Unassociated Document


    EXHIBIT
      10.2

    


    LIMITED
      RECOURSE PROMISSORY NOTE

    


    CDN
      $6,750,000.00Minneapolis,
      Minnesota, USA

    June
      6,
      2008

    


    1.  FOR
      VALUE
      RECEIVED, the undersigned, HUNTER
      BATES MINING CORPORATION,
      a
      Minnesota corporation (hereinafter “Borrower”) whose address is 900 IDS Center,
      80 South 8th
      Street,
      Minneapolis MN 55402-8773, promises to pay to the order of GEORGE
      E. OTTEN, (“Holder”),
      a
      Colorado resident whose address is 11438 Weld County Rd 19, Fort Lupton, CO
      80621 (or his nominee or assignee) the principal sum of Six Million Seven
      Hundred Fifty Thousand and 00/100 Canadian Dollars (CDN $6,750,000.00), in
      lawful money of Canada, together with interest on the unpaid principal balance,
      at the interest rate as set forth below, in installments as
      follows:

    


    (i) On
      or
      before December 1, 2008, the sum of $250,000;

    


    (ii) Commencing
      on April 1, 2010, and continuing on each January 1, April 1, July 1, and October
      1 thereafter (each, a “Payment Date”) until the Maturity Date (as defined
      below), the Borrower shall pay a quarterly installment of accrued interest
      only
      plus a Production Revenue Payment (as defined below), calculated at the interest
      rate as set forth below. 

    


    (iii) On
      the
      earlier of (i) fifth anniversary of the first Production Revenue Payment or
      (ii)
      December 31, 2015 (such earlier date is referred to herein as the “Maturity
      Date”), the entire remaining principal balance together with any unpaid accrued
      interest shall be due and payable.

    


    2.  From
      the
      date hereof until December 31, 2009, no interest shall accrue on the unpaid
      balance hereunder. From January 1, 2010 until this Note is paid in full,
      interest shall accrue on the unpaid balance hereunder at the rate of six percent
      (6.00%) per annum; provided, however, that in the event of a default hereunder,
      the unpaid balance shall accrue interest at the rate of eight (8%) (the “Default
      Rate”) during the period of such default. 

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    3.  In
      addition to the interest payments due above, Borrower agrees that, on the first
      Payment Date following the first Calendar Quarter (which is defined as any
      (i)
      January 1 to March 31, (ii) April 1 to June 30, (iii) July 1 to September 30,
      or
      (iv) October 1 to December 31, of any year) in which Borrower realizes Profit
      (as defined below) in excess of US$100,000 in such Calendar Quarter from the
      real estate commonly known as the “Hunter Gold Mine”, located in the Gilpin
      County, Colorado, USA (the “Mine”), which was acquired by Borrower in part from
      Hunter Gold Mining Inc. (“HGM Inc.”), in part from Central City Consolidated
      Corp. (“Central City”) and in part from George Otten (“Otten”) on the date of
      this Note, and continuing on each Payment Date thereafter until this Note is
      repaid in full, Borrower shall make principal repayments hereunder (each a
      “Production Revenue Payment”), which payment(s) shall equal:

    


    
      	 	
              (i)

            	
              For
                all Calendar Quarters ending on or prior to December 31, 2012,
                seventy-five per cent (75%) of the Profit realized by the Borrower
                for the
                immediately preceding Calendar Quarter,
                and

            


    

    
      	 	
              (ii)

            	
              For
                Calendar Quarters ending after December 31, 2012, the greater of
                (a)
                Seventy-five per cent (75%) of the Profit realized by the Borrower
                for the
                relevant Calendar Quarter and (b) CDN
                $300,000.00.

            


    

    


    Notwithstanding
      the foregoing, if the Borrower has not been obligated to make a Production
      Revenue Payment by December 31, 2012, then beginning on April 1, 2013 and
      continuing on each Payment Date until the Borrower has become obligated to
      make
      a Production Revenue Payment, the Borrower shall make principal repayments
      hereunder in the amount of CDN $550,000. Upon the Borrower becoming obligated
      to
      make a Production Revenue Payment at anytime after April 1, 2013, the Borrower
      shall thereafter make Production Revenue Payments in accordance with the
      foregoing subsection 3(ii).

    


    For
      the
      purposes of the foregoing, “Profit” shall be defined as any positive number
      comprising all revenue received by Borrower from sales of minerals or mineral
      by-products from the Mine, less all Borrower’s expenses, including interest
      expense but excluding depreciation, distributions or dividends paid to
      shareholders of Borrower, incurred in connection with such sales or the
      operation of the Mine for the immediately preceding Calendar
      Quarter.

    


    4.  Notwithstanding
      anything contained in this Note to the contrary, the Holder may demand payment
      in full and declare the outstanding balance due hereunder immediately due and
      payable in the event that (i) there has been a change of control of the Borrower
      by virtue of any party (other than the “Covenantor”, as defined below) acquiring
      more than 50% of the issued and outstanding shares of any class of the Borrower,
      or (ii) if the Borrower disposes of its interests in the Mine. .

