STOCK PURCHASE AGREEMENT
 
dated as of  August 3, 2010
 
between
 
Li3 Energy, Inc.,
 
Pacific Road Capital A Pty. Limited, as trustee for Pacific Road Resources Fund
A,
 
Pacific Road Capital B Pty. Limited, as trustee for Pacific Road Resources Fund
B
 
and
 
Pacific Road Capital Management G.P. Limited, as General Partner of Pacific Road
Resources Fund L.P.
 
relating to the purchase and sale
 
of
 
100% of the issued share capital
 
of
 
Alfredo Holdings, Ltd.

 

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Table of Contents
 
Article I. DEFINITIONS
4
 
1.1
Definitions
4
 
1.2
Other Defined Terms
7
Article II. PURCHASE AND SALE
9
 
2.1
Purchase and Sale of the Acquired Shares
9
 
2.2
Closing Date
10
 
2.3
Transactions to be Effected at the Closing
10
Article III. REPRESENTATIONS AND WARRANTIES OF SELLERS
11
 
3.1
Organization and Good Standing
11
 
3.2
Capitalization
11
 
3.3
Subsidiary of the Acquired Company
12
 
3.4
Authority and Enforceability
13
 
3.5
No Conflicts; Authorizations
13
 
3.6
Financial Statements
14
 
3.7
No Undisclosed Liabilities
14
 
3.8
Status of PRMC’s business
14
 
3.9
Taxes
14
 
3.10
Compliance with Law
15
 
3.11
Authorizations
15
 
3.12
Real Property
16
 
3.13
Intellectual Property
16
 
3.14
Absence of Certain Changes or Events
16
 
3.15
Contracts
18
 
3.16
Litigation
18
 
3.17
Employees and Benefit Plans
19
 
3.18
Environmental
19
 
3.19
Insurance
20
 
3.20
Books and Records
20
 
3.21
Brokers or Finders
21
 
3.22
Bank Accounts
21
 
3.23
Powers of Attorney
21
 
3.24
Support Services
21
 
3.25
Mining Matters
21
 
3.26
Representations Relating to Sellers’ Acquisition of the Purchase Price Shares
22
 
3.27
No Corrupt Practices
24
Article IV. REPRESENTATIONS AND WARRANTIES OF BUYER
25
 
4.1
Organization and Good Standing
25
 
4.2
Capitalization
25
 
4.3
Subsidiaries of the Buyer
26
 
4.4
Authority and Enforceability
26
 
4.5
No Conflicts; Authorizations
27
 
4.6
Financial Statements
27
 
4.7
No Undisclosed Liabilities
27
 
4.8
Absence of Certain Changes or Events
28
 
4.9
Litigation
28
 
4.10
Brokers or Finders
29
 
4.11
Exchange Act Filings
29
 
4.12
Investment Company Act
29
 
4.13
Internal Controls
29
 
4.14
Sarbanes-Oxley
29
 
4.15
No Corrupt Practices
29

2

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Article V. COVENANTS OF SELLERS
30
 
5.1
Access to Samples
30
 
5.2
Confidentiality
30
 
5.3
Notification of Certain Matters
31
 
5.4
Lock-Up; No Shorting
31
Article VI. COVENANTS OF BUYER
31
 
6.1
Preemptive Rights
31
 
6.2
Seller Nominee to Board of Directors
32
 
6.3
Rule 144 Information
32
 
6.4.
Sellers’ Options to Invest
33
Article VII. COVENANTS OF BUYER AND SELLER
33
 
7.1
Public Announcements
33
 
7.2
Tax Matters
33
 
7.3
Cooperation in Filing Tax Returns
33
 
7.4
Use of Certain Names
34
 
7.5
Further Assurances
34
Article VIII. DELIVERABLES
34
 
8.1
Deliveries by Buyer
34
 
8.2
Deliveries by Sellers
34
Article IX. AVAILABLE REMEDIES
35
Article X. INDEMNIFICATION
35
 
10.1
Survival
35
 
10.2
Indemnification by Sellers
36
 
10.3
Indemnification by Buyer
36
 
10.4
Indemnification Procedures for Third Party Claims
37
 
10.5
Indemnification Procedures for Non-Third Party Claims
39
 
10.6
Maximum Liability
40
 
10.7
Exclusion of consequential liability
40
 
10.8
Environmental Actions
40
 
10.9
Effect of Investigation; Waiver
40
Article XI. MISCELLANEOUS
41
 
11.1
Notices
41
 
11.2
Amendments and Waivers
42
 
11.3
Expenses
43
 
11.4
Successors and Permitted Assigns
43
 
11.5
Governing Law
43
 
11.6
Consent to Jurisdiction
43
 
11.7
Counterparts
43
 
11.8
Third Party Beneficiaries
43
 
11.9
Entire Agreement
43
 
11.10
Captions
44
 
11.11
Severability
44
 
11.12
Interpretation
44

 
Sellers Disclosure Schedules
 
Buyer Disclosure Schedule
 
Exhibits
 
Exhibit A - CD with disclosed Due Diligence documents

 
3

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STOCK PURCHASE AGREEMENT
 
STOCK PURCHASE AGREEMENT, dated as of August 3, 2010 (the “Agreement”), between
Li3 Energy, Inc., a Nevada corporation (“Buyer”), and Pacific Road Capital A
Pty. Limited, as trustee for Pacific Road Resources Fund A, a trust governed by
the laws of Australia (“Fund A”), Pacific Road Capital B Pty. Limited, as
trustee for Pacific Road Resources Fund B, a trust governed by the laws of
Australia (“Fund B”), and Pacific Road Capital Management G.P. Limited, as
General Partner of Pacific Road Resources Fund L.P., limited partnership formed
and registered under the laws of  England and Wales (“PR Partnership” and,
together with Fund A and Fund B, “Sellers”).
 
WHEREAS, Sellers are the record and beneficial owners of all of the issued and
outstanding share capital (the “Acquired Shares”), of Alfredo Holdings, Ltd., an
exempted limited company incorporated under the laws of the Cayman Islands (the
“Acquired Company”), which owns eight hundred seventy-three thousand, eight
hundred sixty-three (873,863) of the issued share capital of Pacific Road Mining
Chile, SA, a Chilean corporation (“PRMC”). The remaining 2 shares of the issued
share capital of PRMC (“PRMC Minority Shareholding”) are owned one each by
Carlos Alberto Reyes Comandari; and Alejandra Pérez Rossi.
 
WHEREAS, Sellers desire to sell the Acquired Shares to Buyer, and Buyer desires
to purchase the Acquired Shares from Sellers and the PRMC Minority Shareholding,
upon the terms and subject to the conditions set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and the respective
representations and warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
 
ARTICLE I.  DEFINITIONS
 
1.1           Definitions. When used in this Agreement, the following terms
shall have the meanings assigned to them in this Section 1.1, or in the
applicable Section of this Agreement to which reference is made in this Section
1.1.
 
“Affiliate” means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such specified Person.
 
“Alfredo Property” means collectively all the mining concessions specified in
Article 1 of the Option to Purchase Agreement.
 
“Authorization” means any authorization, approval, consent, certificate,
license, permit or franchise of or from any Governmental Entity or pursuant to
any applicable Law.
 
“Business Day” means a day other than a Saturday, Sunday or other day on which
banks located in Santiago, Chile are authorized or required by Law to close.
 
“Buyer Company” means Buyer, and each of Buyer’s domestic and foreign
Subsidiaries, and “Buyer Companies” means, collectively, Buyer and all such
Subsidiaries.
 
“Capital Stock” means (a) in the case of a corporation, its shares of capital
stock, (b) in the case of an exempted limited company incorporated under the
laws of the Cayman Islands, its share capital, (c) in the case of a partnership
or limited liability company, its partnership or membership interests or units
(whether general or limited), and (d) any other interest that confers on a
Person the right to receive a share of the profits and losses, or distribution
of assets, of the issuing entity.

 
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“Charter Documents” means, with respect to any entity, the certificate of
incorporation, the articles of incorporation, by-laws, articles of organization,
memorandum and articles of association, limited liability company agreement,
partnership agreement, formation agreement, joint venture agreement or other
similar organizational documents of such entity (in each case, as amended).
 
“Claim” means any (i) Lien arising in connection with community property laws,
claim, preferential purchase right, option, right of first refusal, indenture,
production payment, restriction, burden, right of purchase or right of a vendor
under any title retention or conditional sale agreement, or (ii) arrangement,
contract, commitment, understanding or obligation of any nature whatsoever which
serves to restrict or impair the value of a property or security.
 
“Contract” means any agreement, contract, license, lease, commitment,
arrangement or understanding, written or oral, including any sales order or
purchase order.
 
“Due Diligence” means the enquiries and investigations into the Acquired
Company, PRMC, the Alfredo Property and its assets and rights carried out by the
Buyer.
 
“Equity Securities” means (a) shares of Capital Stock, and (b) options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other Contracts that, directly or indirectly, could require the issuer
thereof to issue, sell or otherwise cause to become outstanding shares of
Capital Stock.
 
“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
 
“Final Determination” means a decision, judgment, decree or other order by any
court of competent jurisdiction, which decision, judgment, decree or other order
has become final after all allowable appeals by either party to the action have
been exhausted or the time for filing such appeals has expired and is not
subject to further review or modification.
 
“GAAP US” means United States generally accepted accounting principles.
 
“Governmental Entity” means any government, governmental, semi-governmental,
administrative, fiscal, municipal or judicial body, including any department,
commission, board, agency, bureau, subdivision, instrumentality, official or
other regulatory, administrative or judicial authority thereof.
 
“Indebtedness” means any of the following: (a) any indebtedness for borrowed
money, (b) any obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) any obligations to pay the deferred purchase price of
property or services, except trade accounts payable and other current
Liabilities arising in the ordinary course of business, (d) any obligations as
lessee under capitalized leases, (e) any indebtedness created or arising under
any conditional sale or other title retention agreement with respect to acquired
property, (f) any obligations, contingent or otherwise, under acceptance credit,
letters of credit or similar facilities, and (g) any guaranty of any of the
foregoing.
 
“Indemnitee” means any Person that is seeking indemnification from an Indemnitor
pursuant to the provisions of this Agreement.
 
“Indemnitor” means any party hereto from which any Indemnitee is seeking
indemnification pursuant to the provisions of this Agreement.

 
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“Knowledge” of a Person or any similar phrase means, with respect to any fact or
matter, the actual knowledge of the directors and  executive officers of the
Person or its Subsidiaries, together with such knowledge that such directors,
executive officers could be expected to discover after due investigation
concerning the existence of the fact or matter in question.
 
“Law” means any statute, law (including common law), constitution, treaty,
ordinance, code, order, decree, judgment, rule, regulation and any other binding
requirement or determination of any Governmental Entity.
 
“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, adverse claim or other encumbrance in respect of such
property or asset.
 
“Losses” means all losses, damages, claims (including third party claims),
charges, interest, penalties, Taxes, costs and expenses (including reasonable
legal, consultant, accounting and other professional fees, costs of sampling,
testing, investigation, removal, treatment and remediation of contamination and
fees and costs incurred in enforcing rights under Article X), but excluding
consequential liability pursuant to the terms in Section 10.7.
 
“Material Adverse Effect” on a Person means a material adverse effect on the
condition (financial or otherwise), operations or results of operations of that
Person and its Subsidiaries taken as a whole.
 
“Mines” means excavations in the soil and sub-soil from which ores or other
Minerals are removed, excluding any such removal for exploration works or
evaluation purposes.
 
“Minerals” means any metallic or non-metallic substance, existing within the
boundaries of the Mining Concessions.
 
“Mineral Interest” or “Mining Concession” mean any mining exploration
concessions (Concesiones de Exploracion), mining claims (Pertenencias), whether
fully granted or still under procedure (pedimentos or manifestaciones) pursuant
to Chilean mining law, which is part of the Alfredo Property.
 
“Mineral Leases” means. agreements between a property owner and another party
who is allowed to explore for and extract Minerals that are found on the Mining
Concessions for a stated time in exchange for periodic payments to the
landowner.
 
“Option to Purchase Agreement” means that certain Option to Purchase Agreement,
dated as of June 6, 2008, by and between Sociedad Contractual Minera La
Fortaleza, and PRMC, as amended as of April 17, 2009 and assigned as of  October
24 2008, a copy of which is attached in the Seller Disclosure Schedule.
 
“Order” means any award, injunction, judgment, decree, order, ruling, subpoena
or verdict or other decision issued, promulgated or entered by or with any
Governmental Entity of competent jurisdiction.
 
“Permitted Liens” means (a) Liens for current real or personal property taxes
not yet due and payable, (b) workers’, carriers’ and mechanics’ or other like
liens incurred in the ordinary course of business with respect to which payment
is not due and that do not impair the conduct of the businesses of the Acquired
Company or  its Subsidiary or the present use of the affected property and (c)
liens that are immaterial in character, amount, and extent and which do not
detract from the value or interfere with the present or proposed use of the
properties they affect.

 
6

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“Person” means an individual, a corporation, a partnership, a limited liability
company, a trust, an unincorporated association, a Governmental Entity or any
agency, instrumentality or political subdivision of a Governmental Entity, or
any other entity or body.
 
“Pre-Closing Environmental Liabilities” means Liabilities based upon or arising
out of a breach of Environmental Laws in connection with PRMC’s activities in
the Alfredo Property at any time from the date of the Option to Purchase
Agreement until Closing.
 
“SEC” means the United States Securities and Exchange Commission.
 
“Securities Act” means the United States Securities Act of 1933, as amended and
the rules and regulations promulgated thereunder.
 
“Seller Company” means each Seller and each of the Acquired Company and PRMC,
and “Seller Companies” means, collectively, Sellers, the Acquired Company and
PRMC.
 
“Subsidiary” or “Subsidiaries” means, with respect to any party, any Person, of
which (a) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership), or (b) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such Person is directly or indirectly owned or controlled by such party and/or
by any one or more of its Subsidiaries.
 
“Tax” or “Taxes” means any and all federal, state, local, or foreign net or
gross income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, profits,  transaction, license, lease, service,
service use, occupation, severance, energy, unemployment, social security,
workers’ compensation, capital, premium, and other taxes, assessments, customs,
duties, fees, levies or other governmental charges of any nature whatever,
whether disputed or not, together with any interest, penalties, additions to
tax, or additional amounts with respect thereto.
 
“Tax Returns” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
“Taxing Authority” means any Governmental Entity having jurisdiction with
respect to any Tax.
 
“Trading Day” with respect to any security, means any day on which the principal
securities exchange or electronic quotation service on which such security is
traded or quoted is open.
 
“Transaction Documents” means this Agreement and all other agreements,
instruments, schedules and other documents entered into or to be entered into or
furnished or to be furnished  pursuant hereto, or in connection with the
execution or performance of this Agreement.
 
“Transfer Taxes” means sales, use, transfer, real property transfer, recording,
documentary, stamp, registration and stock transfer taxes and fees.
 
“$” means United States dollars.
 
