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

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of June 30, 2008

by and among

NORD RESOURCES CORPORATION
as Borrower,

and

COCHISE AGGREGATES AND MATERIALS, INC.
as Guarantor,

THE LENDERS FROM TIME TO TIME PARTY HERETO
as Lenders

and

NEDBANK LIMITED,
as Administrative Agent

___________________________

NEDBANK LIMITED,
as Sole Lead Arranger

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

TABLE OF CONTENTS

    Page       ARTICLE I. DEFINITIONS 1 Section 1.1. Defined Terms 1 Section
1.2. Terms Generally 15 Section 1.3. Accounting Terms; GAAP 15 ARTICLE II. THE
TERM LOANS 15 Section 2.1. Term Loans 15 Section 2.2. Borrowings 16 Section 2.3.
Requests for Borrowings 16 Section 2.4. Funding of Borrowings 16 Section 2.5.
Termination and Reduction of Term Loan Commitments 17 Section 2.6. Repayment of
Term Loans 17 Section 2.7. Evidence of Debt 17 Section 2.8. Optional Prepayments
of Term Loans 18 Section 2.9. Mandatory Prepayments 18 Section 2.10. Fees 19
Section 2.11. Interest 20 Section 2.12. Alternate Rate of Interest 20 Section
2.13. Increased Costs 21 Section 2.14. Break Funding Payments 22 Section 2.15.
Taxes 22 Section 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs 23 Section 2.17. Mitigation Obligations 25 ARTICLE III. REPRESENTATIONS
AND WARRANTIES 25 Section 3.1. Status and Power 25 Section 3.2. Authorization;
Enforceability 25 Section 3.3. No Conflicts 25 Section 3.4. Financial Statements
26 Section 3.5. Feasibility Study 26 Section 3.6. Litigation, etc 26 Section
3.7. Title to Assets 26

i

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

TABLE OF CONTENTS
(continued)

    Page       Section 3.8. Conduct of Business 26 Section 3.9. Labor and
Employment Matters 26 Section 3.10. No Default 27 Section 3.11. Tax Returns and
Taxes 27 Section 3.12. Withholding and Other Taxes 27 Section 3.13. Material
Contracts 27 Section 3.14. Compliance with Environmental Laws 27 Section 3.15.
Solvency 28 Section 3.16. Locations of Tangible Assets 28 Section 3.17. Consents
and Approvals for the Project 28 Section 3.18. Consents and Approvals for the
Security 28 Section 3.19. Capitalization of the Borrower 28 Section 3.20.
Subsidiaries 28 Section 3.21. Mining Properties 29 Section 3.22. Feasibility
Study 29 Section 3.23. Financial Model, Construction Schedule and Capital
Spending Plan 29 Section 3.24. Project Information 29 Section 3.25. Intellectual
Property 29 Section 3.26. Liens 30 Section 3.27. Insurance 30 Section 3.28.
Ranking 30 ARTICLE IV. CONDITIONS 30 Section 4.1. Closing Date 30 Section 4.2.
Additional Conditions 33 ARTICLE V. AFFIRMATIVE COVENANTS 33 Section 5.1.
Financial Statements; Ratings Change and Reporting 33 Section 5.2. Notices of
Material Events 35 Section 5.3. Existence; Conduct of Business 36 Section 5.4.
Payment of Obligations 36

ii

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

TABLE OF CONTENTS
(continued)

    Page       Section 5.5. Maintenance of Properties; Insurance 36 Section 5.6.
Books and Records; Inspection Rights 36 Section 5.7. Compliance with Laws 36
Section 5.8. Use of Proceeds 36 Section 5.9. Project; Construction; Etc 37
Section 5.10. Updated Financial Model 37 Section 5.11. Further Assurances 38
ARTICLE VI. NEGATIVE COVENANTS 38 Section 6.1. Indebtedness 38 Section 6.2.
Liens 38 Section 6.3. Fundamental Changes; Dispositions; Subsidiaries; Etc 38
Section 6.4. Investments, Loans, Advances, Guarantees and Acquisitions 39
Section 6.5. Hedging Agreements 39 Section 6.6. Restricted Payments 39 Section
6.7. Transactions with Affiliates 39 Section 6.8. Restrictive Agreements 39
Section 6.9. Material Contracts 40 Section 6.10. Financial Covenants 40 ARTICLE
VII. EVENTS OF DEFAULT 40

ARTICLE VIII. THE ADMINISTRATIVE AGENT

42 ARTICLE IX. GUARANTY 44 Section 9.1. Guaranty 44 Section 9.2. Guaranty
Absolute 44 Section 9.3. Waiver 45 Section 9.4. Continuing Guaranty; Assignments
45 Section 9.5. Subrogation 46 Section 9.6. Maximum Obligations 46 ARTICLE X.
MISCELLANEOUS 47 Section 10.1. Notices 47 Section 10.2. Waivers; Amendments 47

iii

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

TABLE OF CONTENTS
(continued)

    Page       Section 10.3. Expenses; Indemnity; Damage Waiver 48 Section 10.4.
Successors and Assigns 49 Section 10.5. Survival 52 Section 10.6. Counterparts;
Integration; Effectiveness 52 Section 10.7. Severability 53 Section 10.8. Right
of Setoff 53 Section 10.9. Governing Law; Jurisdiction; Consent to Service of
Process 53 Section 10.10. WAIVER OF JURY TRIAL 54 Section 10.11. Headings 54
Section 10.12. Confidentiality 54 Section 10.13. Interest Rate Limitation 55
Section 10.14. Know Your Customer Requirements 55

iv

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

SCHEDULES:

Schedule 1.1 -- Material Contracts
Schedule 2.1 -- Term Loan Commitments
Schedule 6.2 -- Existing Liens

EXHIBITS:

Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Term Loan Borrowing Request
Exhibit C -- Form of Collateral Account Agreement
Exhibit D -- Form of Deed of Trust
Exhibit E -- Form of Excess Cash Flow Certificate

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

AMENDED AND RESTATED CREDIT AGREEMENT

     AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 30, 2008, among NORD
RESOURCES CORPORATION, a Delaware corporation (the “Borrower”), and COCHISE
AGGREGATES AND MATERIALS, INC., a Nevada corporation (“Cochise”, a “Guarantor”),
the lenders from time to time party hereto (each a “Lender” and collectively,
the “Lenders”), and NEDBANK LIMITED, as administrative agent (in such capacity,
the “Administrative Agent”) and as sole lead arranger (in such capacity, the
“Sole Lead Arranger”).

     WHEREAS the Borrower, the Guarantor, the Lenders and the Administrative
Agent entered into certain Credit Agreement dated June 17, 2007 to provide to
the Borrower a term loan facility to assist in financing the construction,
start-up, and operation of mining and metal operations at the Johnson Camp Mine,
a copper mine and production facility located 65 miles east of Tuscon, Arizona
in Cochise County (the “Original Agreement”);

     WHEREAS the Borrower has amended its mine plan as a result of unexpected
guidance provided to the Borrower by the Arizona Department of Environmental
Quality;

     WHEREAS it is therefore necessary that certain of the time periods provided
for in the Original Agreement be extended or otherwise varied, which extensions
the Lenders are prepared to grant subject to certain conditions;

     WHEREAS the parties have accordingly agreed to cause the Original Agreement
to be amended and restated as set forth herein;

     NOW THEREFORE, in consideration of the foregoing recitals, the mutual
agreements contained herein and for other good and valuable consideration (the
receipt and sufficiency of which is hereby acknowledged), the parties hereto
agree as follows:

ARTICLE I.
DEFINITIONS

     SECTION 1.1. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:

     “Administrative Agent” means Nedbank Limited, in its capacity as
administrative agent for the Lenders hereunder.

     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

     “Applicable Law” means all public laws, statutes, ordinances, decrees,
judgments, codes, standards, acts, orders, by-laws, rules, regulations,
Approvals, permits and requirements of any Governmental Authority, in each case
having the force of law and which now or hereafter may be lawfully applicable to
and enforceable against any Loan Party or its property or any part thereof.

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

     “Applicable Percentage” means, with respect to any Lender, the percentage
of the total Term Loan Commitments represented by such Lender’s Term Loan
Commitment. If the Term Loan Commitments have terminated or expired, the
Applicable Percentages shall be determined based upon the Term Loan Commitments
most recently in effect, giving effect to any assignments.

     “Applicable Margin” means (a) prior to Completion, 3.5% per annum, and (b)
after Completion, 3.0% per annum.

     “Approvals” means each and every approval, order in council, authorization,
license, permit, consent, filing and registration by or with any Governmental
Authority or other Person which are required by Applicable Law and necessary to
authorize or permit the development and operation of the Project and the
execution, delivery, performance, validity and enforceability of the Loan
Documents or the Material Contracts.

     “Assignment and Assumption” means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.4), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

     “Availability Period” means the period from and including the Closing Date
to but excluding the earlier of (a) the date of termination of the Term Loan
Commitments, (b) the first Principal Payment Date and (c) December 31, 2008.

     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.

     “Borrower” has the meaning set forth in the recitals hereto.

     “Borrowing” means a borrowing of Term Loans.

     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

     “CADS” means, for a particular period, (a) gross revenues for such period
(for any future period, calculated (i) using the actual hedged price for future
hedged production and (ii) the unhedged price for unhedged production, with the
unhedged price being the Historic Six Month Average Spot Price at such time)
less (b) the sum of (i) the aggregate of Project Development Costs for such
period, (ii) cash Tax Expenses for such period, and (iii) cash Operating Costs
for such period, and (c) adjusted for changes in Working Capital over such
period (plus any increases and minus any decreases).

     “Capital Expenditures” means, for a particular period, the aggregate of all
expenditures by the Borrower during such period that, in accordance with GAAP,
are classified as capital expenditures.

- 2 -

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

     “Capital Lease Obligations” of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.

     “Casualty Event” means, with respect to any Property of any Person, any
loss of or damage to, or any condemnation or other taking of, such Property for
which such Person receives insurance proceeds, or proceeds of a condemnation
award or other compensation.

     “Change of Control” means (a) Cochise shall cease to be a direct
wholly-owned subsidiary of the Borrower; or (b) the Administrative Agent, for
the benefit of the Lenders, shall cease to have a perfected security interest in
Equity Interests of Cochise representing 100% of the aggregate equity value
represented by the issued and outstanding Equity Interests in Cochise.

     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.13(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement.

     “Closing Date” means the second Business Day after which the conditions
specified in Section 4.1 are satisfied (or waived in accordance with Section
10.2) .

     “Cochise” has the meaning in the recitals hereto.

     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

     “Collateral” means a collective reference to all real and personal property
with respect to which Liens have been granted in favor of the Administrative
Agent pursuant to and in accordance with the Security Documents.

     “Collateral Account Agreement” means the Collateral Account Agreement in
the form attached as Exhibit C hereto.

     “Collateral Accounts” shall have the meaning set forth in the Collateral
Account Agreement.

     “Completion” means the earlier to occur of the date upon which the Borrower
has delivered the Completion Certificates to the Administrative Agent, duly
executed by the Borrower, and verified by the Independent Technical Consultant,
and such certificates shall have been accepted by the Administrative Agent.

- 3 -

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

     “Completion Certificates” shall mean, collectively, the forms of
certificates relating to Completion which shall be in a form satisfactory to the
Borrower, the Administrative Agent, and the Independent Technical Consultant.

     “Completion Date” means the date upon which Completion occurs.

     “Consent Agreements” means, collectively, the agreements so named, entered
into or to be entered into between the Lenders, the Administrative Agent, the
Borrower and each of the counterparties to each Material Contract with a value
in excess of $1,000,000 (as determined by the Administrative Agent in
consultation with the Borrower) pursuant to which, inter alia, such
counterparties consent to the Security and grant to the Lenders or their nominee
certain “step-in” rights.

     “Construction Schedule and Capital Spending Plan” means the Borrower’s
construction schedule and capital spending plan, dated June 20, 2007, as the
same may be modified by the Borrower and approved by the Required Lenders.

     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

     “Debt Issuance” means the issuance of any Indebtedness by any Loan Party
other than the issuance of any Indebtedness permitted under Section 6.1.