    


    5.  All
      payments hereunder shall be made by way of guaranteed or immediately available
      funds delivered to the offices of Pushor Mitchell LLP, 3rd
      Floor,
      1665 Ellis Street, Kelowna, British Columbia, Canada, V1W 4T7, Attention: E.
      Blair Forrest. The parties hereto specifically agree that any payments made
      to
      or for the benefit of Holder, HGM Inc., Hunter Gold Mining Corp. (“HGM Corp.”),
      a British Columbia corporation, or Central City by Borrower or Covenantor,
      shall
      be deemed to be payments made hereunder and credited against sums next due
      and
      owing hereunder, provided that, (i) prior to making such payment(s), Borrower
      shall have received written approval from Pushor Mitchell, LLP (as escrow agent
      in respect of this Note, or their successor) that such payments shall be for
      the
      account of Holder hereunder and (ii) payments referenced in Section 19 of the
      Fifth Amendment to Asset Purchase Agreement, dated of even date herewith, by
      and
      among the foregoing parties, are deemed to be payments made hereunder. The
      Holder shall promptly provide the Borrower with a written receipt for all
      payments received from the Borrower and/or the Covenantor in respect of the
      sums
      due hereunder.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    6.  It
      is
      hereby expressly agreed that should default be made in the payment of any
      installment of principal, interest or other sums when due hereunder, and such
      default continues for forty-five (45) days after the date due, an “Event of
      Default” shall occur under the Deed of Trust and Security Agreement (“Deed of
      Trust”) of even date herewith securing this Note and covering property located
      in Gilpin County, Colorado, the whole sum of principal, accrued interest and
      other sums outstanding hereunder shall, at the option of the Holder hereof,
      be
      fully accelerated and become immediately due and payable, anything contained
      herein or in any instrument now or hereafter securing this Note to the contrary
      notwithstanding. Said acceleration option and Default Rate shall continue until
      all such defaults have been cured. In the event of such acceleration, the term
      “Maturity Date” shall be deemed to mean the date on which this Note is due and
      payable as a result of such acceleration. 

    


    6.1 Notwithstanding
      any other provision of this Note, if an “Event of Default” shall occur under the
      Deed of Trust, the Borrower and Wits Basin Precious Minerals Inc., a Minnesota
      corporation (hereinafter the “Covenantor”), whose address is 900 IDS Center, 80
      South 8th
      Street,
      Minneapolis MN 55402-8773, shall be jointly and severally personally liable
      solely for the amount (the “Limited Recourse Amount”) of CDN $2,000,000 less the
      aggregate of (i) all payments of principal and interest hereunder received
      by or
      on behalf of the Holder, (ii) any cash proceeds (the “Cash Proceeds”) received
      by or on behalf of the Holder from the cash sale, prior to such default, of
      any
      of the 3,620,000 shares of the .01 par value common stock of Wits Basin Precious
      Minerals Inc. which represents part of the purchase price for the Mine (the
      “Stock Consideration”), and (iii) any deemed proceeds (the “Deemed Proceeds”)
      resulting from the in specie disposition of the Stock Compensation by the Holder
      to any of Otten, Central City, HGM Inc., Hunter Gold Mining Corp. and/or the
      shareholders of any of them (a “Transferee”). For the purposes of the foregoing,
      the “Deemed Proceeds” shall be calculated on the basis of CDN $0.5525 per share
      disposed of by the Holder and the “Cash Proceeds” shall be deemed to be the
      greater of CDN $0.5525 per share disposed of and the actual proceeds per share
      disposed of by the Holder (expressed in Canadian dollars). The Holder’s sole
      recourse for any amounts due on default hereunder in excess of the Limited
      Recourse Amount shall be the secured property described in the Deed of Trust.
      For greater certainty, the cash proceeds received by any Transferee in respect
      of a subsequent sale of any transferred shares shall not be included in the
      foregoing Limited Recourse Amount calculations. If an “Event of Default” shall
      occur under the Deed of Trust, any remaining shares comprising the Stock
      Consideration that are sold by or on behalf of the Holder after the time of
      such
“Event of Default” shall be deemed to have been sold for Cash Proceeds
      calculated in the foregoing manner unless the Holder has complied with the
      right
      of first refusal provisions set forth in paragraph 10 below, in which case
      the
      provisions of paragraph 10 shall apply. 

    


    6.2 Notwithstanding
      the provisions of Section 6.1 above, the parties hereto agree that the recourse
      provisions of Section 6.1 shall not apply until and unless the obligations
      and
      deliveries required by that certain Undertaking Agreement of even date herewith,
      by and among HGM Corp., the Holder, Dell Balfour, Douglas McNaughton, the
      Covenantor and the Borrower have been fully satisfied, as evidenced by the
      certificate of an officer of HGM Corp. to that effect and delivered to the
      Borrower and the Covenantor. 


