OPTION AGREEMENT

AMONG

CORE VALUES MINING & EXPLORATION COMPANY,

CORE VALUES MINING & EXPLORATION COMPANY SUCURSAL COLOMBIA,

AND

UNIVERSAL GOLD HOLDINGS (CAYMAN), LIMITED

DATED AS OF

April 23, 2010

 
 

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OPTION AGREEMENT

THIS AGREEMENT IS made as of the 23rd day of April 2010

AMONG:

CORE VALUES MINING & EXPLORATION COMPANY, a corporation continued under the laws
of the Cayman Islands

(hereinafter called “CVME”)

OF THE FIRST PART

CORE VALUES MINING & EXPLORATION COMPANY SUCURSAL COLOMBIA, a corporation
incorporated under the laws of Colombia

(hereinafter called “CVMEC”)

OF THE SECOND PART

AND

UNIVERSAL GOLD HOLDINGS (CAYMAN), LIMITED a limited company incorporated under
the laws of the Cayman Islands

(hereinafter called lip “PARTNER”)

OF THE THIRD PART

WHEREAS:

(A)
CVME is a Corporation incorporated under the laws of the Cayman Islands;

(B)
CVMEC is a wholly-owned subsidiary of CVME;

(C)
CVME owns all of the issued and outstanding shares in the capital of CVMEC;

(D)
CVMEC holds or has the right to acquire or intends to acquire the Property (as
defined below);

(E)
CVME: and CVMEC desire to grant PARTNER, an option to earn a 50% interest in the
Property.

NOW THEREFOR THIS AGREEMENT WITNESSES that in consideration of the recitals and
of the mutual covenants and agreements hereinafter contained, the parties hereto
agree as follows:

 
 

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ARTICLE 1
DEFINITIONS AND INTERPRETATION

Section 1.1
Definitions.

In this Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms have the following meanings:

"Additional Property" has the meaning set forth in Section 11.3.

"Acquired Interest" has the meaning set forth in Section 11.1.

"Acquiring Party" has the meaning set forth in Section 11.1.

“Agreement", "herein", "hereby", "hereof", ,"hereunder" and similar expressions
mean or refer to this agreement or any instrument supplementary or ancillary
hereto; and the expressions "article", "paragraph" or "subparagraph" followed by
a number mean and refer to the specified article, paragraph or subparagraph of
this Agreement.

"Affiliate" means any person, partnership, joint venture, corporation or other
form of enterprise which directly or indirectly controls, is controlled by, or
is under common control of a Party. For purposes of the preceding sentence,
"control" means possession, directly or indirectly, of the power to direct or
cause direction of management and policies through ownership of voting
securities, contract, voting trust or otherwise.

"Area of Interest" means the area beginning at a point two (2) kilometres south
and one (1) kilometre west of the southwest corner of the Property (license
GEWM-12) and extending from that point, five (5) kilometres east and 15
kilometres ,north encompassing an area of approximately 7,500 hectares.

"assignor" has the meaning set forth in Section 10.2.

"CVME Group" means CVME and CVMEC, collectively and their respective Affiliates.

"Business Day" means any day of the year, other than Saturday, Sunday or any day
on which banks are required or authorized to close in Toronto, Canada.

"cash price" has the meaning set forth in Section 10.2.

"Closing" means the date of signing of this Agreement.

"confidential information" has the meaning set forth in Section 9.1.

"Costs" means all costs and expenses incurred and monies expended by the parties
in carrying out the Work, which will include, but not be limited to, all costs
and expenses incurred and monies expended (and including any value added tax
which must be remitted thereon):

 
 

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(i)
in doing geophysical, geochemical, land Of geological examinations and surveys;

 
(ii)
in searching for, digging, trenching" sampling, assaying" testing, working,
developing, )mining or extracting Ore, minerals and metals;

 
(iii)
in doing diamond and other drilling;

 
(iv)
in erecting and installing mining plant, milling plant, ancillary facilities,
buildings, machinery, tools, appliances or equipment and constructing access
roads, railroads and other transportation facilities for use in relation to the
Property, on or off the Property;

 
(v)
in transporting Ore, minerals" metals, personnel, supplies, mining or milling
plant, buildings, machinery, tools, appliances or equipment in, to or from the
Property;

 
(vi)
in paying wages and salaries (including "fringe benefits") of personnel and
consultants directly engaged in performing Work;

 
(vii)
in paying assessments or contributions under worker's compensation, employment
insurance, pension or other similar legislation or ordinances relating to such
personnel;

 
(viii)
in supplying food, lodging and other reasonable needs for personnel;

 
(ix)
in obtaining independent legal and accounting and support services directly
relating to Work;

 
(x)
in keeping the Property in good standing under the mineral tenure legislation in
Colombia or under the Underlying Agreements, including establishment and/or
maintenance of a regional office and its staff to support this and all other
exploration and development operations;

 
(xi)
for improving, protecting or perfecting title to the Property;

 
(xii)
in Property payments and Property acquisition and maintenance costs including
those under the Underlying Agreements;

 
(xiii)
in preparing engineering, geological, financial or marketing studies and reports
and activities related thereto:

 
(xiv)
in connection with any applications and necessary studies for the obtaining of
permits, licenses, and other regulatory approvals including the preparation for
and attendance at hearings and other meetings relating to the Property;

 
 

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(xv)
in preparing a Preliminary Feasibility Study and any reports supplementary
thereto;

 
(xvi)
the amount of any Differential Payment; and

 
(xvii)
including, without duplication, any amounts paid to CVME as cash calls under
Section 7.4;

plus an amount to offset general overhead and administration expenses of CVME as
equal to $30,000 per month payable to CVME, allocated to the Costs of the
Property on which CVME is Operator.

"Differential Payment" shall have the meaning set forth in Section 4.1.

“Effective Date” of this Agreement shall be April 23, 2010.

"Feasibility Study" means a "feasibility study" as defined in NI 43-101
"Standards of Disclosure for Mineral Projects", provided that if the Feasibility
Study is prepared by PARTNER or one of its Affiliates! it will be reviewed by an
independent firm of international mining engineers and the cost of such review
will be included as qualified Costs incurred by PARTNER toward the exercise of
the Option.

"Fair Market Value" is the greater of: (i) the value determined for the Property
and its assets, reserves and resources, or a portion thereof as determined by
applying current market conditions, prices and costs to the model used as a
determinant of commerciability within a Preliminary Feasibility Study or
Feasibility Study performed by a qualified third party On the Property; or (ii)
the estimated auction value of Mineral Reserves & Mineral Resources (per NI
43-101) and assets of the property as determined by qualified third party; or
(iii) a combination thereof.

“Governmental Authority” means any foreign, domestic, national, federal,
provincial, territorial, state, regional, municipal or local government or
authority, quasi government authority, fiscal or judicial body, government or
self regulatory organization, commission, board, tribunal, organization, or any
regulatory, administrative or other agency, or any political or other
subdivision, department, or branch of any of the foregoing.

"Interest" means the undivided right, title arid interest of a Party in the
Property.