     “Debt Service Charges” means, for a particular period, the sum of all
scheduled principal payments made or required to have been made by the Borrower
hereunder with respect to Term Loans during such period and interest on such
Term Loans paid or required to have been paid by the Borrower during such
period.

     “Debt Service Coverage Ratio” means, (a) with respect to a particular
Historical Test Period, the ratio of (i) CADS for such Test Period to (ii) Debt
Service Charges for such Test Period (as determined with respect to the
financial statements most recently delivered pursuant to Section 5.1(a) and (b)
hereof); and (b) with respect to a particular Future Test Period, the ratio of
(i) CADS for such Test Period to (ii) Debt Service Charges for such Test Period
(as determined with respect to the Financial Model then in effect).

     “Debt Service Reserve Account” has the meaning set forth in the Collateral
Account Agreement.

     “Deed of Trust’ means the Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing in the form of Exhibit D, hereto.

     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.

- 4 -

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

     “Disclosure Schedule” means the disclosure schedule that has been prepared
by the Borrower, delivered by the Borrower to the Lender, and dated as of June
17, 2007, as supplemented by the updates provided by the Borrower to the Lender
from and after such date..

     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.

     “dollars” or “$” refers to lawful money of the United States of America.

     “EBIT” means, for a particular period, Net Income for such period plus, to
the extent deducted in determining such Net Income and without duplication, the
aggregate of the (a) Interest Expenses for such period, and (b) Tax Expenses for
such period, determined in each case in accordance with GAAP.

     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to health
and safety matters.

     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower directly or indirectly resulting from
or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

     “Environmental Plan” means the Compliance Order dated September 7, 2002
issued by the Arizona Department of Environmental Quality, as the same may be
modified, replaced, or superceded (including, without limitation, by the
appropriate Aquifer Protection Permit).

     “Equity Interests” means shares of equity interest, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.

     “Equity Issuance” means any issuance by the Borrower to any Person (other
than a Loan Party) of shares of its Equity Interests.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the

- 5 -

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

Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.

     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

     “Event of Default” has the meaning assigned to such term in Article VII.

     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a) .

     “Excess Cash Flow” means, at any particular time and from time to time, the
amount identified in the Excess Cash Flow Certificate.

     “Excess Cash Flow Certificate” means a certificate of a Financial Officer
of the Borrower substantially in the form of Exhibit E hereto.

     “Existing Bridge Loan Facility” means the loan evidenced by the $4,900,000
Amended and Restated Secured Promissory Note dated May 31, 2006 between the
Borrower and Nedbank Limited, as the same may be amended and modified from time
to time.

- 6 -

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

     “Feasibility Study” means the Feasibility Study, dated September 2007,
prepared by Bikerman Engineering & Technology Associates, Inc..

     “Fee Letter” means the fee letter dated June 27, 2007 between the Borrower
and Nedbank Limited, as the same may be amended, modified, supplemented or
replaced from time to time.

     “Financial Model” means the financial model dated June 20, 2007, as the
same may be modified from time to time in accordance with Section 5.10.

     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.

     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.

     “Forward Sale Price Protection Program” means a hedging program with
respect to a specified percentage of copper output from the Project which shall
be entered into prior to the Closing Date and which shall be in form and
substance satisfactory to the Borrower and the Administrative Agent.

     “Future Test Periods” means with respect to any Test Date, the period of
four consecutive fiscal quarters ending on each of the next four succeeding Test
Dates.

     “GAAP” means generally accepted accounting principles in the United States
of America.

     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.

     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation; provided, that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.

     “Guarantor” means Cochise.

- 7 -

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

     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

     “Hedging Agreement” means any present or future swap, hedging, foreign
exchange or cash management agreement or other derivative transaction entered
into by any Loan Party which constitutes any copper or commodity hedging
transaction, spot or forward foreign exchange transaction, interest rate swap
transaction, currency swap transaction, forward rate transaction, rate cap
transaction, rate floor transaction, rate collar transaction, and any other
exchange or rate protection transaction, any combination of such transactions or
any option with respect to any such transaction entered into by any Loan Party.

     “Historic Six Month Average Spot Price” means, for any day, the average of
the closing spot price for copper on New York Comex for each Business Day over
the six-month period ending on such day.

     “Historical Test Period” means the period of four consecutive fiscal
quarters of the Borrower ending on a Test Date; provided that for purposes of
calculating the Debt Service Coverage Ratio and Interest Coverage Ratio for each
of the first three applicable Test Dates after Completion, the amount of each of
CADS, Debt Service Charges, EBIT and Interest Expense for purposes of such
calculations shall be determined as follows: (a) for the first Test Date, such
amounts shall equal the amounts for the most recently ended fiscal quarter
multiplied by 4, (b) for the second Test Date, such amounts shall equal the
amount for the two most recently ended fiscal quarters multiplied by 2; and (c)
for the third Test Date, such amounts shall equal the amount for the three most
recently ended fiscal quarters multiplied by 3/4.

     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.

- 8 -

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

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Independent Technical Consultant” means the technical engineering
consultant as the Administrative Agent, in consultation with the Borrower, may
engage from time to time to monitor the Borrower’s construction under and
compliance with the Construction Schedule and Capital Spending Plan, certify the
passage of the Completion tests and otherwise carry out the responsibilities of
the Independent Technical Consultant under the Loan Documents.

     “Initial Financial Model” has the meaning set forth in Section 5.10(a) .

     “Intellectual Property” shall mean all issued patents and patent
applications, industrial design registrations, trade-marks, registrations and
applications therefor, trade-names and styles, logos, copyright registrations
and applications therefor, all of the foregoing owned by or licensed to the Loan
Parties or any of them and used in or necessary to the operation of the Project.

     “Interest Coverage Ratio” means (a) with respect to a particular Historical
Test Period, the ratio of (i) EBIT for such Test Period to (ii) Interest Expense
for such Test Period (as determined with respect to the financial statements
most recently delivered pursuant to Section 5.1(a) and (b) hereof); and (b) with
respect to a particular Future Test Period, the ratio of (i) EBIT for such Test
Period to (ii) Interest Expense for such Test Period (as determined with respect
to the Financial Model then in effect); provided that any such calculation shall
be effected without regard to the effect of any non-cash expense associated with
the $23 million equity financing.

     “Interest Expense” means, for any particular period, the aggregate amount
which would be classified on the income statement of the Borrower for such
period as interest expenses (whether expensed or capitalized or in respect of
synthetic lease obligations), all as determined in accordance with GAAP.

     “Interest Payment Date” means the last Business Day of each of March, June,
September and December in each year.

     “Interest Period” means, with respect to any Borrowing, (a) the period from
and including the date of such Borrowing to but excluding the first Interest
Payment Date occurring after such Borrowing, and (b) thereafter, the period from
and including the first Interest Payment Date for such Borrowing, to but
excluding the next Interest Payment Date.

     “Lenders” has the meaning set forth in the recitals hereto.

     “LIBOR Rate” means (a) the rate of interest per annum, calculated on the
basis of a year of 360 days, determined by the Administrative Agent for a
particular Interest Period to be the rate of interest per annum that appears as
such on the Telerate Screen Page 3750 at 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such Interest Period, (b) if, for any
reason, such rate does not appear on such Telerate Page, the rate of interest
per annum, calculated on the basis of a year of 360 days, determined by the
Administrative Agent for a particular Interest Period to be the rate of interest
per annum that appears as such on the Reuters Page LIBOR01 at 11:00 a.m. (New
York City time) on the second Business Day prior to the commencement of such
Interest Period, or (c) if, for any reason, such rate does not appear on

- 9 -

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

such Telerate or Reuters Pages, LIBOR shall mean the rate of interest per annum,
calculated on the basis of a year of 360 days and rounded upwards if necessary
to the nearest whole multiple of 1/16% determined by the Administrative Agent as
being the rate of interest at which the Administrative Agent, in accordance with
its normal practices, would be prepared to offer to leading banks in the London
interbank market for delivery on the first day of each relevant Interest Period
for a period equal to the relevant Interest Period based on the number of days
comprised therein, deposits in U.S. dollars of comparable amounts to the amount
of the Term Loan, to be outstanding during the Interest Period, at or about
11:00 am (London time) on the second Business Day prior to the commencement of
such Interest Period.

     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.

     “Loan Documents” means this Agreement, the Security Documents, and the Fee
Letter.

     “Loan Party” means each of the Borrower and the Guarantor.

     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Project or any Loan Party, (b) the ability of any Loan Party to perform any
of its obligations under this Agreement or (c) the rights of or benefits
available to the Lenders under the Loan Documents.

     “Material Contracts” means the material contracts set forth on Schedule
1.1, and any other contract which, in the event of a breach, could reasonably be
expected to result in a Material Adverse Effect, as determined by the
Administrative Agent in consultation with the Borrower.

     “Material Indebtedness” means Indebtedness (other than the Term Loans), or
obligations in respect of one or more Hedging Agreements, of any one or more of
any Loan Party in an aggregate principal amount exceeding $200,000. For purposes
of determining Material Indebtedness, the “principal amount” of the obligations
of any Loan Party in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such
Loan Party would be required to pay if such Hedging Agreement were terminated at
such time.

     “Mining Properties” means the real property pledged to the Administrative
Agent for the benefit of the Lenders pursuant to the Security Documents.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Multiemployer Plan” means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

- 10 -

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

     “Net Cash Proceeds” means:

     (a) with respect to any Disposition, the excess, if any, of (i) the sum of
cash and cash equivalents received in connection with such Disposition less (ii)
the sum of (x) the out-of-pocket expenses incurred by the Borrower in connection
with such Disposition and (y) taxes reasonably estimated to be actually payable
in connection therewith;

     (b) with respect to any Casualty Event, the excess, if any, of (i) the sum
of insurance proceeds or other condemnation award received (other than any
amounts received in connection with business interruption insurance) in
connection with such Casualty Event less (ii) the sum of any reasonable expenses
incurred in connection therewith; and

     (c) with respect to any Debt Issuance, the excess, if any, of (i) all cash
received in connection with such Debt Issuance less (ii) the sum of all
reasonable expenses by the Borrower incurred in connection therewith;

     “Net Income” means, for a particular period, the aggregate amount which
would be classified on the income statement of the Borrower for such period as
net income, determined in accordance with GAAP; provided that Net Income shall
be inclusive of extraordinary, unusual and non-recurring items to the extent
received or paid in cash and exclusive of extraordinary, unusual and
non-recurring items to the extent not received or paid in cash.

     “Obligations” means all indebtedness, obligations and liabilities, present
or future, absolute or contingent, matured or not, at any time owing by a Loan
Party to a Lender or the Administrative Agent under or in connection with the
Loan Documents or any Hedging Agreement.

     “Operating Costs” means, for any period, the sum, computed without
duplication, of all consolidated costs and expenses (including, without
limitation, costs relating to corporate overhead, salaries, insurance, board
expenses, legal expenses, deferred salaries, and expenses in connection with
letters of credit) paid directly or indirectly by the Borrower during such
period (or, in the case of any future period, projected to be paid or payable
during such period) in connection with the operation, maintenance and
administration of the Project.

     “Other Taxes” means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.

     “Participant” has the meaning set forth in Section 10.4.

     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.

     “Permitted Investments” means:

     (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the

- 11 -

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

extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof;

     (b) investments in commercial paper maturing within 270 days from the date
of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody’s;

     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

     (d) fully collateralized repurchase agreements with a term of not more than
30 days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c) above; and

     (e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio
assets of at least $5,000,000,000.

     (f) any deposits of the type described in clause (d) of “Permitted Liens”

     “Permitted Liens” means Liens:

     (a) imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.4;

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.4;

     (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations;

     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds, letters of
credit and other obligations of a like nature, in each case in the ordinary
course of business;

     (e) judgment liens in respect of judgments that do not constitute an Event
of Default under clause (k) of Article VII; and

     (g) easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of business
that do not secure any monetary obligations and do not materially detract from
the value of the affected property or interfere with the ordinary conduct of
business of the Borrower;

- 12 -

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

provided that the term “Permitted Liens” shall not include any Lien securing
Indebtedness.