1.2           Other Defined Terms. The following terms have the meanings
assigned to such terms in the Sections of the Agreement set forth below:

 
7

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Acquired Balance Sheet
 
3.6
Acquired Balance Sheet Date
 
3.6
Acquired Company
 
Recital
Acquired Financial Statements
 
3.6
Acquired Shares
 
Recital
Acquired Subsidiary Shares
 
3.3(b)
Acquisition
 
2.1
Action
 
3.16(a)
Agreement
 
Preamble
Alfredo Mine
 
2.1(b)
Applicable Survival Period
 
10.1(c)
Buyer
 
Preamble
Buyer Annual Financial Statements
 
4.6
Buyer Balance Sheet
 
4.6
Buyer Balance Sheet Date
 
4.6
Buyer Common Stock
 
2.1(a)
Buyer Disclosure Schedule
 
Preamble to Article IV
Buyer Financial Statements
 
4.6
Buyer Indemnitees
 
10.2(a)
Buyer Interim Balance Sheet
 
4.6
Buyer Interim Balance Sheet Date
 
4.6
Buyer Interim Financial Statements
 
4.6
Buyer SEC Report
 
4.12
Buyer Warranty Losses
 
10.2(b)
Closing
 
2.2
Closing Date
 
2.2
Consents
 
3.5(a)
Contingent Consideration
 
2.1(b)
Contingent Milestone
 
2.1(b)
Environment
 
3.18(a)(i)
Environmental Action
 
3.18(a)(ii)
Environmental Laws
 
3.18(a)(iii)
Environmental Permits
 
3.18(a)(iv)
Equity Payment Option
 
2.1(c)
Hazardous Substances
 
3.18(a)(v)
Intellectual Property
 
3.13(a)
Liabilities
 
3.6
Material Contract
 
3.15(b)
Maximum Liability Amount
 
10.6 (a)
Milestone Notice
 
2.1(c)
Minor Contracts
 
3.15(e)
Moving Average Price
 
2.1(a)
Notice of Claim
 
10.4(a)
PPO Price
 
2.1(a)
PRMC
 
Recitals
PRMC Payable
 
3.14(xviii)
PRMC Minority Shareholding
 
Recitals

 
8

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Purchase Price Shares
 
2.1(a)
Release
 
3.18(a)(vi)
Seller Disclosure Schedule
 
Preamble to Article III
Seller Indemnitees
 
10.3(a)
Seller Warranty Losses
 
10.3(b)
Third Party Claim
 
10.4(a)
Third Party Defense
 
10.4(b)
Traspaso de Acciones
 
2.3(b)

 
ARTICLE II.  PURCHASE AND SALE
 
2.1           Purchase and Sale of the Acquired Shares. Upon the terms and
subject to the conditions of this Agreement, at the Closing, the Sellers shall
sell to Buyer, and Buyer shall purchase from the Sellers, all of the Acquired
Shares free and clear of all Liens.  The aggregate consideration to be provided
by Buyer to the Sellers for the Acquired Shares (The purchase and sale of the
Acquired Shares is referred to in this Agreement as the “Acquisition”) is:
 
(a)          A number of newly issued shares (the “Purchase Price Shares”) of
the common stock, par value $0.001 per share, of the Buyer (“Buyer Common
Stock”), equal to the quotient of $2,500,000 divided by the lesser of (i) Moving
Average Price (as defined below) as of the Closing, and (ii) the price per share
of Buyer Common Stock received by Buyer in any private placement of Buyer Common
Stock completed by Buyer after April 20, 2010 and prior to the Closing (such
lesser price, the “PPO Price”).  As used in this Agreement, the “Moving Average
Price,” as of any date, means the average of the last sale price (or, if there
are no sales on such date, the closing bid price) for the Buyer Common Stock on
the thirty (30) Trading Days immediately preceding such date.  The Purchase
Price Shares shall be delivered as provided in Section 2.3; and
 
(b)          If and when the following milestones (“Contingent Milestones”) are
achieved with respect to a mine to recover iodine or nitrate from the Alfredo
Property (the “Alfredo Mine”), Buyer shall pay to Sellers the following
additional amounts in cash (the “Contingent Consideration”):
 
 
(i)
$1,000,000 upon board resolution of Buyer to commence final engineering and
design of the Alfredo Mine;

 
 
(ii)
a further $2,000,000 upon board resolution of Buyer to commence construction of
the Alfredo Mine; and

 
 
(iii)
a further $2,500,000 upon commencement of commercial production from the Alfredo
Mine. For these purposes commercial production means the production from the
Alfredo Property at a rate of 75% of design capacity for 3 months.

 
(c)          Within fifteen (15) Business Days of the occurrence of any
Contingent Milestone, Buyer shall give each Seller notice thereof (a “Milestone
Notice”).  Each Seller shall have the right (the “Equity Payment Option”) to
elect to receive any payment of Contingent Consideration in shares of Buyer
Common Stock, valued for such purpose at the greater of (i) the PPO Price and
(ii) the Moving Average Price as of the date of payment.  Each Seller may
exercise its Equity Payment Option with respect to the Contingent Consideration
arising out of any Contingent Milestone by delivering notice of such Seller’s
exercise of the Equity Payment Option to Buyer within five (5) Business Days of
receiving the Milestone Notice related to such Contingent Milestone.  Buyer
shall pay the Contingent Consideration with respect to any Contingent Milestone
to the Sellers within thirty (30) Business Days of the occurrence of such
Contingent Milestone. Sellers shall have the right, on reasonable written
request to Buyer, to inspect the Alfredo Property from time to time in order to
assess the progress made toward completion of the Contingent Milestones,
provided such inspections do not adversely affect the normal operation of the
Alfredo Property.

 
9

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(d)          Buyer shall deliver to each Seller such portion of the Purchase
Price Shares or Contingent Consideration, as the case may be, as is set forth
for such Seller in Schedule 2.1(d) hereto. Buyer shall deliver a portion of the
Purchase Price Shares not to exceed 20% to such other Person designated by a
Seller, provided that such Person agrees to the transfer restrictions set forth
in Section 5.4 (in this specific case the Lock-up Period shall be of 6 months
and not 18 months as provided in such Section 5.4) and makes customary investor
qualification representations in a written document in a form reasonably
acceptable to Sellers and Buyer. Schedule 2.1(d) sets forth the allocation of
the Purchase Price Shares considering the Persons hereby designated by Sellers.
 
(e)          Sellers acknowledge and agree that Buyer is under no obligation to
seek the achievement of any Contingent Milestone, to cause PRMC to exercise any
rights under the Option to Purchase Agreement, or otherwise to seek to explore
and/or develop the Alfredo Property or any other Mine or Mineral Interests.
 
(f)           If, at any time within the period ending on the third anniversary
following the Closing Date, the Buyer sells, transfers or otherwise disposes,
directly or indirectly, of all or substantially all of the Acquired Shares, the
shares of PRMC or the Alfredo Property to any other Person, then prior to such
sale, transfer or disposition, the acquiring party must first expressly
acknowledge to the Sellers and the Buyer in writing that it is bound by the
Buyer’s obligations in Section 2.1(b) above, in form satisfactory to the
Sellers. In such case (i) the transferee will satisfy the payment obligations in
cash and the Equity Payment Option shall not apply and (ii) Buyer will cease to
be liable to Sellers for any subsequent Contingent Consideration.
 
2.2           Closing Date. The signing and closing of the Acquisition (the
“Closing”) take place concurrently at the offices of Baker & McKenzie, in
Santiago, Chile, at 10:00 a.m. on  August 3, 2010. The date upon which the
Closing and the signing simultaneously occur is herein referred to as the
“Closing Date.”
 
2.3           Transactions to be Effected at the Closing.
 
(a)          At the Closing, Buyer shall deliver to Sellers (i) certificates
representing the Purchase Price Shares, and (ii) all other documents,
instruments or certificates required to be delivered by Buyer, acting
reasonably, at or prior to the Closing pursuant to this Agreement.
 
(b)          At the Closing, Sellers shall deliver to Buyer or procure the
delivery to the Buyer of (or if Buyer so elects, to a Subsidiary of the
Buyer):  (i) executed instruments of transfer; (ii) a resolution of the board of
directors of the Acquired Company noting and approving the transfer of the
Acquired Shares from Sellers to the Buyer; (iii)  all other documents and
instruments necessary to vest in Buyer (or its Subsidiary) all of Sellers’
right, title and interest in and to the Acquired Shares, free and clear of all
Liens; (iii) copy of the members register of the Acquired Company evidencing the
transfer of the Acquired Shares; (iv) duly executed transfer documents
(“Traspaso de Acciones”) of PRMC Minority Shareholding to the Affiliate of the
Buyer designated by Buyer; (v)  the shareholders’ registry of PRMC evidencing
the transfer of  PRMC Minority Shareholding to the Affiliate designated by
Buyer; (vi) original share certificates of PRMC Minority Shareholding in the
name of Carlos Alberto Reyes Comandari and Alejandra Pérez Rossi duly cancelled
and newly issued shares certificate of  PRMC  in the name of the Affiliate
designated by Buyer; and (vii) all other documents, instruments or certificates
required to be delivered by Sellers at or prior to the Closing pursuant to this
Agreement. Documents indicated in letters (iv), (v) and (vi) may be delivered by
Seller to Buyer’s counsel in Chile, Baker & McKenzie Santiago,  who shall
acknowledge receipt of those documents.

 
10

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ARTICLE III.  REPRESENTATIONS AND WARRANTIES OF SELLERS
 
Sellers represent and warrant to Buyer that each statement contained in this
Article III is true and correct as of the date hereof, except as set forth in
the in the disclosure schedule dated and delivered as of the date hereof by
Sellers to Buyer (the “Seller Disclosure Schedule”), which is attached to this
Agreement and is designated therein as being the Seller Disclosure Schedule. The
Seller Disclosure Schedule shall be arranged in sections corresponding to each
Section of this Article III.  Each exception to a representation and warranty
set forth in the Seller Disclosure Schedule shall qualify the specific
representation and warranty which is referenced in the applicable section of the
Seller Disclosure Schedule, and no other representation or warranty.
 
3.1           Organization and Good Standing.
 
(a)           The Acquired Company is an exempted limited company duly
incorporated, validly existing and in good standing under the Laws of the Cayman
Islands, Fund A and Fund B are trusts duly organized, validly existing and in
good standing under the Laws of Australia; and PR Partnership is an limited
partnership duly formed and registered, validly existing and in good standing
under the Laws of England and Wales.  Each of the Sellers and the Acquired
Company has all requisite power to own and to carry on its business as currently
conducted, and the Acquired Company is duly qualified to do business and is in
good standing in  Cayman Islands.
 
(b)           Neither the Acquired Company nor any Seller is in default under
its Charter Documents. The Charter Documents of the Acquired Company in the
forms attached to the Seller Disclosure Schedule are the Charter Documents of
the Acquired Company as in effect on the date of this Agreement.
 
3.2           Capitalization.
 
(a)           The authorized Capital Stock of the Acquired Company consists of
five million (5,000,000) shares with a par value of $0.01 per share. All of the
Acquired Shares are duly authorized, validly issued, fully paid and
nonassessable and are owned of record and beneficially by Sellers  free and
clear of all Liens.  Upon transfer of the Acquired Shares to Buyer in accordance
with the terms of Article II.  , and upon the directors of the Acquired Company
approving and registering the transfers and the Buyer being entered into the
Acquired Company’s register of members as the registered owner of the Acquired
Shares, Buyer will receive valid title to the Acquired Shares, free and clear of
all Liens.
 
(b)           All of the Acquired Shares were issued in compliance with
applicable Laws. None of the Acquired Shares was issued in violation of any
Contract to which any Seller or the Acquired Company is a party or is subject
to, or in violation of, any preemptive or similar rights of any Person.
 
(c)           Other than the Acquired Shares, the Acquired Company does not have
outstanding any Equity Securities or any other securities. The Acquired Company
is not a party or subject to any Contract obligating the Acquired Company to
issue any Equity Securities or any other securities and, to Seller’s Knowledge,
there is no circumstance or condition that may give rise to a claim by any
Person that such Person is entitled to acquire any securities of the Acquired
Company. The Acquired Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matter.

 
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(d)           The Acquired Company does not have outstanding or authorized any
stock appreciation, phantom stock, profit participation, or similar rights.
 
(e)           Neither Seller nor the Acquired Company is a party or subject to
any stockholder agreement, voting agreement, voting trust or any other similar
arrangement which has the effect of restricting or limiting the transfer, voting
or other rights associated with the Acquired Shares.
 
(f)           There are no obligations, contingent or otherwise, of the Acquired
Company to provide corporate funding (in the form of a loan or capital
contribution) to any Person.
 
(g)           No share certificates have been issued by the Acquired Company or
are existing in respect of the Acquired Shares.
 
3.3          Subsidiary of the Acquired Company.
 
(a)           PRMC is validly existing and in good standing under the Laws of
the jurisdiction of its formation, has all requisite power to carry on its
business as currently conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which it conducts any business so as to
require such qualification.
 
(b)           PRMC is  the only Subsidiary of the Acquired Company. The Seller
Disclosure Schedule sets forth  the formation documents, the authorized and
outstanding Capital Stock of such Subsidiary and the owner(s) of record of such
outstanding Capital Stock. The outstanding shares of Capital Stock of the
Subsidiary of the Acquired Company (collectively, the “Acquired Subsidiary
Shares”) are duly authorized, validly issued, fully paid and nonassessable, and
are owned by the Acquired Company or another Subsidiary or nominee of the
Acquired Company free and clear of all Liens.
 
(c)           All of the Acquired Subsidiary Shares were issued in compliance
with applicable Laws. None of the Acquired Subsidiary Shares was issued in
violation of any Contract to which any Seller, the Acquired Company or  its
Subsidiary is a party or is subject.
 
(d)           Other than the Acquired Subsidiary Shares set forth in the Seller
Disclosure Schedule, the Subsidiary of the Acquired Company does not have
outstanding any Equity Securities or any other securities. The Subsidiary of the
Acquired Company is not a party and it is not subject to any Contract obligating
such Subsidiary to issue any Equity Securities or any other securities and, to
Seller’s Knowledge, there is no circumstance or condition that may give rise to
a claim by any Person that such Person is entitled to acquire any securities of
the Subsidiary of the Acquired Company. No Subsidiary of the Acquired Company
has outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matter.
 
(e)           No Subsidiary of the Acquired Company has outstanding or
authorized any stock appreciation, phantom stock, profit participation, or
similar rights.
 
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(f)           Other than PRMC,  the Acquired Company does not directly or
indirectly own any Equity Securities or other securities in any Person.
Likewise.  PRMC does not directly or indirectly own any Equity Securities or
other securities in any Person
 
(g)           None of Seller, the Acquired Company or the Subsidiary of the
Acquired Company is a party or subject to any stockholder agreement, voting
agreement, voting trust or any other similar arrangement which has the effect of
restricting or limiting the transfer, voting or other rights associated with the
Acquired Subsidiary Shares.
 
(h)           There are no obligations, contingent or otherwise, of the
Subsidiary of the Acquired Company to provide corporate funding (in the form of
a loan or capital contribution) to any Person.
 
3.4          Authority and Enforceability. Such Seller has the requisite power
and authority to enter into this Agreement and to consummate the Acquisition.
The execution and delivery of this Agreement and the consummation of the
Acquisition have been duly authorized by all necessary corporate action on the
part of such Seller. This Agreement has been duly executed and delivered by or
on behalf of such Seller and, assuming due authorization, execution and delivery
by Buyer, constitutes the valid and binding obligation of such Seller,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting or relating to creditors’ rights
generally, and (b) the availability of injunctive relief and other equitable
remedies.
 
