Exhibit 4.3


 


COMMON SHARE PURCHASE
WARRANT INDENTURE


 


 


TERRANE METALS CORP.


 


- AND -


 


COMPUTERSHARE TRUST COMPANY
OF CANADA


 


 


Providing for the issue


of up to 36,591,275 Common
Share Purchase Warrants


 


 


April 16, 2010


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 INTERPRETATION

  	
  2

  
	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Meaning of “outstanding” for
  Certain Purposes

  	
  5

  
	
  1.3

  	
  Day not a Business Day

  	
  6

  
	
  1.4

  	
  Words Importing the Singular

  	
  6

  
	
  1.5

  	
  Time of the Essence

  	
  6

  
	
  1.6

  	
  Interpretation not Affected
  by Headings, etc.

  	
  6

  
	
  1.7

  	
  Applicable Law

  	
  6

  
	
  1.8

  	
  Warrant Indenture
  Legislation

  	
  7

  
	
  1.9

  	
  Severability

  	
  7

  
	
  1.10

  	
  Entire Agreement

  	
  7

  
	
  1.11

  	
  Currency

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 ISSUE OF WARRANTS

  	
  7

  
	
   

  	
   

  
	
  2.1

  	
  Creation and Issue of
  Warrants

  	
  7

  
	
  2.2

  	
  Form and Terms of
  Warrant Certificates

  	
  7

  
	
  2.3

  	
  Issue of Warrant
  Certificates

  	
  8

  
	
  2.4

  	
  Warrantholder not a
  Shareholder

  	
  8

  
	
  2.5

  	
  Execution of Warrant
  Certificates

  	
  8

  
	
  2.6

  	
  Certification by Warrant
  Agent

  	
  8

  
	
  2.7

  	
  Exchange of Warrant
  Certificates

  	
  9

  
	
  2.8

  	
  Issue in Substitution for
  Lost Certificates

  	
  9

  
	
  2.9

  	
  Registration and Transfer of
  Warrants

  	
  10

  
	
  2.10

  	
  Enforcement of Rights of
  Warrantholders

  	
  11

  
	
  2.11

  	
  Warrants to Rank Pari Passu

  	
  12

  
	
  2.12

  	
  Notice to Warrantholders

  	
  12

  
	
  2.13

  	
  Notice to the Company or the
  Warrant Agent

  	
  12

  
	
  2.14

  	
  Transfer Restrictions and
  Legends

  	
  14

  
	
  2.15

  	
  Reliance by the Warrant
  Agent

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 EXERCISE OF WARRANTS

  	
  17

  
	
   

  	
   

  
	
  3.1

  	
  Method of Exercise of
  Warrants

  	
  17

  
	
  3.2

  	
  Effect of the Exercise of
  Warrants

  	
  19

  
	
  3.3

  	
  Partial Exercise of Warrants

  	
  19

  
	
  3.4

  	
  Cancellation of Warrants

  	
  20

  
	
  3.5

  	
  Expiration of Warrants

  	
  20

  
	
  3.6

  	
  Adjustment of the Exercise Price
  and Subscription Rights

  	
  20

  
	
  3.7

  	
  Adjustment Rules for
  Exercise Price

  	
  25

  
	
  3.8

  	
  Postponement of Issue of
  Shares, etc.

  	
  27

  
	
  3.9

  	
  Notice of Certain Events

  	
  27

  
	
  3.10

  	
  No Fractional Shares

  	
  28

  
	
  3.11

  	
  Reclassification,
  Reorganizations, etc.

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 COVENANTS OF THE COMPANY

  	
  29

  
	
   

  	
   

  
	
  4.1

  	
  General Covenants

  	
  29

  
	
  4.2

  	
  Securities Qualification
  Requirements

  	
  31

  
	
  4.3

  	
  Warrant Agent’s Remuneration
  and Expenses

  	
  31

  
	
  4.4

  	
  Notice to Warrantholders of
  Certain Events

  	
  31

  
	
  4.5

  	
  Closure of Share Transfer
  Books

  	
  32

  
	
  4.6

  	
  Performance of Covenants by
  Warrant Agent

  	
  33

  
	
  4.7

  	
  Representation and Warranty

  	
  33

  
	
  4.8

  	
  Currently Not Reporting in
  United States

  	
  33

  



 

















 


	
  ARTICLE 5 MEETINGS OF WARRANTHOLDERS

  	
  33

  
	
   

  	
   

  
	
  5.1

  	
  Right to Convene Meeting

  	
  33

  
	
  5.2

  	
  Notice

  	
  34

  
	
  5.3

  	
  Chairman

  	
  34

  
	
  5.4

  	
  Quorum

  	
  34

  
	
  5.5

  	
  Power to Adjourn

  	
  35

  
	
  5.6

  	
  Show of Hands

  	
  35

  
	
  5.7

  	
  Poll

  	
  35

  
	
  5.8

  	
  Voting

  	
  35

  
	
  5.9

  	
  Persons Entitled to be
  Present

  	
  36

  
	
  5.10

  	
  Regulations

  	
  36

  
	
  5.11

  	
  Certain Powers Exercisable
  by Extraordinary Resolution

  	
  36

  
	
  5.12

  	
  Definition of “Extraordinary
  Resolution”

  	
  37

  
	
  5.13

  	
  Resolutions Binding on all
  Warrantholders

  	
  38

  
	
  5.14

  	
  Holdings by Company
  Disregarded

  	
  38

  
	
  5.15

  	
  Minutes

  	
  38

  
	
  5.16

  	
  Powers Cumulative

  	
  38

  
	
  5.17

  	
  Instruments in Writing

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 SUPPLEMENTAL INDENTURES AND SUCCESSOR
  COMPANIES

  	
  39

  
	
   

  	
   

  
	
  6.1

  	
  Provision for Supplemental
  Indenture for Certain Purposes

  	
  39

  
	
  6.2

  	
  Successor Companies

  	
  40

  
	
  6.3

  	
  Successor Body Corporate
  Substituted

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 CONCERNING THE WARRANT AGENT

  	
  40

  
	
   

  	
   

  
	
  7.1

  	
  Rights and Duties of Warrant
  Agent

  	
  40

  
	
  7.2

  	
  Evidence, Experts and
  Advisors

  	
  41

  
	
  7.3

  	
  Documents, Moneys, etc.
  Held by Warrant Agent

  	
  42

  
	
  7.4

  	
  Action by Warrant Agent to
  Protect Interests

  	
  43

  
	
  7.5

  	
  Warrant Agent not Required
  to give Security

  	
  43

  
	
  7.6

  	
  Protection of Warrant Agent

  	
  43

  
	
  7.7

  	
  Replacement of Warrant Agent

  	
  44

  
	
  7.8

  	
  Conflict of Interest

  	
  45

  
	
  7.9

  	
  Acceptance of Appointment

  	
  46

  
	
  7.10

  	
  Accounts

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 GENERAL

  	
  46

  
	
   

  	
   

  
	
  8.1

  	
  Satisfaction and Discharge
  of Indenture

  	
  46

  
	
  8.2

  	
  Sole Benefit of Parties and
  Warrantholders

  	
  47

  
	
  8.3

  	
  Discretion of Directors

  	
  47

  
	
  8.4

  	
  Privacy

  	
  47

  
	
  8.5

  	
  Force Majeure

  	
  47

  
	
  8.6

  	
  Counterparts and Formal Date

  	
  48

  



 


SCHEDULE “A”


FORM OF NON-U.S. WARRANT CERTIFICATE


SCHEDULE “B”


FORM OF U.S. WARRANT CERTIFICATE


SCHEDULE “C”


FORM OF U.S. PURCHASER LETTER


 


ii

















 


THIS COMMON SHARE PURCHASE WARRANT INDENTURE is made as of the 16th day of April, 2010.