     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

     “Plan” means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

     “Principal Payment Dates” means the last Business Day of March, June,
September, and December in each year, starting with the first such date at least
15 months after the first drawdown (the “First Principal Payment Date”) and
ending on the date that is 45 months after the First Principal Payment Date.

     “Proceeds Account” has the meaning set forth in the Collateral Account
Agreement.

     “Project” means the construction, startup and operation by the Borrower of
the Johnson Camp Mine, a copper mine and production facility located 65 miles
east of Tucson, Arizona, as described in the Feasibility Study and as augmented
by the Construction Schedule and Capital Spending Plan and Financial Model.

     “Project Development Costs” means amounts (other than Operating Expenses)
spent pursuant to Material Contracts and the Construction Schedule and Capital
Spending Plan.

     “Register” has the meaning set forth in Section 10.4.

     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.

     “Required Lenders” means, at any time, Lenders having Term Loans and unused
Term Loan Commitments representing more than 50% of the sum of the total Term
Loans and unused Term Loan Commitments at such time.

     “Restricted Payment” means (a) any dividend or other distribution (whether
in cash, securities or other property) with respect to any Equity Interests in
the Borrower, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any option, warrant or other right to
acquire any such Equity Interests in the Borrower, and (b) any other
expenditures not constituting Project Development Costs or Operating Costs,
including, without limitation, any amounts expended with respect to (x)
exploration at the Coyote Springs site in an amount in excess of $1,500,000
during the Availability Period, and (y) exploration at the Mimbres site in an
amount in excess of $100,000 during the Availability Period.

     “S&P” means Standard & Poor’s.

- 13 -

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

     “Secured Parties” means the Administrative Agent and the Lenders.

     “Security” means the collateral security constituted by the Security
Documents.

     “Security Documents” means the Deed of Trust, the Collateral Account
Agreement, the Consent Agreements and such other security documents and
instruments, including without limitation Uniform Commercial Code financing
statements, as may be executed and/or delivered by the Loan Parties pursuant to
the terms hereunder or any collateral document which, in each case, shall be
deemed executed and delivered for the benefit of the Administrative Agent and
the Lenders.

     “Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and (e)
such Person is able to pay its debts and liabilities, contingent obligations and
other commitments as they mature in the ordinary course of business. The amount
of contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time, represents
the amount that can be reasonably be expected to become an actual or matured
liability.

     “Start-up of Commercial Production” means the earliest date on which the
Borrower has produced at least three million pounds of saleable copper cathodes.

     “subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.

     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.

     “Term Loans” has the meaning set forth in Section 2.1.

     “Term Loan Borrowing Request” means a borrowing request substantially in
the form Exhibit B.

- 14 -

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

     “Term Loan Commitment” means the commitment of such Lender to make Term
Loans hereunder, as such amount may be reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.4. The
initial amount of each Lender’s Term Loan Commitment is set forth on Schedule
2.1, or in the assignment and assumption pursuant to which such Lender shall
have assumed its Term Loan Commitment, as applicable. The initial aggregate
amount of the Term Loan Commitment is $25,000,000, which amount may be reduced
by the Borrower in accordance with Section 2.5(b) .

     “Test Date” means the last day of December, March, June, and September of
each year, commencing from the date on which Completion occurs or the first such
date at least 12 months after the first drawdown, whichever is earlier, until
the final Principal Payment Date.

     “Transactions” means (a) the execution, delivery and performance by the
Loan Parties of (i) the Loan Documents, the Borrowing and the use of the
proceeds thereof, and (ii) the Material Contracts, and (b) the development of
the Project by the Borrower.

     “Withdrawal Liability” means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

     “Working Capital” means, at any particular time, (a) the amount which would
be classified on the balance sheet of the Borrower at such time as current
assets, minus (b) the amount which would be classified on the balance sheet of
the Borrower at such time as current liabilities (other than the current portion
of long-term debt), in each case determined in accordance with GAAP.

     SECTION 1.2. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

     SECTION 1.3. Accounting Terms; GAAP. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative

- 15 -

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

Agent that the Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or in
the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.

ARTICLE II.
THE TERM LOANS

     SECTION 2.1. Term Loans. Subject to the terms and conditions set forth
herein, each Lender agrees to make available to the Borrower during the
Availability Period, loans (“Term Loans”) in an aggregate principal amount that
will not result in a Lender exceeding such Lender’s Term Loan Commitment. The
Term Loan is not revolving in nature, and any portion thereof that is repaid or
prepaid cannot be reborrowed. Borrowings may occur from time to time but not
more frequently than once per calendar month.

     SECTION 2.2. Borrowings.

     (a) Each Term Loan shall be made as part of a Borrowing consisting of Term
Loans made by the Lenders ratably in accordance with their respective Term Loan
Commitments. The failure of any Lender to make any Term Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Term Loan Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Term Loans as required.

     (b) Each Lender at its option may make any Term Loan by causing any branch
or Affiliate of such Lender to make such Term Loan; provided that any exercise
of such option shall not affect the obligation of such Lender hereunder to make
such Term Loan or the obligation of the Borrower to repay such Term Loan in
accordance with the terms of this Agreement; and provided further that any such
Lender shall in any event be subject to Section 2.17.

     (c) Each Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $2,500,000.

     SECTION 2.3. Requests for Borrowings. To request a Borrowing, the Borrower
shall provide a Term Loan Borrowing Request to the Administrative Agent not
later than 11:00 a.m., New York City time, two Business Days prior to the date
of the proposed Borrowing. Promptly following receipt of a Term Loan Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender’s Term Loan
to be made as part of the requested Borrowing.

     SECTION 2.4. Funding of Borrowings.

- 16 -

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

     (a) Each Lender shall make each Term Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Term Loans available to the Borrower by
promptly crediting the amounts so received to the Proceeds Account.

     (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to such Borrowing. If
such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Term Loan included in such Borrowing.

     SECTION 2.5. Termination and Reduction of Term Loan Commitments.

     (a) Unless previously terminated, the Term Loan Commitments shall terminate
on the last day of the Availability Period.

     (b) The Borrower may at any time terminate, or from time to time reduce,
the Term Loan Commitments; provided that each reduction of the Term Loan
Commitments shall be in an amount that is an integral multiple of $100,000 and
not less than $1,000,000.

     SECTION 2.6. Repayment of Term Loans. The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Lender the
then unpaid principal amount of the Term Loan in 15 (fifteen) equal installments
on each Principal Payment Date.

     SECTION 2.7. Evidence of Debt.

     (a) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Term Loan made by such Lender, including the amounts of
principal and interest payable to such Lender hereunder.

     (b) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Term Loan made hereunder and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from

- 17 -

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

the Borrower to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.

     (c) The entries made in the accounts maintained pursuant to paragraph (a)
or (b) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Term Loans in accordance with the terms of this Agreement.

     (d) Any Lender may request that Term Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Term Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 10.4) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

     SECTION 2.8. Optional Prepayments of Term Loans. The Borrower shall have
the right at any time and from time to time to prepay any Term Loan in whole or
in part, provided that:

     (a) the Borrower shall notify the Administrative Agent in writing of any
prepayment hereunder not later than 11:00 a.m., New York City time, at least
five Business Days before the date of prepayment; each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Term Loan or portion thereof to be prepaid; promptly following receipt of
any such notice, the Administrative Agent shall advise the Lenders of the
contents thereof;

     (b) each prepayment shall be applied to the Term Loans to be prepaid in
inverse order of maturity. Prepayments shall be accompanied by accrued interest
to the extent required by Section 2.11 and any break funding payments required
by Section 2.14.

     (c) the Debt Service Reserve Account is fully funded;

     (d) the Borrower shall be in compliance with the financial covenants set
forth in Section 6.10 after giving effect to any such prepayment (calculated on
a proforma basis with respect to the Historical Test Period and Future Test
Period for the Test Date most recently ended); and

     (e) so long as such prepayment is made with the proceeds of internally
generated funds (and not a refinancing) then no prepayment penalty shall apply;
provided that a prepayment penalty in an amount set forth on the following
schedule shall apply with respect to any prepayment made with proceeds of other
than internally generated funds:

Period Percentage of Principal Amount Prepaid

Closing Date through but excluding the second anniversary of the Closing Date

3.5% Second anniversary date of the Closing Date to but excluding the third
anniversary of the Closing Date 2.5% Third anniversary date of the Closing Date
to but excluding the fourth anniversary of the Closing Date 1.5% From and after
the fourth anniversary of the Closing Date 1.0%

- 18 -

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

     SECTION 2.9. Mandatory Prepayments.

     (a) Excess Cash Flow. After the termination of the Availability Period, on
each date of delivery of financial statements as required by Sections 5. 1(a)
and (b), the Borrower shall deliver to the Administrative Agent an Excess Cash
Flow Certificate for the fiscal quarter most recently ended and shall
simultaneously prepay outstanding Term Loans in the aggregate principal amount
equal to the amount of Excess Cash Flow as indicated on such certificate,
provided that, once the amounts prepaid by the Borrower in terms of this Section
are equal to or in excess of $1,500,000 in the aggregate, the Borrower shall be
thereafter obliged to prepay outstanding Term Loans in the aggregate principal
amount equal to 25% of Excess Cash Flow as indicated on such certificate. The
Administrative Agent shall notify the Borrower, within 10 Business Days after
receipt of such certificate, whether it validates and approves such certificate,
and, if it does not validate and approve the certificate, advise the Borrower of
the amount of the Excess Cash Flow as calculated by the Administrative Agent. In
the absence of manifest error on the part of the Administrative Agent, the
Borrower shall adjust the amount to be paid by it on the following Principal
Payment Date by the amount necessary to take account of the discrepancy in such
the certificate, as certified by the Administrative Agent. Any such prepayment
shall be applied in accordance with clause (e) hereof.

     (b) Dispositions. The Borrower shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds of any Disposition or series of
Dispositions by any Loan Party or any Subsidiary of a Loan Party pursuant to
Section 6.3(a)(iii) generating Net Cash Proceeds in excess of $250,000 in the
aggregate after the Closing Date. Each such prepayment shall be due promptly
upon receipt by the such Person of such Net Cash Proceeds and shall be applied
as set forth in clause (e) below. Notwithstanding the foregoing, the Borrower
shall not be required to apply any such proceeds in accordance with clause (e)
to the extent that the Borrower advises the Administrative Agent at the time of
the relevant Disposition that the Borrower intends to use the Net Cash Proceeds
thereof to finance one or more Operating Costs or Project Development Costs
permitted by this Agreement, and such Net Cash Proceeds are in

- 19 -

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

fact so applied (or contractually committed to be applied) to such expenditures
within 180 days of such Disposition (it being understood that Net Cash Proceeds
shall be deemed to be utilized in the same order in which they are received. Any
such Net Cash Proceeds which are not applied (or contractually committed to be
applied) within such 180 day period as required by the immediately preceding
sentence shall forthwith be applied in accordance with clause (e).
Notwithstanding the foregoing, the Borrower shall not be required to prepay any
proceeds realized form the sale of any Dispositions generated from the sale of
assets exclusively related to the Coyote Springs or Mimbres sites. In addition,
the Borrower agrees that the sale of any drilling equipment no longer used in
the business of the Borrower shall be considered to be Disposition under Section
6.3(a)(iii) .

     (c) Casualty Events. The Borrower shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds received by any Loan Party or any
Subsidiary of a Loan Party in connection with any Casualty Event or series of
Casualty Events generating Net Cash Proceeds in excess of $1,000,000 in the
aggregate for any fiscal year. Each such prepayment shall be due promptly upon
receipt by such Person of such Net Cash Proceeds and shall be applied as set
forth in clause (e) below. Notwithstanding the foregoing, the Borrower shall not
be required to apply any such proceeds in accordance with clause (e) to the
extent that the Company advises the Administrative Agent at the time of the
relevant Casualty Event that it intends to use Net Cash Proceeds thereof to
finance the replacement or repair of such affected property, and such Net Cash
Proceeds are in fact so applied (or contractually committed to be applied) to
such affected Property within 360 days of receipt thereof (it being understood
that Net Cash Proceeds shall be deemed to be utilized in the same order in which
they are received). Any such Net Cash Proceeds which are not applied (or
contractually committed to be applied) within such 360 day period as required by
the immediately preceding sentence shall forthwith be applied as set forth in
clause (e) below.

