

(c)           Neither Participant, without the consent of the other Participant,
shall make a Transfer that shall violate any Law, or result in the cancellation
of any permits, licenses, or other similar authorization;

(d)           No Transfer permitted by this Article XVI shall relieve the
transferring Participant of its share of any liability, whether accruing before
or after such Transfer, which arises out of Operations conducted prior to such
Transfer or exists on the Effective Date;

 
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(e)           Neither Participant, without the consent of the other Participant,
shall make a Transfer that shall cause termination of the tax partnership
established by Section 4.2. If such termination is caused, the transferring
Participant shall indemnify the other Participant for, from and against any and
all loss, cost, expense, damage, liability or claim therefor arising from the
Transfer, including without limitation any increase in taxes, interest and
penalties or decrease in credits caused by such termination and any tax on
indemnification proceeds received by the Indemnified Participant.

(f)           In the event of a Transfer of less than all of a Participating
Interest, the transferring Participant and its transferee shall act and be
treated as one Participant; provided however, that in order for such Transfer to
be effective, the transferring Participant and its transferee must first:

(i)           agree, as between themselves, that one of them is authorized to
act as the sole agent ("Agent") on their behalf with respect to all matters
pertaining to this Agreement and the Business; and

(ii)           notify the other Participant of the designation of the Agent, and
in such notice warrant and represent to other Participant that:

(A)           the Agent has the sole authority to act on behalf of, and to bind,
the transferring Participant and its transferee with respect to all matters
pertaining to this Agreement and the Business;

(B)           the other Participant may rely on all decisions of, notices and
other communications from, and failures to respond by, the Agent, as if given
(or not given) by the transferring Participant and its transferee; and

(C)           all decisions of, notices and other communications from, and
failures to respond by, the other Participant to the Agent shall be deemed to
have been given (or not given) to the transferring Participant and its
transferee.

The transferring Participant and its transferee may change the Agent (but such
replacement must be one of them) by giving notice to the other Participant,
which notice must conform to Subsection 16.2(f)(ii).

(g)           If the Transfer is the grant of an Encumbrance in a Participating
Interest to secure a loan or other indebtedness of either Participant in a bona
fide transaction, other than a transaction approved unanimously by the
Management Committee or Project Financing approved by the Management Committee,
such Encumbrance shall be granted only in connection with such Participant's
financing payment or performance of that Participant's obligations under this
Agreement and shall be subject to the terms of this Agreement and the rights and
interests of the other Participant hereunder (including without limitation under
Section 6.7). Any such Encumbrance shall be further subject to the condition
that the holder of such Encumbrance ("Chargee") first enter into a written
agreement with the other Participant in form satisfactory to the other
Participant, acting reasonably, binding upon the Chargee, to the effect that:

 
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(i)           the Chargee shall not enter into possession or institute any
proceedings for foreclosure or partition of the encumbering Participant's
Participating Interest and that such Encumbrance shall be subject to the
provisions of this Agreement;

(ii)           the Chargee's remedies under the Encumbrance shall be limited to
the sale of the whole (but only of the whole) of the encumbering Participant's
Participating Interest to the other Participant, or, failing such a sale, at a
public auction to be held at least sixty (60) days after prior notice to the
other Participant, such sale to be subject to the purchaser entering into a
written agreement with the other Participant whereby such purchaser assumes all
obligations of the encumbering Participant under the terms of this Agreement.
The price of any preemptive sale to the other Participant shall be the remaining
principal amount of the loan plus accrued interest and related expenses, and
such preemptive sale shall occur within sixty (60) days of the Chargee's notice
to the other Participant of its intent to sell the encumbering Participant's
Participating Interest. Failure of a sale to the other Participant to close by
the end of such period, unless failure is caused by the encumbering Participant
or by the Chargee, shall permit the Chargee to sell the encumbering
Participant's Participating Interest at a public sale; and

(iii)           the charge shall be subordinate to any then-existing debt,
including Project Financing previously approved by the Management Committee,
encumbering the transferring Participant's Participating Interest;

(h)           If a sale or other commitment or disposition of Products or
proceeds from the sale of Products by either Participant upon distribution to it
pursuant to Article XI creates in a third party a security interest by
Encumbrance in Products or proceeds therefrom prior to such distribution, such
sales, commitment or disposition shall be subject to the terms and conditions of
this Agreement including, without limitation, Section 6.7.

16.3           Preemptive Right. Any Transfer by either Participant under
Section 16.1 shall be subject to a preemptive right of the other Participant as
described below.

 
(a)
If either Participant intends to Transfer all or any part of its Participating
Interest (“Transferring Entity”), such Participant shall promptly notify the
other Participant of such intent.  The notice shall state the price and all
other pertinent terms and conditions of the intended Transfer, and shall be
accompanied by a copy of the offer or the contract for sale.  If the
consideration for the intended transfer is, in whole or in part, other than
monetary, the notice shall describe such consideration and its monetary
equivalent (based upon the fair market value of the non-monetary consideration
and stated in terms of cash or currency).

 
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(b)
The other Participant shall have ninety (90) days from the date such notice is
received to notify the Transferring Entity whether it elects to acquire the
offered interest at the same price (or its monetary equivalent) and on the same
terms and conditions as set forth in the notice.  If it does so elect, the
acquisition by the other Participant shall be consummated promptly after notice
of such election is delivered.

 
(c)
If the other Participant fails to so elect within said ninety (90) day period,
the Transferring Entity shall have ninety (90) days following the expiration of
such period to consummate the Transfer to the third party at a price and on
terms no less favorable to the Transferring Entity than those offered.  Failure
by the Transferring Entity to consummate the Transfer to a third party within
said following ninety (90) day period shall revive the pre-emptive right of the
other Participant. Any subsequent proposal to Transfer such interest shall be
conducted in accordance to the procedures set forth in this Subsection.

 
(d)
These procedures shall not apply to the following:

 
(i)
Transfer by either Participant of all or any part of its interest to an
Affiliate; pursuant to a corporate consolidation or reorganization of a
Participant by which the surviving entity shall possess substantially all of the
stock or all of the property rights and interests and be subject to
substantially all of the liabilities and obligations of that Participant; or
corporate merger or amalgamation by which the surviving entity or amalgamated
company shall possess all of the stock or all of the property rights and
interests, and be subject to substantially all of the liabilities and
obligations of that Participant.

 
(ii)
Subject to Section 16.2, the grant by either Participant of a security interest
in its Participating Interest by Encumbrance.

 
(iii)
The creation by any Affiliate of either Participant of an Encumbrance affecting
its Control of such Participant.

 
(iv)
A sale or other commitment or disposition of Products or proceeds from a sale of
Products by either Participant upon distribution to it pursuant to Article XI.

 
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ARTICLE XVII
DISPUTES

17.1           Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Alaska, without regard
for any conflict of laws or choice of laws principles that would permit or
require the application of the laws of any other jurisdiction.

17.2           Venue. The Participants agree that the location for any
arbitration proceeding shall be Denver, Colorado.

17.3           Dispute Resolution. The Parties prefer to attempt to settle and
resolve any controversy or claim relating to this Agreement informally through
good faith face-to-face negotiations between executive representatives of each
Party having the authority to settle. Representatives of the parties to the
dispute shall meet within sixty (60) days of a Party’s written notice to the
other Parties providing the specifics of a dispute requiring resolution. If the
Parties to the dispute have not reached a mutually agreeable resolution to such
dispute within thirty (30) days of the meeting, any affected Party may seek
resolution via binding arbitration pursuant to the American Arbitration
Association rules of arbitration.

17.4           Fees and Costs. All disputes arising under or in connection with
this Agreement which cannot be resolved by agreement between the Participants
shall be resolved in accordance with applicable Law. If arbitration is initiated
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or substantially prevailing Participant shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
arbitration proceeding, in addition to any other relief to which it or they may
be entitled.

ARTICLE XVIII
CONFIDENTIALITY, OWNERSHIP, USE AND
DISCLOSURE OF INFORMATION

18.1           Business Information. All Business Information shall be owned
jointly by the Participants as their Participating Interests are determined
pursuant to this Agreement. Both before and after the termination of the
Business, all Business Information may be used by either Participant for any
purpose, whether or not competitive with the Business, without consulting with,
or obligation to, the other Participant. Except as provided in Sections 18.3 and
18.4, or with the prior written consent of the other Participant, each
Participant shall keep confidential and not disclose to any third party or the
public any portion of the Business Information that constitutes Confidential
Information.

 
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18.2           Participant Information. In performing its obligations under this
Agreement, neither Participant shall be obligated to disclose any Participant
Information. If a Participant elects to disclose Participant Information in
performing its obligations under this Agreement, such Participant Information,
together with all improvements, enhancements, refinements and incremental
additions to such Participant Information that are developed, conceived,
originated or obtained by either Participant in performing its obligations under
this Agreement ("Enhancements"), shall be owned exclusively by the Participant
that originally developed, conceived, originated or obtained such Participant
Information. Each Participant may use and enjoy the benefits of such Participant
Information and Enhancements in the conduct of the Business hereunder, but the
Participant that did not originally develop, conceive, originate or obtain such
Participant Information may not use such Participant Information and
Enhancements for any other purpose. Except as provided in Section 18.4, or with
the prior written consent of the other Participant, which consent may be
withheld in such Participant's sole discretion, each Participant shall keep
confidential and not disclose to any third party or the public any portion of
Participant Information and Enhancements owned by the other Participant that
constitutes Confidential Information.

18.3           Permitted Disclosure of Confidential Business Information. Either
Participant may disclose Business Information that is Confidential Information:
(a) to a Participant's officers, directors, partners, members, employees,
Affiliates, shareholders, agents, attorneys, accountants, consultants,
contractors, subcontractors or advisors, for the sole purpose of such
Participant's performance of its obligations under this Agreement; (b) to any
party to whom the disclosing Participant contemplates a Transfer of all or any
part of its Participating Interest, for the sole purpose of evaluating the
proposed Transfer; (c) to any actual or potential lender, underwriter or
investor for the sole purpose of evaluating whether to make a loan to or
investment in the disclosing Participant; or (d) to a third party with whom the
disclosing Participant contemplates any independent business activity or
operation.

The Participant disclosing Confidential Information pursuant to this
Section 18.3, shall disclose such Confidential Information to only those parties
who have a bona fide need to have access to such Confidential Information for
the purpose for which disclosure to such parties is permitted under this
Section 18.3 and who have agreed in writing supplied to, and enforceable by, the
other Participant to protect the Confidential Information from further
disclosure, to use such Confidential Information solely for such purpose and to
otherwise be bound by the provisions of this Article XVIII. Such writing shall
not preclude parties described in Subsection 18.3(b) from discussing and
completing a Transfer with the other Participant. The Participant disclosing
Confidential Information shall be responsible and liable for any use or
disclosure of the Confidential Information by such parties in violation of this
Agreement and such other writing.

18.4           Disclosure Required By Law. Notwithstanding anything contained in
this Article XVIII, a Participant may disclose any Confidential Information if,
in the opinion of the disclosing Participant's legal counsel: (a) such
disclosure is legally required to be made in a judicial, administrative or
governmental proceeding pursuant to a valid subpoena or other applicable order;
or (b) such disclosure is legally required to be made pursuant to the rules or
regulations of a stock exchange or similar trading market applicable to the
disclosing Participant. Prior to any disclosure of Confidential Information
under this Section 18.4, the disclosing Participant shall give the other
Participant at least ten (10) days prior written notice (unless less time is
permitted by such rules, regulations or proceeding) and, in making such
disclosure, the disclosing Participant shall disclose only that portion of
Confidential Information required to be disclosed and shall take all reasonable
steps to preserve the confidentiality thereof, including, without limitation,
obtaining protective orders and supporting the other Participant in intervention
in any such proceeding.

 
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18.5           Public Announcements. Prior to making or issuing any press
release or other public announcement or disclosure of Business Information that
is not Confidential Information, a Participant shall first consult with the
other Participant as to the content and timing of such announcement or
disclosure, unless in the good faith judgment of such Participant, there is not
sufficient time to consult with the other Participant before such announcement
or disclosure must be made under applicable Laws or stock exchange rule; but in
such event, the disclosing Participant shall notify the other Participant, as
soon as possible, of the pendency of such announcement or disclosure, and it
shall notify the other Participant before such announcement or disclosure is
made if at all reasonably possible. Any press release or other public
announcement or disclosure to be issued by either Participant relating to this
Business shall also identify the other Participant.

ARTICLE XIX
GENERAL PROVISIONS

19.1           Notices. All notices, payments and other required or permitted
communications ("Notices") to a Party shall be in writing, and shall be
addressed respectively as follows:

 
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If to RAVEN:                                                         Raven Gold
Alaska Inc.
c/o International Tower Hill Mines Ltd.
1920 – 1188 W. Georgia St.
Vancouver, B.C.  V6E 4A2  Canada
Attention:                      Jeff Pontius
Telephone:                      (604) 408-7488

With a Copy to:            Raven Gold Alaska Inc.
c/o International Tower Hill Mines Ltd.
9137 Ridgeline Blvd. Suite 250
Highlands Ranch, CO 80129 USA
Attention:                      Russell Myers
Telephone:                      (303) 470-8700

 
If to ITH:
International Tower Hill Mines Ltd.

1920 – 1188 W. Georgia St.
Vancouver, B.C.  V6E 4A2  Canada
Attention:                      Jeff Pontius
Telephone:                      (604) 408-7488

With a Copy to:            International Tower Hill Mines Ltd.
9137 Ridgeline Blvd. Suite 250
Highlands Ranch, CO 80129 USA
Attention:                      Russell Myers
Telephone:                      (303) 470-8700

 
If to TERRA:
Terra Gold Corporation

1256 W Elmira Rd
Sandpoint, ID  83864 USA
Attention:                      Gregory Schifrin
Telephone:                      (208) 265-5858
Cell:                                  (208) 290-1180

 
If to TMC:
Terra Mining Corporation

1256 W Elmira Rd
Sandpoint, ID  83864 USA
Attention:                      Gregory Schifrin
Telephone:                      (208) 265-5858
Cell:                                  (208) 290-1180

 
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All Notices shall be given (a) by personal delivery to the Participant, (b) by
electronic communication, capable of producing a printed transmission, (c) by
registered or certified mail return  receipt requested; or (d) by overnight or
other express courier service. All Notices shall be effective and shall be
deemed given on the date of receipt at the principal address if received during
normal business hours, and, if not received during normal business hours, on the
next business day following receipt, or if by electronic communication, on the
date of such communication. Either Participant may change its address by Notice
to the other Participant.

19.2           Gender. The singular shall include the plural, and the plural the
singular wherever the context so requires, and the masculine, the feminine, and
the neuter genders shall be mutually inclusive.

19.3           Currency. All references to "dollars" or "$" herein shall mean
lawful currency of the United States of America.