 


BETWEEN:


 


TERRANE METALS CORP., a company existing under the laws of British
Columbia


 


(hereinafter the “Company”)


 


AND:


 


COMPUTERSHARE TRUST COMPANY
OF CANADA, a trust company registered
under the laws of Canada and duly authorized to carry on the trust business in
each Province of Canada


 


(hereinafter the “Warrant
Agent”).


 


RECITALS


 


WHEREAS:


 


A.                            The
Company may issue up to 36,591,275 Warrants under this Indenture pursuant to
the Offering of Units;


 


B.                            Each
whole Warrant will be exercisable to acquire one Share at the Exercise Price at
any time before the Warrant Expiry Time on the Warrant Expiry Date on the terms
and conditions set forth herein;


 


C.                            The
Company is duly authorized to create and issue the Warrants to be issued as
herein provided;


 


D.                            The
Warrant Agent has agreed to enter into this Indenture and to hold all rights,
interests and benefits contained herein for and on behalf of the persons who
become Warrantholders; and


 


E.                             The
foregoing recitals A, B and C are made as representations and statements of
fact by the Company and not by the Warrant Agent.  All capitalized terms used in the foregoing
recitals have the meanings ascribed to them in Section 1.1 below.


 


NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency whereof is hereby acknowledged, the
Company hereby appoints the Warrant Agent as warrant agent, for the
Warrantholders, to hold all rights, interests and benefits contained herein for
and on behalf of those persons who become holders of Warrants from time to time
issued pursuant to this Indenture and the parties hereto agree as follows:


 














 


ARTICLE 1

INTERPRETATION


 


1.1                                                                             Definitions


 


In this Indenture and in the Warrant
Certificates:


 


“Accredited Investor”
means an “accredited investor” as that term is defined in Rule 501(a) of
Regulation D;


 


“Applicable Legislation”
means the provisions of the Business Corporations Act (British
Columbia), as from time to time amended, and any statute of Canada or a
province thereof, and the regulations and rules under any such named or
other statute relating to warrant indentures or the rights, duties or obligations
of corporations and warrant agents under warrant indentures as are from time to
time in force and applicable to this Indenture;


 


“auditors” of
the Company means a chartered accountant or firm of chartered accountants as
may be duly appointed as auditor of the Company from time to time;


 


“business day”
means a day that is not a Saturday, Sunday or civic or statutory holiday in the
City of Vancouver, British Columbia;


 


“Closing Date”
means April 16, 2010, being  the date of
closing of the Offering;


 


“Convertible Securities”
means securities of the Company or any other issuer that are convertible into
or exchangeable or exercisable for or otherwise carry the right to acquire
Shares, and “Convertible Security” means any
one of them;


 


“Corporate Reorganization”
has the meaning ascribed thereto in Section 3.6(7);


 


“Current Market Price”,
at any date, means the volume weighted average trading price per Share at which
the Shares have traded on the Exchange or such other stock exchange which
constitutes the principal trading market (by volume) for the Shares during the
twenty consecutive trading days before such date, and the volume weighted
average trading price shall be determined by dividing the aggregate sale price
of all Shares sold on the Exchange or market, as the case may be, during the
twenty consecutive trading days by the total number of Shares so sold.  Whenever the Current Market Price is required
to be determined hereunder, the Company shall deliver to the Warrant Agent a
certificate of an officer specifying such Current Market Price and setting out
the details of its calculation.  In the
event of any subsequent dispute as to the determination of the Current Market
Price, the Company’s auditors shall make such determination which, absent
manifest error, shall be binding for all purposes hereunder;


 


“Date of Issue”
means the date hereof, notwithstanding that Warrants may be issued and
countersigned later than the date hereof;


 


2

















 


“Director” means
a director of the Company from time to time and reference without more to
action by the Directors shall mean action by the Directors as a board or by any
authorized committee thereof;


 


“dividends”
means dividends (payable in cash or in securities, property or assets of
equivalent value) declared payable on the Shares;


 


“Exchange” means
the TSX Venture Exchange, or if the Shares are not listed on that exchange,
such other stock exchange or quotation system on which the Shares may then be
listed as may be selected for such purpose by the directors of the Company or,
if the Shares are not then listed on any stock exchange then on the
over-the-counter market;


 


“Exchange Act”
means the United States Securities Exchange Act of 1934, as amended;


 


“Exercise Price”
means $1.50 per Share, as adjusted in accordance with the terms of this
Indenture, from time to time;


 


“Extraordinary Resolution”
means an extraordinary resolution of Warrantholders as defined in Section 5.12
and includes a written instrument signed by Warrantholders pursuant to the
provisions of Section 5.17;


 


“Institutional Accredited
Investor” means an Accredited Investor as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D;


 


“Offering” means
the public offering of up to 73,182,500 Units (including an over-allotment
option) of the Company by way of short form prospectus in certain Provinces of
Canada, and by way of private placement in the United States;


 


“Original U.S. Purchaser”
means an Institutional Accredited Investor that purchased the Warrants in the
United States directly from the U.S. registered broker-dealer affiliate of one
of the Underwriters in a purchase of Units made pursuant to the Underwriting
Agreement;


 


“person” means
an individual, a corporation, a partnership, a government or any department,
agency or instrumentality thereof, a joint venture, a trust, a trustee, an
estate, an unincorporated organization and the heirs, executors, administrators
or other legal representatives of an individual; and pronouns and other words
importing persons have a similarly extended meaning;


 


“Qualifying Jurisdictions”
means each of the Provinces of Canada, other than Quebec, and the United
States, and other jurisdictions which are agreed to by the Company and the
Underwriters;


 


“Regulation D”
means Regulation D under the U.S. Securities Act;


 


“Regulation S”
means Regulation S under the U.S. Securities Act;


 


3

















 


“Securities Commissions”
means, collectively, the securities commissions or other securities regulatory
authorities under the applicable Securities Laws of each of the Canadian
Qualifying Jurisdictions;