     (d) Debt Issuances. The Borrower shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds received by the Borrower or any
Subsidiary in connection with any Debt Issuance. Each such prepayment shall be
due promptly upon receipt by such Person of such Net Cash Proceeds and shall be
applied as set forth in clause (e) below.

     (e) Application. Any such prepayment shall, be applied (i) first, to the
Debt Service Reserve Account until fully funded and (ii) thereafter, pro rata to
installments of the Term Loan in inverse order of maturity until paid in full.

     SECTION 2.10. Fees.

     (a) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender a facility fee, which shall accrue at 0.250% per annum on the
daily amount of the unused Term Loan Commitment of such Lender during the
Availability Period, subject to the last sentence hereof. Accrued facility fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Term Loan Commitments
terminate, commencing on the first such date to occur after the date hereof. All
facility fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day). Such fees shall be payable on an amount of unused
commitments for each day equal to the amount of

- 20 -

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

unused Commitments set forth in the table below minus the amount of Term Loans
outstanding on such day:

Period

Amount of
unused
Commitments

From the Closing Date through the last day of September, 2007 $ 3,000,000
October 2007 7,500,000 November 2007 12,500,000 December 2007 16,000,000 January
2008 20,500,000 February 2008 22,000,000 March 2008 23,000,000 April 2008
through the end of the Availability Period 25,000,000

For purposes of illustration, (a) if Term Loans in an amount in excess of
$9,000,000 were outstanding on September 15, 2007, no such fee would be payable
on such day, and (b) if Term Loans in an amount of $2,000,000 were outstanding
on September 15, 2007, such fee would be payable in respect of $1,000,000 in
unused Term Loan Commitments on such day.

     (b) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees and participation fees, to the Lenders. Fees paid
shall not be refundable under any circumstances.

     SECTION 2.11. Interest.

     (a) The aggregate principal amount of all outstanding Term Loans shall bear
interest from the date such Term Loan is made until the date the principal of
such Term Loan is repaid at an annual rate equal the LIBOR Rate for the Interest
Period in effect for such Term Loan plus the Applicable Margin.

     (b) Notwithstanding the foregoing, upon any Event of Default, all principal
amounts hereunder shall bear interest, after as well as before judgment, at a
rate per annum equal to 3% plus the rate otherwise applicable to such Term Loan
as provided in the preceding paragraph of this Section.

- 21 -

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

     (c) Accrued interest on each Term Loan shall be payable in arrears on each
Interest Payment Date; provided that (i) interest accrued pursuant to paragraph
(b) of this Section shall be payable on demand, and (ii) in the event of any
prepayment of any Term Loan, accrued interest on the principal amount prepaid
shall be payable on the date of such prepayment. Notwithstanding the foregoing,
for each Interest Payment Date prior to the first Principal Payment Date, any
interest payable with respect to the Term Loans on such Interest Payment Date
shall be capitalized and shall increase the unpaid principal amount of the Term
Loans, provided that any interest capitalized pursuant to the preceding sentence
shall not reduce amounts available for drawing under Section 2.1.

     (d) The applicable LIBOR Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.

     SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for any Term Loan:

     (a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBOR Rate for such Interest Period; or

     (b) the Administrative Agent is advised by the Required Lenders that the
LIBOR Rate for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Term Loans (or
its Term Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) no borrowing
request shall be effective, and (ii) the Borrower and the Lenders shall enter
into negotiations in good faith with a view to establish a satisfactory
alternative basis for computing interest on the Term Loans.

     SECTION 2.13. Increased Costs.

     (a) If any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender; or

     (ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Term Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Term Loan (or of maintaining its obligation
to make Term Loans) or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender, such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

- 22 -

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

     (b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as
a consequence of this Agreement or the Term Loans made by, such Lender to a
level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s or holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Lender’s holding company for any such reduction suffered.

     (c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.

     (d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 270-day period referred to above shall be
extended to include the period of retroactive effect thereof.

     SECTION 2.14. Break Funding Payments. In the event of (a) the payment of
any principal of any Term Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
failure to borrow any Term Loan on the date specified in any notice delivered
pursuant hereto, then, in each such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. Such loss,
cost or expense to any Lender shall be deemed to include an amount determined by
such Lender to be the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount of such Term Loan had such event not
occurred, at the LIBOR Rate that would have been applicable to such Term Loan,
for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, for the period
that would have been the Interest Period for such Term Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate on demand.

- 23 -

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

     SECTION 2.15. Taxes.

     (a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of any present and future tax liability
and without deduction for any Indemnified Taxes or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

     (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     (c) The Borrower shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.

     (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.

     (e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

     (f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.15, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.15 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses

- 24 -

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

of the Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Borrower, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

     SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

     (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City
time, on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made into account number 2000193000423 maintained by the
Administrative Agent with Wachovia Bank, N.A. located in New York, New York,
except that payments pursuant to Sections 2.13, 2.14, 2.15 and 10.3 shall be
made directly to the Persons entitled thereto. The Administrative Agent shall
distribute any such payments received by it for the account of any other Person
to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in dollars.

     (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties,
and (ii) second, towards payment of principal then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal then
due to such parties.

     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Term Loans resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Term Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Term Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Term Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to

- 25 -

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

apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Term Loans to any assignee or participant, other than to the Loan Parties or any
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.

     (d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.

     (e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.4(a), 2.16(d) or 10.3(c) , then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.

     SECTION 2.17. Mitigation Obligations. If any Lender requests compensation
under Section 2.13, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Term Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

     Each Loan Party represents and warrants to the Lenders that:

     SECTION 3.1. Status and Power. The Borrower is a corporation duly
incorporated and validly existing under the laws of the State of Delaware. The
Guarantor is a corporation duly

- 26 -

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

incorporated and validly existing under the laws of the State of Nevada. Each
Loan Party is duly qualified, registered or licensed in all jurisdictions where
such qualification, registration or licensing is required except where the lack
of such qualification, registration or licensing could not reasonably be
expected to have a Material Adverse Effect. Each Loan Party has all requisite
corporate capacity, power and authority to own, hold under license or lease its
properties, to carry on its business as now conducted and to otherwise enter
into, and carry out the Transactions. None of the Loan Parties nor any of their
property has any immunity from jurisdiction of any court or from any legal
process (whether through service, notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).

     SECTION 3.2. Authorization; Enforceability. All necessary action, corporate
or otherwise, has been taken to authorize the execution, delivery and
performance by each Loan Party of the Loan Documents to which it is a party.
Each Loan Party has duly executed and delivered the Loan Documents to which it
is a party. The Loan Documents to which each Loan Party is a party are legal,
valid and binding obligations of such Loan Party, enforceable against such Loan
Party by the other parties thereto in accordance with their respective terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance and other similar laws of general application limiting the
enforcement of creditors’ rights generally and the fact that the courts may deny
the granting or enforcement of equitable remedies.

     SECTION 3.3. No Conflicts. The execution, delivery and performance by each
Loan Party of the Loan Documents and Material Contracts to which it is a party,
and the consummation of the transactions contemplated herein and therein (i) do
not conflict with, result in any breach or violation of, or constitute a default
under the terms, conditions or provisions of (A) the articles of incorporation
or by-laws (or comparable constituting documents) of, or any shareholder
agreement relating to, any Loan Party or (B) any law, regulation, judgment,
decree or order binding on or applicable to any Loan Party or to which its
property is subject or any agreement, lease, license, permit or other instrument
to which any Loan Party is a party or is otherwise bound or by which any Loan
Party benefits or to which any of its property is subject except, in each case,
to the extent that such conflict does not and could not reasonably be expected
to have a Material Adverse Effect and (ii) do not require the consent or
approval of any Governmental Authority or any other Person which has not been
obtained and provided to the Administrative Agent.

     SECTION 3.4. Financial Statements. The Borrower’s unaudited consolidated
financial statements (consisting of a balance sheet, statement of operations,
statement of changes in shareholder’s deficit, and statement of cash flows) for
the quarter ended March 31, 2007, were prepared in accordance with GAAP
consistently applied (except that certain information and footnote disclosures
normally included in financial statements prepared in accordance with GAAP have
been omitted or condensed and subject to normal and recurring year-end
adjustments which will not be individually or in the aggregate material) in
accordance with past practice and no Material Adverse Change has occurred since
such date. Such financial statements fairly present the financial condition of
the Borrower as at the date thereof and the financial statements fairly present
the results of operations, cash flow and income of the Borrower during the
fiscal period covered thereby.

- 27 -

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

     SECTION 3.5. Intentionally Omitted.

     SECTION 3.6. Litigation, etc. Except as described in Section 3.6 of the
Disclosure Schedule, there are no actions, suits, investigations, claims or
proceedings which have been commenced or, to the knowledge of any Loan Party,
have been threatened in writing against or affecting any Loan Party before any
Governmental Authority which contest any of the transactions contemplated in any
of the Loan Documents or Material Contracts. There are no actions, suits,
investigations, claims or proceedings which have been commenced or, to the
knowledge of any Loan Party, have been threatened in writing against or
affecting any Loan Party before any Governmental Authority which could
reasonably be expected to have a Material Adverse Effect.

     SECTION 3.7. Title to Assets. Except as described in Section 3.7 of the
Disclosure Schedule, each Loan Party has a good and marketable title to all of
its property and assets which constitute Collateral, free from any Liens other
than the Permitted Liens, and no Person has any agreement or right to acquire
any of the Collateral except as permitted hereunder.

     SECTION 3.8. Conduct of Business. No Loan Party is in violation of any
mortgage, franchise, license, certificate of approval, permit, judgment, decree,
order, statute, rule or regulation relating in any way to itself or to the
operation of its business or to its property or assets in a manner which could
reasonably be expected to have a Material Adverse Effect. Except as set forth in
Section 3.8 of the Disclosure Schedule, each Loan Party has all licenses,
certificates of approval, permits, registrations, approvals and consents which
are required to own its properties and assets and to operate its businesses
where they are currently being operated, other than any such items the absence
of which could not reasonably be expected to have a Material Adverse Effect.

     SECTION 3.9. Labor and Employment Matters. Except as described in Section
3.9 of the Disclosure Schedule, there are no material employment agreements
covering management of the Borrower and there are no collective bargaining
agreements or other labor agreements covering any employees of the Borrower.
Hours worked by and payment made to employees of the Borrower have not been in
violation of any Applicable Law dealing with such matters. All payments due and
payable from the Borrower on account of employee health and welfare insurance
have been paid or accrued as a liability on the books of the Borrower.

     SECTION 3.10. No Default. No Default or Event of Default exists or would
result from the incurring by any Loan Party of its respective Obligations. No
Loan Party is in default under or with respect to any Material Contract or any
other contractual obligation in any respect which, individually or together with
all such defaults, could reasonably be expected to have a Material Adverse
Effect.

     SECTION 3.11. Tax Returns and Taxes. Except as described in Section 3.11 of
the Disclosure Schedule, each Loan Party has filed all tax returns and tax
reports required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or charges
which are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have been set
aside on its books.

- 28 -

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

     SECTION 3.12. Withholding and Other Taxes. Assuming the Loans are funded by
bank branches in London or the United States, no income, stamp or other taxes or
levies, imposts, deductions, fees, duties, compulsory loans, withholdings or
other charges of any nature whatsoever are or will be, under Applicable Law as
in effect on the date hereof, imposed, assessed, levied or collected by the
United States or any political subdivision or taxing authority thereof or
therein on or in respect of principal, interest or fees payable to the Lenders
or the Administrative Agent hereunder or under any other Loan Document, except,
as of the date hereof, tax payable on net income under the laws of the United
States or any State thereof. To the extent this representation is repeated or
deemed repeated pursuant to this Agreement or other Loan Documents, this
representation shall continue to be true and correct if the Borrower discloses
in writing to the Administrative Agent any change as to this representation.

     SECTION 3.13. Material Contracts. The copies of each Material Contract and
of any amendments thereto provided or to be provided by the Loan Parties to the
Administrative Agent are, or when delivered will be, true and complete copies of
such agreements and documents and no consent or other further action is required
for the effectiveness and enforceability of any of such agreements heretofore
provided and each such agreement is, or when executed and delivered will be, in
full force and effect and enforceable by the relevant Loan Party, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and other similar
laws of general application limiting the enforcement of creditors’ rights
generally and the fact that the courts may deny the granting or enforcement of
equitable remedies.