19.4           Headings. The subject headings of the Sections and Subsections of
this Agreement and the Paragraphs and Subparagraphs of the Exhibits to this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.

19.5           Waiver. The failure of either Participant to insist on the strict
performance of any provision of this Agreement or to exercise any right, power
or remedy upon a breach hereof shall not constitute a waiver of any provision of
this Agreement or limit such Participant's right thereafter to enforce any
provision or exercise any right.

19.6           Modification. No modification of this Agreement shall be valid
unless made in writing and duly executed by both Participants.

19.7           Force Majeure. Except for the obligation to make payments when
due hereunder, or obligations to maintain the Properties in good standing, the
obligations of a Participant shall be suspended to the extent and for the period
that performance is prevented by any cause, whether foreseeable or
unforeseeable, beyond its reasonable control, including, without limitation,
labor disputes (however arising and whether or not employee demands are
reasonable or within the power of the Participant to grant); acts of God; Laws,
instructions or requests of any government or governmental entity; judgments or
orders of any court; inability to obtain on reasonably acceptable terms any
public or private license, permit or other authorization; curtailment or
suspension of activities to remedy or avoid an actual or alleged, present or
prospective violation of Environmental Laws; action or inaction by any federal,
state or local agency that delays or prevents the issuance or granting of any
approval or authorization required to conduct Operations beyond the reasonable
expectations of the Participant seeking the approval or authorization
(including, without limitation, a failure to complete any review and analysis
required by the National Environmental Policy Act or any similar state law; acts
of war or conditions arising out of or attributable to war, whether declared or
undeclared; riot, civil strife, insurrection or rebellion; fire, explosion,
earthquake, volcanic eruption, sink holes, flood, drought or other severe or
unusually adverse weather condition; delay or failure by suppliers or
transporters of materials, parts, supplies, services or equipment or by
contractors' or subcontractors' shortage of, or inability to obtain, labor,
transportation, materials, machinery, equipment, supplies, utilities or
services; accidents; breakdown of equipment, machinery or facilities; actions by
Native or tribal entities or groups, environmental entities or groups, or other
similar special interest groups; or any other cause, whether similar or
dissimilar to the foregoing. The affected Participant shall promptly give notice
to the other Participant of the suspension of performance, stating therein the
nature of the suspension, the reasons therefor, and the expected duration
thereof. The affected Participant shall resume performance as soon as reasonably
possible. During the period of suspension the obligations of both Participants
to advance funds pursuant to Section 10.2 shall be reduced to levels consistent
with then current Operations.

 
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19.8           Rule Against Perpetuities. The Participants do not intend that
there shall be any violation of the Rule Against Perpetuities, the Rule Against
Unreasonable Restraints on the Alienation of Property, or any similar rule.
Accordingly, if any right or option to acquire any interest in the Properties,
in a Participating Interest, in the Assets, or in any real property exists under
this Agreement, such right or option must be exercised, if at all, so as to vest
such interest within time periods permitted by applicable statute or rules. If,
however, any such violation should inadvertently occur, the Participants hereby
agree to undertake all actions reasonably necessary, including initiation of
arbitration if required, to reform that provision in such a way as to
approximate most closely the intent of the Participants within the limits
permissible under such rules.

19.9           Further Assurances. Each of the Participants shall take, from
time to time and without additional consideration, such further actions and
execute such additional instruments as may be reasonably necessary or convenient
to implement and carry out the intent and purpose of this Agreement or as may be
reasonably required by lenders in connection with Project Financing.

19.10           Entire Agreement; Successors and Assigns. This Agreement
contains the entire understanding of the Participants and supersedes all prior
agreements and understandings between the Participants relating to the subject
matter hereof. This Agreement shall be binding upon and inure to the benefit of
the respective successors and permitted assigns of the Participants.

19.11           Memorandum. A mutually agreeable memorandum or short form of
this Agreement, in the form attached hereto as Exhibit H, shall be executed and
acknowledged by RAVEN on or before October 14, 2010, and by TERRA as soon as
possible thereafter, and then delivered to the Manager for recording and filing
in those appropriate recording districts, government agency offices, and Uniform
Commercial Code filing offices as may be necessary to provide constructive
notice of this Agreement and the rights and obligations of the Participants
hereunder. The Manager shall record and file in the proper recording districts,
government agency offices, and Uniform Commercial Code filing offices, all such
documents delivered to it by the Participants. Unless both Participants agree,
this Agreement shall not be recorded.

19.12           Counterparts. This Agreement may be executed in any number of
counterparts, and it shall not be necessary that the signatures of both
Participants be contained on any counterpart. Each counterpart shall be deemed
an original, but all counterparts together shall constitute one and the same
instrument.

 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Effective Date.

 

  RAVEN GOLD ALASKA INC.            By:/s/ Jeff Pontius, President          
 INTERNATIONAL TOWER HILL MINES LTD.            By: /s/ Jeff Pontius, President
           TERRA GOLD CORPORATION            By:/s/ Gregory Schifrin    
 Gregory Schifrin, President & CEO            TERRA MINING CORPORATION    
 By/s/ Gregory   Schifrin      Gregory Schifrin, President & CEO  

 

 

 

 
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EXHIBIT A                                ASSETS AND AREA OF INTEREST
 
EXHIBIT A
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska Inc.
And
Terra Gold Corporation

ASSETS AND AREA OF INTEREST

1.1           PROPERTIES; TITLE EXCEPTIONS AND ENCUMBRANCES

PROPERTIES:

The Properties comprise the following:

 
(a)
the State of Alaska mining locations described in Schedule 1 attached hereto;

 
(b)
the rights, titles, and interests of the “Lessee” under that certain Lease dated
March 22, 2005, between lessor Ben Porterfield and lessee AngloGold Ashanti
(USA) Exploration Inc., (“Porterfield Lease”) respecting the State of Alaska
mining locations described in Schedule 2 attached hereto.

Included within the Properties described in 1.1(b) above are

 
(i)
the right of the “Lessee” under Section V.C.3 of the Porterfield Lease to
purchase from the “Lessor” under the Porterfield Lease a 1.00% Net Smelter
Returns royalty out of said Lessor’s reserved royalties described in
Sections V.C.1 and V.C.2, for a purchase price of $1,000,000; and,

 
(ii)
the right of the “Lessee” under Section V.C.3 of the Porterfield Lease to
purchase from the “Lessor” under the Porterfield Lease—if “Lessee” has
previously exercised its right to purchase a 1.00% Net Smelter Returns Royalty
as described in (i) above—an additional 1.00% Net Smelter Returns royalty out of
said Lessor’s reserved royalties described in Sections V.C.1 and V.C.2, for a
purchase price of an additional $3,000,000.

The Participants agree that any monies expended to acquire either the first or
both of said 1.00% Net Smelter Returns royalties from the “Lessor” under the
Porterfield Lease shall not constitute Qualifying Expenses under the Agreement.
The Participants further agree that any such acquisition shall be initiated by
either Participant utilizing the procedures set forth in Sections 13.2, 13.3,
and 13.4 of the Agreement, except that TERRA may not initiate such acquisition
until it has made its Initial Contribution in full.
 
 
Page 1 of 4

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

 

TITLE EXCEPTIONS AND ENCUMBRANCES:

 
(i)
Raven Royalty. Upon execution of a Memorandum Joint Venture Agreement in the
form of Exhibit H by which Raven shall convey and assign the Properties to
itself to hold in accordance with Section 3.4 of the Agreement and otherwise for
the purposes of the Terra Gold Project Joint Venture, Raven also shall except
and reserve unto itself—free and clear of the Agreement and of the Terra Gold
Project Joint Venture—the Raven Royalty, to have and to hold forever. As agreed
by the Parties, the Raven Royalty is not and shall never become part of the
Properties.

 
(ii)
Paramount title of the State of Alaska. Each of the state mining locations
described in any Schedule attached hereto is subject to the following:

 
(A)
the paramount title of the State of Alaska in, to, and respecting all of the
lands and waters included in said mining location, including but not limited to

 
(1)
all rights, titles, interests, and estates of the state in, to, or respecting
oil, gas, coal, and other minerals or mineral materials in and under said lands
that are not locatable minerals under state law,

 
(2)
the right of the state under AS 38.05.205 to require that the lands within any
leasehold location be included in an upland mining lease before commercial
mining operations may be conducted thereon,

 
(3)
the right of the state under AS 38.05.255 to conduct, or to authorize the
conduct of, reasonable concurrent uses on, in, under, across, or through the
lands included in said mining location,

 
(4)
the right of the state as underlying landowner to require that millsite leases
or rights-of-way be acquired for uses typically authorized thereby under
AS 38.05.255, AS 38.05.850, or other applicable authority,

 
(5)
all rights of the state to regulate acquisition and use of water rights under
AS 46.15, and

 
Page 2 of 4

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

 

 
(6)
all rights of the state as underlying landowner to require prior approval of all
activities on state lands relating to development, mining, extraction,
processing, recovery, and removal of minerals and to the reclamation,
rehabilitation, restoration, and remediation of the lands affected thereby.

 
(B)
the rights of the State of Alaska as underlying landowner to receive rentals
under AS 38.05.211 and royalties under AS 38.05.212.

 
(iii)
Porterfield Lease—Generally. The rights, titles, and interests of the “Lessee”
under the Porterfield Lease are subject to the rights, titles, and interests
retained by the “Lessor” thereunder in, to, and respecting each of the state
mining locations described in Schedule 2 attached hereto (including but not
limited to the minimum royalties and production royalties required to be paid
under and pursuant to Sections V.B, V.C, and V.D of the Porterfield Lease, the
right of said Lessor to conduct simultaneous operations under Section II.I of
the Porterfield Lease, and the right of said Lessor to consent in advance to
certain transfers under Section XII.D of the Porterfield Lease), and to the
obligations and liabilities of the “Lessee” accrued or accruing under the
Porterfield Lease.

 
(iv)
Porterfield Lease—Area of Interest. Those of the state mining locations
described in Schedule 1 attached hereto that fall within the “Area of Interest”
described in Section II.G of the Porterfield Lease have become part of the
“Subject Property” under the Porterfield Lease and thus are subject to the
rights, titles, and interests of the “Lessor” thereunder as if each of said
state mining locations had been described in Schedule 2 attached hereto, and to
the obligations and liabilities of the “Lessee” accrued or accruing under the
Porterfield Lease. The map and legal description of the Area of Interest under
the Porterfield Lease to which Ben Porterfield agrees prior to October 14, 2010,
shall be attached to this Exhibit A prior to October 14, 2010.

 
(v)
Porterfield Lease—Area of Interest—Future Acquisitions. Any and all additional
state mining locations or other interests in real property hereafter acquired by
any Party to this Agreement within the “Area of Interest” described in
Section II.G of the Porterfield Lease shall become part of the “Subject
Property” under the Porterfield Lease and thus shall become subject to (A) the
rights, titles, and interests of the “Lessor” thereunder as if each such state
mining location or other interest had been described in Schedule 2 attached
hereto, and (B) the obligations and liabilities of the “Lessee” accrued or
accruing under the Porterfield Lease.

 
Page 3 of 4

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

 

 
(vi)
Taxing and Regulatory Authorities. The power of the United States, the State of
Alaska, and relevant local governments, as governments, to impose and collect
taxes of various types (including but not limited to the tax currently imposed
under AS 43.65 (tax on net income derived from mining)) and, in the exercise the
police power, to authorize, permit, regulate, restrict, condition, and prohibit
certain activities and operations on the lands within the Properties.

1.2           PERSONAL PROPERTY

All of the personal property described in Schedule 3 attached hereto.

All Existing Data.

1.3           AREA OF INTEREST

All lands within the exterior boundary of the Properties contributed by Raven as
its Initial Contribution, as listed in Schedules 1 and 2 attached hereto,
together with each quarter-quarter section of land any portion of which is
within three (3) miles of any lands included within or covered by any of the
Properties contributed by Raven as its Initial Contribution, as listed in
Schedules 1 and 2 attached hereto.

The map and legal description of the Area of Interest established under this
Agreement shall be prepared by RAVEN and attached to this Exhibit A prior to
October 14, 2010.

 
Page 4 of 4

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

 

SCHEDULE 1
To
EXHIBIT A
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location
TX 01
9-Aug-2004
 
645778
S20N025W 36
TX 02
9-Aug-2004
 
645779
S19N025W 01
TX 03
9-Aug-2004
 
645780
S19N025W 01
TX 04
9-Aug-2004
 
645781
S19N025W 12
TX 05
9-Aug-2004
 
645782
S19N025W 12
TX 06
9-Aug-2004
 
645783
S20N024W 30
TX 07
9-Aug-2004
 
645784
S19N024W 06
TX 08
9-Aug-2004
 
645785
S19N024W 07
TX 09
9-Aug-2004
 
645786
S19N024W 07
TX 10
9-Aug-2004
 
645787
S19N024W 18
TX 11
9-Aug-2004
 
645788
S20N024W 30
TX 12
9-Aug-2004
 
645789
S20N024W 31
TX 13
9-Aug-2004
 
645790
S20N024W 31
TX 14
9-Aug-2004
 
645791
S19N024W 06
TX 15
9-Aug-2004
 
645792
S19N024W 06
TX 16
9-Aug-2004
 
645793
S19N024W 07
TX 17
9-Aug-2004
 
645794
S19N024W 07
TX 18
9-Aug-2004
 
645795
S19N024W 18
TX 19
9-Aug-2004
 
645796
S20N024W 32
TX 20
9-Aug-2004
 
645797
S19N024W 05
TX 21
9-Aug-2004
 
645798
S19N024W 05
TX 22
9-Aug-2004
 
645799
S19N024W 08
TX 23
9-Aug-2004
 
645800
S19N024W 05
TX 24
9-Aug-2004
 
645801
S19N024W 05
TX 25
9-Aug-2004
 
645802
S19N024W 08
TX 26
9-Aug-2004
 
645803
S19N024W 08
TX 27
9-Aug-2004
 
645804
S19N024W 17
TX 28
8-Mar-2005
 
648390
S20N024W 29
TX 29
5-Mar-2005
 
648391
S20N024W 30
TX 30
8-Mar-2005
 
648392
S20N025W 36
TX- 31
13-Apr-2005
 
649367
S20N025W 15
TX- 32
13-Apr-2005
 
649368
S20N025W 14
TX- 33
13-Apr-2005
 
649369
S20N025W 14
TX- 34
13-Apr-2005
 
649370
S20N025W 13

 
 
 
Page 1 of 6

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

 
 