 


“Securities Laws”
means, collectively, the applicable securities laws of each of the Canadian
Qualifying Jurisdictions and the respective regulations made and forms
prescribed thereunder together with all applicable published policy statements,
rules, instruments, blanket orders and rulings of the Securities Commissions;


 


“Shares” means
the common shares without par value in the capital of the Company as
constituted on the date hereof, provided that in the event of any adjustment
pursuant to Article 3, “Shares” will
thereafter mean the shares or other securities or property resulting from such
adjustment that a Warrantholder is entitled to acquire on exercise of a Warrant
after the adjustment;


 


“Shareholder”
means an owner of record of one or more Shares or shares of any other class or
series of the Company;


 


“Share Reorganization”
has the meaning ascribed thereto in Section 3.6(2);


 


“Subsidiary”
means a corporation, a majority of the outstanding voting shares of which is
owned, directly or indirectly, by the Company, or by one or more Subsidiaries
of the Company and, as used in this definition, “voting
shares” means shares of a class or classes ordinarily entitled to
vote for the election of a majority of the directors of a corporation
irrespective of whether or not shares of any other class or classes shall have
or might have the right to vote for directors by reason of the happening of any
contingency, whether or not such contingency shall have happened;


 


“this Indenture”,
“hereto”, “herein”,
“hereby”, “hereunder”,
“hereof” and similar expressions refer
to this instrument and include any and every instrument supplemental or
ancillary hereto or in implementation hereof and the expressions “article”, “section”,
“subsection” and “paragraph” followed by a number, letter or both mean and
refer to the specified article, section, subsection or paragraph of this
Indenture;


 


“Time of Exercise”
means the time that surrender of the Warrant Certificate, the Warrant Exercise Form (attached
hereto as part of Schedule “A”) and payment of the Exercise Price is effected
by a Warrantholder according to the provisions of Section 3.1 hereof;


 


“trading day”
means, with respect to a stock exchange, a day on which such exchange is open
for the transaction of business and with respect to the over-the-counter market
means a day on which the TSX Venture Exchange is open for the transaction of
business;


 


“Underwriters”
means National Bank Financial Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc.
and Sandfire Securities Inc.;


 


“Underwriting Agreement”
means the underwriting agreement dated March 31, 2010 between the Company
and the Underwriters;


 


4

















 


“Units” means
the units issued pursuant to the Offering at the purchase price of $1.10 per
Unit, each Unit consisting of one Share and one-half of one Warrant;


 


“United States”
means the United States of America, its territories and possessions, any state
of the United States, and the District of Columbia;


 


“U.S. Person”
means a U.S. person as that term is defined in Regulation S under the U.S.
Securities Act;


 


“U.S. Securities Act”
means the United States Securities Act of 1933,
as amended;


 


“Warrant Agent”
means Computershare Trust Company of Canada or any lawful successor thereto
from time to time under this Indenture;


 


“Warrant Certificate”
means a certificate substantially in the form specified in Schedule “A” hereto
evidencing one or more Warrants;


 


“Warrant Exercise Form”
means the exercise form forming part of each Warrant Certificate as more
particularly described in Section 3.1(3) hereof;


 


“Warrant Expiry Date”
means the date that is 12 months after the Closing Date;


 


“Warrant Expiry Time”
means 5:00 p.m. (Pacific time) on the Warrant Expiry Date;


 


“Warrantholder”,
“holder” or “holder of
Warrants” means with respect to the Warrants, a person entered on
the register to be maintained under Section 2.9 as the registered holder
of a Warrant for the time being; and


 


“Warrants” means
the share purchase warrants of the Company issued and countersigned hereunder
and for the time being outstanding, each exercisable into one Share upon due
exercise and payment of the Exercise Price.


 


1.2                                                                             Meaning of “outstanding” for
Certain Purposes


 


Every Warrant represented by a Warrant
Certificate countersigned and delivered by the Warrant Agent hereunder shall be
deemed to be outstanding until the Warrant Expiry Time, or until such Warrant
Certificate shall be surrendered to the Warrant Agent upon the exercise thereof
pursuant to Article 3, provided however that:


 


(a)                                  where a Warrant Certificate has been issued in substitution for a
Warrant Certificate which has been partially exercised, lost, stolen or
destroyed, the Warrants represented by only one of them shall be counted for
the purpose of determining the number of Warrants outstanding; and


 


(b)                                 for the purpose of any provision of this Indenture entitling holders of
outstanding Warrants to vote, sign consents, requests or other instruments or
take any other action under this Indenture, Warrants owned legally or 


 


5

















 


equitably
by the Company or any Subsidiary thereof shall be disregarded, except that:


 


(i)                                     for the purpose of determining whether the Warrant Agent shall be
protected in relying on any such vote, consent, request or other instrument or
other action, only the Warrants of which the Warrant Agent has notice that they
are so owned by the Company or any Subsidiary shall be so disregarded; and


 


(ii)                                  Warrants so owned which have been pledged in good faith other than to
the Company or any Subsidiary thereof shall not be so disregarded if the
pledgee shall establish to the satisfaction of the Warrant Agent the pledgee’s
right to vote the Warrants in his discretion free from the control of the
Company or any Subsidiary thereof, as the case may be, and the terms of the
pledge thereof as to the right to vote shall govern.


 


1.3                                                                             Day not a Business Day


 


If the day on or before which any action (other
than the exercise of a Warrant) would otherwise be required to be taken or is
contemplated to commence hereunder is not a business day, that action will be
required to be taken and such procedure will commence on or before the
requisite time on the next succeeding day that is a business day.


 


1.4                                                                             Words Importing the Singular


 


Words importing the singular include the plural
and vice versa and words importing a
particular gender include all genders.


 


1.5                                                                             Time of the Essence


 


Time shall be of the essence in this Indenture
and in the Warrant Certificates.


 


1.6                                                                             Interpretation not Affected by
Headings, etc.


 


The division of this Indenture into Articles,
and Sections and subsections, the provision of a table of contents and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation hereof.


 


1.7                                                                             Applicable Law


 


This Indenture and the Warrant Certificates
shall be governed by and construed in accordance with the laws of the Province
of British Columbia and the federal laws of Canada applicable therein and shall
be treated in all respects as British Columbia contracts.


 


6

















 


1.8                                                                             Warrant Indenture Legislation


 


(1)                                  If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable Legislation,
the mandatory requirement will prevail.


 


(2)                                  Each of the Company and the Warrant Agent will at all times in relation
to this Indenture and any action to be taken hereunder observe and comply with
and be entitled to the benefits of Applicable Legislation.


 


1.9                                                                             Severability


 


In the event that any provision hereof shall be
determined to be invalid or unenforceable in any respect, such determination
shall not affect such provision in any other respect or any other provision
hereof, all of which shall remain in full force and effect.


