Exhibit 10.1

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (the “Agreement”) is entered into as of the 28th
day of May, 2004, by and among Wits Basin Precious Minerals Inc., a Minnesota
corporation (the “Company”), and Pandora Select Partners L.P., a British Virgin
Islands limited partnership (the “Purchaser”).

R E C I T A L S :

     WHEREAS, in consideration of $650,000, the Company proposes to issue to the
Purchaser, and the Purchaser desires to purchase, a $650,000 secured convertible
promissory note in the form attached as Exhibit A (the “Note”) and a warrant in
the form of Exhibit B (the “Warrant”) to purchase particular shares of the
Company’s common stock, $0.01 par value (the “Common Stock”); and

     WHEREAS, conditioned on the Company’s timely satisfaction of particular
milestones and conditions as described in a separate letter agreement in the
form attached as Exhibit C (the "Call and Option Agreement"), the Purchaser
shall purchase, and the Company shall issue to the Purchaser, an additional
secured convertible promissory note of at least $350,000 (which, at Purchaser’s
option, may be for up to $850,000 inclusive of the foregoing $350,000) and an
additional warrant to purchase Common Stock;

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:

SECTION 1. AGREEMENT TO SELL AND PURCHASE

     1.1. Authorization of Transaction. On or prior to the closing of the
transactions contemplated in this Agreement (the “Closing”), the Company shall
have authorized the sale and issuance to the Purchaser of the Note, the Warrant
and the shares of Common Stock issuable as payment under the Note, upon
conversion of the Note and upon exercise of the Warrant (collectively, the
“Shares”).

     1.2. Sale and Purchase. Subject to the terms and conditions hereof, at the
Closing, the Company hereby agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, the Note and the Warrant for an
aggregate purchase price of $650,000 (the “Purchase Price”).

SECTION 2. CLOSING, DELIVERY AND PAYMENT

     2.1. Closing. The Closing shall take place at 10:00 a.m. on the date hereof
at the offices of the Purchaser’s legal counsel, Messerli & Kramer P.A., in
Minneapolis, Minnesota, or at such other time or place as the Company and the
Purchaser may mutually agree (the “Closing Date”). At the Closing, subject to
the terms and conditions hereof, the Company will issue, sell and deliver to the
Purchaser the Note and the Warrant, against payment of the Purchase Price by
certified check or wire transfer of immediately available funds. At that time,
the Company shall also execute and deliver to the Purchaser the Registration
Rights Agreement in the form attached as Exhibit D (the “Registration Rights
Agreement”) and the Security Agreement in the form attached as Exhibit E (the
“Security Agreement”). In addition, at the Closing, the Company shall cause
Wayne W. Mills ("Mills") to execute and deliver to the Purchaser the Personal
Guaranty in the form attached as Exhibit F (the "Mills Guaranty").

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SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Purchaser as of the
Closing Date, and agrees, as follows:

     3.1. Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota. The Company’s only active subsidiaries are Active
Hawk Minerals, LLC, a Minnesota limited liability company (“Active Hawk”), and
Brazmin Ltda., a limited liability company organized under the laws of Brazil
(“Brazmin,” and together with Active Hawk, the "Subsidiaries"). Active Hawk is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Minnesota. Brazmin is a limited liability company
duly organized, validly existing and in good standing under the laws of Brazil.
Each of the Company and the Subsidiaries has all requisite corporate or limited
liability company power and authority to own and operate its respective
properties and assets and to carry on its respective business as presented
conducted and as presently proposed to be conducted. The Company has all
requisite corporate power and authority to execute and deliver this Agreement,
the Note, the Warrant, the Registration Rights Agreement and the Security
Agreement (together, the “Transaction Documents”), to pledge the Company’s
assets as described on the attached Exhibit G as security for the Note (the
“Collateral”), to issue and sell the Shares as payment under the Note, upon
conversion of the Note and upon exercise of the Warrant and to carry out the
provisions of the Transaction Documents. Each of the Company and the
Subsidiaries is duly qualified and is authorized to do business and is in good
standing in each U.S. and foreign jurisdiction in which the nature of its
respective activities and of its respective properties (both owned and leased)
makes such qualification necessary, except for those jurisdictions in which
failure to be so qualified would not have a materially adverse effect on the
Company or its business, taken as a whole.