     SECTION 3.14. Compliance with Environmental Laws. Except as described in
Section 3.14 of the Disclosure Schedule, as of the date hereof, the operations
and properties of the Borrower are in compliance with applicable Environmental
Laws, except where (i) appropriate remedial action acceptable to the Borrower
and the applicable Governmental Authority is (or is in the process of) being
taken or (ii) failure to so comply, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Borrower has
designed the Project in compliance in all material respects with applicable
Environmental Laws and the Administrative Agent and the Lenders are fully
indemnified by the Loan Parties against any future liabilities arising under any
applicable Environmental Laws.

     SECTION 3.15. Solvency. After giving effect to the transactions
contemplated by this agreement and the other Loan Documents (including the
receipt of equity proceeds as contemplated by Section 4.1(m)), and before and
after giving effect to each Term Loan, each Loan Party is, and the Loan Parties
on a consolidated basis are, Solvent.

     SECTION 3.16. Locations of Tangible Assets. The addresses of all locations
of the inventory, equipment and other tangible assets of the Borrower comprising
part of the Collateral (other than inventory in transit) are as set out in
Section 3.16 of the Disclosure Schedule. With respect to inventory located at a
public warehouse, the Borrower has not issued a negotiable document of title
with respect thereto.

     SECTION 3.17. Consents and Approvals for the Project. Except as set forth
in Section 3.17 of the Disclosure Schedule, all Approvals and all concessions,
mining rights, water rights, easements, mining and civil usufructs, surface
rights, rights of way, property rights and other

- 29 -

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

consents between the Borrower and third parties necessary for the development,
construction and operation of the Project and all licenses or other rights to
use technology have been obtained, are in full force and effect and are
sufficient to permit (A) the development and construction of the Project in all
material respects as contemplated by the Construction Schedule and Capital
Spending Plan and the Feasibility Study, (B) the operation of the Project in all
material respects as contemplated by the Feasibility Study and (C) the
execution, delivery and performance by any Loan Party of its obligations under
the Material Contracts, in each case other than those which (x) are not now
necessary and which are expected to be obtained in the ordinary course of
business by the time they are necessary or (y) the failure to have or to obtain
will not now and could not reasonably be expected to have a Material Adverse
Effect.

     SECTION 3.18. Consents and Approvals for the Security. No consents,
approvals, acknowledgements, undertakings, non-disturbance agreements,
directions or other documents or instruments which have not already been
provided to the Administrative Agent are required to be entered into by any
Person (i) to make effective the Security created or intended to be created by
the Loan Parties in favor of the Administrative Agent pursuant to the Security
Documents, (ii) to ensure the perfection and the intended priority of such
Security other than financing statements and other registrations made in
connection with such Security or (iii) to implement the transactions
contemplated by the Loan Documents.

     SECTION 3.19. Intentionally Omitted.

     SECTION 3.20. Subsidiaries. The Borrower has no Subsidiaries, other than
Cochise.

     SECTION 3.21. Mining Properties. The Mining Properties have been validly
granted to and registered in the name of the Borrower, are owned by the Borrower
and are in full force and effect and in good standing. Except as set forth in
Section 3.7 of the Disclosure Schedule, no Person other than the Borrower and,
to the extent provided in the Security Documents, the Administrative Agent, has
any right, title or interest in, to or under the Mining Properties or in the
property and rights encompassed thereby other than Permitted Liens. Taken as a
whole, the Mining Properties are sufficient in duration, scope, content and
effect to permit the Borrower to conduct all activities contemplated in the
Feasibility Study to be conducted by it over the time periods specified therein.

     SECTION 3.22. Feasibility Study. As of the date hereof, the Feasibility
Study (as augmented by the Construction Schedule and Capital Spending Plan and
the Financial Model) does not, taken as a whole, include any untrue statement of
a material fact or omit a material fact necessary to make the information
therein not misleading. As of the date hereof, the Borrower believes that, taken
as a whole, except for the assumptions relating to metal prices to the extent
such prices are not hedged, interest rates, exchange rates and the rate of
inflation (which assumptions reflect solely a choice of a reasonable manner of
calculation and presentation), (i) the Feasibility Study (as augmented by the
Construction Schedule and Capital Spending Plan and Financial Model), taken as a
whole, is fair and reasonable in light of the Borrower’s expectations as of the
date hereof with respect to the Project, (ii) the assessment of reserves of the
Project contained in the Feasibility Study (as augmented by the Construction
Schedule and Capital Spending Plan and Financial Model) is fair and reasonable,
and (iii) the cash flow calculations contained in the Feasibility Study (as
augmented by the Construction Schedule and

- 30 -

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

Capital Spending Plan and Financial Model) are based on assumptions which, at
the date hereof, are fair and reasonable in light of the Borrower’s expectations
with respect to the Project.

     SECTION 3.23. Financial Model, Construction Schedule and Capital Spending
Plan. The Borrower believes that, except for the assumptions relating to metal
prices to the extent such prices are not hedged, interest rates, exchange rates
and the rate of inflation (which assumptions reflect solely a choice of a
reasonable manner of calculation and presentation), (i) the Construction
Schedule and Capital Spending Plan, and the Financial Model, taken as a whole,
are fair and reasonable in light of the Borrower’s expectations and information
as of the date hereof with respect to the Project and (ii) taken as a whole, the
cash flow calculations contained in the Financial Model are based on assumptions
which, at the date hereof, are fair and reasonable in light of the Borrower’s
expectations and information with respect to the Project.

     SECTION 3.24. Project Information. Except as otherwise expressly provided
herein, the information provided by or on behalf of the Loan Parties in writing
to the Administrative Agent (except to the extent such information relates to
Persons other than the Loan Parties) but excluding metal prices to the extent
such prices are not hedged, interest rates, exchange rates and the rate of
inflation (which assumptions reflect solely a choice of a reasonable manner of
calculation and presentation), taken as a whole, does not contain any untrue
statement of material fact (or omit any material fact or circumstance necessary
in order to make the information contained therein not misleading) known to the
Borrower at the time of execution of this Agreement.

     SECTION 3.25. Intellectual Property. The Borrower owns or is licensed or
otherwise has the right to use all Intellectual Property that is used in the
operation of its business without conflict with the rights of any other Person
(other than any Intellectual Property the absence of which or any such conflict
with respect to which could not reasonably be expected to have a Material
Adverse Effect). The Borrower has not received any notice of any claim of
infringement or similar claim or proceeding relating to any of the Intellectual
Property which if determined against the Borrower could reasonably be expected
to have a Material Adverse Effect.

     SECTION 3.26. Liens. Subject to the requisite registrations of the Security
Documents or filings thereof, the Liens granted to the Administrative Agent
pursuant to the Security Documents are fully perfected first priority Liens in
and to the Collateral, subject only to Permitted Liens.

     SECTION 3.27. Insurance. All insurance required to be maintained pursuant
to Section 5.5 is in full force and effect.

     SECTION 3.28. Ranking. The Term Loans shall rank at least pari passu with
all other unsecured indebtedness of the Loan Parties, except for those which are
preferred by provisions of applicable statutory law.

- 31 -

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

ARTICLE IV.
CONDITIONS

     SECTION 4.1. Closing Date. The obligations of the Lenders to make Term
Loans hereunder shall not become effective until the second Business Day after
the date on which each of the following conditions is satisfied in a manner
satisfactory to the Administrative Agent (or waived in accordance with Section
10.2):

     (a) The Administrative Agent shall have received executed versions of each
of the Loan Documents from each of the parties thereto, including the Borrower.

     (b) Each of the Material Contracts set forth on clause (A) of Schedule 1.1
shall be in form and substance reasonably satisfactory to the Administrative
Agent and shall have been executed by each of the parties thereto and delivered
to the Administrative Agent. Each of the Consent Agreements shall be in form and
substance satisfactory to the Administrative Agent and shall have been executed
by each of the parties thereto and delivered to the Administrative Agent.

     (c) The Administrative Agent and the Borrower shall have agreed on (i) the
Initial Financial Model, the Construction Schedule and Capital Spending Plan,
and the Environmental Plan and (ii) the operating budgets (which shall include
an operating budget for contract mining or lease payments for mining equipment),
copies of which shall have been delivered to the Administrative Agent (it being
understood that the initial budgets shall be included as part of the Initial
Financial Model).

     (d) Evidence that the Existing Bridge Loan Facility has been repaid in full
and all Liens securing the obligations thereunder have been released.

     (e) Evidence that the Forward Sale Price Protection Program has been
implemented.

     (f) The Independent Technical Consultant shall have been appointed.

     (g) The Administrative Agent and the Borrower shall have agreed on the
forms of Completion Certificates and the tests for Completion for purposes
thereof.

     (h) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Closing Date) of (i) Ballard Spahr Andrews & Ingersoll LLP, Arizona counsel for
the Borrower, and (ii) Bingham McCutchen LLP, New York counsel to the
Administrative Agent, covering such matters relating to the Loan Parties, this
Agreement or the Transactions as the Administrative Agent shall reasonably
request.

     (i) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Loan Parties,
the authorization of the Transactions and any other legal matters relating to
the Borrower and the Guarantor, this

- 32 -

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

Agreement or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel, including, but not limited to:

     (i) a copy of the certificate of incorporation and by-laws or other
founding documentation of each of the Borrower and the Guarantor;

     (ii) a copy of the resolutions of the board of directors or other
appropriate decision making body of each of the Borrower and the Guarantor
authorizing the conclusion and execution of each of the Loan Documents; and

     (iii) specimen signatures of each of the authorized officers of the
Borrower for the purposes of implementation of the Loan Documents.

     (j) The Administrative Agent shall have received:

     (i) evidence that all insurance required to be maintained pursuant to the
Loan Documents has been obtained and is in effect, together with evidence that
the Administrative Agent has been named as “additional insured” and “loss payee”
under each policy of insurance;

     (ii) evidence that the Borrower has obtained all Approvals necessary to
commence implementation of the Construction Schedule and Capital Spending Plan;

     (iii) to the extent relevant, searches of Uniform Commercial Code or other
similar records or filings in the jurisdiction of formation of the Borrower, the
jurisdiction of the chief executive office of the Borrower and each jurisdiction
where any Collateral is located or where a filing would need to be made in order
to perfect the Administrative Agent’s security interest in the Collateral,
copies of the financing statements on file in such jurisdictions and evidence
that no Liens exist other than Liens permitted by Section 6.2;

     (iv) all certificates evidencing all certificated equity interests pledged
to the Administrative Agent pursuant to the Security Documents, together with
duly executed in blank, undated stock powers attached thereto;

     (v) in the case of any real property Collateral, a title insurance policy
together with proof of payment of all fees and premiums for such policy, from
the applicable title insurance Loan Party and in amounts satisfactory to the
Administrative Agent, insuring the interest of the Administrative Agent as
mortgagee;

     (vi) all applicable “Know Your Customer” client identification
documentation;

     (vii) in the case of any personal property Collateral located at a premises
leased the Borrower, such estoppel letters, consents and waivers from the
landlords on such real property as may be required by the Administrative Agent;
and

- 33 -

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

     (viii) the Collateral Accounts shall have been established with a bank
acceptable to the Administrative Agent and the Collateral Account Agreement
shall have been executed by such bank and the Lenders, the Administrative Agent
and the Borrower and delivered to the Administrative Agent.

     (k) The Lenders shall have completed a due diligence investigation of the
Project, the Borrower and its subsidiaries in scope, and with results,
satisfactory to the Lenders, and shall have been given such access to the
management records, books of account, contract and properties of Borrower and
its subsidiaries and shall have received such financial, business and other
information regarding the Project and each of the foregoing Persons and their
businesses as they shall have reasonably requested.

     (l) The Administrative Agent shall have received certification that there
does not exist (a) any order, decree, judgment, ruling or injunction which
restrains the consummation of the Loan Documents in the manner contemplated
hereby, and (b) any pending or threatened action, suit, investigation or
proceeding which is reasonably likely to be adversely determined and, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.