3.5          No Conflicts; Authorizations.
 
(a)           The execution and delivery of this Agreement by or on behalf of
the Sellers do not, and the performance by Sellers of their obligations
hereunder and the consummation by Sellers of the transactions contemplated
hereby (in each case, with or without the giving of notice or lapse of time, or
both) will not, directly or indirectly, (i) violate the provisions of any of the
Charter Documents of any Seller, the Acquired Company or its Subsidiary, (ii)
violate or constitute a default, an event of default or an event creating rights
of acceleration, termination, cancellation, imposition of additional obligations
or loss of rights, or require a consent to assignment, under any Contract (A) to
which any Seller, the Acquired Company or its Subsidiary is a party, (B) of
which any Seller, the Acquired Company or its Subsidiary is a beneficiary or (C)
by which any Seller, the Acquired Company or its Subsidiary or any of their
respective assets is bound, (iii) to Sellers’ Knowledge, violate or conflict
with any Law, Authorization or Order applicable to any Seller, the Acquired
Company or its Subsidiary, or give any Governmental Entity or other Person the
right to challenge any of the transactions contemplated by this Agreement or to
exercise any remedy, obtain any relief under or revoke or otherwise modify any
rights held under, any such Law, Authorization or Order, or (iv) to Sellers’
Knowledge, result in the creation of any Liens upon any of the assets owned or
used by any Seller, the Acquired Company or its Subsidiary.  Section 3.5(a) of
the Seller Disclosure Schedule sets forth all consents, waivers, assignments and
other approvals and actions that are required in connection with the
transactions contemplated by this Agreement under any Contract to which the
Acquired Company or its Subsidiary is a party (collectively, “Consents”) in
order to preserve all rights of, and benefits to, the Acquired Company and its
Subsidiary thereunder.
 
(b)           No Authorization or Order of, registration, declaration or filing
with, or notice to, any Governmental Entity or other Person is required by or
with respect to any Seller, the Acquired Company or its Subsidiary in connection
with the execution and delivery of this Agreement and the consummation of the
Acquisition.
 
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3.6          Financial Statements. True and complete copies of (a) the financial
statements of the Acquired Company from inception until July 15, 2010 and the
related balance sheet, statement of income and statement of changes in equity;
(b) the financial statements of PRMC as at December 31 in each of the years 2008
and 2009 and the related statements of income and retained earnings for the
years then ended; and (c) the financial statements consisting of the balance
sheet of the PRMC as at June 30, 2010, and the related statements of income and
retained earnings for the six-month period then ended. The financial statements
referred to in (a), (b) and (c) above collectively referred to as the “Acquired
Financial Statements”, all of which are included in the Seller Disclosure
Schedule. The Acquired Financial Statements are true, complete and correct and
have been prepared in accordance with generally accepted accounting principles
in the jurisdiction of their respective place of incorporation  applied on a
consistent basis throughout the periods involved, subject, in the case of
interim financial statements, to normal and recurring year-end adjustments (the
effect of which will not be materially adverse) and the absence of notes (that,
if presented, would not differ materially from those presented in the annual
financial statements). The Acquired Financial Statements are based on the books
and records of the Acquired Company and its Subsidiary, and fairly present the
financial condition of the Acquired Company and its Subsidiary as of the
respective dates they were prepared and the results of the operations of the
Acquired Company and its Subsidiary for the periods indicated. The balance
sheets of the Acquired Company as of July 15, 2010 and its Subsidiary as of June
30, 2010 are referred to herein as the “Acquired Balance Sheet” and June 30,
2010 is referred to as the “Acquired Balance Sheet Date”.  Each of the Acquired
Company and its Subsidiary maintains a standard system of accounting established
and administered in accordance with generally accepted accounting principles in
the jurisdiction of their respective place of incorporation.
 
3.7          No Undisclosed Liabilities. To the Seller’s Knowledge the Acquired
Company and its Subsidiary have no liabilities, obligations or commitments of
any nature whatsoever, asserted or unasserted, known or unknown, absolute or
contingent, accrued or unaccrued, matured or unmatured or otherwise
(“Liabilities”), except (a) those which are reflected or reserved against in the
Acquired Balance Sheet as of the Acquired Balance Sheet Date, (b) those which
have been incurred in the ordinary course of business and consistent with past
practice since the Acquired Balance Sheet Date and which are not, individually
or in the aggregate, material in amount; and (c) the PRMC Payable
 
3.8          Status of PRMC’s business. PRMC has not started the operation and
exploitation of the Alfredo Property.   The Acquired Company and PRMC do not
have customers, inventories or account receivables (other than VAT receivables).
 
3.9          Taxes.
 
(a)           All Tax Returns required to have been filed by or with respect to
the Acquired  Company and its Subsidiary have been duly and timely filed, and
each such Tax Return correctly and completely reflects liability for Taxes and
all other information required to be reported thereon. All Taxes owed by the
Acquired Company and its Subsidiary (whether or not shown on any Tax Return)
have been timely paid. The Acquired Company and its Subsidiary have adequately
provided for, in their books of account and related records, liability for all
unpaid Taxes, being current Taxes not yet due and payable.
 
(b)           Other than as specified in Seller’s Disclosure Schedule, there is
no action or audit currently proposed, threatened or pending against, or with
respect to, the Acquired Company or its Subsidiary in respect of any Taxes.  The
Acquired Company and its Subsidiary are not the beneficiary of any extension of
time within which to file any Tax Return, nor have any of the Acquired Company
or its Subsidiary made (or had made on their behalf) any requests for such
extensions. No claim has ever been made by an authority in a jurisdiction where
any of the Acquired Company or its Subsidiary do not file Tax Returns that any
of them is or may be subject to taxation by that jurisdiction or that any of
them must file Tax Returns. There are no Liens on any of the stock or assets of
the Acquired Company or its Subsidiary with respect to Taxes.
 
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(c)           The Sellers, the Acquired Company and its Subsidiary have withheld
and timely paid all Taxes required to have been withheld and paid and have
complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto.
 
(d)           There is no dispute or claim concerning any liability for Taxes
with respect to the Acquired Company and its Subsidiary for which notice has
been provided, or which is asserted or threatened, or which is otherwise known
to Seller or any other Seller Company. No issues have been raised in any Taxes
examination with respect to any Seller Company which, by application of similar
principles, could be expected to result in liability for Taxes for the Acquired
Company or its Subsidiary. The Seller Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed with respect to the Acquired
Company and its Subsidiary for taxable periods ended on or after December 31,
2008.
 
(e)           The tax losses of the Acquired Company and its Subsidiary have
been incurred in accordance with the Law, including those related to the tax
enquiry identified in the Sellers’ Disclosure Schedule. The Acquired Company and
its Subsidiary maintain all appropriate supporting accounting books and
commercial documentation evidencing such losses, which losses may be supported
and justified with any Tax Authority.
 
(f)           No Tax will be payable by PRMC or the Acquired Company as a result
of activities performed within tax periods starting before the Closing Date
which Tax Returns are filed on or after the Closing Date.
 
3.10        Compliance with Law.
 
(a)           From their incorporation date and until the Closing Date, each of
the Acquired Company and its Subsidiary has complied in all material respects
with each, and is not in material violation of any, applicable Law to which the
Acquired Company or any such Subsidiary or its respective business, operations,
assets or properties is or has been subject.
 
(b)           No event has occurred and to Sellers’ Knowledge no circumstances
exist that (with or without the passage of time or the giving of notice) may
result in a violation of, conflict with or failure on the part of the Acquired
Company or its Subsidiary to comply with, any Law. Neither the Acquired Company
nor its Subsidiary has received notice regarding any violation of, conflict
with, or failure to comply with, any Law.
 
3.11        Authorizations.
 
(a)           Each of the Acquired Company and its Subsidiary owns, holds or
lawfully uses in the operation of its business all Authorizations which are
necessary for it to conduct its business as currently conducted or for the
ownership and use of the assets owned or used by the Acquired Company or any
such Subsidiary in the conduct of its business free and clear of all Liens. Such
Authorizations are valid and in full force and effect and none of such
Authorizations will be terminated or impaired or become terminable as a result
of the transactions contemplated by this Agreement
 
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(b)           No event has occurred and to Sellers’ Knowledge no circumstances
exist that (with or without the passage of time or the giving of notice) may
result in a violation of, conflict with, failure on the part of the Acquired
Company or  its Subsidiary to comply with the terms of, or the revocation,
withdrawal, termination, cancellation, suspension or modification of any
Authorization. Neither the Acquired Company nor its Subsidiary has received
notice regarding any violation of, conflict with, failure to comply with the
terms of, or any revocation, withdrawal, termination, cancellation, suspension
or modification of, any Authorization. Neither the Acquired Company nor its
Subsidiary is in default, nor has the Acquired Company or its Subsidiary
received notice of any claim of default, with respect to any Authorization.
 
3.12        Real Property. The Acquired Company and PRMC do not own, lease or
otherwise have any interest in any Real Property or Personal Property.
 
3.13        Intellectual Property.
 
(a)           As used in this Agreement, “Intellectual Property” means: (i)
inventions (whether or not patentable), trade secrets, technical data,
databases, customer lists, designs, tools, methods, processes, technology,
ideas, know-how, source code, product road maps and other proprietary
information and materials; (ii) trademarks and service marks (whether or not
registered), trade names, logos, trade dress and other proprietary indicia and
all goodwill associated therewith; (iii) documentation, advertising copy,
marketing materials, web-sites, specifications, mask works, drawings, graphics,
databases, recordings and other works of authorship, whether or not protected by
copyright; (iv) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, design documents, flow-charts, user manuals and training
materials relating thereto and any translations thereof; and (v) all forms of
legal rights and protections that may be obtained for, or may pertain to, the
Intellectual Property set forth in clauses (i) through (iv) in any country of
the world, including all letters patent, patent applications, provisional
patents, design patents, PCT filings, invention disclosures and other rights to
inventions or designs , all registered and unregistered copyrights in both
published and unpublished works , all trademarks, service marks and other
proprietary indicia (whether or not registered) , trade secret rights, mask
works, moral rights or other literary property or authors rights, and all
applications, registrations, issuances, divisions, continuations, renewals,
reissuances and extensions of the foregoing.
 
(b)           Neither the Acquired Company nor PRMC owns any right, title or
interest in or to any Intellectual Property other than the names “Pacific Road,”
“Pacific Road Mining” and “Pacific Road Mining Chile” (the “Pacific Road
Marks”).
 
3.14        Absence of Certain Changes or Events. From the Acquired Balance
Sheet Date (in the case of PRMC) and from July 15, 2010 (in the case of the
Acquired Company) to the Closing Date:
 
 
(i)
there has not been any material adverse change in the condition (financial or
otherwise), operations, prospects or results of operations of the Acquired
Company and its Subsidiary taken as a whole;

 
 
(ii)
neither the Acquired Company nor  its Subsidiary has amended or changed its
Charter Documents;

 
 
(iii)
neither the Acquired Company nor its Subsidiary has declared, set aside or paid
any dividend or other distribution (whether in cash, stock or property) with
respect to any Equity Security or any other security;

 
 
(iv)
neither the Acquired Company nor its Subsidiary has split, combined or
reclassified any Equity Security or other security, or issued, or authorized for
issuance, any Equity Security or other security;

 
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(v)
neither the Acquired Company nor its Subsidiary has altered any term of any
outstanding Equity Security or other security;

 
 
(vi)
neither the Acquired Company nor its Subsidiary has hired any employee or
otherwise incurred in any material labor or social security liability;

 
 
(vii)
the Acquired Company nor its Subsidiary has sold, leased, transferred or
assigned any property or  material assets of the Acquired Company or any such
Subsidiary;

 
 
(viii)
neither the Acquired Company nor its Subsidiary has incurred, assumed or
guaranteed any  Indebtedness;

 
 
(ix)
neither the Acquired Company nor its Subsidiary has created or assumed any Lien
on the Alfredo Property or has created or assumed any material Lien on any other
asset;

 
 
(x)
neither the Acquired Company nor its Subsidiary has made any loan, advance or
capital contribution to, or investment in, any Person other than travel loans,
payments or advances in the ordinary course of business consistent with past
practice;

 
 
(xi)
neither the Acquired Company nor its Subsidiary has entered into any Contract in
amounts exceeding $25,000; (i) the Option to Purchase Agreement has not been
modified, and (ii) no rights thereunder have been waived or accelerated;

 
 
(xii)
there has not been any material violation of or conflict with any Law to which
the business, operations, assets or properties of the Acquired Company or its
Subsidiary are subject;

 
 
(xiii)
none of Sellers, the Acquired Company or the Subsidiary of the Acquired Company
has agreed or entered into any arrangement to take any action which, if taken
prior to the date hereof, would have made any representation or warranty set
forth in this Article III.  untrue or incorrect;

 
 
(xiv)
To the Sellers’ Knowledge there has not been any material damage, destruction or
loss with respect to the property and assets of the Acquired Company or its
Subsidiary;

 
 
(xv)
none of the Acquired Company or its Subsidiary has made any change in accounting
practices;

 
 
(xvi)
none of the Acquired Company or its Subsidiary has made any Tax election,
changed its method of Tax accounting or settled any claim for Taxes; or

 
 
(xvii)
none of Sellers, the Acquired Company or  its Subsidiary has agreed, whether in
writing or otherwise, to do any of the foregoing.

 
 
(xviii)
Pursuant to the Letter of Intent executed by Sellers and Buyer on April 20 2010,
Buyer had to make a payment in the amount of $90,000 to the Sellers, which the
latter instructed the Buyer to deliver directly to PRMC. PRMC recorded the
$90,000 as an account payable to Sellers (the “PRMC Payable”).

 
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3.15        Contracts.
 
(a)           The Seller Disclosure Schedule contains a complete and accurate
list of each Contract or series of related Contracts to which the Acquired
Company or  its Subsidiary is a party or is subject, or by which any of their
respective assets are bound:
 
(b)           Other than the Letter of Intent executed by Sellers and Buyer on
April 20 2010, the Option to Purchase Agreement is the only material contract
entered into by the Acquired Company or PRMC (the “Material Contract”), which is
in full force and effect and valid and enforceable in accordance with its terms.
 
(c)           Neither the Acquired Company nor its Subsidiary is, and to each
Seller’s Knowledge, no other party thereto is, in default in the performance,
observance or fulfillment of any obligation, covenant, condition or other term
contained in the Material Contract, and neither the Acquired Company nor its
Subsidiary has given or received notice to or from any Person relating to any
such alleged or potential default that has not been cured. To Sellers’
Knowledge, no event has occurred which with or without the giving of notice or
lapse of time, or both, may conflict with or result in a violation or breach of,
or give any Person the right to exercise any remedy under or accelerate the
maturity or performance of, or cancel, terminate or modify, the Material
Contract.
 
(d)           Sellers have delivered accurate and complete copies of each
Contract listed in the Seller Disclosure Schedule to Buyer.
 
(e)           All Contracts other than Material Contracts to which the Acquired
Company or  its Subsidiary is a party or is subject, or by which any of their
respective assets are bound (collectively, the “Minor Contracts”), are in all
material respects valid and enforceable in accordance with their terms. Neither
the Acquired Company nor  its Subsidiary is in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained
therein, and no event has occurred which with or without the giving of notice or
lapse of time, or both, would constitute a default thereunder by the Acquired
Company or  its Subsidiary, except in either case where such default
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Acquired Company.
 