"Laws" means all statutes, ,codes ordinances, decrees, rules, regulations,
municipal by-laws, judicial or arbitral or administrative or ministerial or
departmental or regulatory judgments, orders, decisions, rulings Or awards,
policies, voluntary restraints, guidelines, or any provisions of such Laws,
including general principles common and civil Law and equity, binding on or
affecting the Person referred to in the context in which such word is used, and
"Law" means anyone of foregoing.

 
 

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"NI 43-101" shall mean National Instrument 43-101 "Standard of Disclosure for
Mineral Projects" of the Consolidated Ontario Securities Act, Regulations and
Rules as the same has been amended from time to time.

"Mineral Rights" means:

 
(a)
prospecting licenses, exploration licenses, mining leases, mining license,
mineral concessions, permits and claims and other forms of mineral tenure or
other rights to Ore, or to work upon lands for the purpose of searching for,
developing or extracting Ore under any form of mineral title recognized under
the laws applicable in Colombia, whether contractual statutory or otherwise; or

 
(b)
any interest in any Mineral Right.

"Non-Operator" means PARTNER or a PARTNER Affiliate.

"Other Rights" means any interest in real property, whether freehold, leasehold,
license, right of way, easement, any other surface or other right ill relation
to real property, and any right, licence or permit in relation to the use or
diversion of water, but excluding any Mineral Rights.

"Operator" means CVME (or it’s designate in the CVME Group).

“Option" means the rights and options granted to PARTNER to earn art Interest in
the Property pursuant to Article 4.

"Option Period" means, in relation to the Option, the period of time between the
granting of the Option and the date that the Option is exercised.

“Ore" means all materials containing a mineral or minerals of commercial
economic value extracted or derived from the Property.

"PARTNER Work Codes" has the meaning set forth in Section 2.1.

“Party” or “Parties” means the initial parties to this Agreement and their
respective successors and permitted assigns which become parties to this
Agreement and, where the context requires, means the CVME Group.

“Preliminary Feasibility Study” means a “preliminary feasibility study" as
defined in NI 43-101 “Standards of Disclosure for Mineral Projects", provided
that if the Preliminary Feasibility Study is prepared by PARTNER or one of its
Affiliates, it will be reviewed by an independent firm of international mining
engineers and the cost of such review will be included as qualified Costs
incurred by PARTNER toward the exercise of the Option.

"Products" means any marketable Ore, concentrates, precipitates, dare, metal or
other product produced from the Property.

 
 

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"Property" means as of the date of Closing, the Property described as such in
Schedule" A", as to which CVMEC now holds or which it has the right to acquire.

"Qualified Person" has the meaning set forth in Section 4.1(1)(c).

"Shareholders' Agreement" means a shareholders' agreement in substantially the
form set forth in Schedule "B".

"Technical Committee" means the technical committee established pursuant to
Section 3.1.

"Term" has the meaning set forth in Section 16.1.

"Underlying Agreements" means any agreement under which an interest in the
Property is originally acquired from the Underlying Owner.

"Underlying Owner" means a party to an Underlying Agreement other than any of
the CVME Group or PARTNER or its Affiliates.

"Vesting Date" has the meaning set forth in Section 4.1(2).

"Work" means prospecting, exploration, development or other mining work approved
by the Technical Committee and performed on or in relation to the Property,
including the preparation of a Preliminary Feasibility Study.

"Year 1" has the meaning set forth in Section 4.1(1)(a).

"Year 2" has the meaning set forth in Section 4.1(1)(b).

"Year 3" has the meaning set forth in Section 4.1(1)(c).

Section 1.2
Interpretation.

 
(a)
Words importing the singular number will mean and include the plural and vice
versa, and words importing the masculine gender will include the feminine and
neuter genders.

 
(b)
Any schedule attached hereto is hereby incorporated by reference and forms part
of this Agreement.

 
(c)
Any statement of or reference to dollar amounts in this Agreement means coin or
currency of the United States of America.

 
(d)
The division of this Agreement into articles and paragraphs, the provision of
any index hereto and the insertion of headings are for convenience reference
only and are not intended to affect the construction or interpretation hereof.

 
 

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(e)
All representations, warranties, covenants and agreements of any of CVME, CVMEC
or CVMEC in this Agreement will be deemed to be joint and several
representations, warranties, covenants and agreements of each of CVME, CVMEC and
CVMEC.

 
(f)
Any reference in this Agreement to CVME's interest in the Property will apply to
any interest held directly by CVME and indirectly through CVMEC and/or CVMEC.

 
(g)
Any right or privilege that any of CVME, CVMEC, CVMEC or the CVME Group may have
hereunder may be exercised by any of them, and any election made, notice or
waiver given or agreement entered into by anyone of CVME, CVMEC or CVMEC
pursuant to this Agreement will be binding on all of them for the purposes of
this Agreement.

ARTICLE 2
OPERATOR

Section 2.1
CVME as Operator.

(1)
Designation of Operator. CVME shall carry out Work as Operator in accordance
with PARTNER's codes for work practice (the "PARTNER Work Codes") including,
without limitation, in relation to communities, sustainable development, health
and safety and the environment. So long as CVME is the Operator of the Property,
PARTNER shall reimburse CVME for its Costs to be incurred annually for
administration and overhead in the amount of $30,000 per month, which
reimbursement shall constitute "Costs" incurred by PARTNER.

(2)
PARTNER Personnel. On the Property where CVME is the Operator, PARTNER shall
have tile right to designate personnel from its own resources to be used for the
projects on the Property, including the project geologist and site manager and
other personnel, which personnel shall report either to tile CVME country
manager or project manager, as applicable, and shall take directions from such
person.

(3)
Consultants. CVME will notify PARTNER with respect to any outside consultant
that CVME wishes to use in connection with the Property; provided, however, that
PARTNER shall have the right to promptly object to any such consultant, in which
case, the same will not be used.

ARTICLE 3
TECHNICAL COMMITTEE

Section 3.1
Formation.

Upon the Closing, CVME and PARTNER will form a technical committee (the
"Technical Committee") in accordance with this Article 3. Each of CVME and
PARTNER has the right to appoint one (1) member each to the Technical Committee.
Such committee will be responsible during the Option Period for determining Work
programs to be conducted on the Property under Option and any significant
program amendments; for receiving and reviewing the technical reports of the
Operator summarizing the results of the Work; and for approving the material
terms of or any modifications to the Underlying Agreements of the Property under
Option.

 
 

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Section 3.2
Work.

No Work will be carried out and no Costs will be incurred except in accordance
with Work programs and budgets approved from time to time by the Technical
Committee.

Section 3.3
Approval.

If the members of the Technical Committee are unable to agree on any matter to
be approved or decided by the Technical Committee, Gustavson Associates, LLC
("GA") of Lakewood, Colorado, will be retained to review the matter and make the
deciding vote within fifteen (15) days, CVME and PARTNER will hold GA harmless
and recognize GA as an independent 3rd party, notwithstanding that GA prepared a
technical report, dated March 31, 2010, with respect to the Property and may
perform work for the Parties in the future.

Section 3.4
Meetings

The Technical Committee will meet at least twice in each year, unless otherwise
agreed.

ARTICLE 4
OPTION ON PROPERTY

Section 4.1
Option on Property.