     3.2. Capitalization. The Company is authorized to issue 150,000,000 shares
of Common Stock, par value $0.01 per share, of which 33,275,181 shares are
issued and outstanding. Except as set forth on Schedule 3.2 or in the Company’s
current, quarterly, annual and other periodic filings (the “SEC Reports”) with
the U.S. Securities and Exchange Commission (the “Commission”), the Company has
no outstanding options, warrants or other rights to acquire any capital stock,
or securities convertible or exchangeable for capital stock or for securities
themselves convertible or exchangeable for capital stock (together, “Convertible
Securities”). Except as set forth on Schedule 3.2 or in the SEC Reports, the
Company has no agreement or commitment to sell or issue any shares of capital
stock or Convertible Securities. All issued and outstanding shares of the
Company’s capital stock (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable, (iii) are free from any preemptive and
cumulative voting rights and (iv) were issued pursuant to an effective
registration statement filed with the Commission and applicable state securities
authorities or pursuant to valid exemptions under federal and state securities
laws. Except as set forth on Schedule 3.2, there are no outstanding rights of
first refusal or proxy or shareholder agreements of any kind relating to any of
the Company’s securities to which the Company or any of its executive officers
and directors is a party or as to which the Company otherwise has knowledge of.
When issued in compliance with the provisions of the Note and the Warrant (and
upon payment as provided by the Warrant), the Shares will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances;
provided, however, that the Shares may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time a transfer is proposed.

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     3.3. Authorization; Binding Obligations. All corporate action on the part
of the Company, its officers, directors and shareholders necessary for the
authorization of the Transaction Documents, the performance of all obligations
of the Company hereunder and thereunder at the Closing, including the pledge of
the Collateral as security for the Note, and the authorization, sale, issuance
and delivery of the Shares as payment under the Note, upon conversion of the
Note and upon exercise of the Warrant has been taken. The Transaction Documents,
when executed and delivered, will be valid and binding obligations of the
Company enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors’ rights, (ii) according
to general principles of equity that restrict the availability of equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Registration Rights Agreement may be limited by applicable
laws. The Mills Guaranty, when executed and delivered, will be a valid and
binding obligation of Mills enforceable in accordance with its terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors’ rights and
(ii) according to general principles of equity that restrict the availability of
equitable remedies. The sale of the Shares upon exercise of the Warrant, upon
conversion of the Note or as payment under the Note is not and will not be
subject to any preemptive rights or rights of first refusal.

     3.4. Financial Statements. The Company’s audited consolidated balance
sheets at, and the audited consolidated statements of operations, cash flows and
shareholders’ equity of the Company for the years ended, December 31, 2003 (as
restated) and 2002 and the Company’s unaudited consolidated balance sheet at,
and the unaudited consolidated statements of operations and cash flows of the
Company for the three months ended March 31, 2004 (all of the foregoing
together, the “Financial Statements,” with March 31, 2004 being the “Latest
Statement Date” and the consolidated financial statements at and for the three
months ended March 31, 2004 being the “Latest Financial Statements”), as
contained in the SEC Reports, fairly present in all material respects the
consolidated financial position, results of operations, cash flows and
shareholders’ equity of the Company as of the respective dates and for the
respective periods covered thereby in accordance with generally accepted
accounting principles consistently applied and the rules and regulations of the
Commission.

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     3.5. Liabilities. The Company has no material liabilities and, to the best
of its knowledge, the Company knows of no material contingent liabilities, not
disclosed in the Latest Financial Statements or SEC Reports, except current
liabilities incurred in the ordinary course of business subsequent to the Latest
Statement Date that have not been, either in any individual case or in the
aggregate, materially adverse.

     3.6. Certain Agreements and Actions. Except as disclosed in the SEC
Reports, the Company has not (i) declared or paid any dividends, or authorized
or made any distribution upon or with respect to any class or series of its
capital stock, (ii) since the Latest Statement Date, incurred any indebtedness
for money borrowed or any other material liabilities out of the ordinary course
of business, (iii) made any loans or advances to any person, other than ordinary
advances for travel or entertainment expenses or (iv) sold, exchanged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.