(f)           The Option to Purchase Agreement grants to PRMC an exclusive,
irrevocable and unconditional (except for the payment of the corresponding
option fees) right to purchase the Alfredo Property. PRMC has paid to Sociedad
Contractual Minera la Fortaleza all the option fees due in consideration for the
option to purchase the Alfredo Property up to the Closing Date.  Each of the
current and former parties to the Option Purchase Agreement took all necessary
corporate actions and exercised all powers and/or actions necessary to authorize
the execution, delivery and performance by it of the Option to Purchase
Agreement, including each of its amendments and assignments.
 
3.16        Litigation.
 
(a)           There is no action, suit or proceeding, claim, arbitration,
litigation or investigation (each, an “Action”) (i) pending or, to any Seller’s
Knowledge, threatened against or affecting the Acquired Company or  its
Subsidiary, or (ii) that challenges or seeks to prevent, enjoin or otherwise
delay the transactions contemplated by this Agreement. No event has occurred or
circumstances exist that may give rise or serve as a basis for any such Action.
There is no Action against any current or, to any Seller’s Knowledge, former
director or employee of the Acquired Company or its Subsidiary with respect to
which the Acquired Company or any such Subsidiary has or is reasonably likely to
have an indemnification obligation.
 
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(b)           There is no unsatisfied judgment, penalty or award against or
affecting the Acquired Company or  its Subsidiary or any of their respective
properties or assets.  To Seller’s Knowledge there is no Order to which the
Acquired Company or its Subsidiary or any of their respective properties or
assets are subject.
 
3.17        Employees and Benefit Plans. Neither the Acquired Company nor PRMC
have any employees, labor or social security liability or pension or benefit
plan.
 
3.18        Environmental.
 
(a)           As used in this Agreement, the following words and terms have the
following definitions:
 
 
(i)
“Environment” the global system made up of natural and artificial elements,
whose physical, chemical and biological nature, along with their cultural
interactions, are in constant change by all human or natural actions, which
govern and condition the existence and further development of life and each one
of its forms.

 
 
(ii)
“Environmental Action” means any claim, proceeding or other Action brought or
threatened under any Environmental Law or otherwise asserting that the Acquired
Company or a Subsidiary of the Acquired Company has incurred any Pre-Closing
Environmental Liability.

 
 
(iii)
“Environmental Laws” means any and all applicable Laws and Authorizations
issued, promulgated or entered into by any Chilean Governmental Entity relating
to the Environment, human health, worker health and safety, preservation or
reclamation of natural resources, or to the management, handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, Release or threatened Release of
or exposure to Hazardous Substances, whether now existing or subsequently
amended or enacted.,

 
 
(iv)
“Environmental Permits” means any Authorization under Environmental Law, and
includes any and all Orders issued or entered into by a Governmental Entity
under Environmental Law.

 
 
(v)
“Hazardous Substances” means all explosive materials, radioactive materials,
hazardous materials, toxic materials, wastes, chemicals, petroleum, petroleum
by-products and petroleum products (including crude oil or any fraction
thereof), asbestos and asbestos containing materials, and all other materials,
chemicals and substances that are regulated by, form the basis of liability or
are defined as hazardous, extremely hazardous, toxic or words of similar import,
under any Environmental Law.

 
 
(vi)
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous
Substances into the Environment.

 
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(b)           Each of the Acquired Company and its Subsidiary has been, and is
currently, in compliance with all Environmental Laws. None of Seller, the
Acquired Company or  its Subsidiary has received notice alleging that the
Acquired Company or  its Subsidiary is not in such compliance with Environmental
Laws.
 
(c)           There are no past, pending or, to any Seller’s Knowledge,
threatened Environmental Actions against or affecting the Acquired Company its
Subsidiary or the Mining Concessions, and no Seller is aware of any facts or
circumstances which could be expected to form the basis for any Environmental
Action against the Acquired Company or any such Subsidiary.
 
(d)           Neither the Acquired Company nor its Subsidiary has entered into
or agreed to any Order, and to Sellers Knowledge neither the Acquired Company
nor its Subsidiary is subject to any Order, relating to compliance with any
Environmental Law or to investigation or cleanup of a Hazardous Substance under
any Environmental Law.
 
(e)           No Lien has been attached to, or asserted against, the assets, the
Mining Concessions, the or rights of the Acquired Company or  its Subsidiary
pursuant to any Environmental Law, and, to Sellers’ Knowledge, no such Lien has
been threatened. To Sellers’ Knowledge, there are no facts, circumstances or
other conditions that could be expected to give rise to any Liens on or
affecting any Mining Concession
 
(f)           To Sellers Knowledge, there has been no treatment, storage,
disposal or Release of any Hazardous Substance at, from, into, on or under any
Mining Concession.
 
(g)           Neither the Acquired Company nor its Subsidiary has received
information requests from the Comisión Nacional del Medio Ambiente,  Ministerio
del Medio Ambiente or Superintendencia del Medio Ambiente in Chile.
 
(h)           To Sellers Knowledge, there is no asbestos containing material or
lead based paint containing materials in, at, on, under or within the Mining
Concessions.
 
(i)           Neither the Acquired Company nor its Subsidiary has transported or
arranged for the treatment, storage, handling, disposal, or transportation of
any Hazardous Material to any off-site location which is an Environmental
Clean-up Site.
 
3.19        Insurance. There are no insurance policy which covers the Acquired
Company or its Subsidiary or their respective businesses, properties, assets or
directors.
 
3.20        Books and Records. The minute books (containing the records of the
meetings, or written consents in lieu of such meetings, of the shareholders, the
board of directors and any committees of the board of directors), the register
of members of the Acquired Company and its Subsidiary are correct and complete,
and have been maintained in accordance with the applicable Law and sound
business practices. The minute books of the Acquired Company and its Subsidiary
contain accurate and complete records of all meetings, or actions taken by
written consent, of the shareholders, the board of directors and any committees
of the board of directors, of the Acquired Company and its Subsidiary, and no
meeting, or action by written consent in lieu of such meeting, of any such
shareholder, board of directors or committee of such board of directors, has
been held for which minutes or written resolutions have not been prepared and
not contained in the minute books. At the Closing, all of the books and records
of the Acquired Company and its Subsidiary (including corporate, accounting and
financial records) will be in the possession of the Acquired Company.  At the
Closing, Sellers will deliver, or cause to be delivered, to Buyer or its
designee all of the minute books and other books and records of the Acquired
Company and its Subsidiary, subject to any restrictions under applicable Law.
 
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3.21        Brokers or Finders. No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of any Seller or the Acquired Company or its Subsidiary,
other than the finder fee in the amount of $200,000 worth of Purchase Price
Shares  payable to Rodman and Renshaw LLC, which fee will be exclusively borne
by Sellers
 
3.22        Bank Accounts. PRMC maintains the bank account No 049-03384-00 at
Banco de Chile.  Neither PRMC or the Acquired Company has any other account,
lock box or safe deposit box.
 
3.23        Powers of Attorney. As of the Closing Date the powers of attorney
executed by or on behalf of the Acquired Company or its Subsidiary in favor of
any Person will be cancelled.
 
3.24        Support Services. Sellers provide no support or other services to
the Acquired Company and its Subsidiary
 
3.25        Mining Matters. Without limiting the generality of any of the
foregoing representations and warranties:
 
(a)           Seller Disclosure Schedule contains a list of all the Mining
Concessions.   Other than the Alfredo Property, PRMC does not have any option to
purchase or ownership interest in any mining concession.
 
(b)           None of the Seller Company, their Affiliates, directors or
executives own any mining concession  within a distance of 5 (five) kilometers
from the boundaries of the Alfredo Property;
 
(c)           There are no Mines in the Alfredo Property and to the Seller’s
Knowledge, PRMC has conducted all exploration and evaluation activities  in all
material respects, in accordance with generally accepted mining practices and
applicable Laws;
 
(d)           The Sellers do not own or lease  any item of operating equipment
required in connection with the operation of its Mineral Interests;
 
(e)           PRMC will have good and defensible title to the Alfredo Property
upon exercising its right to purchase under the Option to Purchase Agreement
(provided that the parties to the Option to Purchase Agreement comply with their
obligation thereunder in accordance with its terms and Chilean Law) free and
clear of any Liens except for the Liens arising from the Option to Purchase
Agreement;
 
(f)           There are no Mineral Leases and other Contracts pursuant to which
the Acquired Company or its Subsidiary leases or otherwise acquires or obtains
operating rights affecting any Mining Concession or real property;
 
(g)           There are no royalties, overriding royalties and other burdens on
production in connection with the Alfredo Property other than those stated in
the Option to Purchase Agreement. All expenses relating to the ownership of the
Mineral Interests have been timely and properly paid or are pending payment and
are within the payment terms set forth in the contracts concerning the Mineral
Interest;
 
(h)           To Sellers’ Knowledge none of the Mineral Interests is subject to
any preferential purchase, consent or similar right (other than the Option to
Purchase Agreement) which would become operative as a result of the transactions
contemplated by this Agreement;
 
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(i)           To Sellers’ Knowledge no Person other than the Acquired Company or
a Subsidiary of the Acquired Company has any right (whether preferential,
subordinated, previous  or subsequent) that may limit, conflict with or
otherwise affect the Mineral Interest, except as provided for in the Option to
Purchase Agreement;
 
(j)           The Acquired Company or its Subsidiary has all necessary  rights
and interests relating to the Mineral Interests granting the Acquired Company or
its Subsidiary, as applicable, the right and ability to explore for Minerals,
ore and metals as currently conducted;
 
(k)           To Sellers’ Knowledge the Mineral Interests: (A) have been
properly granted and issued by the appropriate Governmental Body; (B) are clear
of all Liens (except for those provided in the Option to Purchase Agreement) and
are not the subject of any unsatisfied penalties or unresolved disputes; (C) are
not subject to the rights or claims of any third party; (D) do not overlap any
third-party claim such as may entitle such third party to explore or mine any
substance likely to be granted under a mining concession on the same property;
and
 
(l)           To Sellers’ Knowledge all terms of, and all requirements in
connection with the Mineral Interests have been met, including the timely
payment of all annual fees and compliance with all environmental obligations and
all works performed by PRMC.
 
3.26        Representations Relating to Sellers’ Acquisition of the Purchase
Price Shares.
 
(a)           Each Seller is acquiring the Purchase Price Shares for investment
for its own account and not with the view to, or for resale in connection with,
any distribution thereof in violation of US Federal, applicable state securities
laws or the Lock-Up provision under this Agreement  Each Seller understands and
acknowledges that the Purchase Price Shares have not been registered under the
Securities Act or any state or foreign securities laws, by reason of a specific
exemption from the registration provisions of the Securities Act and applicable
state and foreign securities laws, which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.  Each Seller
further represents that it does not have any contract, undertaking, agreement or
arrangement with any Person to sell, transfer or grant participation to any
third person with respect to any of the Purchase Price Shares.
 
(b)           Each Seller understands that an active public market for Buyer
Common Stock may not now exist and that there may never be an active public
market for the Purchase Price Shares acquired under this Agreement.
 
(c)           Each Seller either (i) is an “accredited investor” as defined in
Rule 501 of Regulation D as promulgated by the Securities and Exchange
Commission under the Securities Act or (ii) is not a “U.S. Person” as defined in
Regulation S as promulgated by the Securities and Exchange Commission under the
Securities Act, and, in each case, shall submit to Buyer such further assurances
of such status as may be reasonably requested by Buyer.
 
(d)           Each Seller, if a non-U.S. Person, agrees that it is acquiring the
Shares in an offshore transaction pursuant to Regulation S and hereby represents
to Buyer as follows:
 
 
(i)
Such Seller is outside the United States when receiving and executing this
Agreement;

 
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(ii)
Such Seller has not acquired the Shares as a result of, and will not itself
engage in, any “directed selling efforts” (as defined in Regulation S) in the
United States in respect of the Shares which would include any activities
undertaken for the purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the United States for the resale of the
Shares; provided, however, that such Seller may sell or otherwise dispose of the
Shares pursuant to registration of the Shares under the Securities Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;

 
 
(iii)
Such Seller understands and agrees that offers and sales of any of the Shares
prior to the expiration of a period of six (6) months after the Closing Date
(the “Distribution Compliance Period”), shall only be made in compliance with
the safe harbor provisions set forth in Regulation S, pursuant to the
registration provisions of the Securities Act or an exemption therefrom, and
that all offers and sales after the Distribution Compliance Period shall be made
only in compliance with the safe harbor provisions set forth in Regulation S and
the registration provisions of the Securities Act or an exemption therefrom, and
in each case only in accordance with all applicable securities laws; and

 
 
(iv)
Such Seller understands and agrees not to engage in any hedging transactions
involving the Shares prior to the end of the Distribution Compliance Period
unless such transactions are in compliance with the Securities Act.

 
 
(v)
Such Seller hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with any invitation to
subscribe for the Shares or any use of this Subscription Agreement, including:
(a) any applicable legal requirements incumbent upon such Seller within its
jurisdiction for the purchase of the Shares; (b) any foreign exchange
restrictions applicable to such purchase; (c) any governmental or other consents
that such Seller may need to obtain; and (d) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Shares. Such Seller’s subscription and payment for, and
its continued beneficial ownership of the Shares, will not violate any
applicable securities or other Laws of such Seller’s jurisdiction.

 
(e)           Each Seller represents that neither it nor, to its knowledge, any
Person or entity controlling, controlled by or under common control with it, nor
any Person having a beneficial interest in it, nor any Person on whose behalf
such Seller is acting: (i) is a Person listed in the Annex to Executive Order
No. 13224 (2001) issued by the President of the United States (Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism); (ii) is named on the List of Specially
Designated Nationals and Blocked Persons maintained by the U.S. Office of
Foreign Assets Control; (iii) is a non-U.S. shell bank or is providing banking
services indirectly to a non-U.S. shell bank; (iv) is a senior non-U.S.
political figure or an immediate family member or close associate of such
figure; or (v) is otherwise prohibited from investing in Buyer pursuant to
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules or orders (categories (i) through (v), each a “Prohibited
Seller”).  Each Seller agrees to provide Buyer, promptly upon request, all
information that is reasonably necessary or appropriate to comply with
applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules and orders.  Each Seller consents to the disclosure to U.S.
regulators and law enforcement authorities by Buyer and its affiliates and
agents of such information about such Seller as is reasonably necessary or
appropriate to comply with applicable U.S. anti-money-laundering, anti-terrorist
and asset control laws, regulations, rules and orders.  Each Seller acknowledges
that if, following its investment in Buyer, Buyer reasonably believes that such
Seller is a Prohibited Seller or is otherwise engaged in suspicious activity or
refuses to promptly provide information that Buyer requests, Buyer has the right
or may be obligated to prohibit additional investments, and take any other
actions required by Law.
 
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(f)           Each Seller or its duly authorized representative realizes that
because of the inherently speculative nature of business activities and
investments of the kind contemplated by Buyer, Buyer’s financial position and
results of operations may be expected to fluctuate from period to period and
will, generally, involve a high degree of financial and market risk that can
result in substantial or, at times, even total loss of the value of the Purchase
Price Shares.
 