     (m) The Borrower shall have received additional equity proceeds in an
amount not less than $23,000,000 on terms acceptable to the Administrative
Agent.

     (n) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.2.

     (o) The Administrative Agent shall have received all fees, costs and
expenses and other amounts due and payable on or prior to the Closing Date in
connection with the Transaction, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.

The Administrative Agent shall notify the Borrower and the Lenders of the
Closing Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Term Loans hereunder shall
not become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 10.2) at or prior to 3:00 p.m., New York City time,
on September 30, 2007 (and, in the event such conditions are not so satisfied or
waived, the Term Loan Commitments shall terminate at such time).

     SECTION 4.2. Additional Conditions. The obligation of each Lender to make a
Term Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:

     (a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Borrowing.

     (b) At the time of and immediately after giving effect to such Borrowing no
Default shall have occurred and be continuing.

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.

- 34 -

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

ARTICLE V.
AFFIRMATIVE COVENANTS

     Until the Term Loan Commitments have expired or been terminated and the
principal of and interest on each Term Loan and all fees payable hereunder shall
have been paid in full, the Loan Parties covenant and agree with the Lenders
that:

     SECTION 5.1. Financial Statements and Reporting. The Borrower, will furnish
the Administrative Agent and each Lender with the following documents,
statements and reports (by email and in pdf format):

     (a) Annual Financial Statements. Within 90 days after the end of each
fiscal year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth, in the case of statements of operations and
cash flows, in comparative form the figures for the previous fiscal year, all
reported on by Mayer Hoffman McCann P.C. or other independent public accountants
of recognized national standing to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated subsidiaries in
accordance with GAAP consistently applied.

     (b) Quarterly and Semi-Annual Financial Statements. For the first 3 years
after the Closing Date, 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, and after such 3 year period,
within 45 days after the end of each fiscal half year, the Borrower shall
deliver its consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such fiscal quarter
or half year, as applicable and the then elapsed portion of the fiscal year,
setting forth, in the case of statements of operations and cash flows, in
comparative form the figures for the corresponding period or periods of (or, in
the case of the balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Borrower and
its consolidated subsidiaries in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes.

     (c) Quarterly Financial Projections. As soon as available, but in any event
at least 30 days prior to the close of each fiscal quarter of the Borrower, a
quarterly projection with respect to the operations of the Borrower for the next
four fiscal quarters. Such projections shall be certified by the Financial
Officer of the Borrower to the effect that such projections have been prepared
on the basis of sound financial planning practice and that such Financial
Officer has no reason to believe that they are misleading in any material
respect based upon the knowledge and information available at the time of
creation, update, and/or certification.

     (d) Certificate of Compliance. Concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a Financial Officer
of the Borrower (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 6.10 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the

- 35 -

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

audited financial statements referred to in Section 3.4 and, if any such change
has occurred, specifying the effect of such change on the financial statements
accompanying such certificate.

     (e) Certificate of Accounting Firm. Concurrently with any delivery of
financial statements under clause (a) above, a certificate of the accounting
firm that reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial statements of
any Default (which certificate may be limited to the extent required by
accounting rules or guidelines).

     (f) Construction Progress Reports. As soon as available, but in no event
more than 20 days after the end of each calendar month prior to Completion, a
summary of construction of the Project during such month in a form agreed to by
the Borrower and the Administrative Agent, describing (i) physical progress and
expenditure during such month, (ii) cumulative expenditure through the end of
such month, (iii) variations of such progress and expenditure from that set
forth in the Construction Schedule and Capital Spending Plan, (iv) the
Borrower’s then current estimates of total Project Development Costs and of the
date of Start-up of Commercial Production and the Completion Date and (v) any
fact or occurrence of which the Borrower is aware that (x) may reasonably be
expected to increase the aggregate Project Development Costs above those in the
Construction Schedule and Capital Spending Plan, delay Start-up of Commercial
Production or the Completion Date beyond the then-currently estimated dates
therefor or have a Material Adverse Effect on the performance of the Project
when completed or (y) may reasonably be expected to render unreasonable or
inappropriate any material assumption on which the Financial Model or the
Construction Schedule and Capital Spending Plan was based, and the anticipated
manner and timing of actions proposed to be taken by the Borrower in reaction to
any such fact or occurrence.

     (g) Operating Reports. As soon as available but in no event more than 20
days after the end of each fiscal quarter after the earlier of the date of
Completion or Start-up of Commercial Production, a summary of such month’s or
such fiscal quarter’s operations and a summary of the fiscal year-to-date
operations in a form agreed to by the Borrower and the Administrative Agent, in
each case compared to the budgets and forecasts delivered pursuant to clause (h)
above, including information in reasonable detail concerning (i) Project
production and shipment of Project production during such period and variations
from the related projections for such period reflected in the Financial Model,
(ii) the Borrower’s inventory of product at the end of such period, (iii)
revenues generated during such period from the sale of product, (iv) Operating
Costs during such period as compared to the Financial Model, (v) costs
constituting Capital Expenditures during such period as compared to the
Construction Schedule and Capital Spending Plan, (vi) the Borrower’s most recent
cash planning forecast covering at least the next following month or fiscal
quarter, as the case may be, and (vii) any material developments during such
period in Project operation, including material technical problems, discovery of
any material defects in the physical facilities of the Project, material
interruptions to operation or material labor difficulties.

     (h) Budget. As soon as available, but in any event at least 30 days prior
to the close of each fiscal year of the Borrower, the Borrower’s budget and
operating plan for the following fiscal year, such budget to be in a form
reasonably satisfactory to the Administrative Agent.

- 36 -

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

     (i) Environmental Compliance. Any material update of the Environmental Plan
within 30 days after such update is available. The Borrower shall promptly, but
in no event later than 5 Business Days after the Borrower obtains knowledge
thereof, deliver written notice to the Administrative Agent (for delivery to
each Lender) of the occurrence of (i) any material environmental accident or
spill affecting the Borrower or the Project, (ii) any other condition, event or
circumstance that results in non-compliance by the Borrower or the Project with
any applicable Environmental Law in any material respect and (iii) any other
material condition, event or circumstance which is listed as a reportable event
under the Environmental Plan then in effect. In addition, the Borrower shall,
upon the request of the Administrative Agent, but in any event no more
frequently than annually (unless an Event of Default shall have occurred and be
continuing) provide a report to the Administrative Agent with regard to the
Borrower’s compliance with applicable Environmental Laws in a form as reasonably
agreed between the Borrower and the Administrative Agent.

     (j) Insurance Certification. As soon as available, but in no event more
than 30 days after the end of each fiscal year of the Borrower, a certification
by the Borrower’s insurance broker confirming insurance coverage and payment of
premiums.

     (k) Other Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Borrower, or compliance with the terms of this Agreement, as the
Administrative Agent or any Lender may reasonably request.

Any delivery required to be delivered by clauses (a) and (b) of this Section by
the Borrower shall be deemed to be delivered to the Administrative Agent and the
Lender upon the filing of such items with the Securities and Exchange Commission
or other applicable securities commission, provided that such items are readily
available for public viewing.

     SECTION 5.2. Notices of Material Events. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

     (a) the occurrence of any Default;

     (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

     (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$250,000; and

     (d) any other development that results in, or could reasonably be expected
to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or

- 37 -

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

development requiring such notice and any action taken or proposed to be taken
with respect thereto.

     SECTION 5.3. Existence; Conduct of Business. The Borrower will do or cause
to be done all things reasonably necessary to preserve, renew and keep in full
force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business.

     SECTION 5.4. Payment of Obligations. Each Loan Party shall pay its
obligations, including Tax liabilities, that, if not paid, could result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings, (b) such Loan Party has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.

     SECTION 5.5. Maintenance of Properties; Insurance. Each Loan Party will (a)
keep and maintain all property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such
amounts and against such risks as are customarily maintained by companies
engaged in the same or similar businesses operating in the same or similar
locations.

     SECTION 5.6. Books and Records; Inspection Rights. Each Loan Party will
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. Each Loan Party will permit any representatives designated by the
Administrative Agent or any Lender, upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss its affairs, finances and condition with its officers and
independent accountants, all at such reasonable times and as often as reasonably
requested.

     SECTION 5.7. Compliance with Laws. Each Loan Party will comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

     SECTION 5.8. Use of Proceeds. The proceeds of the Term Loans will be used
only for the purposes of (a) repayment of Existing Bridge Loan Facility (to the
extent remaining unpaid) and (b) costs and expenses in connection with
redevelopment of the Project. No part of the proceeds of the Term Loans will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board of Governors of the Federal Reserve
System, including Regulations T, U and X.

     SECTION 5.9. Project; Construction; Etc.

     (a) The Borrower shall not change in any material respect the purpose or
scope of the Project from that set forth in the Feasibility Study (as augmented
by the Construction Schedule and Capital Spending Plan) unless approved in
writing by the Required

- 38 -

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

Lenders. The physical facilities to be constructed and owned by the Borrower
shall be substantially the same as those described in the Feasibility Study (as
augmented by the Construction Schedule and Capital Spending Plan) and shall be
constructed pursuant to and substantially in accordance with the Construction
Schedule and Capital Spending Plan.

     (b) The Borrower shall enforce against the other parties to the Material
Contracts any rights (including warranty rights) under the Material Contracts,
except to the extent non-enforcement thereof could not reasonably be expected to
have a Material Adverse Effect.

     SECTION 5.10. Updated Financial Model.

     (a) On or prior to the date of delivery of financial statements provided
for in Sections 5.1(a) and (b), the Borrower shall deliver to the Administrative
Agent an updated Financial Model. Each updated Financial Model shall (i) be in
substantially the form of, and contain the same type of data, projections,
forecasts, calculations, assumptions and other information as, the Financial
Model delivered on the Closing Date (the “Initial Financial Model”), but shall
be updated to include actual financial results and other current financial
information (including with respect to the price for unhedged copper production)
and (ii) provide an explanation of any deviation in the amount attributed to any
line item specified in such Financial Model where such deviation is 10% or more
of the amount attributed to the same line item in the Initial Financial Model
unless such deviation has been explained and incorporated into a prior Financial
Model; and (iii) include such other information as the Administrative Agent may
reasonably request.

     (b) The Administrative Agent shall have 10 days from the date of receipt of
an updated Financial Model to accept or reject such updated Financial Model. In
the event that the Administrative Agent accepts such updated Financial Model, it
shall become the current Financial Model. The Administrative Agent shall
promptly review such updated Financial Model, and if the Administrative Agent
does not accept such updated Financial Model, it shall promptly notify the
Borrower thereof, the Borrower shall, within 10 Business Days and after
consultation with the Administrative Agent as to the reasons therefor, submit an
appropriately revised Financial Model. Following such resubmission, the process
shall be repeated until the Financial Model has been accepted by the
Administrative Agent. To the extent that a fiscal quarter commences without a
Financial Model having been approved in accordance with this Section 5.10, the
previously approved Financial Model shall remain in effect until a revised
Financial Model shall have been approved.

- 39 -

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

     SECTION 5.11. Further Assurances. Each Loan Party will, and will cause each
of its Subsidiaries to, cooperate with the Lenders and the Administrative Agent
and execute such further instruments and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Agreement and the other Loan Documents. If
the Borrower enters into any Material Contract after the Closing Date, it shall
provide a Consent Agreement to such Material Contract in a form reasonably
acceptable to the Administrative Agent (if such Material Contract has a value in
excess of $1,000,000, as determined by the Administrative Agent in consultation
with the Borrower).

ARTICLE VI.
NEGATIVE COVENANTS

     Until the Term Loan Commitments have expired or terminated and the
principal of and interest on each Term Loan and all fees payable hereunder have
been paid in full, the Borrower covenants and agrees with the Lenders that:

     SECTION 6.1. Indebtedness. The Loan Parties will not create, incur, assume
or permit to exist any Indebtedness, except

     (a) Indebtedness created hereunder;

     (b) Indebtedness in respect of capital leases and purchase money
obligations for fixed or Capital Assets within the limitations set forth in
Section 6.2(d); provided, that the aggregate amount of all such Indebtedness at
any one time outstanding shall not exceed $250,000; and

     (c) Indebtedness in respect of letters of credit issued in connection with
obligations arising under Material Contracts or other vendor accounts payable in
the ordinary course of business.