     3.7. Obligations of or to Related Parties. Except as disclosed on Schedule
3.7 or in the SEC Reports, there are no obligations of the Company to officers,
directors, shareholders, employees or consultants of the Company, or to any
members of their immediate families or other affiliates, other than (i) for
payment of salary for services rendered since the commencement of the Company’s
most recent payroll period, (ii) reimbursement for expenses reasonably incurred
on behalf of the Company and (iii) for other standard employee benefits made
generally available to all employees (including stock option agreements
outstanding under any stock option plan approved by the Board of Directors of
the Company). Except as disclosed on Schedule 3.7 or in the SEC Reports, none of
the officers, directors, shareholders, employees or consultants of the Company,
or any members of their immediate families or other affiliates, are indebted to
the Company or have any direct or indirect ownership interest in any firm,
corporation or other entity with which the Company is affiliated or with which
the Company has a business relationship, or any firm, corporation or other
entity that competes with the Company. Except as disclosed in the SEC Reports,
no officer, director, shareholder, employee or consultant of the Company, or, to
the Company’s knowledge, any member of their immediate families or other
affiliates, is, directly or indirectly, interested in or a party to any material
contract with the Company. Except as disclosed on Schedule 3.7 or in the SEC
Reports, the Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.

     3.8. Changes. Since the Latest Statement Date, and except as disclosed in
the SEC Reports, there has not been, to the Company’s knowledge, any event or
condition of any character that, either individually or cumulatively, has
materially and adversely affected the business, assets, liabilities, financial
condition, operations or prospects of the Company.

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     3.9. Title to Properties and Assets; Liens. Except as set forth on Schedule
3.9 or in the SEC Reports, the Company has good and marketable title to its
properties and assets, including the properties and assets reflected in the
Latest Financial Statements and (directly or through its joint venture
interests) the gold exploration rights in South Africa, Canada and South America
as described in the SEC Reports, and good title to its leasehold estates, in
each case subject to no mortgage, pledge, lien, lease, encumbrance or charge,
other than (i) those resulting from taxes that have not yet become delinquent,
(ii) minor liens and encumbrances that do not materially detract from the value
of the property subject thereto or materially impair the operations of the
Company and (iii) those that have otherwise arisen in the ordinary course of
business. All facilities, machinery, equipment, fixtures and other properties
owned, leased or used by the Company are in good operating condition and repair
and are reasonably fit and usable for the purposes for which they are being
used, reasonable wear and tear excepted.

     3.10. Patents and Trademarks. Except as set forth on Schedule 3.10 or in
the SEC Reports, the Company owns or licenses all patents, trademarks, service
marks, trade names, copyrights, trade secrets, information and other proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted, without any known infringement of the rights of others. The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with their duties to the Company or that would
conflict with the Company’s business as proposed to be conducted. None of the
execution or delivery of, or the performance of the transactions contemplated
by, the Transaction Documents, the pledge of the Collateral by the Company to
secure the Note, the carrying on of the Company’s business by the employees of
the Company nor the conduct of the Company’s business as currently conducted or
proposed will conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company, except for inventions, trade secrets or proprietary information
that have been assigned to the Company.

     3.11. Compliance with Other Instruments. Except as disclosed in the SEC
Reports, the Company is not in violation or default of any term of its Articles
of Incorporation or Bylaws, or of any provision of any mortgage, indenture,
contract, agreement, instrument or contract to which it is party or by which it
is bound or of any judgment, decree, order, writ or, to its knowledge, any
statute, rule or regulation applicable to the Company that would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company. The execution and delivery of, and the
performance of and compliance with the transactions contemplated by, the
Transaction Documents, and the issuance and sale of the Shares as payment under
the Note, upon conversion of the Note or upon exercise of the Warrant, will not,
with or without the passage of time or giving of notice, result in any such
material violation, or be in conflict with or constitute a default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.

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     3.12. Litigation. Except as disclosed in the SEC Reports, there is no
action, suit, proceeding or investigation pending or, to the Company’s
knowledge, currently threatened against the Company that questions the validity
of this Agreement or the other agreements contemplated hereby or the right of
the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby. Except as disclosed in the SEC
Reports, there is no action, suit, proceeding or investigation or, to the
Company’s knowledge, currently threatened against the Company that might result,
either individually or in the aggregate, in any material adverse change in the
assets, condition, affairs or prospects of the Company, financial or otherwise,
or any change in the current equity ownership of the Company, nor is the Company
aware that there is any basis for the foregoing. The foregoing includes, without
limitation, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any of the employees of the Company,
their use in connection with the Company’s business of any information or
techniques allegedly proprietary to any of their former employers or their
obligations under any agreements with prior employers. Except as disclosed in
the SEC Reports, the Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality.