(1)
Grant of Option. PARTNER shall have the following expenditure and payment
requirements with respect to the Property, subject to any termination under
Section 4.2 or Section 8.2 with respect to the Property. In each case where
PARTNER has not met the minimum expenditure commitment(s) in any year, PARTNER
shall pay to CVME within thirty (30) days of the end of the applicable year the
differential between the actual expenditures incurred and such minimum
expenditure commitment(s)(a "Differential Payment") If Partner does not make the
Differential Payment within forty five (45) days of the end of the applicable
year, all rights of PARTNER with respect to the Property shall be terminated
under Section 4,5. Any such Differential Payment shall constitute Costs
incurred, rather than payments made to CVME.  Excess expenditures in anyone year
above the minimum expenditure commitment for that year shall not be credited to
the minimum expenditures commitment in following years (but shall be credited to
the aggregate expenditures commitments). A phase of exploration shall be deemed
complete by agreement between PARTNER and CVME, but shall occur no later than
twelve (Ii) months after initiation of that phase, and any unexpended funds
shall be added to funding for that Property required from PARTNER for the next
phase of exploration.

 
 

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In accordance with the foregoing, the CVME Group hereby grants to PARTNER the
right and option to earn a 50.00 % Interest in the Property by completing all of
the following:

 
(a)
Within 30 Business Days after Closing PARTNER shall have funded a minimum of
$2,200,000 for Costs in Year 1 and shall have made a cash payment of $100,000 to
CVME. At the end of this phase (Year 1), PARTNER Shall have earned a 25.00%
Interest in the Property;

 
(b)
Within 30 Business Days after completion of Year 1, PARTNER shall have funded a
minimum of $2,500,000 additional for Costs in Year 2 and shall have made a cash
payment of $150,000 to CVME. At the end of this phase (Year 2), PARTNER shall
have earned an additional 15,00% Interest in the Property, Of an aggregate of
40.00%;

 
(c)
Within 30 Business Days after completion of Year 2, PARTNER shall have funded a
minimum of $2;800,000 additional for Costs in Year 3, shall have made a cash
payment of $250,000 to CVME in Year 3, and shall have funded an aggregate
minimum of $8,000,000 of Costs and cash payments (including all Costs funded.
and cash payments made in Year 1, Year 2 and Year 3), which includes funding for
a Preliminary Feasibility Study that contains a resource calculated to NI 43-101
standards and is approved by an independent third party "Qualified Person" (as
defined in NI 43-101). At the end of this phase (Year 3), PARTNER shall have
earned an additional 10.00% Interest in the Property, (or an aggregate of
50.00%.

(2)
CVME Interest. CVME, at its sole discretion, Within forty five (45) calendar
days of Year 3 and its receipt and acceptance of the Preliminary Feasibility
Study, has the option of either;

 
(a)
Maintaining and managing its undivided 50% interest in the Property for its
benefit by funding its share of agreed future program costs, or by disposing of
all or part of its interest otherwise as CVME so determines; or

 
(b)
Vending all or part of its undivided 50% interest in the Property for shares of
a listed or unlisted company holding PARTNER's interest in the Property said
shares being valued at the three (3) month average price for shares prior to
said vend-in, based on the greater of the ‘Fair Market Value' of the Property or
other valuation method as determined by a Qualified Person, at no more than an
eight percent (8%) discount rate, and acceptable to relevant regulatory
authorities.

 
 

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(3)
Vesting of Interest. The completion of the requirements in Section 4.1(1) shall
be verified by (i) written notice delivered to CVME by PARTNER, signed by an
officer of PARTNER, to which is attached a written statement in reasonable
detail setting out the particulars of ail Costs, fundings and payments to CVME,
prepared by the internal or independent accountants acting for Partner.  Such
written notice and delivery will be conclusive evidence of the exercise of the
Option. On the thirty first (3101) day after CVME's receipt of PARTNER's notice,
unless a notice of objection has been given by CVME, PARTNER shall be deemed to
have vested up to a 50.00% Interest, depending on elections made by PARTNER, in
the Property, subject only to the terms of this Agreement, including the
provisions of Article 5 (with the date of such vesting herein defined as the
"Vesting Date").

Section 4.2
CVME Options.

Within sixty (60) days of the Vesting Date, CVME may elect any of the following
options, by notice in writing given to PARTNER within sixty (60) days of such
Vesting Date:

To be determined by mutual agreement.

Section 4.3
Funding Report.

Subject to prior termination pursuant to Section 4.2 or Section 8.2 hereof, and
so long as PARTNER has the Option to acquire any Interest in the Property, then,
within sixty (60) days of the end of the anniversary date of Closing, PARTNER
will deliver to CVME a written notice signed by an officer of PARTNER confirming
that PARTNER has funded the minimum Costs and payments required by the end of
such year with respect to the Property, attaching thereto a written statement in
reasonable detail prepared by the internal or independent accountants acting for
PARTNER setting out the particulars of such fundi.ngs and payments. Each such
written notice will be conclusive evidence of the Costs funded by PARTNER unless
CVME gives written notice to PARTNER questioning such Costs within thirty (30)
days of its receipt of PARTNER's notice.

Section 4.4
Funding Audit.

If CVME delivers a notice of objection pursuant to this Section 4.4, then
forthwith after its delivery CVME will refer the matter to its auditors for
confirmation. If CVME's auditors do not confirm to CVME the amount of funding
and payments stated to have been incurred by PARTNER, then PARTNER will instruct
its auditors to confer and attempt to reach agreement with CVME's auditors as to
the eligible Costs. If the auditors do not reach agreement within sixty (60)
days after the date of CVME's notice of objection, then the matter will be
referred to arbitration pursuant to Article 15. The decision of the arbitrator
or arbitrators, as the case may be, will be final and binding on the Parties. If
the auditors of the Parties agree or the arbitrator(s) determine that the amount
of funding and payments incurred by PARTNER are less than the relevant amount
required under Section 4.1, then within fifteen (15) days thereafter PARTNER
will pay the amount of such deficiency into a trust account to be expended by
PARTNER on further Work. If PARTNER fails to pay such deficiency by the due
date, then the Option with respect to the Property will be cancelled.

 
 

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Section 4.5
Failure to Acquire Interest.

If PARTNER fails to fund the minimum Costs and elects not to or fails to make
the applicable cash payments for Year 1, all within the time periods set out in
Section 4.1, then PARTNER's Interest in the Property immediately reverts to
CVME, with no encumbrances, liens or attachments. If PARTNER fails to incur the
aggregate minimum Costs, elects not to or fails to make the applicable aggregate
cash payments, or fails to deliver the Preliminary Feasibility Study, all within
the time periods set out in Section 4.1, then CVME shall give PARTNER
notification of same ("Notification"), from which date PARTNER shall have thirty
(30) days to correct and cure said deficiency. Should said curative action not
take place within the allotted time period, then CVME shall have the right, but
not the obligation, to reacquire any Interest earned and held by PARTNER by
paying PARTNER within one hundred and eighty (180) days from Notification the
lesser of (i) Fair Market Value of that Interest, or (ii) one-and-one-half (1.5)
times the documentable amount of funds provided to the project under the terms
of this Agreement. Upon receipt of payment, PARTNER shall revert any and all
Interest in the Property to CVME, free and clear of all encumbrances, liens and
attachments and this Agreement and the Option shall terminate thereto in respect
with Section 8.3. Notwithstanding the foregoing, neither Party shall be deemed
to be in default with respect to any of its obligations under this Agreement if
the non-performance or default is due to the non-performance or default of the
other Party.