     SECTION 6.2. Liens. The Loan Parties will not create, incur, assume or
permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except

     (a) Permitted Liens;

     (b) Liens as of the Closing Date and set forth on Schedule 6.2 (provided
that the aggregate amount of Indebtedness or other obligations secured by such
Liens does not exceed $1,000,000);

     (c) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing); and

     (d) Liens securing Indebtedness permitted under Section 6.1(b); provided
that (i) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (ii) the Indebtedness secured thereby
does not exceed the cost or fair market value, whichever is lower, of the
property being acquired on the date of acquisition.

- 40 -

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

     SECTION 6.3. Fundamental Changes; Dispositions; Subsidiaries; Etc.

     (a) The Borrower will not merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, or make any Disposition, provided that the Borrower may make
Dispositions

     (i) of obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business,

     (ii) of inventory in the ordinary course of business, and

     (iii) of Property which results in an aggregate amount of proceeds not to
exceed $250,000 from and after the Closing Date, provided that the Net Cash
Proceeds of any such Dispositions pursuant to this clause (iii) are applied in
accordance with Section 2.9(b) .

     (b) The Borrower will not engage in any business or exploration other than
the development of the Project or, in accordance with the terms of this
Agreement, the Coyote Springs or Mimbres sites.

     SECTION 6.4. Investments, Loans, Advances, Guarantees and Acquisitions. The
Borrower will not purchase, hold or acquire any Equity Interest, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person (other than Cochise), or
purchase or otherwise acquire any assets of any other Person constituting a
business unit, except (a) Permitted Investments, (b) investments in Coyote
Springs and the Mimbres sites, in accordance with the terms of this Agreement,
(c) and other investment in an amount not to exceed $20,000.

     SECTION 6.5. Hedging Agreements. The Loan Parties will not enter into any
Hedging Agreement with respect to copper, except the Forward Sale Price
Protection Program.

     SECTION 6.6. Restricted Payments. The Borrower will not declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment except that

     (a) the Borrower may make Restricted Payments so long as (i) Completion
shall have occurred, (ii) immediately after making such payment, the Debt
Service Coverage Ratio for any Historical Test Period or Future Test Period
shall not be less than 1.8:1.00, (iii) the Debt Service Reserve Account is fully
funded, (iv) the Borrower shall be in compliance with all financial covenants on
a proforma basis after giving effect to such Restricted Payment or expenditure
(calculated on a proforma basis with respect to the Historical Test Period most
recently ended and Future Test Period from such date), and (v) no Default or
Event of Default exist or shall occur after giving effect to such Restricted
Payment;

     (b) the Borrower may make Restricted Payments relating to exploration
expenditures at the Mimbres and Coyote Springs sites, so long as (i) Completion
shall have occurred, (ii) immediately after making such payment, the Debt
Service Coverage Ratio for any

- 41 -

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

Historical Test Period or Future Test Period shall not be less than 1.3:1.00,
(iii) the Debt Service Reserve Account is fully funded, (iv) the Borrower shall
be in compliance with all financial covenants on a proforma basis after giving
effect to such Restricted Payment or expenditure (calculated on a proforma basis
with respect to the Historical Test Period most recently ended and Future Test
Period from such date), (v) no Default or Event of Default exist or shall occur
after giving effect to such Restricted Payment, (vi) the maximum amount of all
such expenditures made pursuant to this clause (b) relating to the Mimbres site
shall not exceed $2,750,000, and (vii) the maximum amount of all such
expenditures relating to the Coyote Springs site made pursuant to this clause
(b) shall not exceed $2,100,000 in the aggregate; and

     (c) the Borrower may make Restricted Payments constituting “Liquidity
Incentive Payments” in connection with and as defined under the $23 million
equity financing documentation as such documentation is in effect on the date
hereof, provided that such amounts do not exceed $2,760,000 in the aggregate.

     SECTION 6.7. Transactions with Affiliates. The Borrower will not sell,
lease or otherwise transfer any property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to the
Borrower than could be obtained on an arm’s-length basis from unrelated third
parties, and (b) any Restricted Payment permitted by Section 6.6.

     SECTION 6.8. Restrictive Agreements. The Borrower will not enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon the ability of the Borrower to create,
incur or permit to exist any Lien upon any of its property or assets; provided
that the foregoing shall not apply to restrictions and conditions imposed by law
or by this Agreement.

     SECTION 6.9. Material Contracts. The Borrower shall not amend, modify or
waive any material provision of any Material Contract in any way adverse to the
Lenders.

     SECTION 6.10. Financial Covenants.

     (a) Starting with the last day of the first full fiscal quarter after
Completion, the Borrower will not permit the Debt Service Coverage Ratio for any
Historical Test Period or any Future Test Period to be less than 1.5 to 1.00.

     (b) Starting with the last day of the first full fiscal quarter after
Completion, the Borrower will not permit the Interest Coverage Ratio for any
Historical Test Period or any Future Test Period to be less than 2.0 to 1.00.

     (c) The Borrower will not permit the ratio of (i) Indebtedness of the type
described in clauses (a), (b), and (c) of the definition thereof, to (ii)
Shareholders Equity to exceed 1.3 to 1.00 at any time. For purposes of this
clause (c), “Shareholders Equity” means, as of the date of determination, all
items which would be included under “shareholders equity” on a consolidated
balance sheet of the Borrower and its Subsidiaries in accordance with GAAP,
provided that such amount shall be without regard to the accumulated deficit as
of March 31, 2007.

- 42 -

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

ARTICLE VII.
EVENTS OF DEFAULT

If any of the following events (“Events of Default”) shall occur:

     (a) the Borrower shall fail to pay any principal of the Term Loans when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;

     (b) the Borrower shall fail to pay any interest on the Term Loans or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five
Business Days;

     (c) any representation or warranty made or deemed made by or on behalf of
any Loan Party in or in connection with this Agreement or any amendment or
modification hereof or waiver hereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any amendment or modification hereof or waiver hereunder,
shall prove to have been incorrect in any material respect when made or deemed
made; provided that any such representation or warranty, if capable of being
cured, may be cured by the Borrower within a ten day period;

     (d) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in Section 5.2, 5.3 (with respect to the Borrower’s
existence) or 5.8 or in Article VI; provided that any Default under Sections
6.10 (a) or (b) with respect to a calculation of any Future Test Period (but not
any Historical Test Period) shall only be an “Event of Default” hereunder upon a
vote thereof by the Required Lenders;

     (e) the Borrower shall fail to observe or perform any covenant, condition
or agreement contained in this Agreement (other than those specified in clause
(a), (b) or (d) of this Article) or any other Loan Document, and such failure
shall continue unremedied for a period of 20 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

     (f) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;

     (g) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of either Loan Party or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Loan
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue

- 43 -

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

undismissed for 90 days or an order or decree approving or ordering any of the
foregoing shall be entered;

     (h) a Loan Party shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(g) of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
a Loan Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing;

     (i) a Loan Party shall become unable, admit in writing its inability or
fail generally to pay its debts as they become due;

     (j) one or more judgments for the payment of money in an aggregate amount
in excess of $100,000 shall be rendered against a Loan Party and the same shall
remain undischarged for a period of 45 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of a Loan Party to enforce
any such judgment;

     (k) an ERISA Event shall have occurred that, in the opinion of Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Borrower in an amount
exceeding $250,000 from and after the Closing Date;

     (l) Completion shall not occur on or prior to the 25 month anniversary of
the Closing Date; or

     (m) any Change of Control shall occur;

then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Term Loan Commitments, and thereupon the Term Loan Commitments shall terminate
immediately, and (ii) declare the Term Loans then outstanding to be due and
payable in whole (or in part, in which case any principal not so declared to be
due and payable may thereafter be declared to be due and payable), and thereupon
the principal of the Term Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; and in case of any event with respect to the
Borrower described in clause (h) or (i) of this Article, the Term Loan
Commitments shall automatically terminate and the principal of the Term Loans
then outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due

- 44 -

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

and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.

ARTICLE VIII.
THE ADMINISTRATIVE AGENT

     Each of the Lenders hereby irrevocably appoints the Administrative Agent as
its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent
by the terms hereof, together with such actions and powers as are reasonably
incidental thereto.

     The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Loan Parties or other Affiliate thereof as if
it were not the Administrative Agent hereunder.

     The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing as directed by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.2), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to any
Loan Party that is communicated to or obtained by the bank serving as
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.2) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

     The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone

- 45 -

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

and believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon. The Administrative Agent may consult with legal
counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

     The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the Term Loan provided for
herein as well as activities as Administrative Agent.

     Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New York,
or an Affiliate of any such bank. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 10.3 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

     Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.

- 46 -

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

ARTICLE IX.
GUARANTY

     SECTION 9.1. Guaranty. Guarantor hereby unconditionally and irrevocably
guarantees to each of the Lenders the punctual payment, performance in full and
observance when due, whether at stated maturity, by acceleration or otherwise,
of the Borrower’s Obligations (the “Guaranteed Obligations”) now or hereafter
existing under any Loan Document, whether for principal, interest (including,
without limitation, all interest that accrues after the commencement of any
bankruptcy proceeding of the Borrower, whether or not constituting an allowed
claim in such bankruptcy proceeding), fees, commissions, expense reimbursements,
indemnifications or otherwise, and agrees to pay any and all costs, fees and
expenses (including reasonable counsel fees and expenses) incurred by the
Administrative Agent and the Lenders in enforcing any rights under the guaranty
set forth in this Article IX, as they become due from time to time in accordance
with the express provisions of the Loan Documents. The Administrative Agent
shall be entitled to enforce this Guarantee for its own benefit and the ratable
benefit of the Lenders and each Lender shall be entitled to enforce this
Guarantee for its own benefit through the Administrative Agent in respect of the
Guaranteed Obligations owing to it but without duplication. Without limiting the
generality of the foregoing, Guarantor’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by the
Borrower to the Administrative Agent and the Lenders under any Loan Document but
for the fact that they are unenforceable or not allowable due to the existence
of an bankruptcy proceeding involving the Borrower.

     SECTION 9.2. Guaranty Absolute. Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or the Lenders with respect thereto. The obligations of
Guarantor under this Article IX are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted against Guarantor
to enforce such obligations, irrespective of whether any action is brought
against the Borrower or whether the Borrower is joined in any such action or
actions. The liability of Guarantor under this Article IX constitutes a primary
obligation, and not a contract of surety, and shall be irrevocable, absolute and
unconditional irrespective of, and Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:

     (a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;

     (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from any Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to the Borrower or otherwise

     (c) any taking, exchange, release, subordination or non-perfection of any
of the Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;

- 47 -

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

     (d) any change, restructuring or termination of the corporate structure or
existence of any of the Loan Parties; or

     (e) except for payment in full of the Guaranteed Obligations, any other
circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by the Administrative Agent or
the Lenders that might otherwise constitute a defense available to, or a
discharge of, any of the Loan Parties or any other guarantor or surety.

This Article IX shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or the Lenders or any
other Person upon the insolvency, bankruptcy or reorganization of the Borrower
or otherwise (and whether as a result of any demand, settlement, litigation or
otherwise), all as though such payment had not been made.

     SECTION 9.3. Waiver. Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Article IX and any requirement that the Administrative
Agent or the Lenders exhaust any right or take any action against any of the
Loan Parties or any other Person or any Collateral. Guarantor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 9.3 is
knowingly made in contemplation of such benefits. Guarantor hereby waives any
right to revoke this Article IX, and acknowledges that this Article IX is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.

     SECTION 9.4. Continuing Guaranty; Assignments. This Article IX is a
continuing guaranty and shall (a) remain in full force and effect until payment
in full of the Guaranteed Obligations, (b) be binding upon Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Administrative Agent and the Lenders and their successors, pledgees, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any
Lender may pledge, assign or otherwise transfer all or any portion of its rights
and obligations under this agreement (including, without limitation, all or any
portion of its Term Loan Commitment and its Term Loans) to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise.