 
 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location

TX- 35
13-Apr-2005
 
649371
S20N025W 13
TX- 36
13-Apr-2005
 
649372
S20N024W 18
TX- 37
13-Apr-2005
 
649373
S20N024W 18
TX- 38
13-Apr-2005
 
649374
S20N025W 15
TX- 39
13-Apr-2005
 
649375
S20N025W 14
TX- 40
13-Apr-2005
 
649376
S20N025W 14
TX- 41
13-Apr-2005
 
649377
S20N025W 13
TX- 42
13-Apr-2005
 
649378
S20N025W 13
TX- 43
13-Apr-2005
 
649379
S20N024W 18
TX- 44
13-Apr-2005
 
649380
S20N024W 18
TX- 45
13-Apr-2005
 
649381
S20N025W 22
TX- 46
13-Apr-2005
 
649382
S20N025W 23
TX- 47
13-Apr-2005
 
649383
S20N025W 23
TX- 48
13-Apr-2005
 
649384
S20N025W 24
TX- 49
13-Apr-2005
 
649385
S20N025W 24
TX- 50
13-Apr-2005
 
649386
S20N024W 19
TX- 51
13-Apr-2005
 
649387
S20N024W 19
TX- 52
13-Apr-2005
 
649388
S20N025W 22
TX- 53
13-Apr-2005
 
649389
S20N025W 23
TX- 54
13-Apr-2005
 
649390
S20N025W 23
TX- 55
13-Apr-2005
 
649391
S20N025W 24
TX- 56
13-Apr-2005
 
649392
S20N025W 24
TX- 57
13-Apr-2005
 
649393
S20N024W 19
TX- 58
13-Apr-2005
 
649394
S20N024W 19
TX- 59
13-Apr-2005
 
649395
S20N025W 27
TX- 60
13-Apr-2005
 
649396
S20N025W 26
TX- 61
13-Apr-2005
 
649397
S20N025W 26
TX- 62
13-Apr-2005
 
649398
S20N025W 25
TX- 63
13-Apr-2005
 
649399
S20N025W 25
TX- 64
13-Apr-2005
 
649400
S20N024W 30
TX- 65
13-Apr-2005
 
649401
S20N025W 27
TX- 66
13-Apr-2005
 
649402
S20N025W 26
TX- 67
13-Apr-2005
 
649403
S20N025W 26
TX- 68
13-Apr-2005
 
649404
S20N025W 25
TX- 69
13-Apr-2005
 
649405
S20N025W 25
TX- 70
13-Apr-2005
 
649406
S20N025W 35
TX- 71
13-Apr-2005
 
649407
S20N025W 35
TX- 72
13-Apr-2005
 
649408
S20N025W 36
TX- 73
13-Apr-2005
 
649409
S20N025W 35
TX- 74
13-Apr-2005
 
649410
S20N025W 35
TX- 75
13-Apr-2005
 
649411
S20N025W 36
TX- 76
13-Apr-2005
 
649412
S20N024W 29
TX- 77
13-Apr-2005
 
649413
S20N024W 29

 
 
 
Page 2 of 6

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

 
 
 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location

TX- 78
13-Apr-2005
 
649414
S20N024W 29
TX- 79
13-Apr-2005
 
649415
S20N024W 28
TX- 80
13-Apr-2005
 
649416
S20N024W 28
TX- 81
13-Apr-2005
 
649417
S20N024W 27
TX- 82
13-Apr-2005
 
649418
S20N024W 27
TX- 83
13-Apr-2005
 
649419
S20N024W 32
TX- 84
13-Apr-2005
 
649420
S20N024W 32
TX- 85
13-Apr-2005
 
649421
S20N024W 33
TX- 86
13-Apr-2005
 
649422
S20N024W 33
TX- 87
13-Apr-2005
 
649423
S20N024W 34
TX- 88
13-Apr-2005
 
649424
S20N024W 34
TX- 89
13-Apr-2005
 
649425
S20N024W 32
TX- 90
13-Apr-2005
 
649426
S20N024W 33
TX- 91
13-Apr-2005
 
649427
S20N024W 33
TX- 92
13-Apr-2005
 
649428
S20N024W 34
TX- 93
13-Apr-2005
 
649429
S20N024W 34
TX- 94
13-Apr-2005
 
649430
S19N024W 04
TX- 95
13-Apr-2005
 
649431
S19N024W 04
TX- 96
13-Apr-2005
 
649432
S19N024W 03
TX- 97
13-Apr-2005
 
649433
S19N024W 03
TX- 98
13-Apr-2005
 
649434
S19N024W 04
TX- 99
13-Apr-2005
 
649435
S19N024W 04
TX-100
13-Apr-2005
 
649436
S19N024W 03
TX-101
13-Apr-2005
 
649437
S19N024W 03
TX-102
13-Apr-2005
 
649438
S19N024W 09
TX-103
13-Apr-2005
 
649439
S19N024W 09
TX-104
13-Apr-2005
 
649440
S19N024W 10
TX-105
13-Apr-2005
 
649441
S19N024W 10
TX-106
13-Apr-2005
 
649442
S19N024W 09
TX-107
13-Apr-2005
 
649443
S19N024W 09
TX-108
13-Apr-2005
 
649444
S19N024W 10
TX-109
13-Apr-2005
 
649445
S19N024W 10
TX-110
13-Apr-2005
 
649446
S19N024W 16
TX-111
13-Apr-2005
 
649447
S19N024W 16
TX-112
13-Apr-2005
 
649448
S19N024W 15
TX-113
13-Apr-2005
 
649449
S19N024W 15
TX-114
13-Apr-2005
 
649450
S19N024W 18
TX-115
13-Apr-2005
 
649451
S19N024W 18
TX-116
13-Apr-2005
 
649452
S19N024W 17
TX-117
13-Apr-2005
 
649453
S19N024W 17
TX-118
13-Apr-2005
 
649454
S19N024W 16
TX-119
13-Apr-2005
 
649455
S19N024W 16
TX-120
13-Apr-2005
 
649456
S19N024W 15

 
 
 
Page 3 of 6

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

 
 
 
 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location

TX-121
13-Apr-2005
 
649457
S19N024W 15
TX-122
13-Apr-2005
 
649458
S19N024W 19
TX-123
13-Apr-2005
 
649459
S19N024W 19
TX-124
13-Apr-2005
 
649460
S19N024W 20
TX-125
13-Apr-2005
 
649461
S19N024W 20
TX-126
13-Apr-2005
 
649462
S19N024W 21
TX-127
13-Apr-2005
 
649463
S19N024W 21
TX-128
13-Apr-2005
 
649464
S19N024W 22
TX-129
13-Apr-2005
 
649465
S19N024W 22
TX-130
13-Apr-2005
 
649466
S19N024W 19
TX-131
13-Apr-2005
 
649467
S19N024W 19
TX-132
13-Apr-2005
 
649468
S19N024W 20
TX-133
13-Apr-2005
 
649469
S19N024W 20
TX-134
13-Apr-2005
 
649470
S19N024W 21
TX-135
13-Apr-2005
 
649471
S19N024W 21
TX-136
13-Apr-2005
 
649472
S19N024W 22
TX-137
13-Apr-2005
 
649473
S19N024W 22
TX-138
13-Apr-2005
 
649474
S19N024W 28
TX-139
13-Apr-2005
 
649475
S19N024W 28
TX-140
13-Apr-2005
 
649476
S19N024W 27
TX-141
13-Apr-2005
 
649477
S19N024W 27
TR-142
3-Oct-2005
 
651073
S19N024W 30
TR-143
3-Oct-2005
 
651074
S19N024W 30
TR-144
3-Oct-2005
 
651075
S19N024W 29
TR-145
3-Oct-2005
 
651076
S19N024W 29
TR-146
3-Oct-2005
 
651077
S19N024W 30
TR-147
3-Oct-2005
 
651078
S19N024W 30
TR-148
3-Oct-2005
 
651079
S19N024W 29
TR-149
3-Oct-2005
 
651080
S19N024W 29
TR-150
3-Oct-2005
 
651081
S20N024W 20
TR-151
3-Oct-2005
 
651082
S21N024W 20
TR-152
3-Oct-2005
 
651083
S22N024W 21
TR-153
3-Oct-2005
 
651084
S23N024W 21
TR-154
3-Oct-2005
 
651085
S20N024W 22
TR-155
3-Oct-2005
 
651086
S20N024W 22
TR-156
3-Oct-2005
 
651087
S20N024W 23
TR-157
3-Oct-2005
 
651088
S20N024W 20
TR-158
3-Oct-2005
 
651089
S20N024W 20
TR-159
3-Oct-2005
 
651090
S20N024W 21
TR-160
3-Oct-2005
 
651091
S20N024W 21
TR-161
3-Oct-2005
 
651092
S20N024W 22
TR-162
3-Oct-2005
 
651093
S20N024W 22
TR-163
3-Oct-2005
 
651094
S20N024W 23

 
 
 
Page 4 of 6

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

 
 
 
 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location

TR-164
3-Oct-2005
 
651095
S20N024W 28
TR-165
3-Oct-2005
 
651096
S20N024W 28
TR-166
3-Oct-2005
 
651097
S20N024W 27
TR-167
3-Oct-2005
 
651098
S20N024W 27
TR-168
3-Oct-2005
 
651099
S20N024W 26
TR-169
3-Oct-2005
 
651100
S20N024W 26
TR-170
3-Oct-2005
 
651101
S20N024W 35
TR-171
3-Oct-2005
 
651102
S20N024W 35
TR-172
3-Oct-2005
 
651103
S19N024W 02
TRW- 1
17-Oct-2006
 
655924
S19N025W 24
TRW- 2
17-Oct-2006
 
655925
S19N025W 24
TRW- 3
17-Oct-2006
 
655926
S19N025W 24
TRW- 4
17-Oct-2006
 
655927
S19N025W 24
TRW- 5
17-Oct-2006
 
655928
S19N025W 13
TRW- 6
17-Oct-2006
 
655929
S19N025W 13
TRW- 7
17-Oct-2006
 
655930
S19N025W 13
TRW- 8
17-Oct-2006
 
655931
S19N025W 13
TRW- 9
17-Oct-2006
 
655932
S19N025W 11
TRW-10
17-Oct-2006
 
655933
S19N025W 12
TRW-11
17-Oct-2006
 
655934
S19N025W 11
TRW-12
17-Oct-2006
 
655935
S19N025W 12
TRW-13
17-Oct-2006
 
655936
S19N025W 03
TRW-14
17-Oct-2006
 
655937
S19N025W 02
TRW-15
17-Oct-2006
 
655938
S19N025W 02
TRW-16
17-Oct-2006
 
655939
S19N025W 01
TRW-17
17-Oct-2006
 
655940
S19N025W 03
TRW-18
17-Oct-2006
 
655941
S19N025W 02
TRW-19
17-Oct-2006
 
655942
S19N025W 02
TRW-20
17-Oct-2006
 
655943
S19N025W 01
TRW-21
17-Oct-2006
 
655944
S20N025W 34
TRW-22
17-Oct-2006
 
655945
S20N025W 34
SP- 1
15-Nov-2007
 
661807
S21N24W 25NE
SP- 2
15-Nov-2007
 
661808
S21N23W 30NW
SP- 3
15-Nov-2007
 
661809
S21N23W 30NE
SP- 4
15-Nov-2007
 
661810
S21N24W 25SE
SP- 5
15-Nov-2007
 
661811
S21N23W 30SW
SP- 6
15-Nov-2007
 
661812
S21N23W 30SE
SP- 7
15-Nov-2007
 
661813
S21NN4W 36NE
SP- 8
15-Nov-2007
 
661814
S21N23W 31NW
SP- 9
15-Nov-2007
 
661815
S21N23W 31NE
SP-10
15-Nov-2007
 
661816
S21N24W 36SE
SP-11
15-Nov-2007
 
661817
S21N23W 31SW

 
 
 
Page 5 of 6

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

 
 
 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location

SP-12
15-Nov-2007
 
661818
S20N24W  2NW
SP-13
15-Nov-2007
 
661819
S20N24W  2NE
SP-14
15-Nov-2007
 
661820
S20N24W  3SE
SP-15
15-Nov-2007
 
661821
S20N24W  2SW
SP-16
15-Nov-2007
 
661822
S20N24W  2SE
SP-17
15-Nov-2007
 
661823
S20N24W 10NW
SP-18
15-Nov-2007
 
661824
S20N24W 10NE
SP-19
15-Nov-2007
 
661825
S20N24W 11NW
SP-20
15-Nov-2007
 
661826
S20N24W 11NE
SP-21
15-Nov-2007
 
661827
S20N24W  9SE
SP-22
15-Nov-2007
 
661828
S20N24W 10SW
SP-23
15-Nov-2007
 
661829
S20N24W 10SE
SP-24
15-Nov-2007
 
661830
S20N24W 11SW
SP-25
15-Nov-2007
 
661831
S20N24W 11SE
SP-26
15-Nov-2007
 
661832
S20N24W 12SW
SP-27
15-Nov-2007
 
661833
S20N24W 16NW
SP-28
15-Nov-2007
 
661834
S20N24W 16NE
SP-29
15-Nov-2007
 
661835
S20N24W 15NW
SP-30
15-Nov-2007
 
661836
S20N24W 15NE
SP-31
15-Nov-2007
 
661837
S20N24W 14NW
SP-32
15-Nov-2007
 
661838
S20N24W 14NE
SP-33
15-Nov-2007
 
661839
S20N24W 13NW
SP-34
15-Nov-2007
 
661840
S20N24W 13NE
SP-35
15-Nov-2007
 
661841
S20N23W 18NW
SP-36
15-Nov-2007
 
661842
S20N23W 18NE
SP-37
15-Nov-2007
 
661843
S20N24W 17SE
SP-38
15-Nov-2007
 
661844
S20N24W 16SW
SP-39
15-Nov-2007
 
661845
S20N24W 16SE
SP-40
15-Nov-2007
 
661846
S20N23W 18SW
SP-41
15-Nov-2007
 
661847
S20N23W 18SE

 
Page 6 of 6

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SCHEDULE 2
To
EXHIBIT A
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

 
Claim
Name
 
 
Date of
Posting
Mt. McKinley
Rec. Dist.
Doc. No.
 
DNR Serial
Number
 
MTRS
Location
Fish Creek 1
22-Mar-2005
2005-000012-0
648383
S20N024W 31
Fish Creek 2
22-Mar-2005
2005-000013-0
648384
S20N024W 31
Fish Creek 3
22-Mar-2005
2005-000014-0
648385
S19N024W 06
Fish Creek 4
22-Mar-2005
2005-000015-0
648386
S19N024W 17
Fish Creek 5
22-Mar-2005
2005-000016-0
648387
S19N024W 08

 
 

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SCHEDULE 3
To
EXHIBIT A
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT

Certain Personal Property

See the attached spreadsheets.