 


1.10                                                                      Entire Agreement


 


This Indenture constitutes the entire agreement
between the parties hereto relating to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties and there are no general
or specific warranties, representations or other agreement by or among the
parties in connection with the entering into of this Indenture or the subject
matter hereof except as specifically set forth herein.


 


1.11                                                                        Currency


 


Unless otherwise stated, all dollar amounts
referred to in this Indenture are references to Canadian dollars.


 


ARTICLE 2

ISSUE OF WARRANTS


 


2.1                                                                             Creation and Issue of Warrants


 


(1)                                  A total of 36,591,275 Warrants are hereby created and authorized to be
issued.


 


(2)                                  Subject to adjustment as provided in this Indenture, each Warrant issued
hereunder will entitle the holder thereof to purchase one Share at any time
from and after the Date of Issue of the Warrant to and including the Warrant
Expiry Time upon payment of the Exercise Price.


 


2.2                                                                             Form and Terms of Warrant
Certificates


 


Warrant Certificates shall be substantially in
the forms set out in Schedules “A” and “B” hereto with such additions,
variations or omissions as may be permitted by the provisions of this Indenture
or may from time to time be agreed upon between the Company and the Warrant Agent
and shall be numbered in the manner as the Company, with the approval of 


 


7

















 


the Warrant Agent, may prescribe. No Warrant
Certificates representing fractional Warrants will be issued under this
Indenture, and any fractional Warrants will be rounded down to the nearest
whole Warrant.


 


2.3                                                                             Issue of Warrant Certificates


 


Warrant Certificates to be issued and delivered
from time to time under this Indenture shall be executed by the Company and
countersigned by the Warrant Agent pursuant to or upon the written order of the
Company, without the Warrant Agent receiving any consideration therefor, except
as otherwise provided herein.


 


2.4                                                                             Warrantholder not a Shareholder


 


Nothing in this Indenture or in the ownership
of a Warrant evidenced by a Warrant Certificate, or otherwise, will be
construed as conferring on a Warrantholder any right or interest whatsoever as
a Shareholder of the Company, including but not limited to any right to vote
at, to receive notice of, or to attend, any meeting of Shareholders or any
other proceeding of the Company or any right to receive any dividend or other
distribution.


 


2.5                                                                               Execution of Warrant Certificates


 


Warrant Certificates shall be signed by any one
director or officer of the Company manually or the signature of such director
or officer may be engraved, lithographed or printed in facsimile and shall be
dated the Date of Issue.  Notwithstanding
that any of the persons whose signature appears on any Warrant Certificates as
one of the officers or directors may no longer, before the certification and
delivery of the Warrant Certificate, hold the official capacity in which he
signed, any Warrant Certificate signed as aforesaid shall be valid and binding
upon the Company when the Warrant Certificate has been countersigned by the
Warrant Agent in accordance with Section 2.6 and the registered holder
thereof shall be entitled to the benefits of this Indenture.


 


2.6                                                                             Certification by Warrant Agent


 


(1)                                  No Warrant Certificate shall be issued, or if issued, shall be valid or
entitle the holder to the benefit hereof until it has been countersigned by the
Warrant Agent by being countersigned by or on behalf of the Warrant Agent and
the countersignature upon any Warrant Certificate shall be conclusive evidence
as against the Company that the Warrant Certificate so countersigned has been
duly issued hereunder and is a valid obligation of the Company, and that the
holder is entitled to the benefit hereof.


 


(2)                                  The countersigning by or on behalf of the Warrant Agent on any Warrant
Certificate issued hereunder shall not be construed as a representation or
warranty by the Warrant Agent as to the validity of this Indenture or of the
Warrants and the Warrant Agent shall in no respect be liable or answerable for
the use made of any Warrant Certificate or of the consideration therefor,
except as otherwise specified herein. The countersignature of or on behalf of
the Warrant Agent shall, however, be a representation and warranty by the
Warrant Agent that the Warrant 


 


8

















 


Certificate
has been duly countersigned by or on behalf of the Warrant Agent pursuant to
the provisions of this Indenture.


 


2.7                                                                             Exchange of Warrant Certificates


 


The holder of a Warrant Certificate may at any
time after the date of issue thereof and before the Warrant Expiry Time, upon
surrender thereof to the Warrant Agent at its principal transfer office in the
City of Vancouver or at any other place that is designated by the Company with
the approval of the Warrant Agent, exchange the same for one or more Warrant
Certificates entitling the holder to subscribe in the aggregate for the same
number of Shares for which the holder may subscribe under the surrendered
Warrant Certificate. On each exchange the Warrant Agent may levy a charge
sufficient to reimburse it for any tax or other governmental charge required to
be paid, which shall be paid by the party requesting the exchange, and, in
addition, a reasonable charge for every Warrant Certificate issued upon the
exchange and such additional charge may be made to the Company, as a condition
precedent thereto. The Company shall execute and the Warrant Agent shall
countersign in accordance with Sections 2.5 and 2.6 all Warrant
Certificates necessary to carry out exchanges contemplated herein.


 


2.8                                                                             Issue in Substitution for Lost
Certificates


 


(1)                                  If a Warrant Certificate becomes mutilated or is lost, destroyed or
stolen, the Company, subject to applicable law and subject to subsection (2),
will issue and thereupon the Warrant Agent will countersign and deliver a new
certificate of like denomination, date and tenor as the one mutilated, lost,
destroyed or stolen in exchange for and in place of and on surrender and
cancellation of the mutilated certificate or in lieu of and in substitution for
the lost, destroyed or stolen certificate, and the substituted Warrant
Certificate shall entitle the holder thereof to the same rights and benefits
and will bear the same legends, if any, as the certificate being replaced and
shall rank equally in accordance with its terms with all other Warrant
Certificates issued or to be issued hereunder.


 


(2)                                  The applicant for the issue of a new certificate pursuant to this
section will bear the cost of the issue thereof and in case of loss,
destruction or theft will, as a condition precedent to the issue thereof:


 


(a)                                  furnish to the Company and the Warrant Agent such evidence of ownership
and of the loss, destruction or theft of the certificate to be replaced as is
satisfactory to the Company and to the Warrant Agent in their discretion;


 


(b)                                 furnish an indemnity and security in amount and form satisfactory to the
Company and to the Warrant Agent, in their discretion; and


 


(c)                                  pay the reasonable charges of the Company and the Warrant Agent in
connection therewith.


 


9














 


2.9                                                                              Registration and Transfer of
Warrants


 


(1)                                  The Company shall cause to be kept by and at the principal office of the
Warrant Agent in the City of Vancouver and by the Warrant Agent or such other
registrar as the Company, with the approval of the Warrant Agent, may appoint,
at such other place or places, if any, as the Company may designate with the
approval of the Warrant Agent, registers in which shall be entered in
alphabetical order the names and addresses (including street and number, if
any) of the holders of Warrants and particulars of the Warrants held by them
respectively. Such registration shall be noted on the Warrant Certificates by
the Warrant Agent or other registrar.


