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                                                                    EXHIBIT 10.6

                             SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (the "Agreement") is made as of December 20, 2003
by Nord Resources Corporation, a corporation incorporated and existing under the
laws of Delaware (the "Subordinated Party"), in favour of Allied Gold Limited, a
corporation incorporated and existing under the laws of the state of Western
Australia (the "Lender"), and acknowledged by Nord Pacific Limited, a
corporation incorporated and existing under the laws of the Province of New
Brunswick (the "Borrower").

WHEREAS:

1. The Lender has entered into a Credit Facility Agreement with the Borrower
dated as of the date hereof (such agreement as amended, modified, restated or
supplemented from time to time is herein referred to as the "Credit Agreement")
under which the Borrower and it Subsidiaries (collectively, the "Borrower
Group") is restricted in incurring Debt, other than Permitted Debt (including a
certain amount of subordinated Debt);

2. The Subordinated Party has agreed to subordinate the Subordinated Debt (as
hereinafter defined) and any security held therefor, and all other obligations
of the Borrower Group to the Subordinated Party now or hereafter existing, to
and in favour of the prior satisfaction in full of the Senior Obligations of the
Borrower Group to the Lender under the Credit Agreement;

3. The Subordinated Party, under the laws of the jurisdiction where it is
organized, is duly authorized and has the capacity to execute, deliver and
perform this agreement, and all things necessary have been done and performed to
make this Agreement a legal, valid and binding obligation of the Subordinated
Party;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the sum of Cdn.$10.00 now paid by the Lender to the Subordinated Party, the
receipt and sufficiency of which is hereby acknowledged, the Subordinated Party
covenants and agrees with the Lender as follows:

1.   DEFINED TERMS

All other terms and expressions used herein which are defined in the Credit
Agreement shall, when used herein, and unless otherwise defined herein, have the
meanings as therein ascribed to them..

In this agreement, "Proceeding" shall mean (a) dissolution, distribution of
assets to creditors, winding-up, liquidation, adjustment or readjustment of
debt, reorganization, compromise, arrangement with creditors, relief or
composition of any member of the Borrower Group or its debts, sales in bulk or
similar proceedings of, or in respect of, any member of the Borrower Group or
its property, (b) any bankruptcy, insolvency, reorganization, receivership
(private or court-appointed), assignment for the benefit of creditors or any
other marshalling of the assets and liabilities of any member of the Borrower
Group, or similar proceedings of, or in respect of: any member of the Borrower
Group, whether any of the foregoing is voluntary or involuntary. partial or
complete.

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2.   "SENIOR OBLIGATIONS"/'" SUBORDINATED DEBT"

All liabilities and obligations of Borrower Group to the Lender under the Credit
Agreement or any Note thereunder or under any Document, howsoever created,
arising or evidenced, and whether direct or indirect, absolute or contingent,
legal or equitable, now or hereafter existing, due or to become due, whether for
principal, interest (including interest as provided in any Note, accruing after
the filing of a petition initiating any Proceeding referred to in Section 4,
whether or not such interest accrues after the filing of such petition for
purposes of bankruptcy legislation or is an allowed claim in such Proceeding),
fees, expenses or otherwise, are herein collectively caned "Senior Obligations".

All liabilities and obligations of each member of the Borrower Group, howsoever
created, arising or evidenced, and whether direct or indirect, absolute or
contingent, legal or equitable, now or hereafter existing, due or to become due
(including, without limitation, the obligations of each member of the Borrower
Group to the. Subordinated Party for any dividends or other amounts payable in
connection with any shares, options or other securities held by the Subordinated
Party in the Borrower or any member of the Borrower Group), whether for
principal interest (including interest as provided in any Note, accruing after
the filing of a petition initiating any Proceeding referred to in Section 4,
whether or not such interest accrues after the filing of such petition for
purposes of bankruptcy legislation or is an allowed claim in such Proceeding),
fees, expenses or otherwise, including without ]imitation, amounts payable (i)
in respect of any indemnity, (ii) in respect of any breach of a representation
or a warranty or (Hi) to acquire any shares on account of the redemption
provisions of the shares or in any agreement with the Subordinated Party, are
hereinafter called "Subordinated Debt".