     3.13. Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and, to the
Company’s knowledge, all other taxes due and payable by the Company on or before
the Closing have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (i) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof or
(ii) of any deficiency in assessment or proposed judgment to its federal, state
or other taxes. The Company has no knowledge of any liability of any tax to be
imposed upon the properties or assets of the Company as of the date of this
Agreement that is not adequately provided for.

     3.14. Employees. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company’s knowledge, threatened with respect to the Company. Except as set
forth on Schedule 3.14 or in the SEC Reports, no employee has any agreement or
contract, written or verbal, regarding his employment. Except as disclosed on
Schedule 3.14 or in the SEC Reports, the Company is not a party to or bound by
any currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Company’s knowledge, no employee
of the Company, nor any consultant with whom the Company has contracted, is in
violation of any material term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company; and, to the Company’s
knowledge, the continued employment by the Company of its present employees, and
the performance of the Company’s contracts with its independent contractors,
will not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. Except as disclosed on Schedule
3.14 or in the SEC Reports, no employee of the Company has been granted the
right to continued employment by the Company or to any material compensation
following termination of employment with the Company. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any officer, key employee or group of
key employees.

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     3.15. Registration Rights. Except as to a registration statement on Form
S-2, SEC File No. 333-110831, filed by the Company with the Commission (the "S-2
Registration Statement"), or as disclosed on Schedule 3.15 or required pursuant
to the Registration Rights Agreement, the Company is presently not under any
obligation, and has not granted any rights, to register (as defined in the
Registration Rights Agreement) any of the Company’s presently outstanding
securities or any of its securities that may hereafter be issued.

     3.16. Compliance with Laws; Permits. Except as disclosed in the SEC
Reports, the Company is not in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of its business or
the ownership of its properties that would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of, and
the performance of the transactions contemplated by, the Transaction Documents,
the pledge of the Collateral to secure the Note or the issuance of the Shares as
payment under the Note, upon conversion of the Note or upon exercise of the
Warrant, except such as has been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed in
a timely manner. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company and the
Company believes it can (and covenants to Purchaser that it will) obtain any
similar authority for the conduct of its business as planned to be conducted.

     3.17. Environmental and Safety Laws. Except as disclosed in the SEC
Reports, to the Company’s knowledge, the Company is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the Company’s knowledge, no material
expenditures are or will be required in order to comply with any such existing
statute, law or regulation. Without limiting the foregoing, and except as
disclosed in the SEC Reports:

     (a) with respect to any real property owned, leased or otherwise utilized
by the Company (“Real Property”), the Company is not or has not in the past been
in violation of any Hazardous Substance Law which violation could reasonably be
expected to result in a material liability to the Company or its properties and
assets;

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     (b) the Company nor, to the knowledge of the Company, any third party has
used, Released, generated, manufactured, produced or stored, in, on, under, or
about any Real Property, or transported thereto or therefrom, any Hazardous
Substances that could reasonably be expected to subject the Company to material
liability, under any Hazardous Substance Law;

     (c) to the knowledge of the Company, there are no underground tanks,
whether operative or temporarily or permanently closed, located on any Real
Property that could reasonably be expected to subject the Company to material
liability under any Hazardous Substance Law;

     (d) there are no Hazardous Substances used, stored or present at, or on, or
to the knowledge of the Company that could reasonably be expected to migrate
onto any Real Property, except in compliance with Hazardous Substance Laws; and

     (e) to the knowledge of the Company, there neither is nor has been any
condition, circumstance, action, activity or event that could reasonably be
expected to be a material violation by the Company of any Hazardous Substance
Law, or to result in liability to the Company under any Hazardous Substance Law.