ARTICLE 5
FORMATION OF NEWCO CORPORATION

Section 5.1
Formation of NEWCO Corporation.

Unless CVME chooses an option permitted under section 4.2, promptly after the
Vesting Date (or earlier by mutual consent) with respect to the Property, CVME
and PARTNER (or Affiliates) will form a separate corporation for the ownership,
operation and market-listing of the Property, which will enable each party to
the greatest extent possible to maximize value, liquidity and tax benefits while
minimizing environmental and other liabilities from its participation in: the
joint development and operation of the Property without significant detriment to
the other Party and with each Party owning shares or share capital, directly or
indirectly, in the corporation in proportion to their Interests. Promptly after
the formation of the Newco corporation, CVME will cause the titles to the
Property to be transferred to such Newco corporation free and clear of all
liens, charges and encumbrances, except for obligations arising from the
Underlying Agreements and any royalty or similar agreements existing on the date
hereof, by or through the CVME Group, and all Costs shall be borne by the Newco
corporation.

Section 5.2
Shareholders' Agreement and Future Funding.

Concurrently with the formation o£ a Newco corporation pursuant to this Article
5, the Parties' will forthwith enter into and execute the Shareholders'
Agreement in substantially the form attached as Schedule "B" to this Agreement
pursuant to which the Parties who are shareholders in such Colombian corporation
will cause the corporation to issue such number of shares or to designate such
proportion of share capital as is proportionate to their respective Interests in
the Property held by such Newco corporation.

 
 

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Section: 5.3
Exclusion of Property.

Upon the effective date of the Shareholders' Agreement the Property related
thereto and the affairs of the parties with respect to the Property will be
governed solely by the Newco corporation and the Shareholders Agreement.

ARTICLE 6
RIGHT TO ENTER AND DO WORK

Section 6.1
Operator Access.

Subject to the provisions of this Agreement and, in particular, the access
rights of the Non-Operator set forth in Section 6.2 hereof, an Operator will
have the sole and exclusive right during the Option Period:

 
(a)
to enter in, under and upon the Property;

 
(b)
to have exclusive tan quiet pos-session of the Property;

 
(c)
to carry out all Work as may be required under the provisions of this Agreement,
including bringing or erecting upon the Property machinery, equipment and
ancillary facilities including, without limiting the generality of the
foregoing, housing, utility services, roads, conveyors, plants, buildings, waste
areas, tailing areas, disposal areas or systems and aircraft landing areas; and

 
(d)
to remove Ore, minerals or metals from the Property in reasonable quantities for
the purpose of obtaining assays or making other tests.

Section 6.2
Non-Operator's Access.

During the Option Period, a Non-Operator will have the rights of access
described in Section 7.3(f).

Section 6.3
Title Matters.

During the Option Period, the Operator will have the right and obligation to do
such acts and things as are reasonably necessary to protect and improve, any
right, title or interest in and to the Property, which right and obligation will
include, without limitation, the right to obtain in the name of CVMEC improved
mineral tenures for the Property or any part thereof in accordance with the
provisions of the mining laws of Colombia, in which event such improved mineral
tenures will forthwith constitute part of the Property and be subject to the
terms and conditions of this Agreement.

 
 

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ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 7.1
CVME Representations and Warranties.

CVME hereby represents and warrants, to the best of its knowledge as of the
Effective Date, that, except to the extent disclosed to PARTNER

 
(a)
each of CVME and CVMEC is a corporation duly organized and in good standing in
the jurisdiction in which it is organized and CVMEC is qualified to do business
in Colombia;

 
(b)
each of CVME and CVMEC has the right to enter into this Agreement, and all
corporate and other actions required to authorize it to enter into and perform
this Agreement have been properly taken;

 
(c)
subject to the Underlying Agreements, CVME through CVMEC is or has the right to
become the beneficial and recorded owner of the mineral licences comprising the
Property free and clear of all liens, charges and encumbrances except for this
Agreement, the Underlying Agreements and all charges, encumbrances and liens
that arise by operation of law;

 
(d)
there is no adverse claim or challenge against or to the ownership of or title
to the Property, nor to the knowledge of CVME is there any basis therefor, and
there are no outstanding agreements or options between CVME, CVMEC or CVMEC and
any third party whatsoever with respect to the Property Or any portion thereof
except for the Underlying Agreements;

 
(e)
other than pursuant to the Underlying Agreements, no person, firm or corporation
has any proprietary interest in the Property other than a Party hereto and no
person is entitled to any royalty or other payment in the nature of rent or
royalty on any minerals, Ores, metals or concentrates removed from the Property
except for the Underlying Agreements;

 
(f)
all activities carried out on the Property by any of the CVME Group prior to the
date of this Agreement were carried out in strict compliance with all applicable
environmental laws and regulations; there is to the best of CVME's knowledge no
hazardous waste is situated on or in the Property nor is there currently any
significant reclamation work required in respect of any of the Property;

 
(g)
CVME has given PARTNER full access to all of the relevant correspondence,
reports, studies, ,maps, results, analyses and documents in its possession or
control relating to the Property;

 
(h)
CVME CVMEC or CVMEC has the right to perform Work on and grant an ownership
interest in all of the Property; and

 
 

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(i)
no consent or approval to enter into this Agreement is necessary that has not
been received.

Section 7.2
PARTNER Representations and Warranties.

PARTNER hereby represents and warrants, as of the Effective Date, that:

 
(a)
it is a corporation duly incorporated and in good standing in its jurisdiction
of incorporation and will become qualified to do business in Colombia if it
becomes the Operator for the Property;

 
(b)
it has the right to enter into this Agreement and all corporate and/ or other
actions required to authorize it to enter into and perform this Agreement have
been properly taken and this Agreement constitutes a legal, valid and binding
obligation of PARTNER enforceable against it in accordance with its respective
terms subject only to any limitation under applicable Laws relating to
bankruptcy, winding-up, insolvency, arrangement and other similar Laws of
general application affecting the enforcement of creditors’ rights, and the
discretion that a court may exercise in the granting of equitable remedies such
as specific performance and injunction;

 
(c)
PARTNER has given CVME full access to all of the relevant correspondence,
reports, studies, maps, results, analyses and documents in its possession or
control relating of the Property; and

 
(d)
no consent or approval to enter into this Agreement is necessary that has not
been received.

 
(e)
the execution, delivery and performance by PARTNER of this Agreement does not
(or would not with the giving of notice, the lapse of time or the happening of
any other event or condition) result in a breach or a violation of, or conflict
with, any of the terms or provisions of its constating documents or by-laws or
any contracts or instruments to which it is a party or pursuant to which any of
its assets or property may be affected and will not result in the violation of
any Law.

Section 7.3
Operator's' Covenants.