3.   POSTPONEMENT AND SUBORDINATION

(a) After the occurrence and during the continuance of an Accruing Default or an
Event of Default under the Credit Agreement, so long as any Senior Obligations
are outstanding, and until the Senior Obligations shall have been permanently
paid in full in cash and otherwise satisfied, the payment of all Subordinated
Debt shall be postponed and subordinated. to the permanent payment in full and
satisfaction of all Senior Obligations. The Subordinated Party shall not take or
receive from, or on behalf of, any member of the Borrower Group, in any manner J
payment of (including, without limitation, payment by set-oft), or consideration
(including from or by way of collateral) for the reduction of, the whole or any
part of the principal of, interest on or any other amount in connection with,
any Subordinated Debt or any security therefor without the prior written consent
of the Lender.

(b) If a payment or other consideration is received or made on Subordinated Debt
while an Accruing Default or an Event of Default is continuing, the Subordinated
Party shall hold such payment in trust for the Lender, shall segregate such
payment from other funds and property held by the Subordinated Party and shall
forthwith pay to the Lender (to be held and applied pursuant to the terms of
this Agreement and the Credit Agreement) any payments or other consideration
received by it in respect of such Subordinated Debt in the same form as so
received (with any necessary endorsements). Any exercise of a right of set-off
which has the effect of reducing the Subordinated Debt shall be wholly
ineffective as between the Subordinated Party and the

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Borrower and the Subordinated Party hereby agrees not to exercise any such
right, and the Borrower shall cause each of its Subsidiaries not to exercise any
such right

(c) All security of every nature and kind now or hereafter held by the
Subordinated Party in connection with the Subordinated Debt is wholly postponed
and subordinated to the Senior Obligations owed by the Borrower Group to the
Lender in connection with the Credit Agreement, notwithstanding the dates of
execution or registration of any such security, the date of crystallization of
any floating charge. or any other factor of legal significance.

4.   DISTRIBUTIONS

Upon any Proceeding, all Senior Obligations shall first be permanently paid in
full in cash and otherwise satisfied before the Subordinated Party shall be
entitled to receive or retain any payment or distribution from any member of the
Borrower Group in respect of such Proceeding or any or all of the Subordinated
Debt.

5.   FILING OF CLAIMS

Upon any Proceeding, the Subordinated Party irrevocably authorizes the Lender to
file on behalf of the Subordinated Party any and all claims, proofs of debt.
petitions, consents, and other documents and take such other actions (including,
without limitation, voting the Subordinated Debt or enforcing any security
interest or other lien securing payment of the Subordinated Debt) as it may deem
advisable or necessary for the enforcement of any of its rights or interests
hereunder; and any payment or distribution of assets or securities of any member
of the Borrower Group of any kind or character, whether in cash, property or
securities (including any payment that may be payable by reason of any other
indebtedness of any member of the Borrower Group being subordinated to payment
of the Subordinated Debt), to which the Subordinated Party would be entitled,
shall be paid by the Subordinated Party or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
distribution, directly to the Lender to the extent necessary to pay permanently
all Senior Obligations in full before any payment or distribution is made to the
Subordinated Party.

6.   PROCEEDS HELD IN TRUST

If following the commencement any Proceeding, any payment or distribution of
assets or securities of any member of the Borrower Group of any kind or
character, whether in cash, property or securities, shall be received by the
Subordinated Party before all Senior Obligations are permanently paid in full.
such payment or distribution will be held in trust for the benefit of; shat! be
segregated from other funds and property held by the Subordinated Party, and
shall promptly be paid over in the form received (duly endorsed. if necessary,
to the Lender) to the Lender for application to the payment of Senior
Obligations until all Senior Obligations shall have been permanently paid in
full.