(g)           Each Seller acknowledges and agrees that Buyer was, at one time, a
“shell company” as defined in Rule 12b-2 under the Exchange Act.  Pursuant to
Rule 144(i) under the Securities Act, securities issued by a current or former
shell company (such as the Purchase Price Shares) that otherwise meet the
holding period and other requirements of Rule 144 nevertheless cannot be sold in
reliance on Rule 144 until one year after the date on which such company filed
current “Form 10 information” (as defined in Rule 144(i)) with the SEC
reflecting that it ceased being a shell company (and that, in the Company’s
case, such Form 10 Information was filed on May 14, 2010), and provided that at
the time of a proposed sale pursuant to Rule 144, the issuer is subject to the
reporting requirements of section 13 or 15(d) of the Exchange Act and has filed
all reports and other materials required to be filed by section 13 or 15(d) of
the Exchange Act, as applicable, during the preceding 12 months (or for such
shorter period that the issuer was required to file such reports and materials),
other than Form 8-K reports.  As a result, the restrictive legends on
certificates for the Purchase Price Shares set forth below cannot be removed
except in connection with an actual sale meeting the foregoing requirements.
 
3.27        No Corrupt Practices.
 
(a)           None of Sellers, the Acquired Company nor  its Subsidiary, nor any
officer, director, employee, or agent of any of them, nor any stockholder,
member, partner or other stakeholder of any of them acting on their behalf, has
made any offer, payment, promise to pay, or authorization of the payment of any
money, or offer, gift, promise to give, or authorization of the giving of
anything of value to:
 
 
(i)
any Government Official for purposes of (A) (1) influencing any act or decision
of such Government Official in his official capacity, (2) inducing such
Government Official to do or omit to do any act in violation of the lawful duty
of such official, or (3) securing any improper advantage; or (B) inducing such
Government Official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist any Seller, the
Acquired Company or  its Subsidiary in obtaining or retaining business for or
with, or directing business to, any Person; or

 
 
(ii)
any foreign political party or official thereof or any candidate for foreign
political office for purposes of (A) (1) influencing any act or decision of such
party, official, or candidate in its or his official capacity, (2) inducing such
party, official, or candidate to do or omit to do an act in violation of the
lawful duty of such party, official, or candidate, or (3) securing any improper
advantage; or (B) inducing such party, official, or candidate to use its or his
influence with a foreign government or instrumentality thereof to affect or
influence any act or decision of such government or instrumentality. in each
case in order to assist any Seller, the Acquired Company or  its Subsidiary in
obtaining or retaining business for or with, or directing business to, any
Person; or

 
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(iii)
any Person, while knowing that all or a portion of such money or thing of value
will be offered, given, or promised, directly or indirectly, to any Government
Official, to any foreign political party or official thereof, or to any
candidate for foreign political office, for purposes of (A) (1) influencing any
act or decision of such Government Official, political party, party official, or
candidate in his or its official capacity, (2) inducing such Government
Official, political party, party official, or candidate to do or omit to do any
act in violation of the lawful duty of such Government Official, political
party, party official, or candidate, or (3) securing any improper advantage; or
(B) inducing such Government Official, political party, party official, or
candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist any Seller, the
Acquired Company or  its Subsidiary in obtaining or retaining business for or
with, or directing business to, any Person.

 
(b)           The representations in Section 3.27(a) shall not apply to any
facilitating or expediting payment to a Government Official, political party, or
party official the purpose of which is to expedite or to secure the performance
of a routine governmental action by a Government Official, political party, or
party official.
 
ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF BUYER
 
Buyer represents and warrants to Sellers that each statement contained in this
Article IV.   is true and correct as of the date hereof, except as set forth in
the in the disclosure schedule dated and delivered as of the date hereof by
Buyer to Sellers (the “Buyer Disclosure Schedule”), which is attached to this
Agreement and is designated therein as being the Buyer Disclosure Schedule. The
Buyer Disclosure Schedule shall be arranged in sections corresponding to each
Section of this Article IV.  . Each exception to a representation and warranty
set forth in the Buyer Disclosure Schedule shall qualify the specific
representation and warranty which is referenced in the applicable section of the
Buyer Disclosure Schedule, and no other representation or warranty.
 
4.1          Organization and Good Standing.
 
(a)           The Buyer is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation, has all
requisite power to own, lease and operate its properties and to carry on its
business as currently conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which it owns or leases property or conducts any business
so as to require such qualification.
 
(b)           The Buyer is not in default under its Charter Documents. The
Charter Documents of the Buyer in the forms attached to the Buyer Disclosure
Schedule are the Charter Documents of the Buyer as in effect on the date of this
Agreement.
 
4.2          Capitalization.  
 
(a)           The authorized Capital Stock of the Buyer consists of 290,000,000
shares of Buyer Common Stock and 10,000,000 shares of preferred stock, par value
$0.001 per share. As of July 28 2010, 76,625,095 shares of Buyer Common Stock
are issued and outstanding, and no shares of preferred stock are issued or
outstanding.  All of the outstanding shares of Buyer Common Stock were duly
authorized, validly issued and fully paid and are nonassessable.
 
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(b)           The Purchase Price Shares are duly authorized, and upon transfer
of the Purchase Price Shares to Sellers in accordance with the terms of Article
II.  , will be validly issued, fully paid and nonassessable.  The Purchase Price
Shares will be issued in compliance with applicable Laws. The Purchase Price
Shares will not be issued in violation of any Contract to which Buyer is a party
or is subject or in violation of any preemptive or similar rights of any Person.
 
(c)           Other than the shares of Buyer Common Stock referred to in Section
4.2(a) and as set forth in the Buyer Disclosure Schedule, the Buyer does not
have outstanding any Equity Securities or any other securities. Other than as
set forth in the Buyer Disclosure Schedule, the Buyer is not a party or subject
to any Contract obligating the Buyer to issue any Equity Securities or any other
securities, and there is no circumstance or condition that may give rise to a
claim by any Person that such Person is entitled to acquire any securities of
the Buyer. The Buyer does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or convertible
into, or exercisable or exchangeable for, securities having the right to vote)
on any matter.
 
(d)           The Buyer does not have outstanding or authorized any stock
option, stock appreciation, phantom stock, profit participation, or similar
rights (other than those that constitute Excluded Securities).
 
(e)           Other than as set forth in this Agreement or any other Transaction
Document, the Buyer is not a party or subject to any stockholder agreement,
voting agreement, voting trust or any other similar arrangement which has the
effect of restricting or limiting the transfer, voting or other rights
associated with the Buyer Common Stock.
 
(f)           Other than as set forth in the Buyer Disclosure Schedule, there
are no obligations, contingent or otherwise, of the Buyer to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any Person.
 
4.3          Subsidiaries of the Buyer.
 
(a)           Each Subsidiary of the Buyer is validly existing and in good
standing under the Laws of the jurisdiction of its formation, has all requisite
power to own, lease and operate its properties and to carry on its business as
currently conducted and as proposed to be conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in which it owns or leases
property or conducts any business so as to require such qualification.
 
(b)           The outstanding shares of Capital Stock of each Subsidiary of the
Buyer are duly authorized, validly issued, fully paid and nonassessable, and are
owned by the Buyer or another Subsidiary of the Buyer free and clear of all
Liens.
 
(c)           Other than as set forth in the Buyer Disclosure Schedule, no
Subsidiary of the Buyer has outstanding any Equity Securities or any other
securities not held by the Buyer or another Subsidiary of the Buyer.
 
4.4          Authority and Enforceability. Buyer has the requisite power and
authority to enter into this Agreement and to consummate the Acquisition. The
execution and delivery of this Agreement and the consummation of the Acquisition
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer and,
assuming due authorization, execution and delivery by the Sellers, constitutes
the valid and binding obligation of Buyer, enforceable against it in accordance
with its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to creditors’ rights generally, and (b) the availability of injunctive
relief and other equitable remedies.
 
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4.5          No Conflicts; Authorizations.
 
(a)           The execution and delivery of this Agreement by Buyer do not, and
the performance by Buyer of its obligations hereunder and the consummation by
Buyer of the transactions contemplated hereby (in each case, with or without the
giving of notice or lapse of time, or both) will not, directly or indirectly,
(i) violate the provisions of any of the Charter Documents of the Buyer or any
of its Subsidiaries, (ii) violate or constitute a default, an event of default
or an event creating rights of acceleration, termination, cancellation,
imposition of additional obligations or loss of rights, or require a consent to
assignment, under any Contract (A) to which the Buyer or any of its Subsidiaries
is a party, (B) of which the Buyer or any of its Subsidiaries is a beneficiary
or (C) by which the Buyer or any of its Subsidiaries or any of their respective
assets is bound, (iii) violate or conflict with any Law, Authorization or Order
applicable to Buyer or any of its Subsidiaries, or give any Governmental Entity
or other Person the right to challenge any of the transactions contemplated by
this Agreement or to exercise any remedy, obtain any relief under or revoke or
otherwise modify any rights held under, any such Law, Authorization or Order, or
(iv) result in the creation of any Liens upon any of the assets owned or used by
the Buyer or any of its Subsidiaries.
 
(b)           No Authorization or Order of, registration, declaration or filing
with, or notice to, any Governmental Entity or other Person is required by or
with respect to the Buyer or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and the consummation of the Acquisition
and the issuance of the Purchase Price Shares.
 
4.6          Financial Statements. True and complete copies of the Buyer’s
audited consolidated financial statements consisting of the consolidated balance
sheet of the Buyer and its Subsidiaries as at June 30 in each of the years 2008
and 2009 and the related statements of income and retained earnings,
stockholders’ equity and cash flow, for the years then ended (the “Buyer Annual
Financial Statements”), and unaudited consolidated financial statements
consisting of the balance sheet of the Buyer and its Subsidiaries as at March
31, 2010, and the related statements of income and retained earnings,
stockholders’ equity and cash flow for the nine-month period then ended (the
“Buyer Interim Financial Statements” and together with the Buyer Annual
Financial Statements, the “Buyer Financial Statements”), are included in the
Buyer Disclosure Schedule. The Buyer Financial Statements have been prepared in
accordance with GAAP US applied on a consistent basis throughout the periods
involved, subject, in the case of the Buyer Interim Financial Statements, to
normal and recurring year-end adjustments (the effect of which will not be
materially adverse) and the absence of notes (that, if presented, would not
differ materially from those presented in the Buyer Annual Financial
Statements). The Buyer Financial Statements are based on the books and records
of the Buyer and its Subsidiaries, and fairly present the financial condition of
the Buyer and its Subsidiaries as of the respective dates they were prepared and
the results of the operations of the Buyer and its Subsidiaries for the periods
indicated. The consolidated balance sheet of the Buyer and its Subsidiaries as
of June 30, 2009, is referred to herein as the “Buyer Balance Sheet” and the
date thereof as the “Buyer Balance Sheet Date” and the consolidated balance
sheet of the Buyer and its Subsidiaries as of March 31, 2010, is referred to
herein as the “Buyer Interim Balance Sheet” and the date thereof as the “Buyer
Interim Balance Sheet Date.” Each of the Buyer and its Subsidiaries maintains a
standard system of accounting established and administered in accordance with
GAAP US.
 
4.7          No Undisclosed Liabilities. The Buyer and its Subsidiaries have no
Liabilities, except (a) those which are adequately reflected or reserved against
in the Buyer Balance Sheet as of the Buyer Balance Sheet Date, and (b) those
which have been incurred in the ordinary course of business and consistent with
past practice since the Buyer Balance Sheet Date and which are not, individually
or in the aggregate, material in amount.
 
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4.8          Absence of Certain Changes or Events. Since the Buyer Balance Sheet
Date to the Closing Date:
 
(a)           there has not been any material adverse change in the condition
(financial or otherwise), operations, prospects or results of operations of the
Buyer and its Subsidiaries taken as a whole;
 
(b)           neither the Buyer nor any of its Subsidiaries has amended or
changed its Charter Documents;
 
(c)           neither the Buyer nor any of its Subsidiaries has declared, set
aside or paid any dividend or other distribution (whether in cash, stock or
property) with respect to any Equity Security or any other security;
 
(d)           neither the Buyer nor any of its Subsidiaries has split, combined
or reclassified any Equity Security or other security, or issued, or authorized
for issuance, any Equity Security or other security;
 
(e)           neither the Buyer nor any of its Subsidiaries has altered any term
of any outstanding Equity Security or other security;
 
(f)           neither the Buyer nor any of its Subsidiaries has incurred,
assumed or guaranteed any Indebtedness;
 
(g)           neither the Buyer nor any of its Subsidiaries has made any loan,
advance or capital contribution to, or investment in, any Person other than
travel loans or advances in the ordinary course of business consistent with past
practice;
 
(h)           none of the Buyer or the Subsidiaries of the Buyer has agreed or
entered into any arrangement to take any action which, if taken prior to the
date hereof, would have made any representation or warranty set forth in this
Article IV.   untrue or incorrect;
 
(i)           there has not been any material damage, destruction or loss with
respect to the property and assets of the Buyer or any of its Subsidiaries,
whether or not covered by insurance; or
 
(j)           none of the Buyer or any of its Subsidiaries has agreed, whether
in writing or otherwise, to do any of the foregoing.
 
4.9          Litigation.
 
(a)           There is no Action, (i) pending or, to Buyer’s Knowledge,
threatened against or affecting the Buyer or any of its Subsidiaries, or (ii)
that challenges or seeks to prevent, enjoin or otherwise delay the transactions
contemplated by this Agreement.  No event has occurred or circumstances exist
that may give rise or serve as a basis for any such Action. There is no Action
against any current or, to Buyer’s Knowledge, former director or employee of the
Buyer or any of its Subsidiaries with respect to which the Buyer or any such
Subsidiary has or is reasonably likely to have an indemnification obligation.
 
(b)           There is no unsatisfied judgment, penalty or award against or
affecting the Buyer or any of its Subsidiaries or any of their respective
properties or assets.  To Buyer’s Knowledge there is no Order to which the Buyer
or any of its Subsidiaries or any of their respective properties or assets are
subject.
 
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4.10       Brokers or Finders.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Buyer or any of its Subsidiaries.
 
4.11       Exchange Act Filings.  Each document filed or required to be filed by
the Buyer pursuant to the Exchange Act (each “Buyer SEC Report”) complied and
will comply when so filed in all material respects with the Exchange Act and do
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading.
 
4.12       Investment Company Act.  The Buyer is not required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.
 
4.13       Internal Controls.  Except as disclosed in the Buyer SEC Reports, the
Buyer and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP US and to maintain asset accountability;
(iii) access to assets is only permitted in accordance with management’s general
or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.  Except as set forth in the Buyer SEC
Reports, management has not identified any weaknesses in internal controls over
financial reporting, and since the date of the Buyer Financial Statements, there
has been no change in the Buyer’s internal control over financial reporting that
has materially affected or is likely to materially adversely affect, the Buyer’s
internal control over financial reporting.
 
4.14       Sarbanes-Oxley.  The Buyer is in compliance in all material respects
with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated in connection therewith that are effective as of the
date hereof.
 