 
Page 1

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EXHIBIT B                                ACCOUNTING PROCEDURES
 
EXHIBIT B
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska, Inc.
And
Terra Gold Corporation

ACCOUNTING PROCEDURES
 
 
The financing and accounting procedures to be followed by the Manager and the
Participants under the Agreement are set forth below. All capitalized terms in
these Accounting Procedures shall have the definition attributed to them in the
Agreement, unless defined otherwise herein.

The purpose of these Accounting Procedures is to establish equitable methods for
determining charges and credits applicable to Operations. It is the intent of
the Participants that neither of them shall lose or profit by reason of the
designation of one of them to exercise the duties and responsibilities of the
Manager. The Participants shall meet and in good faith endeavor to agree upon
changes deemed necessary to correct any unfairness or inequity. In the event of
a conflict between the provisions of these Accounting Procedures and those of
the Agreement, the provisions of the Agreement shall control.

ARTICLE I
GENERAL PROVISIONS

1.1           General Accounting Records. The Manager shall maintain detailed
and comprehensive cost accounting records in accordance with these Accounting
Procedures and generally accepted accounting principles used by companies based
in the United States (“US GAAP”). For purposes of this Agreement, US GAAP shall
mean the written opinions, standards, interpretations, and bulletins developed
by the Financial Accounting Standards Board (“FASB”), the accounting profession
(“AICP”) and the Security and Exchange Commission (“SEC”). Cost accounting
records maintained for the Business shall include general ledgers, supporting
and subsidiary journals, invoices, checks and other customary documentation,
sufficient to provide a record of revenues and expenditures and periodic
statements of financial position and the results of Operations for managerial,
tax, regulatory or other financial, regulatory, or legal reporting purposes
related to the Business. Such records shall be retained for the duration of the
period allowed the Participants for audit or the period necessary to comply with
tax or other regulatory requirements. The records shall reflect all obligations,
advances and credits of the Participants.

 
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1.2           Cash Management Accounts. The Manager shall maintain one or more
separate cash management accounts for the payment of all expenses and the
deposit of all cash receipts for the Business.

1.3           Statements and Billings. The Manager shall prepare statements and
bill the Participants as provided in Article X of the Agreement. Payment of any
such billings by either Participant, including the Manager, shall not prejudice
such Participant's right to protest or question the correctness thereof for a
period not to exceed twenty-four (24) months following the calendar year during
which such billings were received by such Participant. All written exceptions to
and claims upon the Manager for incorrect charges, billings or statements shall
be made upon the Manager within such twenty-four (24) month period. The time
period permitted for adjustments hereunder shall not apply to adjustments
resulting from periodic inventories as provided in Paragraphs 5.1 and 5.2.

ARTICLE II
CHARGES TO BUSINESS ACCOUNT

Subject to the limitations hereinafter set forth, the Manager shall charge the
Business Account with the following:

2.1           Property Acquisition Costs, Rentals, Royalties and Other Payments.
All property acquisition and holding costs, including Governmental Fees, filing
fees, license fees, costs of permits and assessment work, delay rentals,
production royalties, including any required advances, and all other payments
made by the Manager which are necessary to acquire or maintain title to the
Assets.

2.2           Labor and Employee Benefits

(a)           Salaries and wages of the Manager's employees directly engaged in
Operations, including salaries or wages of employees who are temporarily
assigned to and directly employed by same.

(b)           The Manager's cost of holiday, vacation, sickness and disability
benefits, and other customary allowances applicable to the salaries and wages
chargeable under Subparagraph 2.2(a) and Paragraph 2.12. Such costs may be
charged on a "when and as paid basis" or by "percentage assessment" on the
amount of salaries and wages. If percentage assessment is used, the rate shall
be applied to wages or salaries excluding overtime and bonuses. Such rate shall
be based on the Manager's cost experience and it shall be periodically adjusted
at least annually to ensure that the total of such charges does not exceed the
actual cost thereof to the Manager.

(c)           The Manager's actual cost of established plans for employees'
group life insurance, hospitalization, pension, retirement, stock purchase,
thrift, bonus (except production or incentive bonus plans under a union contract
based on actual rates of production, cost savings and other production factors,
and similar non-union bonus plans customary in the industry or necessary to
attract competent employees, which bonus payments shall be considered salaries
and wages under Subparagraph 2.2(a) or Paragraph 2.12 rather than employees'
benefit plans) and other benefit plans of a like nature applicable to salaries
and wages chargeable under Subparagraphs 2.2(a) or Paragraph 2.12, provided that
the plans are limited to the extent feasible to those customary in the industry.

 
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(d)           Cost of assessments imposed by governmental authority that are
applicable to salaries and wages chargeable under Subparagraph 2.2(a) and
Paragraph 2.12, including all penalties except those resulting from the willful
misconduct or gross negligence of the Manager.

2.3           Materials, Equipment and Supplies. The cost of materials,
equipment and supplies (herein called "Material") purchased from unaffiliated
third parties or furnished by either Participant as provided in Paragraph 3.1.
The Manager shall purchase or furnish only so much Material as may be required
for immediate use in efficient and economical Operations. The Manager shall also
maintain inventory levels of Material at reasonable levels to avoid unnecessary
accumulation of surplus stock.

2.4           Equipment and Facilities Furnished by Manager. The cost of
machinery, equipment and facilities owned by the Manager and used in Operations
or used to provide support or utility services to Operations charged at rates
commensurate with the actual costs of ownership and operation of such machinery,
equipment and facilities. Such rates shall include costs of maintenance,
repairs, other operating expenses, insurance, taxes, depreciation and interest
at a rate not to exceed the Interest Rate plus three percent (3%) per annum.
Such rates shall not exceed the average commercial rates currently prevailing in
the vicinity of the Operations.

2.5           Transportation. Reasonable transportation costs incurred in
connection with the transportation of employees and material necessary for
Operations.

2.6           Contract Services and Utilities. The cost of contract services and
utilities procured from outside sources, other than services described in
Paragraphs 2.9 and 2.13. If contract services are performed by the Manager or an
Affiliate thereof, the cost charged to the Business Account shall not be greater
than that for which comparable services and utilities are available in the open
market within the vicinity of Operations. The cost of professional consultant
services procured from outside sources in excess of Twenty-Five Thousand Dollars
($25,000.00) per annum per contract shall not be charged to the Business Account
unless approved by the Management Committee.

2.7           Insurance Premiums. Net premiums paid for insurance required to be
carried for Operations for the protection of the Participants. When Operations
are conducted in an area where the Manager may self-insure for Worker's
Compensation and/or Employer's Liability under state law, the Manager may elect
to include such risks in its self-insurance program and shall charge its costs
of self-insuring such risks to the Business Account provided that such charges
shall not exceed published manual rates.

 
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2.8           Damages and Losses. All costs in excess of insurance proceeds
necessary to repair or replace damage or losses to any Assets resulting from any
cause other than the willful misconduct or gross negligence of the Manager. The
Manager shall furnish the Management Committee with written notice of damages or
losses as soon as practicable after a report thereof has been received by the
Manager.

2.9           Legal and Regulatory Expense. Except as otherwise provided in
Paragraph 2.13, all legal and regulatory costs and expenses incurred in or
resulting from Operations or necessary to protect or recover the Assets of the
Business, including costs of title investigation and title curative services.
All attorneys fees and other legal costs to handle, investigate and settle
litigation or claims, and amounts paid in settlement of such litigation or
claims in excess of Twenty-Five Thousand Dollars ($25,000.00) per annum shall
not be charged to the Business Account unless approved by the Management
Committee.

2.10           Audit. Cost of annual audits under Subsection 10.6(a).

2.11           Taxes. All taxes, assessments and like charges on Operations and
Assets which have been paid by the Manager for the benefit of the Participants.
Each Participant is separately responsible for taxes determined or measured by a
Participant=s sales revenue or net income.

2.12           District and Camp Expense (Field Supervision and Camp Expenses).
All costs relating to building, operating and maintaining field offices or “man
camps” not otherwise allocated to the Business under this Agreement including:
(i) the salaries and expenses of the Manager's supervising and field personnel
serving Operations whose time is not allocated directly to such Operations, and
(ii) the costs of maintaining and operating an office and any necessary
suboffice, and (iii) all necessary camps, including housing facilities for
personnel, used for Operations. The expense of those facilities, less any
revenue therefrom, shall include depreciation or a fair monthly rental in lieu
of depreciation of the investment. To the extent district and camp expenses
utilize the Manager’s employees and facilities, the total of such charges for
all Properties served by the Manager's employees and facilities shall be
apportioned to the Business Account on the basis of a ratio to be approved by
the Management Committee.

2.13           Administrative Charge.

(a)           Beginning on the Effective Date, each quarter the Manager shall
charge the Business Account a sum for each phase of Operations as provided below
(collectively the “Administrative Charge”), which shall be a liquidated amount
to reimburse the Manager for its home office overhead and general expenses to
conduct each phase of Operations, and which shall be in lieu of any other
management fee:

(i)           Exploration phase: eight percent (8%) of Allowable Costs.

 
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(ii)           Development phase: eight percent (8%) of Allowable Costs.

(iii)           Major Construction phase: eight percent for the first $25,000 of
Allowable Costs and thereafter three percent (3%) of Allowable Costs.

(iv)           Mining phase: eight percent (8%) of Allowable Costs.

(b)           The term "Allowable Costs" as used in this Paragraph for a
particular phase of Operations shall mean all charges to the Business Account
excluding: (i) the Administrative Charge referred to herein; (ii) depreciation,
depletion or amortization of tangible or intangible Assets; (iii) amounts
charged in accordance with Paragraphs 2.1 and 2.9; and (iv) marketing costs. The
Manager shall attribute such Allowable Costs to a particular phase of Operations
by applying the following guidelines:

(A)           The Exploration phase shall cover those Operations conducted to
ascertain the existence, location, quality, extent or quantity of any deposit of
ore or mineral.  The Exploration phase may include bulk sampling and other
mineral extraction activities conducted prior to completion of a Feasibility
Study.

(B)           The Development phase shall cover those Operations, including
Pre-Feasibility and Feasibility Study Operations, conducted to assess a
commercially feasible ore body or to extend production of an existing ore body,
and to construct or install related fixed Assets.

(C)           The Major Construction phase shall include all capital
expenditures as well as Operations involved in the construction of a mill,
smelter or other ore processing facilities.

(D)           The Mining phase shall include all other Operations activities not
otherwise covered above, including activities conducted after Mining Operations
have ceased.

(c)           Various phases of Operations may be conducted concurrently, in
which event the Administrative Charge shall be calculated separately for
Allowable Costs attributable to each phase.

(d)           The quarterly Administrative Charge determined for each phase of
Operations shall be a liquidated amount to reimburse Manager for its home office
overhead and general and administrative expenses for its conduct of Operations,
and shall be equitably apportioned among all of the Properties served during
such quarterly period on the basis of a ratio approved by the Management
Committee.

 
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(e)           The following is a representative list of items that constitute
the Manager's principal business office expenses that are expressly covered by
the Administrative Charge provided in this Paragraph, except to the extent that
such items are directly chargeable to the Business Account under other
provisions of this Article II:

(i)           Administrative supervision, which includes all services rendered
by managers, department supervisors, officers and directors of the Manager for
Operations.

(ii)           Accounting, data processing, personnel administration, billing
and record keeping in accordance with governmental regulations and the
provisions of the Agreement, and preparation of reports;

(iii)           The services of tax counsel and tax administration employees for
all tax matters, including any protests, except any outside professional fees
which the Management Committee may approve as a direct charge to the Business
Account;

(iv)           Routine legal services rendered by outside sources and the
Manager's legal staff not otherwise charged to the Business Account under
Paragraph 2.9, including property acquisition, attorney management and
oversight, and support services provided by Manager's legal staff concerning any
litigation; and

(v)           Rentals and other charges for office and records storage space,
telephone service, office equipment and supplies.

(f)           The Management Committee shall annually review the Administrative
Charge and shall amend the methodology or rates used to determine such charge if
they are found to be insufficient or excessive based on the principles that the
Manager shall not make a profit or suffer a loss and that the Administrative
Charge should fairly and adequately compensate the Manager for its costs and
expenses.

2.14           Environmental Compliance Fund. Costs of reasonably anticipated
Environmental Compliance which, on a Program basis, shall be determined by the
Management Committee and shall be based on proportionate contributions in an
amount sufficient to establish a fund, which through successive proportionate
contributions during the life of the Business, will pay for ongoing
Environmental Compliance conducted during Operations and which will aggregate
the reasonably anticipated costs of mine closure, post-Operations Environmental
Compliance and Continuing Obligations. The Manager shall invest such amounts on
behalf of the Participants as provided in Subsection 8.2(r).

2.15           Other Expenditures. Any reasonable direct expenditure, other than
expenditures which are covered by the foregoing provisions, incurred by the
Manager for the necessary and proper conduct of Operations.

 
Page 6 of 9

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ARTICLE III
BASIS OF CHARGES TO BUSINESS ACCOUNT

3.1           Purchases. Material purchased and services procured from third
parties shall be charged to the Business Account by the Manager at invoiced
cost, including applicable transfer taxes, less all discounts taken. If any
Material is determined to be defective or is returned to a vendor for any other
reason, the Manager shall credit the Business Account when an adjustment is
received from the vendor.

3.2           Material Furnished by a Participant for Use in the Business. Any
Material furnished by either Participant for use in the Business or distributed
to either Participant by the Manager shall be priced on the following basis:

i)           New Material: New Material furnished by either Participant shall be
priced F.O.B. the nearest reputable supply store or railway receiving point,
where like Material is available, at the current replacement cost of the same
kind of Material, exclusive of any available cash discounts, at the time it is
furnished (herein called "New Price").

ii)           Used Material.

(1)           Used Material in sound and serviceable condition and suitable for
reuse without reconditioning shall be priced as follows:

(A)           Used Material furnished by either Participant shall be priced at
seventy-five percent (75%) of the New Price;

(B)           Used Material distributed to either Participant shall be priced
(i) at seventy-five percent (75%) of the New Price if such Material was
originally charged to the Business Account as new Material, or (ii) at
sixty-five percent (65%) of the New Price if such Material was originally
charged to the Business Account as good used Material at seventy-five percent
(75%) of the New Price.

(2)           Other used Material that, after reconditioning, will be further
serviceable for original function as good secondhand Material, or that is
serviceable for original function but not substantially suitable for
reconditioning, shall be priced at fifty percent (50%) of New Price. The cost of
any reconditioning shall be borne by the transferee.

(3)           Bad-Order Material which is no longer usable for its original
purpose without excessive repair cost but further usable for some other purpose
shall be priced on a basis comparable with items normally used for that purpose.

 
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(4)           All other Material, including junk, shall be priced at a value
commensurate with its use or at prevailing prices.

iii)           Obsolete Material. Any Material that is serviceable and usable
for its original function, but its condition is not equivalent to that which
would justify a price as provided above, shall be priced by the Management
Committee. Such price shall be set at a level that will result in a charge to
the Business Account equal to the value of the service to be rendered by such
Material.