7.   RECORDS

The Subordinated Party will mark its books and records so as to clearly indicate
that the Subordinated Debt is subordinated in accordance with the terms of this
Agreement, and will cause to be clearly inserted in any promissory note or other
instrument which at any time

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evidences any Subordinated Debt a statement to the effect that the payment
thereof is subordinated in accordance with the terms of this Agreement

8.   APPLICATION OF PROCEEDS

All payments and distributions received by the Subordinated Party in respect of
Subordinated Debt, to the extent required to be paid to the Lender hereunder, to
the extent received in or converted into cash, may on receipt by the Lender be
applied by the Lender first to the payment of any and all expenses (including
solicitors' fees on a solicitor and his own client basis) paid or incurred by
the Lender in enforcing the provisions hereof or in endeavouring to collect or
realize upon any Subordinated Debt or any security therefor, and any balance
thereof shall, solely as between the Subordinated Party and the Lender, be
applied by the Lender to the payment of Senior Obligations until permanently
paid in full in such order of application as the Lender may from time to time
select. Notwithstanding any such payments or distributions received by the
Lender in respect of Subordinated Debt and so applied by the Lender toward the
payment of Senior Obligations, the Subordinated Party shall not be subrogated to
the then existing rights of the Lender, if any, in respect of the Senior
Obligations until such time as the Lender shall have received final payment of
the full amount of the Senior Obligations.

9.   WAIVER OF NOTICE AND DILIGENCE

The Subordinated Party hereby waives:

(a) notice of acceptance by the Lender of this instrument;

(b) notice of the existence or creation or non-payment of all or any Senior
Obligations; and

(c) all diligence in collection or protection of or realization upon the Senior
Obligations or any thereof or any security therefore.

10.  COVENANTS OF THE SUBORDINATED PARTY

The Subordinated Party will not, until the Senior Obligations is permanently
paid in fun, without the prior written consent of the Lender:

(a) subordinate any Subordinated Debt or any rights in respect thereof to any
liabilities, obligations or indebtedness other than the Senior Obligations, or
transfer or assign any Subordinated Debt;

(b) take from any member of the Borrower Group any additional collateral
security for any Subordinated Debt;

(c) commence, or join with any other creditor other than the Lender in
commencing, or directly or indirectly cause any member of the Borrower Group to
commence, or assist any member of the Borrower Group in commencing, any
Proceeding with respect to any member of the Borrower Group;

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(d) commence any action in any court for the enforcement of the Subordinated
Debt; or

(e) take, sue for) ask or demand from any member of the Borrower Group payment
of any or all of the Subordinated Debt.

11.  CONTINUING AGREEMENT

The subordination and postponement provisions hereof shall in all respects be a
continuing agreement and shall remain in full force and effect until the final
and indefeasible payment in full in cash of the Senior Obligations.

12.  RIGHTS OF THE LENDER

The Lender may, from time to time, in its sole discretion and without notice to
the Subordinated Party, and without affecting the subordination and postponement
hereunder, take all or any of the following actions:

(a) retain or obtain any security interest in any property to secure any Senior
Obligations;

(b) retain or obtain the primary or secondary obligation of any other obligor or
obligors with respect to any Senior Obligations;

(c) extend or renew any Senior Obligations for one or more periods (whether or
not longer than the original period), alter or exchange any Senior Obligations,
or release or compromise any obligation of any nature of any obligor with
respect to any Senior Obligations; and

(d) fail to perfect, or release, any of its security interests in, or surrender,
release or permit any substitution or exchange for, all or any part of any
property securing any Senior Obligations, or extend or renew for one or more
periods (whether or not longer than the original period) or release, compromise,
alter or exchange any obligations of any nature of any obligor with respect to
any such property.

13.  ASSIGNMENT BY THE LENDER

The Lender may, from time to time in its sole discretion and without notice to
the Subordinated Party, assign or transfer any or all of the Senior Obligations
or any interest therein; and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Senior Obligations shall be
and remain Senior Obligations for the purposes hereof, and every immediate and
successive assignee or transferee of any Senior Obligations or of any interest
therein shall, to the extent of the interest of such assignee or transferee in
the Senior Obligations, be entitled to the full benefits hereof

14.  NO IMPAIRMENT

The Lender shall not be prejudiced in its rights hereunder by any act or failure
to act of the Subordinated Party or any non-compliance by the Subordinated Party
with any agreement or obligation, regardless of any knowledge thereof which the
Lender may have or with which the Lender may be charged; and the Subordinated
Party shall promptly notify the Lender of the

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occurrence of any default or accruing default under the Subordinated Debt, and
no action of the Lender permitted hereunder shall in any way affect or impair
the rights of the Lender or the obligations of the Subordinated Party hereunder.