4.15       No Corrupt Practices.  Neither the Buyer, nor any officer, director,
employee, or agent of any of them, nor any stockholder, member, partner or other
stakeholder of any of them acting on their behalf, has made any offer, payment,
promise to pay, or authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of value to:
 
(a)           any Government Official for purposes of (A) (1) influencing any
act or decision of such Government Official in his official capacity, (2)
inducing such Government Official to do or omit to do any act in violation of
the lawful duty of such official, or (3) securing any improper advantage; or (B)
inducing such Government Official to use his influence with a foreign government
or instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer in
obtaining or retaining business for or with, or directing business to, any
Person; or
 
(b)           any foreign political party or official thereof or any candidate
for foreign political office for purposes of (A) (1) influencing any act or
decision of such party, official, or candidate in its or his official capacity,
(2) inducing such party, official, or candidate to do or omit to do an act in
violation of the lawful duty of such party, official, or candidate, or (3)
securing any improper advantage; or (B) inducing such party, official, or
candidate to use its or his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality. in each case in order to assist Buyer in
obtaining or retaining business for or with, or directing business to, any
Person; or

 
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(c)           any Person, while knowing that all or a portion of such money or
thing of value will be offered, given, or promised, directly or indirectly, to
any Government Official, to any foreign political party or official thereof, or
to any candidate for foreign political office, for purposes of (A) (1)
influencing any act or decision of such Government Official, political party,
party official, or candidate in his or its official capacity, (2) inducing such
Government Official, political party, party official, or candidate to do or omit
to do any act in violation of the lawful duty of such Government Official,
political party, party official, or candidate, or (3) securing any improper
advantage; or (B) inducing such Government Official, political party, party
official, or candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in each case in order to assist Buyer in
obtaining or retaining business for or with, or directing business to, any
Person.
 
(d)           The representations in this Section 4.15 shall not apply to any
facilitating or expediting payment to a Government Official, political party, or
party official the purpose of which is to expedite or to secure the performance
of a routine governmental action by a Government Official, political party, or
party official.
 
ARTICLE V.  COVENANTS OF SELLERS
 
5.1         Access to Samples.  Upon Closing, Sellers shall collaborate with
Buyer in order to facilitate the taking of possession by PRMC of the mineral
samples collected.
 
5.2         Confidentiality.
 
(a)           During the period commencing on the  Closing Date and ending on
the expiration of 18 months after such Closing Date, each Seller will, and will
cause its Affiliates to, hold, and will use its reasonable best efforts to cause
its and their respective Representatives to hold, in confidence any and all
information, whether written or oral, concerning the Acquired Company and its
Subsidiary, except to the extent that such Seller can show that such information
(a) is in the public domain or becomes a part of the public domain after the
Closing through no fault of any Seller or any of their Affiliates or (b)   such
Seller or any of its Affiliates independently obtains, other than through a
breach of this Agreement, knowledge of the confidential information after the
Closing; or (c) if a Seller or any of its Affiliates or Representatives is
compelled to disclose any such information by  Law, court order, court
proceedings or the rules or policies of any stock exchange or government or
regulatory authority having jurisdiction in the matter, such Seller shall
promptly notify Buyer in writing and shall disclose only that portion of such
information which is legally required and  shall exercise its reasonable best
efforts to obtain an appropriate protective order or other reasonable assurance
that confidential treatment will be accorded such information. The Buyer
acknowledges, however, that Sellers disclosed certain information of the
Acquired Company and PRMC, pursuant to the confidentiality agreements listed in
the Seller Disclosure Schedule, prior to the Closing Date, in order for the
recipient of such information to consider the potential purchase of the Acquired
Shares, which information may be of a confidential nature and that this Section
5.2(a) (“Confidentiality”) does not apply to any such disclosure and to
disclosures made in accordance with Section 7.1.
 
(b)           Each Seller will retain any of its books and records that relate
to the Acquired Company and/or its Subsidiary in accordance with Seller’s record
retention policies as presently in effect. During the period commencing on the
Closing Date and ending on the expiration of 18 months after such Closing Date,
Sellers shall not dispose of or permit the disposal of any such books and
records not required to be retained under such policies without first giving 60
days’ prior written notice to Buyer offering to surrender the same to Buyer at
Buyer’s expense. Following the expiration of such 18 month period, Sellers may
dispose of any and all of such books and records.

 
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5.3         Notification of Certain Matters.  Each Seller shall give prompt
notice to Buyer of (i) any fact, event or circumstance known to it that
individually or taken together with all other facts, events and circumstances
known to it, has had or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on the Acquired Company, or that would
cause or constitute a breach of any of its representations, warranties,
covenants or agreements contained herein, (ii) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the Acquisition, (ìii) any notice or other
communication from any Governmental Entity in connection with the Acquisition,
or (iv) any Actions commenced relating to Seller, the Acquired Company or  its
Subsidiary known to it that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to Section 3.16;
provided however, that (A) the delivery of any notice pursuant to this Section
5.3 shall not limit or otherwise affect any remedies available to Buyer or
prevent or cure any misrepresentations, breach of warranty or breach of
covenant, and (B) disclosure by a Seller shall not be deemed to amend or
supplement the Seller Disclosure Schedule or constitute an exception to any
representation or warranty.
 
5.4         Lock-Up; No Shorting.
 
(a)           Each Seller covenants and agrees, except as provided below, not to
(i) offer, sell, contract to sell, grant any option to purchase, hypothecate,
pledge or otherwise dispose of or (ii) transfer title to any of the Purchase
Price Shares (the “Locked-up Securities”), during the period commencing on the
Closing Date and ending on the expiration of 18 months after the Closing Date
(the “Lock-up Period”), without the prior written consent of
Buyer.  Notwithstanding the foregoing, each Seller shall be permitted from time
to time during the Lock-up Period, without the prior written consent of Buyer,
to participate in any transaction in which holders of Buyer Common Stock
participate or have the opportunity to participate pro rata, including, without
limitation, a merger, consolidation or binding share exchange involving Buyer, a
disposition of Buyer Common Stock in connection with the exercise of any rights,
warrants or other securities distributed to the Company’s stockholders, or a
tender or exchange offer for Buyer Common Stock.
 
(b)           Each Seller covenants and agrees that, for a period commencing on
the date hereof and terminating eighteen months after the Closing Date, such
Seller will not (and will cause its Subsidiaries not to), directly or
indirectly, effect or agree to effect any short sale (as defined in Rule 200
under Regulation SHO of the Exchange Act), whether or not against the box,
establish any “put equivalent position” (as defined in Rule 16a-1(h) under the
Exchange Act) with respect to Buyer Common Stock, borrow or pre-borrow any
shares of Buyer Common Stock, or grant any other right (including, without
limitation, any put or call option) with respect to Buyer Common Stock or with
respect to any security that includes, relates to or derives any significant
part of its value from Buyer Common Stock or otherwise seek to hedge its
position in Buyer Common Stock.
 
ARTICLE VI.  COVENANTS OF BUYER
 
6.1         Preemptive Rights.  Except as provided below, Sellers shall have
preemptive rights as described in this Section 6.1 with respect to any offering
by Buyer of any of its Equity Securities other than Excluded Securities (as
defined below) for consideration consisting solely of cash that closes prior to
the earliest of (a) such time that Sellers, in the aggregate, have disposed of
more than 50% of the Purchase Price Shares, (b) the fourth anniversary of the
Closing and (c) the occurrence of the Contingent Milestone referred to in
Section 2.1(b)(i) (any such offering, a “Covered Offering”).

 
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(a)           Buyer shall give Sellers at least 15 days prior notice (the
“Preemption Notice”) of any Covered Offering.   Sellers in aggregate  may
collectively elect, by providing a joint irrevocable notice thereof to Buyer
within ten days of the date of the Preemption Notice, to purchase up to 25% of
the Equity Securities of Buyer that are sold in the Covered Offering on the same
terms and conditions as the other investors in the Covered Offering, except that
any Seller’s investment in a Covered Offering shall be on a non-brokered private
placement basis or otherwise not subject to any commissions or discounts payable
by Buyer to any placement agents or finders. Sellers will indicate in the
Preemption Notice the allocation to each Seller of the aggregate number of
shares contained in such Preemption Notice.
 
(b)           “Excluded Securities” means:  (a) securities issued to employees,
officers, directors, or consultants of Buyer or its subsidiaries pursuant to any
stock or option plan duly adopted for such purpose by a majority of the
non-employee members of the Board of Directors of Buyer or a majority of the
members of a committee of non-employee directors; (b) securities issued upon the
exercise or exchange of or conversion of any securities (i) issued and
outstanding on the date of this Agreement, (ii) constituting Excluded Securities
or (iii) the issuance of which was itself subject to Sellers’ preemptive rights
hereunder; (c) securities issued in connection with bona fide strategic
transactions entered into by Buyer, whether by merger, consolidation, joint
venture, acquisition, sale or purchase of assets, sale, purchase or exchange of
stock or otherwise, in each case approved by a majority of the directors of
Buyer where such directors have determined, in good faith, that such transaction
is not primarily for the purpose of raising capital; or (d) securities issued to
service providers (such as investor relations firms) or lessors in consideration
for bona fide services provided to Buyer in each case that are approved by
Buyer’s board of directors; (e) securities issued or issuable pursuant to stock
dividends, stock splits or similar transactions; or (f) securities issued
pursuant to Buyer’s ongoing private placement offering, the initial closing of
which occurred on June 9, 2010.
 
(c)           The preemptive rights provided for in this Section 6.1 may be
assigned by the Sellers to any fund managed by a Seller, Pacific Road Capital
Management Pty Limited or an Affiliate of any of them, which assignee fund shall
then have all of the rights of a Seller under this Section 6.1.
 
6.2         Seller Nominee to Board of Directors.  Provided that Sellers hold,
in the aggregate, at least 10% of the issued and outstanding Buyer Common Stock
at Sellers request, at the first regular or special meeting of the stockholders
of Buyer called  after the Closing Date for the purpose of filling positions on
the Board of Directors of Buyer, or in any written consent executed in lieu of
such a meeting of stockholders, Buyer shall nominate and recommend for approval
a number of Sellers’ designees (“Seller Candidates”) for election to Buyer’s
Board of Directors equal to the greater of (a) one, and (b) the product, rounded
down to the next full integer, of (i) the number of directors constituting the
full Board of Directors, multiplied by (ii) the quotient of the number of shares
of Buyer Common Stock then held in the aggregate by Sellers divided by the
number of shares of Buyer Common Stock then outstanding.  Sellers acknowledge
that nomination does not guarantee election and that each Seller Candidate shall
be subject to election, re-election and removal by Buyer’s stockholders and may
also be subject to acceptance by any exchange on which Buyer’s Common Stock is
traded. Moreover, Seller Candidates shall be subject to any qualification
requirements applicable generally to the members of Buyer’s Board of Directors.
The right of the Sellers under this Section 6.3 that Buyer nominate and
recommend for approval the Seller Candidates shall also apply to each successive
meeting or written consent for the purpose of filling positions on the Board of
Directors of the Buyer, provided that at the time of such successive meeting or
consent the Sellers hold, in the aggregate, at least 10% of the issued and
outstanding Buyer Common Stock.
 
6.3         Rule 144 Information.  With a view to making available the benefits
of certain rules and regulations of the SEC which may permit the sale of
restricted securities to the public without registration, the Buyer agrees to
(i) make and keep public information available, as those terms are understood
and defined in Rule 144 under the Securities Act at all times; (ii) file with
the SEC in a timely manner all reports and other documents  required of the
Buyer under the Exchange Act; and (iii) furnish to the Seller upon request, a
written statement as to compliance with the reporting requirements of Rule 144
and of the Exchange Act.

 
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6.4.  Sellers’ Options to Invest.  (a)  Sellers shall have the right (the
“Initial Option”), exercisable by irrevocable written notice delivered to Buyer
within sixty (60) days of the Closing, to subscribe for Units (as defined below)
having an aggregate purchase price of not less than  $2,500,000 and up to but
not more than $10,000,000, at a price of $25,000 per Unit.  Each “Unit” consists
of (i) 100,000 shares of Buyer Common Stock; and (ii) warrants to purchase
100,000 shares of Buyer Common Stock at an exercise price of $0.50 per share
until five years after the final closing date of Buyer’s current private
placement offering.  As used in this Agreement, “Remainder Option Amount” shall
mean the difference between $10,000,000 and the aggregate purchase price of
Units purchased by Sellers pursuant to the Initial Option.
 
(b)          Buyer shall promptly deliver notice to Sellers of completion of a
43-101 Inferred Resource on the Alfredo Property (the “Milestone
Notice”).  Commencing upon Buyer’s completion of a 43-101 Inferred Resource on
the Alfredo Property and on at least one lithium property in Argentina, Sellers
shall have the right (the “Milestone Option” and, together with the Initial
Option, the “Seller Options”), exercisable by irrevocable written notice (the
“Milestone Exercise Notice”) delivered to Buyer within forty-five (45) days of
Buyer’s delivery of the Milestone Notice and copies of the 43-101 Inferred
Resource for each such property together with supporting technical analysis and
data, to subscribe for shares of Buyer Common Stock having an aggregate purchase
price of at least $2,500,000 if the Initial Option was not exercised and, in any
event not less than $1,000,000 up to  a maximum of the Remainder Option Amount,
at a price per share equal to the greater of (i) the PPO Price and (ii) the
thirty day volume-weighted average price of the Buyer Common Stock on its
principal market ending with the trading day immediately preceding the date the
Milestone Exercise Notice is delivered to Buyer.
 
(c)           Sellers acknowledge that, although this Agreement does not create
any contractual restrictions on transfer with respect to such securities, any
securities purchased pursuant to the Seller Options (or upon exercise of
warrants purchased pursuant to the Seller Options) will constitute “restricted
securities” within the meaning of Rule 144, and the transferability of such
securities will be restricted to the extent provided by applicable law.
 
ARTICLE VII.  COVENANTS OF BUYER AND SELLER
 
7.1         Public Announcements.  Buyer or Sellers may make press releases or
other public announcements with respect to the transactions contemplated by this
Agreement, whether voluntarily or as it believes are required pursuant to any
listing agreement with any national securities exchange or stock market or
applicable securities Laws, in which case the party which intends or is required
to make the release or announcement shall allow the other party reasonable time
to comment on such release or announcement in advance of such issuance;
provided, further, that each of the parties may make internal announcements to
their respective employees that are consistent with the parties’ prior public
disclosures regarding the Acquisition and may provide a description of this
Agreement on their website after providing the Buyer reasonable time to comment
on such website information.
 
7.2         Tax Matters.
 
7.3         Cooperation in Filing Tax Returns.  Buyer and each Seller shall, and
shall each cause its Subsidiaries and Affiliates to, provide to the other such
cooperation and information, as and to the extent reasonably requested, in
connection with the filing of any Tax Return, amended Tax Return or claim for
refund, determining liability for Taxes or a right to refund of Taxes, or in
conducting any audit, litigation or other proceeding with respect to Taxes. Such
cooperation and information shall include providing copies of all relevant
portions of relevant Tax Returns reporting income or loss, together with
relevant accompanying schedules and relevant work papers, relevant documents
relating to rulings and other determinations by Taxing Authorities, and relevant
records concerning the ownership and Tax basis of property, which any such party
may possess.  Each party will retain all Tax Returns, schedules, work papers,
and all material records and other documents relating to Tax matters during an
eighteen (18) month period as from the Closing Date.
 

 
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7.4         Use of Certain Names.  Within 90 days following the Closing, Buyer
shall cause PRMC to change its name in order to eliminate the use of any Names
(as defined below) therein.  In no event shall Buyer, the Acquired Company or
their respective Subsidiaries use any Names after the Closing in any manner or
for any purpose different from the use of such Names by the Acquired Company and
its Subsidiary, as the case may be, during the 180-day period preceding the
Closing Date. “Names” means the “Pacific Road Marks” or any name, logo or
trademark that includes “Pacific Road,” any variation and derivatives thereof
and any other logos or trademarks of Sellers or their Affiliates after the
Closing.
 