     For purposes hereof, “Hazardous Substances” means (statutory acronyms and
abbreviations having the meaning given them in the definition below of
“Hazardous Substances Laws”) substances defined as “hazardous substances,”
“pollutants” or “contaminants” in Section 101 of the CERCLA; those substances
defined as “hazardous waste,” “hazardous materials” or “regulated substances” by
the RCRA; those substances designated as a “hazardous substance” pursuant to
Section 311 of the CWA; those substances defined as “hazardous materials” in
Section 103 of the HMTA; those substances regulated as a hazardous chemical
substance or mixture or as an imminently hazardous chemical substance or mixture
pursuant to Sections 6 or 7 of the TSCA; those substances defined as
“contaminants” by Section 1401 of the SDWA, if present in excess of permissible
levels; those substances regulated by the Oil Pollution Act; those substances
defined as a pesticide pursuant to Section 2(u) of the FIFRA; those substances
defined as a source, special nuclear or by-product material by Section 11 of the
AEA; those substances defined as “residual radioactive material” by Section 101
of the UMTRCA; those substances defined as “toxic materials” or “harmful
physical agents” pursuant to Section 6 of the OSHA; those substances defined as
hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous
waste constituents in 40 C.F.R. Part 260.10, specifically including Appendix VII
and VIII of Subpart D of 40 C.F.R. Part 261; those substances designated as
hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those substances
defined as hazardous substances or hazardous materials in 49 C.F.R. Part 171.8;
those substances regulated as hazardous materials, hazardous substances, or
toxic substances in 40 C.F.R. Part 1910; any chemical, material, toxin,
pollutant, or waste regulated by or in any other Hazardous Substances Laws; and
in the regulations adopted and publications promulgated pursuant to said laws,
whether or not such regulations or publications are specifically referenced
herein.

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     “Hazardous Substances Law” means any of:

     (i) the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) (“CERCLA”);

     (ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.) (“Clean Water Act” or “CWA”);

     (iii) the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.) (“ RCRA”);

     (iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)
(“AEA”);

     (v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) (“CAA”);

     (vi) the Emergency Planning and Community Right to Know Act (42 U.S.C.
Section 11001 et seq.) (“EPCRA”);

     (vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.) (“FIFRA”);

     (viii) the Oil Pollution Act of 1990 (33 U.S.C.A. Section 2701 et seq.);

     (ix) the Safe Drinking Water Act (42 U.S.C. Sections 300f et seq.)
(“SDWA”);

     (x) the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C.
Sections 1201 et seq.) (“SMCRA”);

     (xi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.)
(“TSCA”);

     (xii) the Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et
seq.) (“HMTA”);

     (xiii) the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C.
Section 7901 et seq.) (“UMTRCA”);

     (xiv) the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) (“OSHA”); and

     (xv) all other federal, state and local governmental rules which govern
Hazardous Substances, and the regulations adopted and publications promulgated
pursuant to all such foregoing laws.

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     3.18. Offering Valid. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 4, the offer, sale and issuance
of the Note and the Warrant (and the Shares issuable as payment under the Note,
upon conversion of the Note or upon exercise of the Warrant) will be exempt from
the registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of the State of Minnesota.

     3.19. Full Disclosure. None of the Transaction Documents nor the SEC
Reports contain any untrue statement of a material fact nor, to the Company’s
knowledge and belief, omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading. There are no facts
that (individually or in the aggregate) materially adversely affect the
business, assets, liabilities, financial condition or operations of the Company
that have not been set forth in the Transaction Documents, the SEC Reports or in
other documents delivered to the Purchaser or its attorneys or agents in
connection herewith.

     3.20. Insurance. The Company has fire and casualty insurance policies with
coverage customary for companies similarly situated to the Company.

     3.21. Investment Company Act. The Company is not, and will not use the
proceeds from the Note in a manner so as to become, an “investment company,” or
a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended.

     3.22. Security Interest in Collateral. The Company owns the Collateral free
and clear of all claims, liens or encumbrances of any kind. Upon consummation of
the transactions as contemplated hereby, the Purchaser will have a first
priority security interest in the Collateral.

     3.23. NASDAQ Compliance. The Company’s Common Stock is registered pursuant
to Section 12(g) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and is listed on the Over-the-Counter Bulletin Board
administered by The Nasdaq Stock Market, Inc. (the “OTCBB”). The Company has
taken no action designed to, or likely to have the effect of, and the
transactions contemplated by this Agreement will not have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
de-listing of the Common Stock from the OTCBB. The Company has not received any
notification that the Commission, the National Association of Securities
Dealers, Inc., the OTCBB or any other self-regulatory organizational body is
contemplating terminating such registration or listing. Without limiting the
foregoing, the Transaction Documents and the transactions contemplated by them
require no shareholder approval under the rules or interpretations of the OTCBB.