3.3           Premium Prices. Whenever Material is not readily obtainable at
published or listed prices because of national emergencies, strikes or other
unusual circumstances over which the Manager has no control, the Manager may
charge the Business Account for the required Material on the basis of the
Manager's direct cost and expenses incurred in procuring such Material and
making it suitable for use. The Manager shall give written notice of the
proposed charge to the Participants prior to the time when such charge is to be
billed, whereupon either Participant shall have the right, by notifying the
Manager within ten (10) days of the delivery of the notice from the Manager, to
furnish at the usual receiving point all or part of its share of Material
suitable for use and acceptable to the Manager.

3.4           Warranty of Material Furnished by the Manager or Participants.
Neither Participant warrants any Material furnished beyond any dealer's or
manufacturer's warranty and no credits shall be made to the Business Account for
defective Material until adjustments are received by the Manager from the
dealer, manufacturer or their respective agents.

ARTICLE IV
DISPOSAL OF MATERIAL

4.1           Disposition Generally. The Manager shall have no obligation to
purchase either Participant's interest in Material. The Management Committee
shall determine the disposition of major items of surplus Material, provided the
Manager shall have the right to dispose of normal accumulations of junk and
scrap Material either by sale or by transfer to the Participants as provided in
Paragraph 4.2.

4.2           Distribution to Participants. Any Material to be distributed to
the Participants shall be made in proportion to their respective Participating
Interests, and corresponding credits shall be made to the Business Account on
the basis provided in Paragraph 3.2.

4.3           Sales. Sales of Material to third parties shall be credited to the
Business Account at the net amount received. Any damages or claims by the
Purchaser shall be charged back to the Business Account if and when paid.

 
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ARTICLE V
INVENTORIES

5.1           Periodic Inventories, Notice and Representations. At reasonable
intervals, inventories shall be taken by the Manager, which shall include all
such Material as is ordinarily considered controllable by operators of mining
properties, and the expense of conducting such periodic inventories shall be
charged to the Business Account. The Manager shall give written notice to the
Participants of its intent to take any inventory at least thirty (30) days
before such inventory is scheduled to take place. A Participant shall be deemed
to have accepted the results of any inventory taken by the Manager if the
Participant fails to be represented at such inventory.

5.2           Reconciliation and Adjustment of Inventories. Reconciliation of
inventory with charges to the Business Account shall be made, and a list of
overages and shortages shall be furnished to the Management Committee within six
(6) months after the inventory is taken. Inventory adjustments shall be made by
the Manager to the Business Account for overages and shortages, but the Manager
shall be held accountable to the Business only for shortages due to lack of
reasonable diligence.
 
 
 
 

 
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EXHIBIT C                                TAX MATTERS
EXHIBIT C
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between
Raven Gold Alaska Inc.
And
Terra Gold Corporation

TAX MATTERS

ARTICLE I
EFFECT OF THIS EXHIBIT

This Exhibit shall govern the relationship of the Participants with respect to
tax matters and the other matters addressed herein. Except as otherwise
indicated, capitalized terms used in this Exhibit shall have the meanings given
to them in the Agreement. In the event of a conflict between this Exhibit and
the other provisions of the Agreement, the terms of this Exhibit shall control.

ARTICLE II
TAX MATTERS PARTNER

2.1           Designation of Tax Matters Partner. The Manager is hereby
designated the tax matters partner (hereinafter "TMP") as defined in Section
6231(a)(7) of the Internal Revenue Code of 1986 ("the Code") and shall be
responsible for, make elections for, and prepare and file any federal and state
tax returns or other required tax forms following approval of the Management
Committee. In the event of any change in Manager, the Participant serving as
Manager at the end of a taxable year shall continue as TMP with respect to all
matters concerning such year unless the TMP for that year is required to be
changed pursuant to applicable Treasury Regulations. The TMP and the other
Participant shall use reasonable best efforts to comply with the
responsibilities outlined in this Article II and in Sections 6221 through 6233
of the Code (including any Treasury regulations promulgated thereunder) and in
doing so shall incur no liability to any other party.

2.2           Notice. Each Participant shall furnish the TMP with such
information (including information specified in Section 6230(e) of the Code) as
it may reasonably request to permit it to provide the Internal Revenue Service
with sufficient information to allow proper notice to the Participants in
accordance with Section 6223 of the Code. The TMP shall keep each Participant
informed of all administrative and judicial proceedings for the adjustment at
the partnership level of partnership items in accordance with Section 6223(g) of
the Code.

 
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2.3           Inconsistent Treatment of Partnership Item. If an administrative
proceeding contemplated under Section 6223 of the Code has begun, and the TMP so
requests, each Participant shall notify the TMP of its treatment of any
partnership item on its federal income tax return that is inconsistent with the
treatment of that item on the partnership return.

2.4           Extensions of Limitation Periods. The TMP shall not enter into any
extension of the period of limitations as provided under Section 6229 of the
Code without first giving reasonable advance notice to the other Participant of
such intended action.

2.5           Requests for Administrative Adjustments. Neither Participant shall
file, pursuant to Section 6227 of the Code, a request for an administrative
adjustment of partnership items for any partnership taxable year without first
notifying the other Participant. If the other Participant agrees with the
requested adjustment, the TMP shall file the request for administrative
adjustment on behalf of the partnership. If consent is not obtained within
thirty (30) days after notice from the proposing Participant, or within the
period required to timely file the request for administrative adjustment, if
shorter, either Participant, including the TMP, may file that request for
administrative adjustment on its own behalf.

2.6           Judicial Proceedings. Either Participant intending to file a
petition under Section 6226, 6228 or other sections of the Code with respect to
any partnership item, or other tax matters involving the tax partnership, shall
notify the other Participant of such intention and the nature of the
contemplated proceeding. If the TMP is the Participant intending to file such
petition, such notice shall be given within a reasonable time to allow the other
Participant to participate in the choosing of the forum in which such petition
will be filed. If both Participants do not agree on the appropriate forum, then
the appropriate forum shall be decided in accordance with Section 7.2. If a
deadlock results, the TMP shall choose the forum. If either Participant intends
to seek review of any court decision rendered as a result of a proceeding
instituted under the preceding part of this Paragraph, such Participant shall
notify the other Participant of such intended action.

2.7           Settlements. The TMP shall not bind the other Participant to a
settlement agreement without first obtaining the written consent of any such
Participant. Either Participant who enters into a settlement agreement for its
own account with respect to any partnership items, as defined by Section
6231(a)(3) of the Code, shall notify the other Participant of such settlement
agreement and its terms within ninety (90) days from the date of settlement.

2.8           Fees and Expenses. The TMP shall not engage legal counsel,
certified public accountants, or others without the prior consent of the
Management Committee. Either Participant may engage legal counsel, certified
public accountants, or others in its own behalf and at its sole cost and
expense. Any reasonable item of expense, including but not limited to fees and
expenses for legal counsel, certified public accountants, and others which the
TMP incurs (after proper consent by the Management Committee as provided above)
in connection with any audit, assessment, litigation, or other proceeding
regarding any partnership item, shall constitute proper charges to the Business
Account and shall be borne by the Participants as any other item which
constitutes a direct charge to the Business Account pursuant to the Agreement.

 
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2.9           Survival. The provisions of the foregoing paragraphs, including
but not limited to the obligation to pay fees and expenses contained in
Paragraph 2.8, shall survive the termination of the tax partnership or the
termination of either Participant's interest in the tax partnership and shall
remain binding on the Participants for a period of time necessary to resolve
with the Internal Revenue Service or the Department of the Treasury any and all
matters regarding the federal income taxation of the tax partnership for the
applicable tax year(s).

ARTICLE III
TAX ELECTIONS AND ALLOCATIONS

3.1           Tax Partnership Election. It is understood and agreed that the
Participants intend to create a partnership for United States federal and state
income tax purposes, and, unless otherwise agreed to hereafter by both
Participants, neither Participant shall make an election to be, or have the
arrangement evidenced hereby, excluded from the application of any provisions of
Subchapter K of the Code, or any equivalent state income tax provision. It is
understood and agreed that the Participants intend to create a partnership for
federal and state income tax purposes only (a "tax partnership"). The Manager
shall file with the appropriate office of the Internal Revenue Service a
partnership income tax return covering the Operations. The Participants
recognize that this Agreement may be subject to state income tax statutes. The
Manager shall file with the appropriate offices of the state agencies any
required partnership state income tax returns. Each Participant agrees to
furnish to the Manager any information it may have relating to Operations as
shall be required for proper preparation of such returns. The Manager shall
furnish to the other Participant for its review a copy of each proposed income
tax return at least two weeks prior to the date the return is filed.

3.2           Tax Elections. The tax partnership shall make the following
elections for purposes of all partnership income tax returns:

i)           To use the accrual method of accounting.

ii)           Pursuant to the provisions at Section 706(b)(1) of the Code, to
use as its taxable year the year ended December 31st. In this connection, RAVEN
represents that its taxable year is the year ending December 31st and TERRA
represents that its taxable year is the year ending December 31st.

iii)           To deduct currently all development expenses to the extent
possible under Section 616 of the Code.

iv)           Unless the Participants unanimously agree otherwise, to compute
the allowance for depreciation in respect of all depreciable Assets using the
maximum accelerated tax depreciation method and the shortest life permissible
or, at the election of the Manager, using the units of production method of
depreciation.

 
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v)           To treat advance royalties as deductions from gross income for the
year paid or accrued to the extent permitted by law.

vi)           To adjust the basis of tax partnership property under Section 754
of the Code at the request of either Participant;

vii)           To amortize over the shortest permissible period all
organizational expenditures and business start-up expenses under Sections 195
and 709 of the Code;

Any other election required or permitted to be made by the tax partnership under
the Code or any state tax law shall be made as determined by the Management
Committee.

Each Participant shall elect under Section 617(a) of the Code to deduct
currently all exploration expenses. Each Participant reserves the right to
capitalize its share of development and/or exploration expenses of the tax
partnership in accordance with Section 59(e) of the Code, provided that a
Participant's election to capitalize all or any portion of such expenses shall
not affect the Participant's Capital Account.

3.3           Allocations to Participants. Allocations for Capital Account
purposes shall be in accordance with the following:

(a)           The Participants recognize the provision for taking production in
kind, as provided elsewhere in the Agreement, as each Participant's right to
determine a market for the sale of a proportionate share of production subject
to Subparagraph 3.3(h) below. All items of income, gain, deduction, loss, credit
or tax attribute arising from the sale and marketing of such production shall be
allocated to the Participant who designated such market.

(b)           Exploration expenses and development cost deductions shall be
allocated among the Participants in accordance with their respective
contributions to such expenses and costs.

(c)           Depreciation and amortization deductions with respect to a
depreciable Asset shall be allocated among the Participants in accordance with
their respective contributions to the adjusted basis of the Asset which gives
rise to the depreciation, amortization or loss deduction.

(d)           Production and operating cost deductions shall be allocated among
the Participants in accordance with their respective contributions to such
costs.

 
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(e)           Deductions for depletion (to the extent of the amount of such
deductions that would have been determined for Capital Account purposes if only
cost depletion were allowable for federal income tax purposes) shall be
allocated to the Participants in accordance with their respective contributions
to the adjusted basis of the depletable property. Any remaining depletion
deductions shall be allocated to the Participants so that, to the extent
possible, the Participants receive the same total amounts of percentage
depletion as they would have received if percentage depletion were allocated to
the Participants in proportion to their respective shares of the gross income
used as the basis for calculating the federal income tax deduction for
percentage depletion.

(f)           Subject to Subparagraph 3.3(h) below, gross income on the sale of
production shall be allocated in accordance with the Participants' rights to
share in the proceeds of such sale.

(g)           Except as provided in Subparagraph 3.3(h) below, gain or loss on
the sale of a depreciable or depletable asset shall be allocated so that, to the
extent possible, the net amount reflected in the Participants' Capital Account
with respect to such property (taking into account the cost of such property,
depreciation, amortization, depletion or other cost recovery deductions and gain
or loss) most closely reflects the Participants' Participating Interests.

viii)           Gains and losses on the sale of all or substantially all the
Assets of the tax partnership shall be allocated so that, to the extent
possible, the Participants' resulting Capital Account balances are in the same
ratio as their Participating Interests at the time of such sale.

ix)           {Intentionally omitted}.

x)           All deductions and losses that are not otherwise allocated in this
Paragraph shall be allocated among the Participants in accordance with their
respective contributions to the costs producing each such deduction or to the
adjusted basis of the Asset producing each such loss.

xi)           Any recapture of exploration expenses under Section 617(b)(1)(A)
of the Code, and any disallowance of depletion under Section 617(b)(1)(B) of the
Code, shall be borne by the Participants in the same manner as the related
exploration expenses were allocated to, or claimed by, them.

xii)           All other items of income and gain shall be allocated to the
Participants in accordance with their Participating Interests.

xiii)           If a reduced Participating Interest is restored pursuant to
Section 9.6, the Manager shall endeavor to allocate items of income, gain, loss,
and deduction (in the same year as the restoration of such Participating
Interest or, if necessary, in subsequent years) so as to cause the Capital
Account balances of the Participants to be the same as they would have been if
the restored Participating Interest had never been reduced.

 
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xiv)           If the Participants’ Participating Interests change during any
taxable year of the tax partnership, the distributive share of items of income,
gain, loss and deduction of each Participant shall be determined in any manner
(1) permitted by Section 706 of the Code, and (2) agreed on by both
Participants. If the Participants cannot agree on a method, the method shall be
determined by the Manager in consultation with the tax partnership's tax
advisers, with preference given to the interim closing-of-the-books method
except where application of that method would result in undue administrative
expense in relationship to the amount of the items to be allocated.

xv)           "Nonrecourse deductions," as defined by Treas. Reg.
Section 1.704-2(b)(1) shall be allocated between the Participants in proportion
to their Participating Interests.

3.4           Regulatory Allocations. Notwithstanding the provisions of
Paragraph 3.3 to the contrary, the following special allocations shall be given
effect for purposes of maintaining the Participants' Capital Accounts.

(a)           If either Participant unexpectedly receives any adjustments,
allocations, or distributions described in Treas. Reg.
Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or
Section 1.704-1(b)(2)(ii)(d)(6), which result in a deficit Capital Account
balance, items of income and gain shall be specially allocated to each such
Participant in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Capital Account deficit of such
Participant as quickly as possible. For the purposes of this Paragraph, each
Participant's Capital Account balances shall be increased by the sum of (i) the
amount such Participant is obligated to restore pursuant to any provision of the
Agreement, and (ii) the amount such Participant is deemed to be obligated to
restore pursuant to the penultimate sentences of Treas. Reg. Section
1.704-2(g)(1) and 1.704-2(i)(5).