Each of the Parties hereby covenants and agrees, so long as it is Operator under
the terms of this Agreement

 
(a)
to carry out Work in a prudent and workmanlike manner, with the degree of
effort, skill and judgment that is in accordance with good exploration,
construction, mining, processing and engineering practices generally prevailing
in the Canadian mining industry and in accordance with all applicable laws and
regulations and all agreements, permits and licenses relating to the Property;

 
 

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-16-
  

 
(b)
to pay and discharge all wages and accounts for material and services and all
other costs and expenses that may be incurred by the Operator in connection with
its Work on the Property, and to save the Non-Operator harmless from and against
all liens in respect of such Work which may be filed against the Property, and
in the event of any liens being so filed; to proceed forthwith to have the same
removed, provided that the foregoing provision will not prevent the Operator
from properly contesting in good faith any claims for liens which the Operator
considers unjustified;

 
(c)
to maintain the Property or the rights to acquire the same in good standing
under the Underlying Agreements and the mining laws of Colombia including;
without limitation, making all payments and expenditures required under each of
the Underlying Agreements, if any;

 
(d)
to indemnify and save the Non-Operator, its directors, officers, employees or
representatives harmless from all claims and demands, costs (including
reasonable attorneys' fees and expenses incurred by the Non-Operator), damages,
actions, suits or other proceedings whatsoever arising out of or attributable to
the negligent acts or omissions of the Operator, its employees of
representatives under this Agreement;

 
(e)
to maintain and keep in force and, upon request by the Non-Operator, provide
reasonable documentary verification of the following insurance in respect of its
activities on the Property, which will protect the interests of the Non-Operator
within the limits of such insurance and subject to availability in Colombia:

 
(i)
Automobile Liability Insurance - covering bodily injury (including passenger
hazard) and property damage arising from the operation of any vehicles used in
the operations and activities under this Agreement, with inclusive limits of not
less than $20,000 for anyone occurrence. With respect to insurance on non-owned
vehicles, the policy will provide coverage for liability assumed under this
Agreement.

 
(ii)
Comprehensive General Liability Insurance - covering liability for bodily injury
and property damage arising from operations and activities under this Agreement.
This insurance will include coverage {or the contingent liability with respect
to the operations and activities of contractors and subcontractors, the
contingent employer's liability of the Operator and the liability assumed by the
Operator under this Agreement. The limits of such insurance will be not less
than $200,000 inclusive for anyone occurrence.

 
(iii)
Workers' Compensation Insurance - covering all employees engaged in the Work
under this Agreement to the extent required by the laws of Colombia at any other
governmental authority having jurisdiction over the operations under this
Agreement,

 
 

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-17-
 
 
(iv)
All Risk Property Insurance - covering all real and personal property of the
Non-Operator under the cafe, custody and/or control of the Operator, where the
values thereof exceed a deductible amount of fiat mare than $5,000.

 
(f)
to permit the Non-Operator, its employees or duly authorized representatives, on
reasonable notice to the Operator, access to the Property, the information and
data with respect to same, and the Operator's books and records in relation
thereto in order to examine any Work carried out by or on behalf of the Operator
and results obtained therefrom, provided that the Non-Operator will not
materially interfere with or obstruct the operations of the Operator, its
employees or agents on the Property, and provided further that the Non-Operator
and its representatives will enter upon the Property at their own risk, and the
Non-Operator hereby agrees to indemnify and save the Operator, its directors,
officers, employees or representatives harmless from all claims and demands,
costs (including reasonable attorneys' fees and expenses incurred by the
Operator), damages, actions, suits or other proceedings whatsoever arising out
of or attributable to the negligent activities of the Non-Operator, its
employees or representatives on the Property;

 
(g)
to keep the Non-Operator reasonably informed on a timely basis of significant
results of Work performed Oft the Property and to supply the Non-Operator with
at least monthly reports while Work is in progress, a general summary of Costs
on a quarterly basis, and annual summary reports on or before January 31 of each
year containing copies of maps and material data: compiled by the Operator and a
statement of Costs incurred with respect to the Property during the previous
calendar year;

 
(h)
to the extent required, record all material Work done in any year on or with
respect to the Property as assessment work or its equivalent in Colombia;

 
(i)
to respond promptly to all reasonable requests by the Non-Operator for
information relating to Work and the activities on or relating to the Property;

 
(j)
without prejudice to Section 7'.3(b) hereof, to keep Property free and dear of
all liens, encumbrances and charges save and except for this Agreement and the
Underlying Agreements; and

 
(k)
if PARTNER or an Affiliate of PARTNER becomes Operator, to leave the Property
upon termination of the Option or this Agreement in a condition that is in
substantial compliance with the requirements of the Underlying Agreements and
all applicable laws of Colombia including, without limitation, regulations
pertaining to environmental matters.

 
 

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-18-
 
Section 7.4
Cash Calls.

CVME, as Operator is entitled to receive from PARTNER and PARTNER shall advance
to CVME for the Property> under an annual program and budget approved by the
Technical Committee under Section 3.1:

 
(i)
at the beginning of the first project year, its anticipated Costs to be incurred
during such year; and

 
(ii)
thereafter, quarterly for each project year, its anticipated Costs to be
incurred during the ensuing three month period against an approve annual program
and budget conforming with Section 3.1, except as otherwise agreed by the
parties.

ARTICLES 8
ABANDONMENT OR EXCLUSION OF PROPERTY AND TERMINATION

Section 8.1
Notice to Abandon.

If at any time during the term of this Agreement either" of the CVME Group or
PARTNER wishes to abandon all or any portion of the Property, it will give the
oilier Party at least thirty (30) days notice prior to the intended abandonment
date. If the notified Party is interested in retaining an interest in such
mineral property, it will advise the notifying Party who must promptly transfer
such mineral property to the notified party at no cost save and except the
reimbursement in respect of any outstanding licence fee deposit or bonding
amounts related thereto If the notified party does not respond within the thirty
(30) day period, or is not interested in retaining an interest in such mineral
property, then such mineral property can be abandoned, Upon such abandonment the
abandoned mineral property will cease to be a part of the Property for the
purposes of this Agreement

Section 8.2
PARTNER Termination.

 
(a)
PARTNER may, in its sole discretion at any time and by notice (accompanied by
any payment required by this Section 8.2 to CVME not less than ninety (90) days
in advance of the effective date of such termination:

 
(i)
terminate the Option, without further obligation (other than under Section 8.3
or as may have otherwise arisen prior to termination) in respect of the Property
to which the Option relates, provided that it has funded with respect to the
Property not less than the amounts required for Year 1 under Section 4.1(1)(a)
or made the Differential Payment to CVME;

 
(ii)
terminate this Agreement without further obligation hereunder (other than under
Section 8.3 or as may have otherwise arisen prior to termination), provided that
it has funded all amounts referred to in this Article 8, or in either case paid
any unfunded balances to CVME.

 
 

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-19-
 
 
(b)
Upon any termination of the Option pursuant to this Section 8.2, PARTNER will
have on further tights or interest in relation to the Property and the Property
will no longer be subject to this Agreement, except as has been earned into as
of the date of termination.

Section. 8.3
Certain Obligations.