     3.24. Reporting Status. The Company has filed in a timely manner all
documents that the Company was required to file under the Exchange Act during
the 12 months preceding the date of this Agreement. The SEC Reports complied in
all material respects with the Commission’s requirements as of their respective
filing dates, and the information contained therein as of the date thereof did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. As of
the date hereof, the Company satisfies the eligibility requirements for the use
of Form S-2 under the Securities Act of 1933, as amended.

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     3.25. No Manipulation of Stock. Neither the Company, nor any of its
directors, officers or controlling persons, has taken or will, in violation of
applicable law, take, any action designed to or that might reasonably be
expected to cause or result in, or which has constituted, stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the securities issued or issuable in connection with the transactions
contemplated hereunder.

     3.26. Foreign Corrupt Practices; Sarbanes-Oxley.

     (a) Neither the Company, nor to the knowledge of the Company, any agent or
other person acting on behalf of the Company, has (i) directly or indirectly,
used any corrupt funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to foreign or domestic political activity, (ii) made
any unlawful payment to foreign or domestic government officials or employees or
to any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended.

     (b) The Company is in compliance in all material respects with all
provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it as of the
Closing Date.

SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     The Purchaser hereby represents and warrants to the Company as of the
Closing Date, and agrees, as follows:

     4.1. Investment Representations. The Purchaser understands that neither the
offer nor the sale of the Note, the Warrant or the Shares has been registered
under the Securities Act. The Purchaser also understands that the Note and
Warrant are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon the Purchaser’s
representations contained in the Agreement. The Purchaser hereby represents and
warrants as follows:

     (a) Purchaser Bears Economic Risk. The Purchaser has substantial experience
in evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. The Purchaser must bear the economic risk of this investment
indefinitely unless the Note or Warrant (or the Shares) are registered pursuant
to the Securities Act, or an exemption from registration is available. Except as
contemplated by the Registration Rights Agreement, the Purchaser has no present
intention of selling or otherwise transferring the Note, the Warrant or the
Shares, or any interest therein. The Purchaser also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow the
Purchaser to transfer all or any portion of the Note, the Warrant or the Shares
under the circumstances, in the amounts or at the times the Purchaser might
propose.

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     (b) Acquisition for Own Account. Except as contemplated by the Registration
Rights Agreement, the Purchaser is acquiring the Note, the Warrant and the
Shares for the Purchaser’s own account for investment only, and not with a view
towards their public distribution.

     (c) Purchaser Can Protect Its Interest. The Purchaser represents that by
reason of its, or of its management’s, business or financial experience, the
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement, the Note, the Warrant and the
Registration Rights Agreement. Further, the Purchaser is aware of no publication
of any advertisement in connection with the transactions contemplated in the
Agreement.

     (d) Accredited Investor. The Purchaser represents that it is an accredited
investor within the meaning of Regulation D of the Securities Act.

     (e) Residence. The Purchaser represents that it is organized under the laws
of the British Virgin Islands and that its principal office is located in the
State of Minnesota.

     (f) Rule 144. The Purchaser acknowledges and agrees that the Note and
Warrant, and, if issued, the Shares, must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited “broker’s
transaction” or in transactions directly with a market maker (as such term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.

     4.2. Transfer Restrictions. The Purchaser acknowledges and agrees that the
Note and Warrant and, if issued, the Shares, are subject to restrictions on
transfer and will bear restrictive legends.

     4.3. Acquisition of Shares. Until the Note is paid in full, the Purchaser
may not acquire “beneficial ownership” (as defined by Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of Shares except for those which
are or may be acquired as payment on the Note or upon exercise of the Warrant.
The foregoing covenant shall lapse if the Company defaults in the timely payment
of any amount due under the Note.

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SECTION 5. CONDITIONS FOR CLOSING

     5.1. Conditions for the Company to Satisfy. The obligation of the Purchaser
to purchase the Note and Warrant as contemplated by this Agreement is subject to
satisfaction of the following contingencies at or prior to Closing:

     (a) The Company shall have obtained all third party consents required in
connection herewith, including consents to pledge the Collateral to the
Purchaser as security for the Note.

     (b) The Company shall have executed and delivered to the Purchaser at
Closing the Transaction Documents.