(b)           The "minimum gain chargeback" and "partner minimum gain
chargeback" provisions of Treas. Reg. Section 1.704-2(f) and 1.704-2(i)(4),
respectively, are incorporated herein by reference and shall be given effect. In
accordance with Treas. Reg. Section 1.704-2(i)(1), deductions attributable to a
"partner nonrecourse liability" shall be allocated to the Participant that bears
the economic risk of loss for such liability.

(c)           If the allocation of deductions to either Participant would cause
such Participant to have a deficit Capital Account balance at the end of any
taxable year of the tax partnership (after all other allocations provided for in
this Article III have been made and after giving effect to the adjustments
described in Subparagraph 3.4(a)), such deductions shall instead be allocated to
the other Participant.

 
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3.5           Curative Allocations. The allocations set forth in Paragraph 3.4
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations. It is the intent of the Participants that, to the
extent possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of income,
gain, loss or deduction pursuant to this Paragraph. Therefore, notwithstanding
any other provisions of this Article III (other than the Regulatory
Allocations), the Manager shall make such offsetting special allocations of
income, gain, loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Participant's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Participant would have had if the Regulatory Allocations were not part of
this Agreement and all items were allocated pursuant to Paragraph 3.3 without
regard to Paragraph 3.4.

3.6           Tax Allocations. Except as otherwise provided in this Paragraph,
items of taxable income, deduction, gain and loss shall be allocated in the same
manner as the corresponding item is allocated for book purposes under Paragraphs
3.3, 3.4 and 3.5 of the corresponding item determined for Capital Account
purposes.

(a)           Recapture of tax deductions arising out of a disposition of
property shall, to the extent consistent with the allocations for tax purposes
of the gain or amount realized giving rise to such recapture, be allocated to
the Participants in the same proportions as the recaptured deductions were
originally allocated or claimed.

(b)           To the extent required by Section 704(c) of the Code, income,
gain, loss, and deduction with respect to property contributed to the tax
partnership by a Participant shall be shared among both Participants so as to
take account of the variation between the basis of the property to the tax
partnership and its fair market value at the time of contribution. The
Participants intend that Section 704(c) shall effect no allocations of tax items
that are different from the allocations under Paragraphs 3.3, 3.4 and 3.5 of the
corresponding items for Capital Account purposes. However, to the extent that
allocations of tax items are required pursuant to Section 704(c) of the Code to
be made other than in accordance with the allocations under Paragraphs 3.3, 3.4
and 3.5 of the corresponding items for Capital Account purposes, Section 704(c)
shall be applied in accordance with the "traditional method without curative
allocations" under Treas. Reg. Section 1.704-3(b).

(c)           Depletion deductions with respect to contributed property shall be
determined without regard to any portion of the property's basis that is
attributable to precontribution expenditures by RAVEN that were capitalized
under Code Sections 616(b), 59(e) and 291(b). Deductions attributable to
precontribution expenditures by RAVEN shall be calculated under such Code
Sections as if RAVEN continued to own the depletable property to which such
deductions are attributable, and such deductions shall be reported by the tax
partnership and shall be allocated solely to RAVEN.

 
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(d)           The Participants understand the allocations of tax items set forth
in this Paragraph, and agree to report consistently with such allocations for
federal and state tax purposes.

ARTICLE IV
CAPITAL ACCOUNTS; LIQUIDATION

4.1           Capital Accounts.

xvi)           A separate Capital Account shall be established and maintained by
the TMP for each Participant. Such Capital Account shall be increased by (i) the
amount of money contributed by the Participant to the tax partnership, (ii) the
fair market value of property contributed by the Participant to the tax
partnership (net of liabilities secured by such contributed property that the
partnership is considered to assume or take subject to under Code Section 752)
and (iii) allocations to the Participant under Paragraphs 3.3, 3.4 and 3.5 of
tax partnership income and gain (or items thereof), including income and gain
exempt from tax; and shall be decreased by (iv) the amount of money distributed
to the Participant by the tax partnership, (v) the fair market value of property
distributed to the Participant by the tax partnership (net of liabilities
secured by such distributed property and that the Participant is considered to
assume or take subject to under Code Section 752), (vi) allocations to the
Participant under Paragraphs 3.3, 3.4 and 3.5 of expenditures of the tax
partnership not deductible in computing its taxable income and not properly
chargeable to a Capital Account, and (vii) allocations of tax partnership loss
and deduction (or items thereof), excluding items described in (vi) above and
percentage depletion to the extent it exceeds the adjusted tax basis of the
depletable property to which it is attributable. The Participants agree that the
net fair market value of the property contributed by RAVEN to the tax
partnership is set out in Section 5.1(a) of the Agreement.

xvii)           In the event that the Capital Accounts of the Participants are
computed with reference to the book value of any Asset which differs from the
adjusted tax basis of such Asset, then the Capital Accounts shall be adjusted
for depreciation, depletion, amortization and gain or loss as computed for book
purposes with respect to such Asset in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(g).

xviii)           In the event any interest in the tax partnership is transferred
in accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
transferred interest, except as provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(1).

xix)           In the event property, other than money, is distributed to a
Participant, the Capital Accounts of the Participants shall be adjusted to
reflect the manner in which the unrealized income, gain, loss and deduction
inherent in such property (that has not been reflected in the Capital Accounts
previously) would be allocated among the Participants if there was a taxable
disposition of such property for the fair market value of such property (taking
Section 7701(g) of the Code into account) on the date of distribution. For this
purpose the fair market value of the property shall be determined as set forth
in Paragraph 4.2(a) below.

 
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xx)           In the event the Management Committee designates a Supplemental
Business Agreement area within the Area of Interest as described in Article XV
of the Agreement, the Management Committee shall appropriately segregate Capital
Accounts to reflect that designation and shall make such other modifications to
the Agreement as are appropriate to reflect the manner of administering Capital
Accounts in accordance with the terms of this Exhibit C.

xxi)           RAVEN is contributing to the Agreement certain depletable
properties with respect to which RAVEN currently has an adjusted tax basis which
may consist in part of depletable expenditures and in part of expenditures
capitalized under Code Sections 616(b), 291(b) and/or 59(e). For purposes of
maintaining the Capital Accounts, the tax partnership's deductions with respect
to contributed property in each year for (i) depletion, (ii) deferred
development expenditures under Section 616(b) attributable to pre-contribution
expenditures, (iii) amortization under Section 291(b) attributable to
pre-contribution expenditures, and (iv) amortization under Section 59(e)
attributable to pre-contribution expenditures shall be the amount of the
corresponding item determined for tax purposes pursuant to Subparagraph 3.6(c)
multiplied by the ratio of (A) the book value at which the contributed property
is recorded in the Capital Accounts to (B) the adjusted tax basis of the
contributed property (including basis resulting from capitalization of
pre-contribution development expenditures under Sections 616(b), 291(b), and
59(e)).

xxii)           The foregoing provisions, and the other provisions of the
Agreement relating to the maintenance of Capital Accounts and the allocations of
income, gain, loss, deduction and credit, are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Management Committee shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Regulations, the Management Committee may make such modification, provided that
it is not likely to have a material effect on the amount distributable to either
Participant upon liquidation of the tax partnership pursuant to Paragraph 4.2.

xxiii)           If the Participants so agree, upon the occurrence of an event
described in Treas. Reg. Section 1.704-1(b)(2)(iv)(5), the Capital Accounts
shall be restated in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(f) to
reflect the manner in which unrealized income, gain, loss or deduction inherent
in the assets of the tax partnership (that has not been reflected in the Capital
Accounts previously) would be allocated among the Participants if there were a
taxable disposition of such assets for their fair market values, as determined
in accordance with Section 4.2(a). For purposes of Paragraph 3.3, a Participant
shall be treated as contributing the portion of the book value of any property
that is credited to the Participant's Capital Account pursuant to the preceding
sentence. Following a revaluation pursuant to this Subparagraph 4.1(h), the
Participants' shares of depreciation, depletion, amortization and gain or loss,
as computed for tax purposes, with respect to property that has been revalued
pursuant to this Subparagraph 4.1(h) shall be determined in accordance with the
principles of Code Section 704(c) as applied pursuant to the final sentence of
Subparagraph 3.6(b).

 
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4.2           Liquidation. In the event the partnership is "liquidated" within
the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g) then,
notwithstanding any other provision of the Agreement to the contrary, the
following steps shall be taken (after taking into account any transfers of
Capital Accounts pursuant to Sections 5.2(a), 6.3(a) or 12.3 of the Agreement):

(a)           The Capital Accounts of the Participants shall be adjusted to
reflect any gain or loss which would be realized by the partnership and
allocated to the Participants pursuant to the provisions of Article III of this
Exhibit C if the Assets had been sold at their fair market value at the time of
liquidation. The fair market value of the Assets shall be determined by
agreement of both Participants; provided, however, that in the event that the
Participants fail to agree on the fair market value of any Asset, its fair
market value shall be determined by a nationally recognized independent
engineering firm or other qualified independent party approved by both
Participants.

(b)           After making the foregoing adjustments and/or contributions, all
remaining Assets shall be distributed to the Participants in accordance with the
balances in their Capital Accounts (after taking into account all allocations
under Article III, including Subparagraph 3.3(h)). Unless otherwise expressly
agreed on by both Participants, each Participant shall receive an undivided
interest in each and every Asset determined by the ratio of the amount in each
Participant's Capital Account to the total of both of the Participants' Capital
Accounts. Assets distributed to the Participants shall be deemed to have a fair
market value equal to the value assigned to them pursuant to Subparagraph 4.2(a)
above.

(c)           All distributions to the Participants in respect of their Capital
Accounts shall be made in accordance with the time requirements of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(b)(2) and (3).

4.3           Deemed Terminations. Notwithstanding the provisions of Paragraph
4.2, if the "liquidation" of the tax partnership results from a deemed
termination under Section 708(b)(1)(B) of the Code, then (i) Subparagraphs
4.2(a) and (b) shall not apply, (ii) the tax partnership shall be deemed to have
distributed its Assets in accordance with the relative Capital Account balances
of the Participants as adjusted pursuant to Subparagraph 4.2(a), (iii) the
Participants shall be deemed for tax purposes to have contributed those Assets
to a new partnership pursuant to the terms of this Exhibit, and (iv) the new tax
partnership shall continue pursuant to the terms of this Agreement and this
Exhibit.

 
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ARTICLE V
SALE OR ASSIGNMENT

The Participants agree that if either one of them makes a sale or assignment of
its Participating Interest under this Agreement, such sale or assignment shall
be structured so as not to cause a termination under Section 708(b)(1)(B) of the
Code. If a Section 708(b)(1)(B) termination is caused, the terminating
Participant shall indemnify the non-terminating Participant and save it harmless
on an after-tax basis for any increase in taxes, interest, and penalties or
decrease in credits to the non-terminating Participant caused by the termination
of the tax partnership.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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EXHIBIT D                                DEFINITIONS
 
EXHIBIT
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska Inc.
And
Terra Gold Corporation

DEFINITIONS

“Acquiring Participant” has the meaning set forth in Section 13.1 of the
Agreement.
 
“Administrative Charge” means the management fee that the Manager is entitled to
receive pursuant to Section 8.2 of the Agreement.
 
“Affiliate” means any person, partnership, limited liability company, joint
venture, corporation, or other form of enterprise which Controls, is Controlled
by, or is under common Control with a Participant.
 
“Agent” means, in the event of a Transfer of less than all of a Participating
Interest, the party authorized to act on behalf of the transferring Participant
and its transferee in accordance with Section 16.2 of the Agreement.
 
“Agreement” means this Terra Gold Project Exploration, Development and Mine
Operating Agreement, including all amendments and modifications, and all
schedules and exhibits, all of which are incorporated by this reference.
 
“Approved Alternative” means a Development and Mining alternative selected by
the Management Committee from various Development and Mining alternatives
analyzed in the Pre-Feasibility Studies.
 
“Area of Interest” means the area situated within five (5) kilometers of the
exterior boundaries of the Properties contributed by Raven as its Initial
Contribution as more fully described in Exhibit A.
 
“Assets” means the Properties, Products, Business Information, and all other
real and personal property, tangible and intangible, including existing or
after-acquired properties and all contract rights held for the benefit of the
Participants hereunder.
 
“Bid Report” means a report on material bids received for Development work as
set forth in Subsection 9.10(b) of the Agreement.
 
“Budget” means a detailed estimate of all costs to be incurred and a schedule of
cash advances to be made by the Participants with respect to a Program.
 

 
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“Business” means the contractual relationship of the Participants under this
Agreement.
 
“Business Account” means the account maintained by the Manager for the Business
in accordance with Exhibit B.
 
“Business Information” means the terms of this Agreement, and any other
agreement relating to the Business, the Existing Data, and all information,
data, knowledge and know-how, in whatever form and however communicated
(including, without limitation, Confidential Information), developed, conceived,
originated or obtained by either Participant in performing its obligations under
this Agreement. The term “Business Information” shall not include any
improvements, enhancements, refinements or incremental additions to Participant
Information that are developed, conceived, originated or obtained by either
Participant in performing its obligations under this Agreement.
 
“Capital Account” means the account maintained for each Participant in
accordance with Exhibit C.
 
“Confidential Information” means all information, data, knowledge and know-how
(including, but not limited to, formulas, patterns, compilations, programs,
devices, methods, techniques and processes) that derives independent economic
value, actual or potential, as a result of not being generally known to, or
readily ascertainable by, third parties and which is the subject of efforts that
are reasonable under the circumstances to maintain its secrecy, including
without limitation all analyses, interpretations, compilations, studies and
evaluations of such information, data, knowledge and know-how generated or
prepared by or on behalf of either Participant.
 
“Continuing Obligations” mean obligations or responsibilities that are
reasonably expected to continue or arise after Operations on a particular area
of the Properties have ceased or are suspended, such as future monitoring,
stabilization, or Environmental Compliance.
 
“Control” used as a verb means, when used with respect to an entity, to possess
the ability, directly or indirectly through one or more intermediaries, to
direct or cause the direction of the management and policies of such entity
through (i) the legal or beneficial ownership of voting securities or membership
interests; (ii) the right to appoint managers, directors or corporate
management; (iii) contract; (iv) operating agreement; (v) voting trust; or
otherwise; and, when used with respect to a person, means to possess the actual
or legal ability to control the actions of another, through family relationship,
agency, contract or otherwise; and “Control” used as a noun means an interest
which gives the holder the ability to exercise any of the foregoing powers.
 
“Cover Payment” shall have the meaning as set forth in Section 10.4 of the
Agreement.
 
“Development” means all preparation (other than Exploration) for the removal and
recovery of Products, including construction and installation of a mill or any
other improvements to be used for the mining, handling, milling, processing, or
other beneficiation of Products, and all related Environmental Compliance.
 