15.  WAIVER

No delay on the part of the Lender in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Lender of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any right or remedy, nor shall any modification, waiver or discharge
of any of the provisions hereof be binding upon the Lender except as expressly
set forth in writing duty signed and delivered by or on behalf of the Lender.

16.  EFFECTIVENESS

The subordination and postponement herein contained shall be effective
notwithstanding any right or power of the Subordinated Party or anyone else to
assert any claim or defence as to the invalidity or unenforceability of any
obligation of the Subordinated Party hereunder, in whole or in part, or any
determination by any court or other tribunal as to such invalidity or
unenforceability, and no such claim, defence or determination shall affect or
impair the agreements and obligations of the Subordinated Party hereunder. The
provisions of this Section 16 shall continue to be effective or be reinstated,
as the case may be, if at any time any of the Senior Obligations are rescinded
or must otherwise be returned by the Lender upon the insolvency, bankruptcy, or
reorganization of any member of the Borrower Group or otherwise, all as though
such payment had not been made.

17.  FURTHER ASSURANCES

The Subordinated Party covenants and agrees, at the request of the Lender, from
time to time to do, make and execute all such further assignments, deeds,
documents, acts, matters and things as may be required by the Lender to give
effect to these presents or in the exercise of the powers of the Lender hereby
conferred or to enable the Lender to exercise and enforce its rights and
remedies hereunder, and the Subordinated Party hereby constitutes and appoints
the Lender the true and lawful attorney of the Subordinated Party, irrevocable,
with full power of substitution, to do, make and execute all such assignments,
deeds, documents, acts, matters and things as the Subordinated Party has agreed
by these presents to do, make and execute or as may be required to give effect
to these presents or in the exercise of the powers on the Lender hereby
conferred, with the right to use the name of the Subordinated Party whenever and
wherever it may be deemed necessary or expedient.

18.  ENUREMENT

This Agreement shall be binding on the Subordinated Party and the successors and
permitted assigns of the Subordinated Party and shall enure to the benefit of,
and be enforceable by, the Lender and its successors and permitted assigns.

19.  GOVERNING LAW

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This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the substantive laws of the state of
Western Australia and the laws of Australia applicable therein. The Subordinated
Party hereby submits to the non-exclusive jurisdiction of the courts of the
state of Western Australia in connection herewith.

20.  DESCRIPTIVE HEADINGS

The descriptive headings contained in this agreement are inserted for
convenience only and shall not be considered in the interpretation of this
Agreement.

21.  INVALIDITY OF PROVISIONS

In case any of the provisions of this Agreement are or are determined to be
invalid, illegal or enforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

22.  TERMINATION

The Subordination Agreement may be terminated and released by the Lender at any
time by notice in writing to that effect.

     IN WITNESS WHEREOF the Subordinated Party has executed and delivered these
presents under the hands of its proper officers duly authorized in that behalf

NORD RESOURCES CORPORATION


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

The provisions of this Agreement are hereby agreed to and acknowledged this 20th
day of December. Borrower covenants to refrain from taking and not to take, and
to cause its Subsidiaries to refrain from taking and not to take, any actions
which would cause a contravention of this Agreement, including, without
limitation, effecting any set-off of obligations of the Subordinated Party to
any member of the Borrower Group against obligations of any member of the
Borrower Group to the Subordinated Party, and each member of the Borrower Group
specifically acknowledges the provisions of Subsections 3(a) and (b) hereof in
that regard.

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NORD PACIFIC LIMITED

By: /s/ Nord Pacific Limited
    ---------------------------------
    President

                                        C/S


By:
    ---------------------------------