     (c) The Company shall have paid Gary S. Kohler and Scot W. Malloy,
together, a $40,000 cash origination fee related to the transactions
contemplated hereby and shall have issued warrants (in form substantially
similar to that of the Warrant) to purchase 100,000 shares of the Company’s
Common Stock to each of Messrs. Kohler and Malloy. Purchaser acknowledges that
the Company has previously paid $20,000 of the cash origination fee to Whitebox
Advisors, LLC pursuant to a letter agreement dated May 13, 2004 and that only
the $20,000 balance is due to Messrs. Kohler and Malloy at Closing.

     (d) Mills shall have executed and delivered the Mills Guaranty to the
Purchaser.

     (e) Maslon Edelman Borman & Brand, LLP, legal counsel to the Company, shall
have delivered an opinion to the Purchaser with respect to the following
matters:

          (i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Minnesota. To such firm’s
knowledge, the Subsidiaries are the only operating subsidiaries of the Company.
Active Hawk is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Minnesota. Each of the Company,
Active Hawk and, to such firm’s knowledge, Brazmin has all requisite corporate
or limited liability company power and authority to own and operate its
respective properties and assets and to carry on its respective business as
presently conducted and as presently proposed to be conducted. The Company has
all requisite corporate power and authority to execute and deliver the
Transaction Documents, to pledge the Collateral as security for the Note, to
issue and sell the Shares, to carry out the provisions of the Transaction
Documents. Each of the Company and Active Hawk is duly qualified and is
authorized to do business and is in good standing in each U.S. and foreign
jurisdiction in which the nature of its respective activities and of its
respective properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to be so qualified
would not have a materially adverse effect on the Company or its business, taken
as a whole.

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          (ii) The Company is authorized to issue 150,000,000 shares of Common
Stock, par value $0.01 per share, of which, to the firm’s knowledge, 33,275,181
shares are issued and outstanding. To the firm’s knowledge, the Company has no
outstanding Convertible Securities or any agreement or commitment to sell or
issue any shares of capital stock or Convertible Securities, except as described
herein. All issued and outstanding shares of the Company’s capital stock (a)
have been duly authorized and validly issued, (b) are fully paid and
nonassessable, (c) are free from any preemptive and cumulative voting rights and
(d) were issued pursuant to an effective registration statement filed with the
Commission and applicable state securities authorities or pursuant to valid
exemptions under federal and state securities laws. To the firm’s knowledge,
there are no outstanding rights of first refusal or proxy or shareholder
agreements of any kind relating to any of the Company’s securities to which the
Company or any of its executive officers and directors is a party. When issued
in compliance with the provisions of the Note and the Warrant (and upon payment
as provided by the Warrant), the Shares will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances; provided, however,
that the Shares may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by such
laws at the time a transfer is proposed.

          (iii) All corporate action on the part of the Company, its officers,
directors and shareholders necessary for the authorization of the Transaction
Documents, the performance of all obligations of the Company under the
Transaction Documents at the Closing, including the pledge of the Collateral as
security for the Note, and the authorization, sale, issuance and delivery of the
Shares as payment under the Note, upon conversion of the Note or upon exercise
of the Warrant has been taken. The Transaction Documents, when executed and
delivered, will be valid and binding obligations of the Company enforceable in
accordance with their terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights, (b) according to general principles
of equity that restrict the availability of equitable remedies; and (c) to the
extent that the enforceability of the indemnification provisions of the
Registration Rights Agreement may be limited by applicable laws. Although it is
not representing Mr. Mills in connection with the transactions contemplated by
this Agreement and the Transactions Documents, nothing has come to such firm’s
attention in connection with its regular representation of the Company that
would cause it to believe that the Mills Guaranty, when executed and delivered,
will not be a valid and binding obligation of Mills enforceable in accordance
with its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights and (b) according to general principles of
equity that restrict the availability of equitable remedies. The sale of the
Shares upon exercise of the Warrant or upon payment under the Note is not and
will not be subject to any preemptive rights or rights of first refusal.

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          (iv) The execution and delivery to the Purchaser of the Transaction
Documents does not violate or constitute a default under the Articles of
Incorporation or Bylaws, as amended, of the Company, or under any agreement
known to such firm to which the Company or the Subsidiary is a party or by which
any of their respective properties or assets are bound.