 


(2)                                  The Company and the Warrant Agent will deem and treat the registered holder
of any Warrant as the absolute owner thereof for all purposes and neither the
Company nor the Warrant Agent shall be affected by any knowledge or notice to
the contrary, except where the Company or the Warrant Agent is required to take
notice by applicable law or by order of a court of competent jurisdiction.


 


(3)                                  No transfer of a Warrant shall be valid unless entered on any one of the
registers upon surrender of the Warrant Certificate representing such Warrant
to the Warrant Agent or other registrar accompanied by a written instrument of
transfer in form satisfactory to the Warrant Agent or other registrar executed
by the registered holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an instrument in
writing in form and execution satisfactory to the Warrant Agent or other
registrar and upon compliance with such reasonable requirements, including
those set forth in Section 2.14 hereof, if applicable, as the Warrant
Agent or other registrar may prescribe.


 


(4)                                  The registered holder of Warrants may at any time and from time to time
have the registration of the Warrants transferred from the register in which
the registration thereof appears to another authorized register upon compliance
with such reasonable requirements as the Warrant Agent or other registrar may
prescribe.


 


(5)                                  The Company shall also cause to be kept by and at the principal office
of the Warrant Agent in the City of Vancouver and by the Warrant Agent or such
other registrar as the Company may appoint, with the approval of the Warrant
Agent, at such other place or places, if any, as the Company may designate with
the approval of the Warrant Agent, registers in which all transfers of Warrants
and the date and other particulars of each transfer shall be set out.


 


(6)                                  The transferee of Warrants shall, after the Warrant Certificate and the
appropriate form of transfer are lodged with the Warrant Agent or other
registrar and upon compliance with all other conditions in that behalf required
by this Indenture or by law, be entitled to be entered on one of the registers
as the owner of the Warrants free from all equities or rights of set-off or
counterclaim between the Company and his transferor or any previous holder of
the Warrants, save in 


 


10

















 


respect
of the equities of which the Company is required to take notice by statute or
by order of a court of competent jurisdiction or by applicable law. The receipt
by the registered holder of Warrants of the Shares purchasable pursuant thereto
will be a good discharge to the Company and the Warrant Agent therefor and
neither the Company nor the Warrant Agent will be bound to inquire into the
title of the holder except as aforesaid.


 


(7)                                  Subject to applicable law, neither the Company nor the Warrant Agent nor
any registrar shall be bound to take notice of or see to the execution of any
trust, whether express, implied or constructive, in respect of any Warrant or
Warrant Certificate, and may transfer the same on the direction of the person
registered as the holder thereof, as though that person were the beneficial
owner thereof.


 


(8)                                  The registers required to be kept in the City of Vancouver shall at all
reasonable times be open for inspection by the Company or any
Warrantholder.  The Warrant Agent and
every registrar shall from time to time when requested to do so by the Company,
by the Warrant Agent or by a Warrantholder, furnish the Warrant Agent or upon
payment by the Company or Warrantholder of a reasonable fee, the Company or the
Warrantholder, as the case may be, with a list of names and addresses of
holders of Warrants entered on the registers kept by them and showing the
number of Warrants held by each such holder.


 


2.10                                                                       Enforcement of Rights of
Warrantholders


 


(1)                                  All or any of the rights conferred upon a Warrantholder by the terms of
the Warrants held by him and/or by the terms of this Indenture may be enforced
by such Warrantholder by appropriate legal proceedings, but subject to the
rights which are hereby conferred upon the Warrant Agent and subject to the
provisions of Section 7.1. The Warrant Agent shall also have the power at
any time and from time to time to institute, in its own name or on behalf of
the Warrantholders, and to maintain such suits and proceedings as it may
reasonably be advised shall be necessary or advisable to preserve and protect
the interests of the Warrantholders.


 


(2)                                  No recourse under or upon any obligation, covenant or agreement
contained in this Indenture or in the Warrant Certificates shall be had against
any shareholder, officer or director, past, present or future, of the Company
or of any of its Subsidiaries or of any successor corporation or any
subsidiary, either directly or through the Company, or the Subsidiaries or
otherwise, by any legal or equitable proceeding by virtue of any statute or
otherwise.


 


(3)                                  This Indenture and the Warrants issued hereunder are solely obligations
of the Company and no personal liability whatsoever shall attach to or be incurred
by the shareholders, officers or directors, past, present or future, of the
Company, or of any of its Subsidiaries, or any successor corporations, under or
by reason of the obligations, covenants or agreements contained in this
Indenture or in the Warrant Certificates; and any personal liability of any
nature whatsoever either at common law, in equity or by statute, and any right
or claim against any such shareholder, 


 


11

















 


officer
or director are hereby expressly waived as a condition of and as consideration
for the execution of this Indenture and the issue of the Warrants.


 


2.11                                                                       Warrants to Rank Pari Passu


 


Except as otherwise provided herein, all
Warrants will rank pari passu,
whatever may be the actual dates of issue thereof.


 


2.12                                                                       Notice to Warrantholders


 


(1)                                  Unless herein otherwise expressly provided, a notice to be given
hereunder to Warrantholders will be deemed to be validly given if the notice is
sent by ordinary mail or air mail, postage prepaid, addressed to the holders or
delivered by hand or prepaid courier (or so mailed to certain holders and so
delivered to the other holders) at their respective addresses appearing on any
of the registers above mentioned.  The
Warrant Agent shall give, in the same manner as for Warrantholders set out
above, a copy of each such notice to National Bank Financial Inc., Attention:
Daniel Wilton (Facsimile No. 604-682-2132, with a copy to Blake, Cassels &
Graydon, Attention: Bob Wooder (Facsimile No. 604-631-3309).  Any notice so given by mail or so delivered
by hand shall be deemed to have been given on the fifth business day after it
has been mailed or on the day upon which it has been delivered, respectively,
or if sent by facsimile on the first business day following the transmission,
as the case may be. In determining under any provision hereof the date when
notice of any meeting or other event must be given, the date of giving the
notice shall be included and the date of the meeting or other event shall be excluded.
Accidental error or omission in giving notice or accidental failure to mail
notice to any Warrantholder shall not invalidate any action or proceeding
founded thereon.


 


(2)                                  If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, a notice to be given to the
Warrantholders hereunder could reasonably be considered unlikely to reach or to
be delayed in reaching its destination, the notice will be valid and effective
only if it is delivered personally to such Warrantholders or if delivered to
the address for such Warrantholders contained in the register of Warrants
maintained by the Warrant Agent, by telecopy or other means of prepaid
transmittal and recorded communication.


 


(3)                                  Any mailings to or from outside of Canada shall be made by postage
prepaid mail or by prepaid courier.