7.5         Further Assurances.  Subject to the terms of this Agreement, each
Seller and Buyer shall execute such documents and other instruments and take
such further actions as may be reasonably required to carry out the provisions
hereof  or consummate the Acquisition.
 
ARTICLE VIII.  DELIVERABLES
 
8.1         Deliveries by Buyer.  On or prior to the Closing Date, Buyer has
delivered to the Sellers, in form and substance satisfactory to the Sellers, the
following:
 
(a)           A notice informing the PPO Price and the indications of how it was
calculated.
 
(b)           Facsimile copies of the certificates representing the Purchase
Price Shares issued in accordance with Schedule 2.1 (d), originals to be
delivered by Buyer to Seller within 15 calendar days from the Closing Date.
 
(c)           A letter addressed to the Sellers confirming that the Buyer has
completed, to its satisfaction, the Due Diligence with respect to the Acquired
Company and it’s Subsidiary. Sellers shall not be exempt from liability if Buyer
or its advisors should have known from their review of documents contained in
Exhibit A or the transaction that any of the covenants, representations or
warranties contained in this agreement were not accurate or complete.  Sellers
shall be liable for Losses whether or not Buyer had reason to know of the
corresponding Liabilities, as a result of the Due Diligence.
 
(d)           A letter addressed to the Sellers confirming that Buyer, to the
maximum extent permitted by applicable Law, will ensure that the Acquired
Company and its Subsidiary do not take any action or proceeding or make any
claim or demand against the retiring directors and/or the retiring general
manager in respect of any act or omission on the part of such director or
general manager before the Closing Date, other than any matter arising from
willful misconduct or fraud of that director or general manager. The Buyer
acknowledges that this letter is for the benefit of the retiring directors and
retiring general manager, and is held in trust for them by the Sellers.
 
8.2         Deliveries by Sellers.  On or prior to the Closing Date, each of the
Sellers, as applicable, has delivered to Buyer, in form and substance
satisfactory to Buyer, the following:
 
(a)           Executed instruments of transfer , a resolution of the board of
directors of the Acquired Company noting and approving the transfer of the
Acquired Shares from Sellers to the Buyer and copy of the members register of
the Acquired Company evidencing the transfer of the Acquired Shares to Buyer.
 
(b)           Duly executed transfer documents (“Traspasos de Acciones”) of PRMC
Minority Shareholding to the Affiliate of the Buyer designated by Buyer.

 
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(c)           Original share certificates of PRMC Minority Shareholding in the
name of Carlos Alberto Reyes Comandari and Alejandra Pérez Rossi duly cancelled
and newly issued shares certificate of PRMC in the name of the Affiliate
designated by Buyer.
 
(d)           The shareholders’ registry of PRMC evidencing the transfer of PRMC
Minority Shareholding to the Affiliate designated by Buyer, board minute book of
PRMC, and any other applicable corporate book.
 
(e)           Duly signed resignations, effective as of the Closing date, of all
the retiring directors.
 
(f)           Duly signed resignation of the retiring general manager.
 
(g)           Resolution passed by the board of directors of the Subsidiary
acknowledging the resignation of the retiring directors of the Subsidiary and
appointing the incoming directors designated by Buyer, and revoking all of the
outstanding powers of attorney issued by the Subsidiary at any time prior to
Closing and granting new powers of attorney pursuant to the structure designated
by Buyer.
 
(h)           Copy of a written agreement executed on behalf of Rodman & Renshaw
LLC, confirming that Rodman & Renshaw LLC will look only to Sellers for payment
of its finder’s fee and shall not seek any compensation from Buyer, the Acquired
Company or any of its Subsidiaries.
 
(i)           Duly signed assignment agreement of the PRMC Payable from Sellers
to the Acquired Company.
 
ARTICLE IX.  AVAILABLE REMEDIES
 
Any party shall be entitled to proceed for specific performance and  shall have
the right to recover damages sustained by such party as a result of any breach
by the other party of any representation, warranty, covenant or agreement
contained in this Agreement or negligent or willful misrepresentation (subject
to the terms, conditions and limitations set forth in Article X).
 
Accordingly, Buyer and the Sellers hereby irrevocably waive the right to
terminate this Agreement and/or any agreement or document delivered and executed
to carry out the provisions hereof or consummate the Acquisition.
 
ARTICLE X.  INDEMNIFICATION
 
10.1       Survival.
 
(a)           All representations and warranties contained in this Agreement, or
in any Schedule, certificate or other document delivered pursuant to this
Agreement, shall survive the Closing for a period of 18 months.
 
(b)           The covenants and agreements which by their terms do not
contemplate performance after the Closing Date and the ones that contemplate
performance after the Closing Date shall survive the Closing for a period of 18
months.

 
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(c)           The period for which a representation or warranty, covenant or
agreement survives the Closing is referred to herein as the “Applicable Survival
Period.” In the event a Notice of Claim for indemnification under Section 10.2
or 10.3 is given within the Applicable Survival Period, the representation or
warranty, covenant or agreement that is the subject of such indemnification
claim (whether or not formal legal action shall have been commenced based upon
such claim) shall survive with respect to such claim until such claim is finally
resolved, provided, however, that a non Third Party Claim will not be
enforceable against Sellers or Buyer, as applicable, and is to be taken for all
purposes to have been withdrawn unless any legal proceedings in connection with
such claim are commenced within 6 months after the Notice of Claim. The
Indemnitor shall indemnify the Indemnitee for all Losses (subject to the
limitations set forth herein, if applicable) that the Indemnitee may incur in
respect of such claim, regardless of when incurred.
 
10.2       Indemnification by Sellers.
 
(a)           Each Seller shall indemnify and defend Buyer and its Affiliates
(including, following the Closing, the Acquired Company and its Subsidiary) and
their respective stockholders, members, managers, officers, directors,
employees, agents, successors and assigns  (the “Buyer Indemnitees”) against,
and shall hold them harmless from, any and all Losses resulting from, arising
out of, or incurred by any Buyer Indemnitee in connection with, or otherwise
with respect to:
 
 
(i)
the failure of any representation and warranty  by any Seller contained in this
Agreement, the Seller Disclosure Schedule, or any certificate or other document
furnished  to Buyer in connection with the transactions contemplated by this
Agreement, to be true and correct in all respects as of the date of this
Agreement;

 
 
(ii)
any breach of any covenant or agreement of any Seller contained in this
Agreement, the Seller Disclosure Schedule, or any certificate or other document
furnished to Buyer in connection with the transactions contemplated by this
Agreement;

 
 
(iii)
any fees, expenses or other payments incurred or owed by any Seller, the
Acquired Company or  its Subsidiary to any agent, broker, investment banker or
other firm or person retained or employed by it in connection with the
transactions contemplated by this Agreement.

 
(b)           Sellers shall not be liable for any Loss or Losses pursuant to
Section 10.2(a)(i) (“Buyer Warranty Losses”)  unless and until the  aggregate
amount of all  Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds
$100,000, in which event Seller shall be liable for such Buyer Warranty Losses
from the first dollar; provided that nothing contained in this Section 10.2(b)
shall be deemed to limit or restrict in any manner any rights or remedies which
Buyer has, or might have, at Law, in equity or otherwise, based on fraud or a
willful misrepresentation or willful breach of warranty hereunder.
 
(c)           The indemnification provisions contained in this Agreement reflect
the contractual agreement of Buyer and Sellers regarding risk allocation with
respect to Losses and other matters.  By agreeing to these provisions, none of
Sellers, the Acquired Company nor its Subsidiary are acknowledging any
wrongdoing or liability with respect to any matter, and these provisions shall
not act as a waiver or otherwise limit any defenses that may be available to any
Seller, the Acquired Company or its Subsidiary with respect to any Third Party
Claims.
 
10.3       Indemnification by Buyer.
 
(a)           Buyer shall indemnify and defend each Seller and its
Affiliates  (the “Seller Indemnitees”) against, and shall hold them harmless
from, any and all Losses resulting from, arising out of, or incurred by any
Seller Indemnitee in connection with, or otherwise with respect to:

 
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(i)
the failure of any representation and warranty  by Buyer contained in this
Agreement, the Buyer Disclosure Schedule, or any certificate or other document
furnished  to Sellers in connection with the transactions contemplated by this
Agreement, to be true and correct in all respects as of the date of this
Agreement; and

 
 
(ii)
any breach of any covenant or agreement of Buyer contained in this Agreement or
any other document furnished  to Sellers in connection with the transactions
contemplated by this Agreement.

 
(b)           Buyer shall not be liable for any Loss or Losses pursuant to
Section 10.3(a)(i) (“Seller Warranty Losses”) (i) unless and until the
aggregate  amount of all Seller Warranty Losses incurred by the Seller
Indemnitees exceeds $100,000, in which event Buyer shall be liable for all
Seller Warranty Losses from the first dollar provided that nothing contained in
this Section 10.3(b) shall be deemed to limit or restrict in any manner any
rights or remedies which Sellers have, or might have, at Law, in equity or
otherwise, based on fraud or willful misrepresentations or willful breach of
warranty hereunder.
 
(c)           The indemnification provisions contained in this Agreement reflect
the contractual agreement of Buyer and Sellers regarding risk allocation with
respect to Losses and other matters.  By agreeing to these provisions, neither
Buyer nor its Subsidiaries are acknowledging any wrongdoing or liability with
respect to any matter, and these provisions shall not act as a waiver or
otherwise limit any defenses that may be available to Buyer or its Subsidiaries
with respect to any Third Party Claims.
 
10.4       Indemnification Procedures for Third Party Claims.
 
(a)           In the event that an Indemnitee receives notice of the assertion
of any claim or the commencement of any Action by a third party in respect of
which indemnity may be sought under the provisions of this Article X.   (“Third
Party Claim”), the Indemnitee shall promptly notify the Indemnitor in writing
(“Notice of Claim”) of such Third Party Claim. Failure or delay in notifying the
Indemnitor will not relieve the Indemnitor of any liability it may have to the
Indemnitee, except and only to the extent that such failure or delay causes
actual harm to the Indemnitor with respect to such Third Party Claim. The Notice
of Claim shall set forth the amount, if known, or, if not known, an estimate of
the foreseeable maximum amount of claimed Losses (which estimate shall not be
conclusive of the final amount of such Losses) and a description of the basis
for such Third Party Claim.
 
(b)           Subject to the further provisions of this Section 10.4, the
Indemnitor will have 10 days (or less if the nature of the Third Party Claim
requires) from the date on which the Indemnitor received the Notice of Claim to
notify the Indemnitee that the Indemnitor will assume the defense or prosecution
of such Third Party Claim and any litigation resulting therefrom with counsel of
its choice (reasonably satisfactory to the Indemnitee) and at its sole cost and
expense (a “Third Party Defense”). If the Indemnitor assumes the Third Party
Defense in accordance with the preceding sentence, the Indemnitor shall be
conclusively deemed to have acknowledged that the Third Party Claim is within
the scope of its indemnity obligation hereunder and shall hold the Indemnitee
harmless from and against the full amount of any Losses resulting therefrom
(subject to the terms and conditions of this Agreement). Any Indemnitee shall
have the right to employ separate counsel in any such Third Party Defense and to
participate therein, but the fees and expenses of such counsel shall not be at
the expense of the Indemnitor unless (A) the Indemnitor shall have failed,
within the time after having been notified by the Indemnitee of the existence of
the Third Party Claim as provided in the first sentence of this paragraph (b),
to assume the defense of such Third Party Claim, (B) the employment of such
counsel has been specifically authorized in writing by the Indemnitor, or (C)
under applicable standards of professional conduct, a conflict on any
significant issue exists between the Indemnitee and the Indemnitor in respect of
the Third Party Claim.

 
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(c)           The Indemnitor will not be entitled to assume the Third Party
Defense if:
 
 
(i)
the Third Party Claim seeks, in addition to or in lieu of monetary damages, any
injunctive or other equitable relief;

 
 
(ii)
the Third Party Claim relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation;

 
 
(iii)
the Third Party Claim relates to or arises in connection with any Environmental
Action;

 
 
(iv)
the Third Party Claim involves a material customer or supplier of the Acquired
Company or  its Subsidiary;

 
 
(v)
the Indemnitee reasonably believes an adverse determination with respect to the
Third Party Claim would be detrimental to or injure the Indemnitee’s reputation
or future business prospects;

 
 
(vi)
the Indemnitor has failed or is failing to vigorously prosecute or defend such
Third Party Claim;

 
 
(vii)
the Indemnitor fails to provide reasonable assurance to the Indemnitee of its
financial capacity to prosecute the Third Party Defense and provide
indemnification in accordance with the provisions of this Agreement; or

 
 
(viii)
the Third Party Claim would give rise to Losses which are more than the amount
indemnifiable by the Indemnitor pursuant to this Article X.

 
(d)           If by reason of the Third Party Claim a Lien, attachment,
garnishment or execution is placed upon any of the property or assets of the
Indemnitee, the Indemnitor, if it desires to exercise its right to assume such
Third Party Defense, must furnish a satisfactory indemnity bond to obtain the
prompt release of such Lien, attachment, garnishment or execution.
 
(e)           If the Indemnitor assumes a Third Party Defense, it will take all
steps necessary in the defense, prosecution, or settlement of such claim or
litigation and will hold all Indemnitees harmless from and against all Losses
caused by or arising out of such Third Party Claim, subject to the terms and
conditions of this Agreement. The Indemnitor will not consent to the entry of
any judgment or enter into any settlement except with the written consent of the
Indemnitee; provided that the consent of the Indemnitee shall not be required if
all of the following conditions are met: (i) the terms of the judgment or
proposed settlement include as an unconditional term thereof the giving to the
Indemnitees by the third party of a release of the Indemnitees from all
liability in respect of such Third Party Claim, (ii) there is no finding or
admission of (A) any violation of Law by the Indemnitees (or any Affiliate
thereof), (B) any violation of the rights of any Person and (C) no effect on any
other Action or claims of a similar nature that may be made against the
Indemnitees (or any Affiliate thereof), and (iii) the sole form of relief is
monetary damages which are paid in full by the Indemnitor. The Indemnitor shall
conduct the defense of the Third Party Claim actively and diligently, and the
Indemnitee will provide reasonable cooperation in the defense of the Third Party
Claim. So long as the Indemnitor is reasonably conducting the Third Party
Defense in good faith, the Indemnitee will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnitor (not to be unreasonably
withheld or delayed). Notwithstanding the foregoing, the Indemnitee shall have
the right to pay or settle any such Third Party Claim, provided that in such
event it shall waive any right to indemnity therefor by the Indemnitor for such
claim unless the Indemnitor shall have consented to such payment or settlement
(such consent not to be unreasonably withheld or delayed). If the Indemnitor is
not reasonably conducting the Third Party Defense in good faith, the Indemnitee
shall have the right to consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitor and the Indemnitor shall reimburse the Indemnitee
promptly for all Losses incurred in connection with such judgment or settlement,
subject to the terms and conditions of this Agreement.