“Effective Date” means the date set forth in the preamble to this Agreement.
 

 
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“Encumbrance” or “Encumbrances” means mortgages, deeds of trust, security
interests, pledges, liens, net profits interests, royalties or overriding
royalty interests, other payments out of production, or other burdens of any
nature.
 
“Enhancements” has the meaning set forth in Section 18.2 of the Agreement.
 
“Environmental Compliance” means actions performed during or after Operations to
comply with the requirements of all Environmental Laws or contractual
commitments related to reclamation of the Properties or other compliance with
Environmental Laws.
 
“Environmental Damage” has the meaning set forth in Subsection 3.2(e) of the
Agreement.
 
“Environmental Laws” means Laws aimed at reclamation or restoration of the
Properties; abatement of pollution; protection of the environment; protection of
wildlife, including endangered species; ensuring public safety from
environmental hazards; protection of cultural or historic resources; management,
storage or control of hazardous materials and substances; releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances as wastes into the environment, including without
limitation, ambient air, surface water and groundwater; and all other Laws
relating to the manufacturing, processing, distribution, use, treatment,
storage, disposal, handling or transport of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes.
 
“Environmental Liabilities” means any and all claims, actions, causes of action,
damages, losses, liabilities, obligations, penalties, judgments, amounts paid in
settlement, assessments, costs, disbursements, or expenses (including, without
limitation, attorneys' fees and costs, experts' fees and costs, and consultants'
fees and costs) of any kind or of any nature whatsoever that are asserted
against either Participant, by any person or entity other than the other
Participant, alleging liability (including, without limitation, liability for
studies, testing or investigatory costs, cleanup costs, response costs, removal
costs, remediation costs, containment costs, restoration costs, corrective
action costs, closure costs, reclamation costs, natural resource damages,
property damages, business losses, personal injuries, penalties or fines)
arising out of, based on or resulting from (i) the presence, release, threatened
release, discharge or emission into the environment of any hazardous materials
or substances existing or arising on, beneath or above the Properties and/or
emanating or migrating and/or threatening to emanate or migrate from the
Properties to off-site properties; (ii) physical disturbance of the environment;
or (iii) the violation or alleged violation of any Environmental Laws.
 
“Equity Account” means the account maintained for each Participant by the
Manager in accordance with Subsection 8.2(n) of the Agreement.
 
“Existing Data” means maps, drill logs and other drillings, geologic, gravity,
magnetic, chemical, soil, core, remote sensing data, tests, pulps, reports,
location and sample surveys, assays, analyses, production reports, operations,
technical, accounting and financial records, business and operations plans, and
other material information obtained or developed in ownership or operations on
the Properties prior to the Effective Date as may be more specifically described
in Exhibit A.
 

 
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“Expansion” or “Modification” means (i) a material increase in mining or
production capacity; (ii) a material change in the recovery process; or (iii) a
material change in waste or tailings disposal methods. An increase or change
shall be deemed “material” if it is anticipated to cost more than twenty percent
(20%) of original capital costs attributable to the Development of the mining or
production capacity, recovery process or waste or tailings disposal facility to
be expanded or modified.
 
“Exploration” means all activities, conducted prior to the completion of a
Feasibility Study, directed toward ascertaining the existence, location,
quantity, quality or commercial value of deposits of Products, including but not
limited to additional drilling and bulk sampling after discovery of potentially
commercial mineralization, and including related Environmental Compliance.
Exploration activities such as bulk sampling may result in disposition of
Products owned by the Participants in proportion to their respective
Participating Interests in accordance with Article XI of the Agreement.
 
“Feasibility Contractors” means one or more engineering firms approved by the
Management Committee for purposes of preparing or auditing any Pre-Feasibility
Study or Feasibility Study.
 
“Feasibility Study” means a report to be prepared following selection by the
Management Committee of one or more Approved Alternatives. The Feasibility Study
shall include a review of information presented in any Pre-Feasibility Studies
concerning the Approved Alternative(s). The Feasibility Study shall be in a form
and of a scope generally acceptable to reputable financial institutions that
provide financing to the mining industry.
 
“Governmental Fees” means all location fees, mining claim rental fees, mining
claim maintenance payments and similar payments required by Law to locate and
hold state mining locations.
 
“Indemnified Participant” and “Indemnifying Participant” shall have the meanings
set forth in Subsection 3.7(a) of the Agreement.
 
“Initial Contribution” means that contribution each Participant has made or
agrees to make pursuant to Section 5.1 of the Agreement.
 
“Interest Rate” means LIBOR plus one half of one percent (0.5%).
 
“Law” or “Laws” means all applicable federal, state and local laws (statutory or
common), rules, ordinances, regulations, grants, concessions, franchises,
licenses, orders, directives, judgments, decrees, and other governmental
restrictions, including permits and other similar requirements, whether
legislative, municipal, executive, administrative or judicial in nature.
 
“LIBOR” means the British Bankers’ Association interbank offered rates as of
11:00 a.m. London time for deposits in Dollars that appear on the relevant page
of the Reuters service (currently page LIBOR01) or, if not available, on the
relevant pages of any other service (such as Bloomberg Financial Markets
Service) that displays such British Bankers’ Association rates.
 

 
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“LOI” means that certain Letter of Intent dated February 26, 2010 between ITH
and American Mining Corporation, the predecessor in interest to TMC, concerning
a possible joint venture concerning the Terra Gold project and properties.
 
“Management Committee” means the committee established under Article VII of the
Agreement.
 
“Material Loss” when used in the context of indemnification under the Agreement
has the meaning described in Subsection 3.7(a) of the Agreement.
 
“Manager” means the Participant appointed under Article VIII of the Agreement to
manage Operations, or any successor Manager.
 
“Mining” means the mining, whether by underground, surface or in situ methods,
extracting, leaching, producing, beneficiating, handling, milling or other
processing, removal or stockpiling of Products following the completion of a
Feasibility Study.
 
“Net Smelter Returns” means certain amounts calculated and payable as provided
in Exhibit E.
 
“Notices” are described in Article XIX of the Agreement.
 
“Operations” means the activities carried out under this Agreement.
 
“Participant” means RAVEN or TERRA, or any permitted successor or assign of
RAVEN or TERRA under the Agreement.
 
“Participant Information” means all information, data, knowledge and know-how,
in whatever form and however communicated (including, without limitation,
Confidential Information but excluding the Existing Data), which, as shown by
written records, was developed, conceived, originated or obtained by a
Participant: (a) prior to entering into this Agreement, or (b) independent of
its performance under the terms of this Agreement.
 
“Participating Interest” means the percentage interest representing the
ownership interest of a Participant in the Assets, and all other rights and
obligations arising under this Agreement, as such interest may from time to time
be adjusted hereunder. Participating Interests shall be calculated to at least
three decimal places and rounded to two decimal places as follows: Decimals
greater than .005 shall be rounded up (e.g., 21.519% rounded to 21.52%);
decimals less than .005 shall be rounded down (e.g., 21.514% rounded to 21.51%);
and decimals precisely equal to .0050 shall be rounded so as to cause the
resulting two-decimal amounts to be “even”—e.g., 54.0250 and 45.9750 would be
rounded to (a) 54.02 and 45.98 instead of to (b) 54.03 and 45.97. The initial
Participating Interests of the Participants are set forth in Section 6.1 of the
Agreement.
 
“Porterfield Lease” means that certain Lease dated March 22, 2005, between
lessor Ben Porterfield and lessee AngloGold Ashanti (USA) Exploration Inc.
(referred to in Exhibit A) and burdening certain of the Properties, as more
particularly described in the description of Encumbrances in Paragraph 1.1 of
Exhibit A.
 

 
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“Porterfield Royalty” means that certain net smelter returns royalty interest
reserved by Ben Porterfield under the Porterfield Lease.
 
“Pre-Feasibility Studies” means one or more studies prepared to analyze whether
economically viable Mining Operations may be possible on the Properties, as
described in Sections 9.7 -9.8 of the Agreement.
 
“Products” means all ores, minerals and mineral resources produced from the
Properties.
 
“Program” means a description in reasonable detail of Operations to be conducted
and objectives to be accomplished by the Manager for a period determined by the
Management Committee.
 
“Program Period” means the time period covered by an adopted Program and Budget.
 
“Project Financing” means any financing approved by the Management Committee and
obtained by the Participants for the purpose of placing a mineral deposit
situated on, in, or under the Properties into commercial production, but shall
not include any such financing obtained individually by either Participant to
finance payment or performance of its obligations under the Agreement.
 
“Properties” means those interests in real property described in Paragraph 1.1
of Exhibit A and all other interests in real property within the Area of
Interest that are acquired and held subject to the Agreement.
 
“Qualifying Expenses” has the meaning set forth in Subsection 5.1(b) of the
Agreement.
 
“Raven Royalty” means that certain royalty interest retained by RAVEN prior to
making its Initial Contribution to the extent it burdens Properties included
within RAVEN’s Initial Contribution as of the Effective Date, as more
particularly described in the description of Encumbrances in Paragraph 1.1 of
Exhibit A.
 
“Recalculated Participating Interest” means the reduced Participating Interest
of a Participant as recalculated under Sections 9.5, 9.6 or 10.5 of the
Agreement.
 
“Reduced Participant” means a Participant whose Participating Interest is
reduced under Sections 9.5, 9.6, or 10.5 of the Agreement.
 
“Secondary Contribution” means that additional contribution that TERRA may elect
to make, following completion of its Initial Contribution, pursuant to Section
5.3 of the Agreement.
 
“Supplemental Business” and “Supplemental Business Agreement” shall have the
meanings set forth in Article XV of the Agreement.
 
“Talon” means Talon Gold Alaska Inc.
 
“Transfer” means, when used as a verb, to sell, grant, assign, create an
Encumbrance, pledge or otherwise convey, or dispose of or commit to do any of
the foregoing, either directly or indirectly; and, when used as a noun, means
such a sale, grant, assignment, Encumbrance, pledge or other conveyance or
disposition, or such an arrangement.
 
 
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EXHIBIT E                                NET SMELTER RETURNS CALCULATION
 
EXHIBIT E
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between
Raven Gold Alaska Inc.
And
Terra Gold Corporation

NET SMELTER RETURNS CALCULATION
 
I.           Definitions.
 
Capitalized terms used herein but not defined herein mean the same herein as in
the Agreement.
 
For purposes hereof and of the Agreement, the following terms have the following
meanings:
 
 
A.
“Gross Value” is hereby deemed to mean, for the following categories of Products
produced from the Properties, to be the quantity of each category of Product
produced from the Properties, as expressed in ounces or other units as described
below and without deducting (and thus prior to the payment of) any royalties
thereon, multiplied by the average price set forth below for such category of
Product:

 
 
(1)
if Royalty Payor causes refined platinum (meeting the specifications for good
delivery of the London Platinum and Palladium Market) to be produced from the
Properties, for purposes of determining the Royalty Interest the refined
platinum will be deemed to have been sold at the Monthly Average Platinum Price
for the month in which it was produced, and the Gross Value will be determined
by multiplying Platinum Production during the month in question by the Monthly
Average Platinum Price for such month. As used herein, “Platinum Production”
means, for any month, the quantity of refined platinum outturned to Royalty
Payor’s pool account by an independent third-party refinery for platinum
produced from the Properties during such month on either a provisional or final
settlement basis, and “Monthly Average Platinum Price” means the average London
Platinum and Palladium Market P.M. Platinum Fix, calculated by dividing the sum
of all such prices reported for the month in question by the number of days in
such month for which such prices were reported;

 
 
(2)
if Royalty Payor causes refined palladium (meeting the specifications for good
delivery of the London Platinum and Palladium Market) to be produced from the
Properties, for purposes of determining the Royalty  Interest the refined
palladium will be deemed to have been sold at the Monthly Average Palladium
Price for the month in which it was produced, and the Gross Value will be
determined by multiplying Palladium Production during the month in question by
the Monthly Average Palladium Price for such month. As used herein, “Palladium
Production” means, for any month, the quantity of refined palladium outturned to
Royalty Payor’s pool account by an independent third-party refinery for
palladium produced from the Properties during such month on either a provisional
or final settlement basis, and “Monthly Average Palladium Price” means the
average London Platinum and Palladium Market P.M. Palladium Fix, calculated by
dividing the sum of all such prices reported for the month in question by the
number of days in such month for which such prices were reported;

 

 
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(3)
if Royalty Payor causes refined gold (meeting the specifications for good
delivery of the London Bullion Market Association) to be produced from the
Properties, for purposes of determining the Royalty Interest the refined gold
will be deemed to have been sold at the Monthly Average Gold Price for the month
in which it was produced, and the Gross Value will be determined by multiplying
Gold Production during the month in question by the Monthly Average Gold Price
for such month. As used herein, “Gold Production” means, for any month, the
quantity of refined gold outturned to Royalty Payor’s pool account by an
independent third-party refinery for gold produced from the Properties during
such month on either a provisional or final settlement basis, and “Monthly
Average Gold Price” means the average London Bullion Market Association P.M.
Gold Fix, calculated by dividing the sum of all such prices reported for the
month in question by the number of days in such month for which such prices were
reported;

 
 
(4)
if Royalty Payor causes refined silver (meeting the specifications for refined
silver subject to the New York Silver Price published by Handy & Harman) to be
produced from the Properties, for purposes of determining the Royalty Interest
the refined silver will be deemed to have been sold at the Monthly Average
Silver Price for the month in which it was produced, and the Gross Value will be
determined by multiplying Silver Production during the month in question by the
Monthly Average Silver Price. As used herein, “Silver Production” means, for any
month, the quantity of refined silver outturned to Royalty Payor’s pool account
by an independent third-party refinery for silver produced from the Properties
during the applicable month on either a provisional or final settlement basis,
and “Monthly Average Silver Price” means the average New York Silver Price as
published daily by Handy & Harman, calculated by dividing the sum of all such
prices reported for the applicable month by the number of days in such month for
which such prices were reported;

 

 
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(5)
if Royalty Payor causes copper cathodes (meeting the specifications for Grade A
Copper cathodes conforming to BS EN 1978:1998, Cathode Grade Designation
Cu-CATH-1 subject to the London Metal Exchange Grade A Copper Price published by
the London Metal Exchange) to be produced from the Properties, for purposes of
determining the Royalty Interest the cathodic copper will be deemed to have been
sold at the Monthly Average Copper Price for the month in which it was produced,
and the Gross Value will be determined by multiplying Copper Production during
the month in question by the Monthly Average Copper Price. As used herein,
“Copper Production” means, for any month, the quantity of cathodic copper
produced and delivered for the account of Royalty Payor by an independent
third-party refinery acceptable to the London Metals Exchange for copper
produced from the Properties during the applicable month on either a provisional
or final settlement basis, and “Monthly Average Copper Price” means the average
Grade A Copper Price as published daily by the London Metal Exchange, calculated
by dividing the sum of all such prices reported for the applicable month by the
number of days in such month for which such prices were reported;