     SECTION 9.5. Subrogation. Guarantor shall not exercise any rights that it
may now or hereafter acquire against the Borrower or any other guarantor that
arise from the existence, payment, performance or enforcement of Guarantor’s
obligations under this Article IX, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Administrative Agent or the
Lenders against any of the Loan Parties or any other guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any of the Loan Parties or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and
until payment in full of the Guaranteed Obligations; provided, that Guarantor
shall not have any rights

- 48 -

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

hereunder against the Borrower if all or any portion of the Guaranteed
Obligations shall have been satisfied with proceeds from the exercise of
remedies in respect of the Equity Interest of the Borrower pursuant to any
Security Document. In addition, unless and until payment in full of the
Guaranteed Obligations, any indebtedness of the Borrower now or hereafter held
by Guarantor is subordinated in right of payment to the Guaranteed Obligations,
and any such indebtedness collected or received by Guarantor after an Event of
Default has occurred and is continuing but prior to payment in full of the
Guaranteed Obligations, shall be held in trust for Administrative Agent on
behalf of the Administrative Agent and the Lenders and shall forthwith be paid
over to Administrative Agent for the benefit of itself and the Lenders to be
credited and applied against the Guaranteed Obligations. If any amount shall be
paid to Guarantor in violation of the immediately preceding two sentences, such
amount shall be held in trust for the benefit of the Administrative Agent and
the Lenders and shall forthwith be paid to Administrative Agent for the benefit
of the Administrative Agent and the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Article IX,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Security for any Guaranteed Obligations or other amounts payable
under this Article IX thereafter arising. Upon payment in full of the Guaranteed
Obligations, the Administrative Agent and the Lenders will, at the Guarantor’s
request and expense, execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by Guarantor.

     SECTION 9.6. Maximum Obligations. Notwithstanding any provision herein
contained to the contrary, Guarantor’s liability with respect to the Obligations
shall be limited to an amount not to exceed, as of any date of determination,
the amount that could be claimed by the Administrative Agent and the Lenders
from Guarantor without rendering such claim voidable or avoidable under Section
548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.

ARTICLE X.
MISCELLANEOUS

     SECTION 10.1. Notices.

     (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

     (i) if to the Borrower, to it at 1 West Wetmore, Suite 203, Tuscon, AZ
85705, Attention of Chief Financial Officer (Telecopy No. 520-292-0268);

     (ii) if to the Administrative Agent, to Nedbank Limited, London Branch, 2
Lambert Hill, 1st Floor, Old Mutual Place, London EC4V, Attention: The Head:
Mining and Resources (Telecopy No. 44-707-002-3408), with a copy to Nedbank
Limited, 135 Rivonia Road, Sandown 2057, Republic of South Africa, Attention:
The Head: Specialized Finance;

- 49 -

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

     (iii) if to any other Lender, to it at its address (or telecopy number) as
indicted to the Administrative Agent.

     (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

     (c) Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

     SECTION 10.2. Waivers; Amendments.

     (a) No failure or delay by the Administrative Agent or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Term Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.

     (b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to an agreement or agreements in writing entered
into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase the Term Loan Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of the Term
Loans or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of the Term
Loans, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Term Loan Commitment, without the written consent of each
Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that
would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, or (v) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of

- 50 -

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

Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.

     SECTION 10.3. Expenses; Indemnity; Damage Waiver.

     (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of any advisor or counsel for the
Administrative Agent or any Lender (provided that the Borrower shall not be
required to pay for more than one counsel to the Administrative Agent and the
Lenders, other than special local counsel), in connection with the syndication
of the Term Loans provided for herein (which in any event shall be conducted in
accordance with Section 10.4(b)), the due diligence, preparation, negotiation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated) and the other Loan Documents and (ii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any advisor or counsel for the
Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its rights
under this Section, or in connection with the Term Loans made, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of the Term Loans.

     (b) The Borrower shall indemnify the Administrative Agent and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
or asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Term Loan or the use of the
proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Loan Parties, or any
Environmental Liability related in any way to the Loan Parties, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

     (c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss,

- 51 -

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

claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent in its capacity as such.

     (d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions or any Term Loan or the use of the proceeds thereof.

     (e) All amounts due under this Section shall be payable promptly after
written demand therefor.

     SECTION 10.4. Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Term Loan
Commitment and the Term Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:

     (A) the Borrower, provided that no consent of the Borrower shall be
required for an assignment to a Lender, an Affiliate of a Lender, or, if an
Event of Default has occurred and is continuing, any other assignee; provided
that any such assignment to an Affiliate shall in all cases be subject to
Section 2.17;

     (B) the Administrative Agent, provided that no consent of the
Administrative Agent shall be required for an assignment of any Term Loan
Commitment to an assignee that is a Lender with a Term Loan Commitment
immediately prior to giving effect to such assignment; and

(ii) Assignments shall be subject to the following additional conditions:

     (A) except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender’s
Term Loan Commitment or Term Loans, the amount of the Term Loan Commitment or
Term Loans of the assigning Lender subject to each - 52 -

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

such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing;

     (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement, provided that this clause shall not be construed to prohibit the
assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one type of Term Loan Commitment or Term Loans;

     (C) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

     (D) the assignee, if it shall not be a Lender, shall designate to the
Administrative Agent one or more Credit Contacts to whom all syndicate-level
information (which may contain material non-public information about the Loan
Parties and their related parties or their respective securities) will be made
available and who may receive such information in accordance with the assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws.

     (iii) Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.14, 2.15 and 10.3) . Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.4
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

     (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Term Loan Commitment of, and principal amount
of the Term Loan Commitment or Term Loans owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register

- 53 -

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

shall be available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

     (v) Upon its receipt of a duly completed Assignment and Assumption executed
by an assigning Lender and an assignee, the processing and recordation fee
referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Assumption and record the information contained
therein in the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it
pursuant to Section 2.5(c), 2.6(d) or (e), 2.7(b), 2.16(d) or 10.3(c), the
Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

     (c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Term Loan Commitment and
the Term Loans owing to it); provided that (A) such Lender’s obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 10.2(b) that
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.8 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.16(c) as though it were a Lender.

     (ii) A Participant shall not be entitled to receive any greater payment
under Section 2.13 or 2.15 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.

     (d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including

- 54 -

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

without limitation any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

     SECTION 10.5. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Term
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on the Term Loans
or any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Term Loan Commitments have not expired or terminated.
The provisions of Sections 2.13, 2.14, 2.15 and 10.3 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of
the transactions contemplated hereby, the repayment of the Term Loans and the
Term Loan Commitments or the termination of this Agreement or any provision
hereof.

     SECTION 10.6. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.1, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.

     SECTION 10.7. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

     SECTION 10.8. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement or

- 55 -

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

any Hedging Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such Hedging Agreement
and although such obligations may be unmatured. The rights of each Lender under
this Section are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.

     SECTION 10.9. Governing Law; Jurisdiction; Consent to Service of Process.

     (a) This Agreement shall be construed in accordance with and governed by
the law of the State of New York.

     (b) The Borrower hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Lender may otherwise have
to bring any action or proceeding relating to this Agreement against the
Borrower or its properties in the courts of any jurisdiction.

     (c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

     (d) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.1. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

     SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

- 56 -

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

     SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

     SECTION 10.12. Confidentiality.

     (a) Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, “Information” means all information received from the
Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

     (b) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION
10.12(a) FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL
NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE
SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

     (c) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS,
FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE
COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION,
WHICH MAY CONTAIN MATERIAL

- 57 -

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

NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR
RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND
THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED A CREDIT CONTACT WHO MAY RECEIVE
INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH
ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.

     SECTION 10.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to the Term Loans,
together with all fees, charges and other amounts which are treated as interest
on the Term Loans under applicable law (collectively the “Charges”), shall
exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Term Loan in
accordance with applicable law, the rate of interest payable in respect of such
Term Loan hereunder, together with all Charges payable in respect thereof, shall
be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Term Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Term Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon to the date of repayment, shall
have been received by such Lender.

     SECTION 10.14. Know Your Customer Requirements. Each Lender that is subject
to “know-your-customer” requirements of any Governmental Authority, hereby
notifies the Borrower that pursuant to such requirements, it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with such
requirements.

[Signature Pages Follow]

- 58 -

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

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

  NORD RESOURCES CORPORATION                   By: /s/ Wayne Morrison   Name:
Wayne Morrison   Title: VP & CFO         COCHISE AGGREGATES AND MATERIALS, INC.
                    By: /s/ Erland A. Anderson   Name: Erland A. Anderson  
Title: President

[SIGNATURE PAGES CONTINUED ON NEXT PAGE]

[Signature Page to Credit Agreement]

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

[SIGNATURE PAGES CONTINUED FROM PREVIOUS PAGE]

  NEDBANK LIMITED,          as Administrative Agent           /s/ S. Orton   By
    Name: S. Orton   Title: Authorized Officer           /s/ Darren McDonnell  
By     Name: Darren McDonnell   Title: Authorized Signatory                    
NEDBANK LIMITED, London Branch,          as Lender           /s/ S. Orton   By  
  Name: S. Orton   Title: Authorized Officer           /s/ Darren McDonnell   By
    Name: Darren McDonnell   Title: Authorized Signatory

[Signature Page to Credit Agreement]

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

  EXHIBIT A   to Amended and   Restated Credit   Agreement

ASSIGNMENT AND ASSUMPTION

     This Assignment and Assumption (the “Assignment and Assumption”) is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Amended and Restated Credit Agreement identified
below (as amended, the “Amended and Restated Credit Agreement”), receipt of a
copy of which is hereby acknowledged by the Assignee. The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

     For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Amended and Restated Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i)
all of the Assignor’s rights and obligations in its capacity as a Lender under
the Amended and Restated Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the Term Loan and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Amended and Restated Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

1. Assignor:   2. Assignee:       [and is an Affiliate of [identify Lender]1 ]
3. Borrower: Nord Resources Corporation

          1 Select as applicable.

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

4. Administrative Agent: Nedbank Limited, as the administrative agent under the
Amended and Restated Credit Agreement       5. Amended and Restated $25,000,000
Credit Agreement dated as of June , 2008 among Nord Resources Corporation, a
Delaware corporation (the “Borrower”), the guarantor party thereto, the lenders
party thereto (the “Lenders”), Nedbank Limited, as Administrative Agent, and the
other agents parties thereto.       6. Assigned Interest:  

Aggregate Amount of
Term Loan
Commitment / Term
Loans for all Lenders Amount of Term Loan
Commitment / Term
Loans Assigned
Percentage of
Assigned Term Loan
Commitment / Term
Loans 2 $ $                                        % $ $                        
               % $ $                                        %

     Effective Date: _____________   ___, 20___ [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

     The Assignee agrees to deliver to the Administrative Agent a designation of
one or more Credit Contacts to whom all syndicate-level information (which may
contain material non-public information about the Loan Parties and their Related
Parties or their respective securities) will be made available and who may
receive such information in accordance with the Assignee’s compliance procedures
and applicable laws, including Federal and state securities laws.

     The terms set forth in this Assignment and Assumption are hereby agreed to:

  ASSIGNOR   [NAME OF ASSIGNOR]                By:    Title:         ASSIGNEE  
[NAME OF ASSIGNEE]                By:  

          2 Set forth, to at least 9 decimals, as a percentage of the Term Loan
Commitment / Term Loans of all Lenders thereunder.

Exhibit A - Assignment and Assumption
2

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

Title:

[Consented to and]3 Accepted:

NEDBANK LIMITED, as Administrative Agent

By     Title:    

 

          3 To be added only if the consent of the Administrative Agent is
required by the terms of the Credit Agreement.

Exhibit A - Assignment and Assumption
3

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

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

     1. Representations and Warranties.

     1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Amended and Restated Credit Agreement or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Loan Parties, any of their Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance
by the Loan Parties, any of their Affiliates or any other Person of any of their
respective obligations under any Loan Document.

     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Amended and Restated Credit
Agreement, (ii) it satisfies the requirements, if any, specified in the Amended
and Restated Credit Agreement that are required to be satisfied by it in order
to acquire the Assigned Interest and become a Lender, (iii) from and after the
Effective Date, it shall be bound by the provisions of the Amended and Restated
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Amended and Restated Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to Section 5.1
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Assumption and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Foreign Lender, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Amended and Restated
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.

     2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the

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

Effective Date and to the Assignee for amounts which have accrued from and after
the Effective Date.

     3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

2

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