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    


    7.       Notwithstanding
      any other provision of this Note to the contrary, it is agreed that, for a
      period of four (4) years commencing on the date of this Note, Borrower reserves
      the right to conduct mineral title research on the Hunter Gold Mine after the
      Borrower has entered the advanced exploration project phase (drill intercepts
      showing an economically viable mine) in the Hunter Gold Mine. If the results
      of
      such mineral title research do not show that good and marketable title to the
      Hunter Gold Mine was properly transferred to the Borrower, Borrower may offset
      against the principal amount and any accrued interest thereon of this Note
      any
      and all costs deemed appropriate by Borrower, acting reasonably, to settle
      adverse claims in, or to acquire arm’s length third-party interests in relation
      to, the Hunter Gold Mine. In the event that the Borrower’s mineral title
      research discloses such an arm’s length third-party adverse claim and the
      Borrower proposes to settle such claim, the Borrower shall first advise and
      confer with the Holder and the Trustee under the Trust Deed and shall permit
      the
      Holder and the Trustee to participate in the settlement negotiations regarding
      such adverse claims.

    


    8.  Borrower
      may prepay a portion or the entire principal amount due hereunder at any time
      without penalty, and such prepayment shall be applied as hereinabove
      provided.

    


    9.  Borrower
      consents to the personal jurisdiction of the state and federal courts located
      in
      the State of Colorado in connection with any controversy related in any way
      to
      this Note or any security or guaranty for this Note, waives any argument that
      venue in such forums is not convenient, and agrees that any litigation initiated
      by any of them against the Holder or any other holder of this Note relating
      in
      any way to this Note or any security or guaranty for this Note shall be venued
      in either the District Court of Gilpin County, Colorado, or the United States
      District Court for the District of Colorado.

    


    10.  In
      the
      event of a default under this Note, the Holder agrees that no further shares
      comprising the Stock Consideration shall be sold by or on behalf of the Holder
      unless the Holder has first offered such shares to the Covenantor (or its
      nominee), which offer (the “Offer”) shall be delivered in writing to the
      Covenantor in the manner set forth in paragraph 12 (below) and shall state
      the
      number of shares offered, the price per share offered and the deadline for
      acceptance of the Offer, which deadline shall not be less than 48 hours from
      the
      time of delivery of the Offer. The Offer may be accepted by the Covenantor,
      in
      whole or in part, at any time prior to the deadline for acceptance of the Offer
      by delivering a written notice of acceptance to the Holder in the manner set
      forth in paragraph 12 (below). If the Offer is accepted by the Covenantor,
      in
      whole or in part, the Covenantor shall deliver the purchase price to the Holder
      (or its nominee) by certified check, bank draft or wire transfer with 3 business
      days thereafter and the Limited Recourse Amount shall be reduced by the actual
      amount of such purchase price, whether such purchase price is greater or less
      than CDN $0.5525 per share. To the extent that the Offer is not accepted by
      the
      Covenantor, the Holder shall be at liberty to sell all of any of the shares
      offered but not purchased by the Covenantor to any arm’s length purchaser(s) and
      the Limited Recourse Amount shall be reduced by the actual amount of the cash
      proceeds of such sale(s) received by the Holder, whether such cash proceeds
      are
      greater or less than CDN $0.5525 per share.

    


    11.       For
      the
      purposes of paragraphs 6 and 10 of this Note, the Holder agrees to provide
      the
      Covenantor with written confirmation of any sales or distributions of the shares
      comprising the Stock Consideration, other than sales to the Covenantor under
      paragraph 10 (above).


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    12.  All
      payments pursuant to this Note which are made or remitted in currency of the
      United States shall be deemed to have been made in Canadian currency at a rate
      equal to 1.5% below the reported Daily 12 Noon Foreign Exchange Rate of the
      Federal Reserve Bank of New York on the date such payment is made or remitted.
      

    


    13.  Any
      notices to be delivered under paragraph 10 (above) shall be delivered by
      facsimile transmission as follows:

    


    If
      to
      the Borrower and/or the Covenantor:

     

    Care
      of
      Wits Basin Precious Minerals Inc.

    Attention:
      Chief Executive Officer

    Facsimile:
      (612) 395-5276

    


    With
      a copy to:

    Maslon
      Edelman Borman & Brand LLP

    Attention:
      William Mower, Esq.

    Facsimile:
      (612) 642-8358

    


    If
      to
      the Holder:

    George
      E.
      Otten

    Facsimile:
      (970) 785-6248 

    


    With
      a copy to:

    Hunter
      Gold Mining Corp.

    Attention:
      Dell Balfour

    Facsimile:
      (250) 765-4420

    


    And
      a
      copy to:

    Pushor
      Mitchell LLP

    Attention:
      E. Blair Forrest

    Facsimile:
      (250) 762-9115

     

     

    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    BORROWER:

    
      	 	 	 	 	 	 	
              Hunter
                Bates Mining Corporation

            


    

    


    /s/
      Mark D. Dacko

    Name:
      Mark
      D. Dacko

    Title:
      CFO

    


    


    COVENANTOR:

    
      	 	 	 	 	 	 	
              Wits
                Basin Precious Minerals
                Inc.

            


    

    


    /s/
      Mark D. Dacko

    Name:
      Mark
      D. Dacko

    Title:
      CFO

    


    


    HOLDER:

    /s/
      George E. Otten 

    George
      E.
      Otten