 
 
(6)
if Royalty Payor causes zinc ingots (meeting the specifications for Special High
Grade Zinc conforming to BS EN 1179:1996, Standard entitled “Zinc and Zinc
Alloys – Primary Zinc” subject to the London Metal Exchange Special High Grade
Zinc Price published by the London Metal Exchange) to be produced from the
Properties, for purposes of determining the Royalty Interest the zinc ingots
will be deemed to have been sold at the Monthly Average Zinc Price for the month
in which it was produced, and the Gross Value will be determined by multiplying
Zinc Production during the month in question by the Monthly Average Zinc Price.
As used herein, “Zinc Production” means, for any month, the quantity of zinc
ingots produced and delivered for the account of Royalty Payor by an independent
third-party refinery acceptable to the London Metals Exchange for zinc produced
from the Properties during the applicable month on either a provisional or final
settlement basis, and “Monthly Average Zinc Price” means the average Special
High Grade Zinc Price as published daily by the London Metal Exchange,
calculated by dividing the sum of all such prices reported for the applicable
month by the number of days in such month for which such prices were reported;

 
 
(7)
if Royalty Payor causes Products other than refined platinum, refined palladium,
refined gold, refined silver, cathodic copper, or zinc ingots meeting the
foregoing specifications to be produced from the Properties, the Gross Value
shall be equal to the Quantity Sold of the particular Product in question
multiplied by the applicable Average Metal Price. As used herein, the term
“Quantity Sold” means the volume or quantity of Product disposed of by Royalty
Payor in a particular sale which settled in the relevant period, provided that
if the Product is ore, concentrate, leachate, precipitate, sponge, doré or any
other material containing impurities, then the Quantity Sold will be the volume
or quantity of the Mineral in question actually contained in the sold Product
(which volume or quantity will be established by sound and generally accepted
assaying or other analytical practices and procedures) multiplied by a recovery
rate equal to the average recovery rate actually experienced by Royalty Payor
during the preceding six (6) months with respect to such Product (or, if no such
average can be calculated, a rate mutually agreed between the parties or,
failing such agreement, settled by arbitration), and “Average Metal Price”
means:

 

 
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(a)
if the Product is platinum, palladium, gold, silver, copper, or zinc, the
Monthly Average Platinum, Palladium, Gold, Silver, Copper, or Zinc Price, as
applicable during the month in which the sale occurred, or

 
 
(b)
if the Product is other than platinum, palladium, gold, silver, copper, or zinc,
the average price, in U.S. dollars, for the metal or mineral in question during
the month in which the sale occurred as quoted in “Metals Week”, published by
McGraw-Hill;

 
 
(8)
if any of the London Platinum and Palladium Market P.M. Platinum Fix, the London
Platinum and Palladium Market P.M. Palladium Fix, the London Bullion Market
Association P.M. Gold Fix, the Handy & Harman New York Silver Price, the London
Metal Exchange Grade A Copper Price, or the London Metal Exchange Special High
Grade Zinc Price are, for any reason, not published for a month in question, the
Monthly Average Platinum, Palladium, Gold, Silver, Copper, or Zinc Price, as
applicable, will be determined by reference to the prices for refined platinum,
palladium, gold, or silver bullion, Grade A copper, or Special High Grade zinc,
as applicable, published in “Metals Week”, published by McGraw-Hill. If the
necessary prices with respect to any Products are not quoted, or the publication
of “Metals Week” ceases, or is suspended, then those prices quoted for the
Product during the applicable period by such other publication or source as is
generally recognized in the mining industry as reflecting the price at which
that Product was being offered for sale and purchase during such period will be
used and, if there is any disagreement with respect thereto, will be settled by
arbitration; and

 

 
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(9)
where outturn of refined platinum, palladium, gold, silver, or other metal, or
the production and delivery of cathodic copper or zinc ingots, is made by an
independent third party refinery on a provisional basis, the Gross Value will be
based upon the amount of such provisional settlement, but will be adjusted in
subsequent statements to account for the amount of refined metal established by
final settlement by such refinery.

 
 
B.
“month” means a calendar month.

 
 
C.
“Net Smelter Returns” means the Gross Value of Products , less all costs,
charges and expenses paid or incurred with respect to such Products after such
Products leave the mine, mill, concentrator or other final processing facility
for the Project including, without limitation:

 
 
(1)
all charges for treatment of Products in the smelting and refining processes
(including handling, processing, and provisional settlement fees, sampling,
assaying and representation costs, metal losses, penalties and other processor
deductions, and interest); provided however, that in the case of heap or dump
leaching operations all processing and recovery costs incurred beyond the point
at which the metal being treated is in solution shall be considered as treatment
charges (it being agreed and understood that such processing and recovery costs
shall not include the cost of mining, crushing, dump preparation, application of
leach solutions or other mining and preparation costs up to the point at which
the metal goes into solution); and also provided that if such treatment is
carried out in facilities owned or controlled, in whole or in part, by Royalty
Payor, then the foregoing charges will be equal to lesser of:

 
 
(a)
the amount Royalty Payor would have incurred if such treatment were carried out
at facilities not owned or controlled by Royalty Payor then offering comparable
services for comparable products on terms then prevailing in the area, or

 
 
(b)
the actual amount of such charges charged by the facilities owned or controlled,
in whole or in part, by Royalty Payor,

 
 
(2)
the actual costs of transportation (including freight, insurance, security,
transaction taxes, handling, port, demurrage, delay, and forwarding expenses
incurred by reason of or in the course of such transportation) of Products from
Royalty Payor’s mine, mill, concentrator or other final processing facility for
the Project to the place of refining, beneficiation or treatment and then to the
place of sale, and

 

 
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(3)
use, gross receipts, severance, export, and ad valorem taxes and any other tax
or government royalty or levy payable by Royalty Payor and based directly upon
and actually assessed against the value or quantity of Product sold or otherwise
disposed or deemed disposed of, but excluding

 
 
(a)
any and all taxes based upon the net or gross income of Royalty Payor, and

 
 
(b)
any and all taxes based upon the value of the Properties, the privilege of doing
business, and other similarly based taxes.

 
 
D.
“Project” means, for purposes limited solely to determining the point or
location beyond which the deductions allowed under the definition of Net Smelter
Returns above may be taken, all rights, titles, and interests in real
property—of which the Properties constitute at least a part but may form only a
part—that are held from time to time in conjunction with and operated together
as a single project. (By way of example and not by way of limitation, if (i) the
Terra Gold Project Joint Venture were to become one of two members in a limited
liability company, (ii) Terra Gold Project Joint Venture contributed to said
limited liability company all of its rights, titles, and interests in, to,
under, and respecting the Properties, (iii) the other member contributed to said
limited liability company all of its rights, titles, and interests in, to,
under, and respecting certain other real property, and (iv) said limited
liability company operated the Properties and said other real property together
as a single project, then the Properties and said other real property together
would constitute a “Project” as defined herein.)

 
 
E.
“Royalty Interest” means, as the case may be from time to time, either (1) the
Raven Royalty or (2) any interest in Net Smelter Returns conveyed to a Reduced
Participant pursuant to Section 6.3 of the Agreement.

 
 
F.
“Royalty Payor” means each Participant (whether one or more than one, from time
to time) that has the right to take in kind or separately dispose of all or a
portion of the Products from the Properties.

 
II.           Payment of Net Smelter Returns.
 
 
A.
Unless otherwise agreed among all Royalty Payors, each Royalty Payor shall be
severally responsible to the owner of each Royalty Interest to make those
payments of Net Smelter Returns that are due to said owner on those Products
taken in kind or separately disposed of by said Royalty Payor. Payments of Net
Smelter Returns due to the owner of any Royalty Interest shall commence in the
calendar quarter following the calendar quarter in which Net Smelter Returns are
first realized, and shall be made within forty-five (45) days following the end
of each calendar quarter during which Net Smelter Returns are realized, and
shall be subject to adjustment, if required, at the end   of each calendar year.
Each such payment due to the owner or owners from time to time of the Raven
Royalty shall be made to a single payee designated in writing by all owners of
the Raven Royalty. Each such payment due to the owner or owners from time to
time of any interest in Net Smelter Returns conveyed to a Reduced Participant
pursuant to Section 6.3 of the Agreement shall be made to a single payee
designated in writing by all owners of said interest.

 

 
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B.
The recipient of such Net Smelter Returns payments shall have the right to audit
such payments following receipt of each payment by giving notice to the Royalty
Payor and by conducting such audit in accordance and consistent with the time
periods and other provisions of Section 10.6 of the Agreement.  Costs of such an
audit shall be borne by the holder of the Royalty Interest.

 
 
C.
In the event of commingling of Products from the Properties with ores, metals,
minerals, or mineral products mined from other lands, the Manager shall
determine the volume or weight of the Products in accordance with sampling and
analytic practices and procedures accepted in the industry, and the weight or
volume so derived and said analysis shall be used by the Royalty Payor as the
basis of allocation and calculation of the share of Net Smelter Returns payable
to the holder of any Royalty Interest hereunder.

 
III.           Applicability.
 
For the sake of clarity, the Participants agree that this Exhibit E is relevant
only to calculation and payment of (1) the Raven Royalty and (2) any interest in
Net Smelter Returns granted to a Reduced Participant pursuant to Section 6.3 of
the Agreement. It does not apply to the calculation of any third-party royalty
such as the Porterfield Royalty, unless the owner or owners thereof expressly so
agree in writing.
 

 
 
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EXHIBIT F                                INSURANCE
 
EXHIBIT F
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska Inc.
And
Terra Gold Corporation

INSURANCE

The Manager shall, at all times while conducting Operations, comply fully with
the applicable worker's compensation laws and purchase, or provide protection
for the Participants comparable to that provided under standard form insurance
policies for the following risk categories:  (i) comprehensive public liability
and property damage with combined limits of not less than Five Million Dollars
($5,000,000) for bodily injury and property damage; (ii) automobile and aircraft
liability insurance, as applicable, with combined limits of not less than Three
Million Dollars ($3,000,000); and (iii) adequate and reasonable insurance
coverage for fire, environmental impairment liability and other risks
ordi­narily insured against in similar operations in similar locations.  If the
Manager elects to self-insure, it shall charge to the Business Account an amount
equal to the premium it would have paid had it secured and maintained a policy
or policies of insurance on a competitive bid basis in the amount of such
coverage.  Each Participant shall self-insure or purchase for its own account
such additional insurance as it deems necessary.
 
 
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EXHIBIT G                                INITIAL PROGRAM AND BUDGET
 
EXHIBIT G
Revised Effective December 15, 2010

To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska Inc.
And
Terra Gold Corporation

INITIAL PROGRAM AND BUDGET
(Pursuant to Section 9.1 of the Agreement as amended by Amendments 1 through 3,
superseding and replacing that
Preliminary Draft Initial Program and Budget which had previously been in
effect)

PROGRAM OBJECTIVES AND SUMMARY
 
Exploration of the Terra Gold Project is at a relatively early stage. 
Identification of the number and extent of bonanza veins along with
demonstration of their continuity will be key aspects of continued exploration. 
Consistent with the recommendations made in the Klipfel 43-101 report, TERRA
plans to undertake the following exploration activities during the first year.
 
 
TERRA proposes to continue drilling the northern strike and down–dip extension
of the Ben Vein as well as develop drill plans for the other veins in the trend.
The identification of and map positioning of vein segments by using differential
GPS ought to help map out those segments for better definition of continuity
along individual veins particularly for Fish Creek and SD veins. This type of
information along with structural analyses will provide a basis for follow-up
drilling in these areas where a number of very high grade veins were encountered
in 2005. 
 
 
TERRA plans to undertake a work program that includes drilling, sampling,
mapping, and structural analysis.  The aim of exploration will be to 1) test the
extent of known vein mineralization through drilling, mapping, and structural
analysis; and 2) characterize mineralization in veins surrounding specific
outcropping veins such as the Ben Vein; and 3) continue to conduct
reconnaissance mapping, sampling, and prospecting throughout the property. 
Drilling will endeavor to increase inferred resources and convert existing
resources to the indicated or measured category.
 
 
TERRA’s objectives include identification of faults and, possible offset
directions, which will likely play a key role in understanding the
vein-intrusive-host rock relations and developing a predictive model for
identifying the location and orientation of veins.  Structural elements derived
from fold-thrust deformation will likely produce the primary architecture. 
Overprinted features of subsequent deformation are likely to control the
location of intrusions and the veins they host. 
 
 
Prior to the summer 2011 field season, TERRA will continue to develop more
detailed plans for prospecting, mapping, and sampling, with the goal to attempt
to locate the source of anomalous surface samples and characterize that
mineralization.
 

 
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BUDGET
 
As a threshold matter, the period covered by this Initial Program and Budget is
a period of sole funding and earn-in by TERRA.

2010  Expenses* Incurred by TERRA Prior to the Effective Date 
[wmia-102.jpg]

 
*The Participants agreed that expenses incurred by TERRA or ITH on behalf of the
Terra Gold Project prior to the Effective Date  may be Qualifying Expenses if
they otherwise meet the criteria of Qualifying Expenses under Subsection 5.1(b)
of the Agreement and Exhibit B.

Initial Program and Budget (Post-Effective Date Estimated Expenses)

G&A***
 $   75,000
   
Porterfield Advanced Royalty
 $   100,000
Terra Camp Purchase
 $   100,000
Office/Housing
 $     30,000
Helicopter – Wet
 $   200,000
Drilling Costs
$ 500,000
Camp Costs
$   75,000
Contract Workers
 $   100,000
Laboratory
 $     35,500
Geophysics
 $     50,000
Claim Staking
 $     15,000
Bulk Sample
 $   195,000
Charter Transport
 $     37,500
Total
>$1,000.000

See also descriptions and estimated amounts from attached spreadsheet.

** The attached spreadsheet and estimates set out in this Exhibit G in no way
change or modify TERRA’s Initial Contribution funding amounts and timing under
Subsection 5.1(b)(ii) of the Agreement.  TERRA, at its sole discretion may fund
at the levels and per the schedule described in Subsection 5.1(b)(ii) or may
accelerate its performance and perform in excess of those stated amounts
pursuant to Subsection 5.1(b)(v).

*** The G&A line item is provided for illustration only as it is not a
qualifying expenditure.
 
 
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EXHIBIT H                                           FORM OF MEMORANDUM OF
AGREEMENT
 
 
EXHIBIT H
To
TERRA GOLD PROJECT
EXPLORATION, DEVELOPMENT AND MINE OPERATING AGREEMENT
By And Between Participants
Raven Gold Alaska Inc.
And
Terra Gold Corporation
 
 
 
 
 
 
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