 


2.13                                                                       Notice to the Company or the
Warrant Agent


 


(1)                                  Unless herein otherwise expressly provided, a notice to be given
hereunder to the Company or the Warrant Agent will be validly given if
delivered or if sent by postage prepaid mail or if transmitted by facsimile:


 


12

















 


(a)                                  if to the Company:


 


Terrane Metals Corp.


#1500-999 West Hastings Street


Vancouver, British Columbia


V6C 2W2


 


Attention:                                          Basil Huxham


Facsimile:                                            (604) 630-2090


 


with a copy, which shall not constitute notice
to the Company, to:


 


Lang
Michener LLP


Barristers
and Solicitors


PO Box
11117, Royal Centre


1500 – 1055
West Georgia Street


Vancouver,
British Columbia


V6E 4N7


 


Attention:                                          Thomas Deutsch


Facsimile:                                            (604) 685-7084


 


(b)                                 if to the Warrant Agent:


 


Computershare
Trust Company of Canada


510 Burrard Street, 3rd
Floor


Vancouver, British Columbia


V6C 3B9


 


Attention:                                          Manager, Corporate Trust


Facsimile:                                            (604) 661-9403


 


and any notice delivered in accordance with the
foregoing will be deemed to have been received on the date of delivery or, if
mailed, on the fifth business day following the day of the mailing of the
notice, or if transmitted by facsimile, on the first business day following the
transmission.


 


(2)                                  The Company or the Warrant Agent, as the case may be, may from time to
time notify the other in the manner provided in subsection (1) of a change
of address which, from the effective date of the notice and until changed by
like notice, will be the address of the Company or the Warrant Agent, as the
case may be, for all purposes of this Indenture.


 


(3)                                  If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, a notice to be given to the Warrant
Agent or to the Company hereunder by registered mail could reasonably be
considered unlikely to reach or to be delayed in reaching its destination, the
notice will be valid and 


 


13

















 


effective
only if it is delivered to an officer of the party to which it is addressed or
if it is delivered to that party at the appropriate address provided in
subsection (1) by cable, facsimile, telegram, or other means of
prepaid transmitted, recorded communication, and any notice delivered in
accordance with the foregoing will be deemed to have been received on the date
of delivery to the officer or if delivered by cable, facsimile, telegram, telex
or other means of prepaid, transmitted, recorded communication, on the first
business day following the date of the sending of the notice.


 


(4)                                  Any mailings to or from outside of Canada shall be made by airmail,
postage prepaid or by prepaid courier.


 


2.14                                                                       Transfer Restrictions and Legends


 


(1)                                  The Warrant Agent understands and acknowledges that the Warrants and the
Shares issuable upon exercise of the Warrants have not been and will not be
registered under the U.S. Securities Act or the securities laws of any state of
the United States.


 


(2)                                  Certificates representing Warrants issued in the United States or to a
U.S. Person or on behalf of a U.S. Person, and Shares issued in the United
States or to a U.S. Person upon exercise of Warrants in the United States or by
or on behalf of a U.S. Person, and all certificates issued in exchange thereof
or in substitution thereof, until such time as it is no longer required under
the applicable requirements of the U.S. Securities Act or applicable U.S. state
laws and regulations, shall bear the following legend:


 


“THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF TERRANE METALS CORP. (THE “COMPANY”) THAT
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY
RULE 144 UNDER THE U.S. SECURITIES ACT, IF APPLICABLE, AND IN COMPLIANCE
WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER
EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE
SECURITIES LAWS.  PROVIDED THAT IN THE
CASE OF TRANSFERS 


 


14

















 


PURSUANT TO (C) OR (D) ABOVE, THE
HOLDER OF THE SECURITIES HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF
RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY.
DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON A CANADIAN STOCK EXCHANGE.  PROVIDED THAT THE COMPANY IS A FOREIGN ISSUER
WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT AT THE TIME OF
SALE, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE
REGISTRAR AND TRANSFER AGENT OF THE COMPANY UPON DELIVERY OF THIS CERTIFICATE
AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE
COMPANY’S REGISTRAR AND TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT SUCH
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.”


 


provided that:


 


(i)                                     if any such securities are being sold under clause (B) of
the above legend and in compliance with Canadian local laws and regulations,
and provided that the Company is a “foreign issuer” within the meaning of
Regulation S at the time of sale, the legend may be removed by providing a
declaration to the Company and the Warrant Agent, in the form attached as
Appendix C to Schedule A to this Indenture to the effect that the
securities are being sold in compliance with Rule 904 of Regulation S,
together with any documentation as may be required by the Company or its
transfer agent to the effect that an exemption from the registration
requirements of the U.S. Securities Act is available; and


 


(ii)                                  if any such securities are being sold under clause (C) or
(D) of the above legend, the legend may be removed by delivery to the
Company and the Warrant Agent of an opinion of counsel, of recognized standing
reasonably satisfactory to the Company, that such legend is no longer required
under applicable requirements of the U.S. Securities Act or state securities
laws.


 


The Company shall use its best efforts to cause
the Warrant Agent to remove such legend, and to deliver a certificate which
does not bear such legend, within three business days of the receipt of such a
declaration or, in the case of Shares being sold pursuant to Rule 144
under the U.S. Securities Act, receipt of the foregoing evidence.


 


15

















 


(3)                                  In addition, the Warrants with the above legend will bear the following
legend:


 


“THESE WARRANTS AND
THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”),
OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE EXERCISED IN THE UNITED
STATES OR BY OR ON BEHALF OF A U.S. PERSON OR A PERSON IN THE UNITED STATES
UNLESS AN EXEMPTION IS AVAILABLE FROM THE REGISTRATION REQUIREMENTS OF THE U.S.
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.  “UNITED STATES” AND “U.S. PERSON” ARE AS
DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT.  THESE WARRANTS MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS.”


 


(4)                                  The Warrant Agent acknowledges that (i) the Warrants evidenced by
any Warrant Certificate which includes the legends set forth in
subsections 2.14(2) and 2.14.(3) above or (ii) any Share
certificate issued with respect to an exercise of Warrants which includes the
legend set forth in subsection 2.14(2) above may not be transferred
except pursuant to registration or compliance with exemptions therefrom under
the U.S. Securities Act and all applicable state securities laws, and the
Warrant Agent agrees not to register any transfer of the Warrants or Shares so
legended unless, in addition to the other requirements set forth herein:


 


(a)                                  the transferor has executed and delivered to the Warrant Agent a
declaration in the form referred to in subsection 2.14(2) (or as the
Company may otherwise prescribe) to the effect that the transfer is being made
pursuant to Rule 904 of Regulation S under the U.S. Securities Act, and in
such case the Warrant Certificate or Share certificate issued to the transferee
shall not include the legend set forth in subsection 2.14(2) (or, in the
case of a Warrant Certificate, the legend set forth in subsection 2.14(3) hereof)
unless the Company has, before the issuance thereof, informed the Warrant Agent
in writing that it has ceased to be a “foreign issuer” as defined in Rule 902
under the U.S. Securities Act; or