Upon arty termination of the Option or this Agreement, in addition to the
requirements of Section 7.3(k):

 
(a)
each party must ensure that all core, maps, data, reports and records relating
to the Property and any copies thereof are forthwith copied to the other party,

 
(b)
each party shall return to the other party any software and computer programs
that ate then being used Of held by such party and thereafter shall cease the
use of the same;

 
(c)
if the termination relates to the Option, then PARTNER must pay or reimburse the
CVME Group for the Costs of keeping the Property and Underlying Agreements in
good standing as required under Section 7.3(c) for a period of not less than
ninety (90) days after the effective date of termination; and

 
(d)
during such ninety (90) day period, PARTNER may at its own expense, enter upon
and remove from the Property any and all buildings, plant, machinery, tools and
equipment or other property of PARTNER, provided that any property not so
removed within such period after termination will become the property of CVME.

Section 8.4
Survival.

The provisions of Section 8.3 and of Article 9 survive any termination of this
Agreement.

ARTICLE 9
CONFIDENTIAL INFORMATION

Section 9.1
Confidential Information

The Parties agree to treat this Agreement and all terms and conditions hereof,
and all data, reports, records, and other information (hereafter, collectively,
the "confidential information") coming into the possession: of the Parties by
virtue hereof as confidential except if disclosure is required by law, by
regulation or by any securities commission or stock exchange or in connection
with the filing of a prospectus or exchange offering prospectus by a Party or
any of its Affiliates.

 
 

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-20-
 
Section 9.2
Permitted Disclosure.

Notwithstanding Section 9.1 a Party may disclose confidential information:

 
(a)
to its employees, representatives, contractors, subcontractors, consultants,
financiers, governmental agents and regulators to the extent necessary to assist
the Party in carrying out its obligations under this Agreement or for other
legitimate business purposes,

 
(b)
to potential acquirers of an Interest or of an interest in such Party or any of
its Affiliates, provided that the disclosure of the confidential information has
agreed to be bound by confidentiality provisions at least equivalent to those of
this Agreement. The disclosing Party hereby assumes liability to the other
Parties for any breach of such confidential obligations by the person, firm,
company or other entity to which such disclosing Party disclosed such
confidential information, or

 
(c)
to the extent required by law or by a lawful requirement of any Governmental
Authority or stock exchanges having jurisdiction over a Party or its Affiliates.

Section 9.3
Disclosure with Consent.

Notwithstanding any other provision of this Article 9, confidential information
may be disclosed by any of the CVME Group with the consent of PARTNER, and by
PARTNER with the consent of CVME, in either case which consent will not be
unreasonably withheld.

Section 9.4
Notice of Excepted or Permitted Disclosure.

Each Party agrees to inform the other Party in advance in the event that it
intends to make any public announcement or disclosure excepted or permitted
hereunder in sufficient time (not less than two (2) business days in the other
Party's country before the time of intended disclosure) when practicable to
permit the other Party to jointly or simultaneously make a similar public
announcement or disclosure if they so desire and with sufficient opportunity to
request that reasonable changes be made in such proposed announcement.

ARTICLE 10
TRANSFER OF INTEREST IN MINERAL PROPERTIES

Section 10.1
Definition.

In this Article, the term "assign" means to sell, assign, transfer, sublet,
grant an option, make a declaration of trust or otherwise convey an interest in
the Property.
 
 
 

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-21-
 
Section 10.2
Right of First Offer.

If the CVME Group or- PARTNER (the "assignor") wishes to assign any part or all
of its Interest in the Property or its interest in this Agreement (either, the
"Interest", for the purposes of this Article 10 only), other than as described
in Section 10.4 or Section 10.5, then it will give written notice of such
proposed assignment to the other Patty. Such notice will specify the interest
offered, the terms of assignment and the cash consideration (the "cash price")
which the assignor will accept for such Interest. For a period of forty five
(45) days following receipt of such notice, the- other Party may elect, by
notice in writing to the assignor together with delivery of the cash
consideration to purchase the Interest or part thereof offered for the cash
consideration and otherwise substantially upon those terms specified in the
notice. If the other Party does not so elect, the assignor will be free to
complete the assignment of such Interest to one, but not more than one third
party, subject to Section 10.3 and provided that such assignment must be
completed within one hundred and eighty (180) days from the date that the other
Party declined or failed to elect in timely fashion to purchase such Interest
and must be for a price and upon terms and conditions no less favourable to the
assignor than those set out in the assignor's notice. If an assignment is not
completed within such one hundred and eighty (180) day period then the
provisions of this Article 10 will apply with respect to any subsequent
assignment or proposed assignment of such Interest.

Section 10.3
Assignment to Third Party.

If an assigning Party wishes to assign any part or all of its Interest to an
assignee who is not a Party or an Affiliate of a Party, the assigning Party must
require that such assignee enter into an agreement with the other Party
concurrent with such assignment containing:

 
(a)
a covenant by such assignee to be bound by this Agreement to the same extent as
if this Agreement had been originally executed by the assigning Party and such
assignee as joint and several obligors making joint and several covenants in
relation. to the assigned Interest;

 
(b)
a provision expressly acknowledging that any further assignment of such assigned
Interest will be subject to the restrictions contained in this Article 10; and

the assignor will thereupon be relieved from all obligations in respect of the
part of its Interest so assigned which thereafter accrue under this Agreement.
Notwithstanding the foregoing Of any other provision of this Agreement, no
assignment may be made by PARTNER (as the assigning Party) to any third party
assignee unless both PARTNER and the third party assignee provide CVME with
evidence, satisfactory to CVME in its sole discretion, as to the financial
strength and technical capability of such third party assignee to fulfill the
obligations set forth in this Agreement.

Section 10.4
Affiliate Transfers.

A Party may assign all, but not less than all, of its Interest in the Property
to an Affiliate at any time without complying with the notice and first right
provisions of Section 10.2 hereof, provided that the Affiliate delivers to the
other Party concurrently with such assignment an agreement containing the
consent and acknowledgement described in Section 10.3 hereof, and that the
assigning Patty will continue to remain principally liable to the other Party
for the performance of its obligations under this Agreement.

 
 

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-22-
 
Section 10.5
Party to Party Transfers.

A Party may assign its Interest or any part thereof to another Party at any time
without complying with the notice and first right provisions of Section 10.2
hereof.

Section 10.6
No Assignment.

Notwithstanding any other provisions of this Article 10, no assignment is
permitted that would violate any of the Underlying Agreements or jeopardize the
rights of any party thereto other than the Underlying Owner.

ARTICLE 11
AREA OF INTEREST

Section 11.1
Operator's Obligations Limited.

The Operator will not be under any obligation to stake or otherwise acquire any
mineral claims Or other Mineral Rights in relation to mineral properties in the
Area of Interest, except in accordance with this Article 11.

Section 11.2
Limitation on Acquisitions.

Each of the CVME Group and PARTNER hereby covenants and agrees with the other
Party that it shall not acquire, nor shall it permit any Affiliate to acquire,
any Mineral Rights or Other Rights (or interest therein) located wholly or in
part within the Area of Interest (in this Article, the "Acquired Interest")
unless me Acquired Interest is made subject to the terms of this Agreement and
the acquiring Party (or, if an Affiliate of a Party has completed the
acquisition, then such Patty, in either case in this Article referred to as the
"Acquiring Party") complies with the provisions of this Article 11.

Section 11.3
Acquisition of Acquired Interest.