          (v) To such firm’s knowledge, except as disclosed in the SEC Reports,
there is no action, suit, proceeding or investigation pending or currently
threatened against the Company, including any that questions the validity of the
Agreement or the other agreements contemplated thereby or the right of the
Company to enter into any of such agreements, or to consummate the transactions
contemplated thereby. To such firm’s knowledge, except as disclosed in the SEC
Reports, there is no action, suit, proceeding or investigation or, to such
firm’s knowledge, currently threatened against the Company that might result,
either individually or in the aggregate, in any material adverse change in the
assets, condition, affairs or prospects of the Company, financial or otherwise,
or any change in the current equity ownership of the Company, nor is such firm
aware that there is any basis for the foregoing. To such firm’s knowledge, and
except as disclosed in the SEC Reports, the Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality.

          (vi) Upon tender of the funds by the Purchaser to the Company as
contemplated by the Agreement and filing of a UCC Financing Statement covering
the Collateral, a security interest in the Collateral will attach in favor of
the Purchaser.

SECTION 6. MISCELLANEOUS

     6.1. Governing Law. This Agreement shall be governed by the laws of the
State of Minnesota as such laws are applied to agreements between Minnesota
residents entered into and performed entirely in Minnesota.

     6.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the parties and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.

     6.3. Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Note, the Warrant or the Shares from time to time.

     6.4. Entire Agreement. The Transaction Documents, the Mills Guaranty and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.

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     6.5. Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     6.6. Amendment and Waiver. This Agreement may be amended or modified, and
any provision hereunder may be waived, only upon the written consent of the
Company and the Purchaser.

     6.7. Notices. All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and received
when delivered in person or by national overnight courier service or by
certified or registered mail, return receipt requested, or by telecopier,
addressed as follows:

  (a) if to the Company, at           Wits Basin Precious Minerals Inc.     520
Marquette Avenue, Suite 900     Minneapolis, Minnesota 55402     Attention: H.
Vance White, Chief Executive Officer     Facsimile: (612) 371-2077          
with a copy to:           Maslon Edelman Borman & Brand, LLP     90 South
Seventh Street, Suite 3300     Minneapolis, Minnesota 55402     Attention:
William M. Mower, Esq.     Facsimile: (612) 642-8358         (b) if to the
Purchaser, in care of:           Whitebox Advisors, LLC     3033 Excelsior
Boulevard, Suite 300     Minneapolis, Minnesota 55416     Attention: Jonathan
Wood, Chief Financial Officer     Facsimile: (612) 253-6151

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> > with a copy to:
> > 
> > Messerli & Kramer P.A.
> > 150 South Fifth Street, Suite 1800
> > Minneapolis, Minnesota 55402
> > Attention: Jeffrey C. Robbins, Esq.
> > Facsimile: (612) 672-3777.

     6.8. Indemnification by the Company. The Company agrees to indemnify and
hold the Purchaser harmless against any loss, liability, damage or expense
(including reasonable legal fees and costs) that the Purchaser may suffer,
sustain or become subject to as a result of or in connection with the breach by
the Company of any representation, warranty, covenant or agreement of the
Company contained in any of the Transaction Documents, or by Mills of any
representation, warranty, covenant or agreement of Mills contained in the Mills
Guaranty.

     6.9. Expenses. At Closing, the Company shall pay the Purchaser’s counsel,
Messerli & Kramer P.A., $10,000 for its legal fees and expenses in representing
the Purchaser in connection with the transactions contemplated hereby. In
addition, the Purchaser agrees to pay or reimburse the Purchaser for its
reasonable legal fees and expenses that it may incur after the date hereof in
connection with the granting of any waiver with respect to, the modification of
any of the terms or provisions of, or the enforcement of any of the Transaction
Documents or the Mills Guaranty.

      6.10. Titles and Subtitles. The titles of the sections and subsections of
the Agreement are for convenience of reference only and are not to be considered
in construing this Agreement.

     6.11. Counterparts. This Agreement may be delivered via facsimile or other
means of electronic communication, and may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.

      IN WITNESS WHEREOF, the parties hereto have hereunto affixed their
signatures.

Wits Basin Precious Minerals Inc. Pandora Select Partners L.P.                
By /s/ Mark D. Dacko By    

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  Mark D. Dacko, Chief Financial Officer         Its        

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