 


(b)                                 the transferor has delivered to the Warrant Agent and the Company an
opinion of counsel to the effect that the transfer is in compliance with the
requirements of the U.S. Securities Act and all applicable  state
securities laws, and the Company has confirmed in writing to the Warrant Agent
that such opinion is satisfactory to the Company, and in such case the Warrant
Certificate or Share certificate issued to the transferee shall include the
legend set forth in subsection 2.14(2) (and the legend set forth in
subsection 2.14(3) in the case of a Warrant Certificate) unless such
opinion states that the legend is no longer required; or


 


16

















 


(c)                                  the Company has confirmed in writing to the Warrant Agent that it has
received other evidence satisfactory to it that the transfer is in compliance
with the requirements of the U.S. Securities Act and all applicable state
securities laws, and has instructed the Warrant Agent regarding the inclusion
or omission of (i) the legends set forth in subsection 2.14(2) and
subsection 2.14(3) on the Warrant Certificate issued to the transferee or (ii) the
legend set forth in subsection 2.14(2) on the Share certificate issued to
the transferee; or


 


(d)                                 the transferee is the Company.


 


2.15                                                                       Reliance by the Warrant Agent


 


The Warrant Agent shall have no obligation to
ensure or verify compliance with any applicable laws or regulatory requirements
on the issue, exercise or transfer of any Warrants or any Shares issuable upon
the exercise thereof, provided such issue, exercise or transfer, as the case
may be, is effected in accordance with the terms of this Indenture.  The Warrant Agent shall be entitled to
process all transfers and exercises of Warrants upon the presumption that such
transfers or exercises are permissible pursuant to all applicable laws and
regulatory requirements.  The Warrant
Agent may assume for the purposes of this Indenture that any address on the
register of the Warrantholders is the holder’s actual address and is also
determinative as to residency and that the address of any transferee to whom
any Shares or Warrants are to be registered, as shown on the transfer document,
is the transferee’s residency.  The
Warrant Agent shall have no obligation to ensure that legends appearing on the
Share certificates or Warrant Certificates comply with regulatory requirements
or securities laws of any applicable jurisdiction, but shall ensure that the
applicable legends required to be placed on the certificates evidencing the
Shares and Warrants pursuant to this Indenture are placed thereon.


 


ARTICLE 3

EXERCISE OF WARRANTS


 


3.1                                                                              Method of Exercise of Warrants


 


(1)                                  Each Warrant may be exercised by the holder thereof at any time on or
after the Date of Issue, but not after the Warrant Expiry Time, upon the terms
and subject to the conditions set forth herein.


 


(2)                                  Subject to and upon compliance with the provisions of this Article, the
holder of any Warrant Certificate may exercise the right of purchase therein
provided for by surrendering the Warrant Certificate to the Warrant Agent at
its principal transfer office in the City of Vancouver or at such additional
place or places as may be designated by the Company from time to time with the
approval of the Warrant Agent during normal business hours on a business day at
that place before the Warrant Expiry Time, together with the Warrant Exercise Form duly
completed and executed by the holder for the number of Shares which the holder
desires to purchase and payment of the aggregate Exercise Price applicable at
the time of the surrender calculated in accordance with the provisions of this
Indenture.  The 


 


17

















 


aggregate
Exercise Price for Shares subscribed for under the Warrants shall be paid by
certified cheque, bank draft or money order payable to or to the order of the
Company at par at the city where the Warrant Certificate is surrendered.  Surrender of a Warrant Certificate with the
Warrant Exercise Form duly completed and payment of the aggregate Exercise
Price will be deemed to have been effected, and Warrants shall be deemed to
have been exercised, only on personal delivery thereof to, or if sent by mail
or other means of transmission on actual receipt thereof by, the Warrant Agent
at one of the offices specified in this section.


 


(3)                                  Every Warrant Exercise Form shall be signed by the holder of the
Warrant Certificate who desires to exercise in whole or in part the right of
purchase therein provided for; shall specify the number of Shares that such
holder wishes to purchase (being not more than he is entitled to purchase under
the applicable Warrant Certificate), the person or persons in whose name or names
the Shares which such holder desires to purchase are to be issued and his or
their address or addresses and the number of Shares to be issued to each such
person, and if more than one is so specified, the form shall have one of the
boxes in Appendix A to the Warrant Exercise Form checked; and shall
be substantially in the form set out in the Warrant Certificate.


 


(4)                                  If any Shares subscribed for are to be issued to a person or persons
other than the Warrantholder, the Warrantholder must pay to the Company or to
the Warrant Agent on his behalf an amount equal to all applicable transfer
taxes or other government charges, and the Company will not be required to
issue or deliver any certificate evidencing any Shares unless or until that
amount has been so paid or the Warrantholder has established to the
satisfaction of the Company that the taxes and charges have been paid or that
no taxes or charges are owing.


 


(5)                                  The Warrants and the Shares issuable upon exercise thereof have not been
registered under the U.S. Securities Act or the securities law of any state of
the United States, and the Warrants may not be exercised within the United
States or by or on behalf of any U.S. Person unless the Shares are registered
under the U.S. Securities Act and the securities laws of all applicable states
of the United States or an exemption from such registration requirements is
available. No exercise of any Warrants shall be effective, and no certificate
representing Shares shall be issued pursuant to the exercise of Warrants,
unless the appropriate box on the Warrant Exercise Form is selected
specifying one of the following:


 


(a)                                  the holder is not in the United States or a U.S. Person, is not
exercising the Warrants on behalf of a U.S. Person, and did not execute or
deliver the Warrant Exercise Form in the United States;


 


(b)                                 the holder is an Original U.S. Purchaser that remains an Accredited
Investor and is exercising the Warrants on its own behalf and not for the
account or benefit of any other person in which case the holder shall, 


 


18

















 


concurrent
with exercise of the Warrants, provide a letter in substantially the form set
out in Schedule “B” hereto; or


 


(c)                                  the holder is resident in the United States or is a U.S. Person and
provides an opinion of counsel of recognized standing in form and substance
satisfactory to the Company to the effect that registration under the U.S.
Securities Act  and applicable state securities
laws is not required.


 


The certificates representing any Shares issued
in connection with the exercise of Warrants pursuant to clause (b) or (c) of
this Section 3.1(5) shall bear the legend set forth in Section 2.14(2) of this
Indenture. No certificates for Shares shall be registered or delivered to an
address in the United States unless the holder complies with clause (b) or (c) of
this Section 3.1(5).