Forthwith upon completing an acquisition of an Acquired Interest, the Acquiring
Party shall give notice thereof to the other Patty, setting out the location of
the Acquired Interest and all information known to the Acquiring Party and its
Affiliates about such Acquired Interest, the costs of acquisition and all other
pertinent details relating thereto.

Upon receipt of such notice, the notified Party shall have a period of thirty
(30) days to elect, by notice to the Acquiring Party, to include all of such
Acquired Interest in the Property and make it subject to the terms of this
Agreement. Upon such election such Acquired Interest shall constitute
"Additional Property" for inclusion in the Property thereafter for all purposes
of this Agreement.

During the Option Period, if the other Party elects to include the Acquired
Interest as part of the Property and if the Acquiring Party is PARTNER, the
acquisition costs shall be included as Costs and shall be credited to PARTNER's
commitment in respect of aggregate Costs tinder Section 4.1(1)(c). If the
Acquiring Party is CVME Group, PARTNER will reimburse it for its acquisition
costs promptly upon PARTNER's election to include the Additional Property.
Notice of Rejection.

 
 

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-23-
 
If, within the SO-day period referred to in Section 11.3, the notified Party
does not give the notice referred to therein, it shall be deemed to have
consented to the exclusion of the Acquired Interest in question from the Area of
Interest; which may thereafter be held or dealt with by the Acquiring Patty and
its Affiliates free of the terms and conditions of this Agreement.

Section 11.4
Further Assurances.

Each of the Parties will execute and deliver or cause to be executed and
delivered such further documents and instruments and give such further
assurances as CVMEC may reasonably require to evidence and give effect to any
acquisition or transfer of Mineral Rights contemplated in this Article 11.

Section 11.5
Non-Compliance Constitutes Default.

Non-compliance with the provisions of this Article 11 by an Affiliate of a Party
constitutes a default under this Agreement by the Party with whom the acquiring
party is affiliated (the" parent") unless the parent can satisfy the other party
hereto that the Affiliate was acting independently and at arm's length from the
parent, without information from or direction by the parent and that the parent
could not reasonably have enforced compliance with the terms hereof by its
Affiliate in the circumstances.

Section 11.6
Other Activities and Interests.

Except as expressly provided in this Agreement, each Party and its Affiliates
will have the right independently to engage in and receive the full benefit of
its business activities, whether or not competitive with the other Party without
consulting the other Party and the doctrines of “corporate opportunity” or
“business opportunity” will not apply to any other activity, venture or
operation of any Party or its Affiliates. A Patty will not have any obligation
to arty other Party with respect to any opportunity to acquire any Mineral
Rights or Other Rights outside of Colombia, or within Colombia after the
termination of this Agreement, unless otherwise specifically provided for
herein.

ARTICLE 12
ACQUISITIONS IN COLOMBIA

Section 12.1
Acquisitions in Colombia

During the term of this Agreement, none of PARTNER or its Affiliates may
directly or indirectly acquire, or allow any agent or other person to acquire on
its behalf or on behalf of any of its Affiliates, any Mineral Rights located in
Colombia unless:

 
 

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-24-
 
 
(a)
such acquisition is made subject to the terms of this Agreement and in
compliance with the provisions this Article 12; or

 
(b)
such Mineral Rights ate a part of (i) art acquisition of a major operating mine
or interest therein (that is; having annual gross revenues of at least
$5,000,000 or, according to a feasibility report prepared by a third party in
accordance with international industry standards, expected to produce such
revenues) or (ii) pursuant to the acquisition of all or substantially all of the
assets or share of another company having interests or property positions in
Colombia, which are not the principal properties of such company and which
company has annual gross revenues or net assets of at least $5,000,000; Northing
herein shall preclude the acquisition of a non-controlling interest in any
company a.th has properties or interests in Colombia.

 
(c)
such Mineral Rights era for oil, gas, coal or uranium.

ARTICLE 13
NOTICES

Section 13.1
Parties' Co-ordinates.

All payments, notices, reports or other communications required or permitted by
this Agreement will be in writing and will be deemed to have been properly given
and received when delivered by hand or sent by facsimile or registered mail with
all postage or delivery charges fully prepaid and addressed to the Parties,
respectively, as follows:

To PARTNER:

Universal Gold Holdings (Cayman), Limited
c/o KDS Capital,
53 Davies Street, Mayfair,
London W1K 5JH, U.K.

Attention: President
Fax: 44 20 7152 6994 ; Tel: 442 07152 6995

To CVME or CVMEC:

Core Values Mining & Exploration Company
3721 State Highway 74, Suite 14 (if by Courier)
P.O. Box 3925 (if by Postal Service)
Evergreen, CO 80437-3925 (if by Courier: 80439)

Attention: President
Fax: 1-303-670-9947 (Tel: 1-303-670-9945)

 
 

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-25-
 
With a copy to:

Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, Ontario
Canada
M5L 1B9

Attention: D'Arcy Nordick
Fax: (416) 947-0866 (Tel: 1-416-869-5508)

or to the latest known address of the Party concerned, as furnished pursuant to
Section 13.3.

Section 13.2
Deemed Receipt.

Any payment, notice, report or communication which is sent by facsimile will be
deemed to have been received by the addressee on the first Business Day
following the electronic sending thereof. In all other instances, the date of
receipt by addressee will be the date of actual delivery.

Section 13.3
Change of Address.

A Party may change its address, facsimile number or e-mail address for the
purpose hereof by giving written notice of such change to the other Party at the
latest address provided in accordance with this article.

ARTICLE 14
FORCE MAJEURE

Section 14.1
Definition.

For the purposes of this Article 14, "force majeure" means fire; power shortage;
strike, lockout or labour dispute; aboriginal disputes; inability to access to
the Property; .wars, terrorism, riots or civil disorders; Acts of God;
governmental, whether federal, provincial, state, regional, or municipal, laws,
regulations or requirements; of any other cause beyond the reasonable control of
the Party seeking to rely upon the force majeure. 'The settling of labour
disputes will for the purposes of this definition be deemed to be beyond the
control of the Party seeking to rely upon the labour dispute as a force majeure
and nothing herein contained will place any obligation upon it to settle any
labour dispute. The payment of monies from one Party to the other Party will be
deemed to be within the reasonable control of the Party who is to pay and the
lack of funds for any such payment will not be considered a force majeure.  The
Patty intending to rely on the force majeure will, upon occurrence of the force
majeure, provide prompt written notice to the other Party setting out the basis
upon which the Party intends to rely on the force majeure as well as the point
in time at which the force majeure occurred. For greater certainty, a force
majeure will only extend the period of time necessary for performance of
obligations under this Agreement that are directly affected by the force majeure
and the Party relying on the force majeure will continue to perform all of its
obligations under this Agreement that are not directly affected by the force
majeure.

 
 

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-26-
 
Section 14.2
Extension of Time.

Time will be of the essence of this Agreement, provided that the time or times
within which any right hereunder may be exercised, Work must be carried out 01'
any obligation performed by a Party wile so long as the Party uses reasonable
efforts to mitigate the effects of the force majeure, be extended by a period of
time equal to all periods of time during which such Party is prevented" hindered
or delayed in exercising such tight, doing such Work or performing such
obligation hereunder by reason of any event of force majeure.