 
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(f)           In the event that (i) an Indemnitee gives Notice of Claim to the
Indemnitor and the Indemnitor fails or elects not to assume a Third Party
Defense which the Indemnitor had the right to assume under this Section 10.4 or
(ii) the Indemnitor is not entitled to assume the Third Party Defense pursuant
to this Section 10.4, the Indemnitee shall have the right, with counsel of its
choice, to defend, conduct and control the Third Party Defense, at the sole cost
and expense of the Indemnitor (unless the subject matter of the Notice of Claim
is not eligible for indemnification hereunder, in which case the Indemnitor
shall not be responsible for such costs and expenses). In each case, the
Indemnitee shall conduct the Third Party Defense actively and diligently, and
the Indemnitor will provide reasonable cooperation in the Third Party Defense.
The Indemnitee shall have the right to consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim on such terms as
it may deem appropriate; provided, however, that the amount of any settlement
made or entry of any judgment consented to by the Indemnitee without the consent
of the Indemnitor shall not be determinative of the validity of the claim,
except with the consent of the Indemnitor (not to be unreasonably withheld or
delayed). Notwithstanding Section 11.6 hereof, in connection with any Third
Party Claim, the Indemnitor hereby consents to the nonexclusive jurisdiction of
any court in which an Action in respect of a Third-Party Claim is brought
against any Indemnitee for purposes of any claim that the Indemnitee may have
under this Article X.   with respect to such Action or the matters alleged
therein and agrees that process may be served on the Indemnitor with respect to
such a claim anywhere in the world. If the Indemnitor does not elect to assume a
Third Party Defense which it has the right to assume hereunder, the Indemnitee
shall have no obligation to do so.
 
(g)           Each party to this Agreement shall use its commercially reasonable
efforts to cooperate and to cause its employees to cooperate with and assist the
Indemnitee or the Indemnitor, as the case may be, in connection with any Third
Party Defense, including attending conferences, discovery proceedings, hearings,
trials and appeals and furnishing records, information and testimony, as may
reasonably be requested; provided that each party shall use its best efforts, in
respect of any Third Party Claim of which it has assumed the defense, to
preserve the confidentiality of all confidential information and the
attorney-client and work-product privileges.
 
10.5       Indemnification Procedures for Non-Third Party Claims.  In the event
of a claim that does not involve a Third Party Claim being asserted against it,
the Indemnitee shall send a Notice of Claim to the Indemnitor. The Notice of
Claim shall set forth the amount, if known, or, if not known, an estimate of the
foreseeable maximum amount of claimed Losses (which estimate shall not be
conclusive of the final amount of such Losses) and a description of the basis
for such claim. The Indemnitor will have 30 days from receipt of such Notice of
Claim to dispute the claim and will reasonably cooperate and assist the
Indemnitee in determining the validity of the claim for indemnity.

 
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10.6       Maximum Liability.
 
(a)           The Sellers’ total liability for any and all Losses however
caused, in contract, tort (including negligence), under any statute or otherwise
from or relating in any way to this Agreement or its subject matter is limited
in aggregate for any and all claims eligible for indemnification hereunder
to  the lesser of  (the “Maximum Liability Amount”): (i) $2 million and
(ii)  the Purchase Price Shares delivered directly to Sellers pursuant to
section 2.1(d) valued at the date of such indemnification payment (as determined
using the methodology described in section 2.1(a)). In lieu of paying cash to
satisfy its indemnification obligations under this Agreement, Sellers, at their
option, may satisfy and extinguish such obligations in whole or in part by
surrender of Purchase Price Shares to the Buyer (based on the value thereof on
the date of surrender determined in accordance with the methodology described in
Section 2.1(a)). In all cases, such share value shall be subject to equitable
adjustment in the event of any stock split, stock dividend, reverse stock split
or similar event affecting the Buyer Common Stock during the period of
calculation and, thereafter, until delivery of the Buyer Common Stock in payment
of indemnification obligations pursuant to this Section 10.6  In any event, by
surrendering to Buyer all of the Purchase Price Shares (that were delivered to
Sellers (this is, excluding the Purchase Price Shares that were delivered to
other Persons designated by Sellers pursuant to section 2.(d) of this
Agreement)), Sellers’ total liability shall be fully extinguished.
 
(b)           The Buyer’s total liability for any and all Losses however caused,
in contract, tort (including negligence), under any statute or otherwise from or
relating in any way to this Agreement or its subject matter is limited in
aggregate for any and all claims eligible for indemnification hereunder to the
Maximum Liability Amount.
 
10.7       Exclusion of consequential liability.  Sellers and Buyer exclude all
liability for indirect and consequential loss or damage (including for loss of
profit (whether direct, indirect, anticipated or otherwise), loss of expected
savings, opportunity costs, loss of business (including loss or reduction of
goodwill), damage to reputation and loss or corruption of data regardless of
whether any or all of these things are considered to be indirect or
consequential losses or damage) in contract, tort (including negligence), under
any statute or otherwise arising from or related in any way to this Agreement or
its subject matter.
 
10.8       Environmental Actions.  Buyer shall have the right (a) to defend,
conduct and control, with counsel of its choice, any Environmental Action, and
(b) to compromise or settle any Environmental Action. In the event that any
Buyer Indemnitee is required or deems it necessary to perform any Remedial Work
in connection with an Environmental Action, or to avoid the initiation of an
Environmental Action, whether or not formal proceedings have been initiated
or threatened with respect thereto, the Buyer Indemnitees shall have the right
to commence and thereafter prosecute to completion, all such Remedial Work, and
shall be indemnified by Sellers with respect to any and all Losses incurred in
connection therewith. “Remedial Work” means any response action, removal action,
remedial action, closure, corrective action, regulatory permitting, monitoring
program, risk assessment, deed restriction, sampling program, investigation or
other activity required, allowed by or consistent with Environmental Law to
clean up, remove, remediate, treat, abate or otherwise address any Hazardous
Substance which existed and was caused by PRCM prior to the date of this
Agreement.
 
10.9       Effect of Investigation; Waiver.
 
(a)           An Indemnitee’s right to indemnification or other remedies based
upon the representations and warranties and covenants and agreements of the
Indemnitor will not be affected by any investigation or knowledge of the
Indemnitee or any waiver by the Indemnitee of any condition based on the
accuracy of any representation or warranty, or compliance with any covenant or
agreement. Such representations and warranties and covenants and agreements
shall not be affected or deemed waived by reason of the fact that the Indemnitee
knew or should have known that any representation or warranty might be
inaccurate or that the Indemnitor failed to comply with any agreement or
covenant. Any investigation by such party shall be for its own protection only
and shall not affect or impair any right or remedy hereunder.

 
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(b)           Each Seller acknowledges and agrees that, upon and following the
Closing, neither the Acquired Company nor  its Subsidiary shall have any
liability or obligation to indemnify, save or hold harmless or otherwise pay,
reimburse or make any Seller whole for or on account of any indemnification or
other claims made by any Buyer Indemnitee hereunder. Sellers shall have no right
of contribution against the Acquired Company or  its Subsidiary with respect to
any such indemnification or other claim.
 
ARTICLE XI.  MISCELLANEOUS
 
11.1       Notices.  Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given (a) on the date established by the sender as having
been delivered personally, (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier, (c) on the date
sent by facsimile, with confirmation of transmission, if sent during normal
business hours of the recipient, if not, then on the next business day, or (d)
on the fifth day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications, to be valid, must be
addressed as follows:
 
If to Buyer, to:
  
Li3 Energy, Inc.
Av. Pardo y Aliaga 699 Of. 802
San Isidro, Lima
PERU
Attention:  Luis Saenz, President & CEO
Facsimile:  + 5114211649
Telephone:  + 511 (212) 1880
luis.saenz@li3energy.com
  
With a required copy to:
  
Gottbetter & Partners, LLP
488 Madison Avenue, 12th Floor
New York, New York  10022
USA
Attention:  Adam S. Gottbetter
Facsimile:  212-400-6901
Telephone:  212-400-6900
asg@gottbetter.com

 
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If to Fund A, to:
   
Pacific Road Resources Fund A.
Level 23
1 Alfred Street
Sydney NSW 2000, Australia
Attn:  Greg Dick
Facsimile:   +612 9241 2255
Telephone:   +612 9241 100
 greg.dick@pacroad.com.au
 
With a required copy to:
  
Urrutia y Compañia Abogados Limitada
 Av. Isidora Goyenechea 3250, 9th floor, Las Condes
Santiago, Chile
Attn:  Carlos Alberto Reyes
Facsimile: 56-2-3351842
careyes@urrutia.cl
     
If to Fund B, to:
   
Pacific Road Resources Fund B.
Level 23
1 Alfred Street
Sydney NSW 2000, Australia
Attn:  Greg Dick
Facsimile:  +612 9241 2255
  
Telephone:  +612 9241 100
  
greg.dick@pacroad.com.au
 
With a required copy to:
   
Urrutia y Compañia Abogados Limitada
 Av. Isidora Goyenechea 3250, 9th floor, Las Condes
Santiago, Chile
Attn:  Carlos Alberto Reyes
Facsimile: 56-2-3351842
careyes@urrutia.cl
     
If to PR Partnership, to:
  
Pacific Road Resources Fund L.P.
89 Nexus Way
Camana Bay
Grand Cayman KY1-9007
Cayman Islands
Attn:  Evan Burtton
Facsimile:  +1 345 945 6265
Telephone:   +1 345 945 6264
Evan.burtton@ogier.com
  
With a required copy to:
     
Urrutia y Compañia Abogados Limitada
 Av. Isidora Goyenechea 3250, 9th floor, Las Condes
Santiago, Chile
Attn:  Carlos Alberto Reyes
Facsimile: 56-2-3351842
careyes@urrutia.cl

 
or to such other address or to the attention of such Person or Persons as the
recipient party has specified by prior written notice to the sending party (or
in the case of counsel, to such other readily ascertainable business address as
such counsel may hereafter maintain). If more than one method for sending notice
as set forth above is used, the earliest notice date established as set forth
above shall control.
 
11.2       Amendments and Waivers.
 
(a)           Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.
 
(b)           No failure or delay by any party in exercising any right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

 
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(c)           To the maximum extent permitted by Law, (i) no waiver that may be
given by a party shall be applicable except in the specific instance for which
it was given and (ii) no notice to or demand on one party shall be deemed to be
a waiver of any obligation of such party or the right of the party giving such
notice or demand to take further action without notice or demand.
 
11.3       Expenses.  Each party shall bear its own costs and expenses in
connection with this Agreement and the transactions contemplated by this
Agreement, including all legal, accounting, financial advisory, consulting and
all other fees and expenses of third parties, whether or not the Acquisition is
consummated.
 
11.4       Successors and Permitted Assigns.  This Agreement may not be assigned
by either party hereto without the prior written consent of the other party.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns.
 
11.5       Governing Law.  This Agreement and the Exhibits and Schedules hereto
shall be governed by and interpreted and enforced in accordance with the Laws of
the Republic of Chile , without giving effect to any choice of Law or conflict
of Laws rules or provisions  that would cause the application of the Laws of any
jurisdiction other than the Laws of the Republic of Chile.
 
11.6       Consent to Jurisdiction.  Any difficulty or controversy arising among
the parties to the Agreement with respect to the application, interpretation,
duration, validity or execution of the Agreement or for any other reason, shall
be submitted to arbitration pursuant to the Rules of Arbitration Procedure of
the Santiago Arbitration and Mediation Center in effect at the time of its
initiation. The parties confer an irrevocable special power of attorney upon the
Santiago Chamber of Commerce so that it may, at the written request of any of
the parties, appoint an arbitrator from among the members of the arbitration
corps of the Santiago Arbitration and Mediation Center, who will be empowered to
act as arbitrator-at-law with regard to the substance of the dispute and as ex
aequo et bono with regard to the procedure. There shall be no remedy against the
arbitrator's resolutions. The arbitrator is especially empowered to resolve any
matter relating to his/her competence and/or jurisdiction.
 
11.7       Counterparts.  This Agreement may be executed in counterparts, and
any party hereto may execute any such counterpart, each of which when executed
and delivered shall be deemed to be an original and all of which counterparts
taken together shall constitute but one and the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto. The parties agree that the delivery
of this Agreement may be effected by means of an exchange of facsimile
signatures with original copies to follow by mail or courier service.
 
11.8       Third Party Beneficiaries.  No provision of this Agreement is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder; except that in the case of Section 8.1(d) hereof, the
retiring directors, the retiring general manager and the other Indemnitees are
intended third party beneficiaries of such sections and shall have the right to
enforce such sections in their own names.
 
11.9       Entire Agreement.  This Agreement and the documents, instruments and
other agreements specifically referred to herein or delivered pursuant hereto
set forth the entire understanding of the parties hereto with respect to the
Acquisition. All Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement. Any and all previous agreements and
understandings between or among the parties regarding the subject matter hereof,
whether written or oral, are superseded by this Agreement, except for the
Confidentiality Agreement which shall continue in full force and effect in
accordance with its terms.

 
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11.10     Captions.  All captions contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
 
11.11     Severability.  Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
 
11.12     Interpretation.
 
(a)           The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term and vice
versa, and words denoting either gender shall include both genders as the
context requires. Where a word or phrase is defined herein, each of its other
grammatical forms shall have a corresponding meaning.
 
(b)           The terms “hereof,” “herein” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement.
 
(c)           When a reference is made in this Agreement to an Article, Section,
paragraph, Exhibit or Schedule, such reference is to an Article, Section,
paragraph, Exhibit or Schedule to this Agreement unless otherwise specified.
 
(d)           The words “include,” “includes,” and “including,” when used in
this Agreement, shall be deemed to be followed by the words “without
limitation,” unless otherwise specified.
 
(e)           A reference to any party to this Agreement or any other agreement
or document shall include such party’s predecessors, successors and permitted
assigns.
 
(f)           Reference to any Law means such Law as amended, modified,
codified, replaced or reenacted, and all rules and regulations promulgated
thereunder.
 
(g)           The parties have participated jointly in the negotiation and
drafting of this Agreement. Any rule of construction or interpretation otherwise
requiring this Agreement to be construed or interpreted against any party by
virtue of the authorship of this Agreement shall not apply to the construction
and interpretation hereof.
 
(h)           All accounting terms used and not defined herein shall have the
respective meanings given to them under corresponding GAAP US.
 
[Signature page follows immediately]
 

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

 
Li3 ENERGY, INC.
       
By:
/s/ Luis Saenz
   
Name: Luis Saenz
   
Title:  President & CEO
       
PACIFIC ROAD CAPITAL A PTY LIMITED, as
trustee for PACIFIC ROAD RESOURCES FUND A,
a trust governed by the laws of Australia
       
By:
/s/ P. R. Espie
   
Name:  P. R. Espie
   
Title:  Director
       
By:
/s/ Gregory Andrew Dick
   
Name:  Gregory Andrew Dick
   
Title:  Director
       
PACIFIC ROAD CAPITAL B PTY LIMITED,
as trustee for PACIFIC ROAD RESOURCES FUND B,
a trust governed by the laws of Australia
       
By:
/s/ Louis I. Rozman
   
Name:  Louis I. Rozman
   
Title:  Director
       
By:
/s/ Gregory Andrew Dick
   
Name:  Gregory Andrew Dick
   
Title:  Secretary
       
PACIFIC ROAD CAPITAL MANAGEMENT  G.P.
LIMITED as General Partner of PACIFIC ROAD
RESOURCES FUND L.P., an English Limited
Partnership
       
By:
/s/ Evan Burtton
   
Name:  Evan Burtton
   
Title:  Director

 
 
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