ARTICLE 15
ARBITRATION

Section 15.1
Arbitration of All Disputes.

If any dispute arises between the Parties or any of them in respect of any
matter relating to this Agreement or with respect to the interpretation of this
Agreement the same will be submitted to arbitration in accordance with the
following provisions.

Ontario Arbitration.  The dispute will be referred to and finally resolved by
arbitration in Toronto, Ontario in accordance with the applicable provisions of
the International Commercial Arbitration Act (Ontario) (the "ICAA"), so far as
lawful thereunder and in accordance with the provisions of this Article 15. The
award of the arbitrator will be final and binding. All disputes referred to
arbitration shall be governed by the substantive law of Ontario. The arbitral
tribunal will consist of a sole arbitrator selected by agreement of the Parties,
failing such agreement within twenty (20) days after the filing of the request
for arbitration the sole arbitrator will be appointed in accordance with the
ICAA from a list of ten (10) persons submitted to the Parties. Each of the
Parties will have the right to delete four (4) persons from such list and the
arbitrator will be one person not deleted from such list. Each person on such
list will have substantial experience and recognized expertise in the fields of
the matters in dispute. The Parties hereby stipulate that the arbitrator's fee
will be a reasonable hourly rate agreed to by the Parties, multiplied by the
total time of the arbitrator spent concerning the arbitration. The arbitrator
will be entitled to receive payment for reasonable disbursements. If the Parties
are unable to agree on a fee within thirty (30) days after the filing of the
request for arbitration, then the fee will be established in accordance with the
ICAA. The Parties further stipulate that the administrative charge will be a
reasonable average hourly rate agreed by the Parties for the services of the
personnel administering the arbitration, plus a reasonable percentage (not to
exceed 10%) for overhead, plus reasonable disbursements. Failing art agreement
of the Parties: within 30 days of the request for arbitration, the charge will
be determined in accordance with the ICAA. If any Party refuses to arbitrate or
institutes any proceeding to stay or enjoin arbitration, the other' Parties,
will be awarded reimbursement of all expenses and legal fees incurred in
connection with any such proceeding to stay or enjoin arbitration.

 
 

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-27-
 
Section 15.2
Arbitration Binding.

The decision of the arbitrator will be in writing and signed by the arbitrator
and will be final and binding upon the Parties as to any question or questions
so submitted to arbitration.

Section. 15.3
Arbitrator's Costs.

Unless otherwise determined by the arbitrator, the compensation and expenses of
such arbitrator will be paid in equal proportions by the Parties involved in a
dispute.

ARTICLE 16
GENERAL

Section 16.1
Non-competition.

For the duration of this Agreement and for a period of three (3) years following
the termination of this Agreement (the "Term"), PARTNER agrees not to compete,
directly or indirectly, on its own behalf or in connection with any person, in
any capacity whatsoever, including as an employer, employee, principal, agent,
joint venturer, partner, shareholder or other equity holder, independent
contractor, licensor, licensee or consultant or by and through any corporation,
cooperative, partnership, trust, unincorporated association or otherwise ac on,
be engaged in, have any financial or other interest in or be otherwise
commercially involved in any endeavour, activity or business in all or any part
of the Area of Interest.

Section 16.2
Non-Solicitation.

During the Term, PARTNER shall not, on its own behalf or on behalf of or in
connection with any other person, directly or indirectly, in any capacity
whatsoever including as an employer, employee, principal, agent, joint venturer,
partner, shareholder or other equity holder, independent contractor, licensor,
licensee, franchiser, franchisee, distributor, consultant, supplier or trustee
or by and through any corporation, cooperative, partnership, trust,
unincorporated association or otherwise:

 
(a)
employ, offer employment to or solicit the employment or engagement of or
otherwise entice away from the employment of tile CVME Group any individual who
is employed by the CVME Group whether or not such individual would commit any
breach of his contract or terms of employment by leaving tile employ of the CVME
Group; or

 
(b)
procure or assist any person to employ, offer employment or solicit the
employment or engagement of or otherwise entice away from the employment of the
CVME Group any such individual.

 
 

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-28-
 
Section 16.3
Further Assurances.

Each Party will, from time to time, and at all times, perform sum acts, execute
and deliver such deeds and documents, and give such assurances as are reasonably
required in order to perform, carry out and give effect to the terms of this
Agreement.

Section 16.4
Waivers.

A waiver of any breach or a provision of this Agreement will not be binding upon
a Party unless the waiver is in writing and such waiver will not affect such
Party's rights in respect of any subsequent breach or enforcement.

Section 16.5
Entire Agreement.

The terms of this Agreement express and constitute the entire agreement between
the Parties with respect to the Property and no implied covenant or liability of
any kind is created or will arise by reason of anything contained in this
Agreement. This Agreement supersedes and replaces all previous agreements,
whether written or oral, between the Parties in respect of the Property.

Section 16.6
Choice of Law.

This Agreement will be governed by and construed in accordance with the laws of
the Province of Ontario (excluding any conflict of laws rule or principle which
might refer such construction to the laws of another jurisdiction) and the laws
of Canada applicable therein.

Section 16.7
Succession.

This Agreement will inure to the benefit of and be binding upon the Parties
hereto, their respective successors and their permitted assigns.

 
 

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-29-
 
IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement the 23rd
of April 2010.

CORE VALUES MINING &
EXPLORATION COMPANY
 
CORE VALUES MINING &
EXPLORATION COMPANY SUCURSAL
COLOMBIA
     
Per
 
Per:
 
/s/ R.C. Moores
   
/s/ R.C. Moores
 
c/s
   
c/s
 
   
   
   
 
Authorized Signatory
Richard C. Moores, II, President
   
Authorized Signatory
Richard C. Moores, II, President,
Per
 
Per:
Gerente General CE 357270
 
   
   
   
 
Name & Title
   
Name & Title
         
UNIVERSAL GOLD HOLDINGS
(CAYMAN), LIMITED
             
Per
       
/s/ David S. Rector
       
c/s
       
   
   
   
 
Authorized Signatory
             
Per
       
David S. Rector, Director
   
   
 
Name & Title
     

 
 

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SCHEDULE “A”

DESCRIPTION OF PROPERTY

PART 1.           TOLDAFRIA PROJECT.

The Licenses for such project are attached as Schedule"A-1”.

 
 

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SCHEDULE “A-1”

TOLDAFRIA PROJECT MINING LICENSE(S)

[GRAPHIC]

The Toldafria prospect (license GEWM-12) is located approximately 10 km
southeast of the city of Manizales in the Villamaria municipality, Department of
Caldas, Colombia.

Table 4-1 Toldafria Property Corners

Point Easting Northing Latitude Longitude
1 848500 1039680 4 º 57’ 13.05” N 75º 26’ 36.20” W
2 849340 1039680 4 º 57’ 13.10” N 75º 26’ 8.94” W
3 849340 1039600 4 º 57’ 10.50” N 75º 26’ 8.93” W’
4 849630 1039600 4 º 57’ 10.52” N 75º 25’ 59.42” W
5 849630 1038200 4 º 56’ 24.95” N 75º 25’ 59.43” W
6 848500 1038200 4 º 56’ 24.88” N 75º 26’ 36.10” W

 
 

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