 


3.2                                                                              Effect of the Exercise of
Warrants


 


(1)                                  Subject to subsection (2) and Section 3.8, on exercise of a
Warrant, the Company shall cause to be issued to the person or persons in whose
name or names the Shares so subscribed for are to be issued as specified in the
Warrant Exercise Form, the number of Shares to be issued to such person or
persons and such person or persons shall become a Shareholder or Shareholders
of the Company in respect of those Shares with effect from the date on which
the Warrant is exercised and shall be entitled to delivery of a certificate or
certificates evidencing the Shares and the Company shall cause the certificate
or certificates to be mailed by insured mail or delivered as specified to such
person or persons (or, if applicable, the trustee under the registered
retirement savings plan which holds the Shares) at the address or addresses
specified in the Warrant Exercise Form within five business days of the
date on which the Warrant is exercised.


 


(2)                                  Notwithstanding any provision herein contained to the contrary, the
Company shall not be required to deliver certificates for Shares in any period
while the share transfer books of the Company are closed and, in the event of
the exercise of any Warrant during any such period, the Shares subscribed for
shall be issued and such person shall be deemed to have become the holder of
record of such Shares on the date on which such share transfer books are
opened.


 


3.3                                                                              Partial Exercise of Warrants


 


A Warrantholder may subscribe for and purchase
any lesser number of Shares than the number of Shares to which such holder is
entitled upon the exercise of the Warrants held by such holder, in which case
the Warrantholder shall be entitled to receive forthwith a new Warrant
Certificate in respect of the Shares purchasable under the original Warrant
Certificate and not then subscribed for and purchased, and the Warrant Agent
shall issue a new Warrant Certificate upon surrender of the original Warrant
Certificate, if satisfied that the new Warrant Certificate is properly
issuable.


 


19














 


3.4                                                                              Cancellation of Warrants


 


All Warrants exercised as provided in Section 3.1,
partially exercised as provided in Section 3.3, or all Warrant
Certificates exchanged for other Warrants as provided in Section 2.7 or
otherwise surrendered to the Warrant Agent shall be cancelled and either held
by the Warrant Agent until termination of this Indenture or resignation of the
Warrant Agent or destroyed by the Warrant Agent at the direction of the Company
and, if required by the Company, the Warrant Agent shall furnish the Company
with a certificate as to the destruction.


 


3.5                                                                              Expiration of Warrants


 


After the Warrant Expiry Time, all rights under
this Indenture and under any Warrant that has not been exercised shall wholly
cease and terminate and the Warrant Certificate therefor shall be wholly void
and of no effect.


 


3.6                                                                              Adjustment of the Exercise Price
and Subscription Rights


 


(1)                                  In this section, the terms “record date”
and “effective date” where used herein,
shall mean the close of business on the relevant date.


 


(2)                                  If and whenever at any time from the date hereof until the Warrant
Expiry Time, the Company:


 


(a)                                  issues Shares or Convertible Securities to all or substantially all of
the holders of Shares by way of stock dividend or other distribution, other than:
a dividend paid in the ordinary course, or a distribution of Shares upon the
exercise of the Warrants pursuant to the exercise of directors, officers or
employee stock options granted under the Company’s stock option plan;


 


(b)                                 subdivides, redivides or changes the outstanding Shares into a greater
number of shares, or


 


(c)                                  combines, consolidates or reduces the outstanding Shares into a lesser
number of shares,


 


(each of such events being herein called a “Share Reorganization”), the Exercise Price will be adjusted
effective immediately on the record date for the dividend or, in the case of a
subdivision, redivision, change, combination, consolidation or reduction,
effective immediately on the record date, or the effective date if no record
date is fixed, to the number that is the product of:


 


(d)                                 the Exercise Price in effect immediately before that effective date or
record date; and


 


20

















 


(e)                                  the fraction of which:


 


(i)                                     the numerator is the total number of Shares outstanding on that
effective date or record date before giving effect to the Share Reorganization,
and


 


(ii)                                  the denominator is the total number of Shares that are or would be
outstanding immediately after that effective date or record date after giving
effect to the Share Reorganization and assuming all Convertible Securities
issued as part of the Share Reorganization had then been converted into or
exchanged for Shares or all rights to acquire Shares had then been exercised.


 


For the purpose of determining the number of
Shares outstanding at any particular time there shall be included that number
of Shares which would have resulted from the conversion or exchange at that
time of all Convertible Securities of the Company (other than any Convertible Securities
issued to holders of Shares by way of a stock dividend or other distribution
and otherwise included in computing the denominator in clause (ii) hereof).
Shares (and Shares issuable upon conversion or exchange of Convertible
Securities) issued or to be issued under a Share Reorganization shall be deemed
to be outstanding on the record date or effective date for such Share
Reorganization for the purpose of calculating the number of outstanding Shares
under subsections (3) and (5). To the extent that any Convertible
Securities issued to holders of Shares by way of a stock dividend or other
distribution are not so converted or exchanged into or for Shares before the
expiration of the right to do so, the conversion price shall then be readjusted
to the conversion price which would then be in effect based upon the number of
Shares actually issued upon the conversion or exchange of the Convertible
Securities.


 


(3)                                  If and whenever at any time from the date hereof to the Warrant Expiry
Time, the Company shall fix a record date for the issuance or distribution of
rights, options or warrants to all or substantially all of the holders of the
outstanding Shares entitling them, for a period expiring not more than 45 days
after the record date, to subscribe for or purchase Shares or Convertible
Securities at a price per Share (or having a conversion price per Share) less
than 95% of the Current Market Price on the record date (any such issuance
being herein called a “Rights Offering”),
the Exercise Price will be adjusted on the record date for the Rights Offering
to the number which is the product of the Exercise Price in effect immediately
before the record date and the fraction:


 


(i)                                     the numerator of which shall be the total of (A) the number of
Shares outstanding immediately before the record date and (B) a number of
Shares equal to the number arrived at by multiplying the total number of
additional Shares offered for subscription or purchase or into or for which the
total number of Convertible Securities so offered are convertible or
exchangeable by the 


 


21

















 


quotient
obtained by dividing the purchase or subscription price for each Share offered
for subscription or purchase or the conversion price for each Convertible
Security so offered by such Current Market Price for the Shares, and


 


(ii)                                  the denominator of which shall be the total number of Shares outstanding
immediately before such record date plus the total number of additional Shares
offered for subscription or purchase or into or for which the total number of
Convertible Securities so offered are convertible or exchangeable.


 


The adjustment shall be made successively
whenever a record date is fixed, and shall become effective immediately after
the record date for determination of shareholders entitled to receive such
Shares or Convertible Securities, provided that if two or more such record
dates or dates of announcement, as applicable, referred to in subsection (3) are
fixed within a period of 35 trading days, the adjustment shall be made
successively as if each of such record dates occurred on the earliest of such
record dates. To the extent that any rights, options or warrants are not so
issued or any of the rights, options or warrants so issued are not exercised
before the expiration thereof, or any Convertible Securities are not so
converted into or exchanged for Shares before the expiration of the right to do
so, the Exercise Price will be readjusted to the Exercise Price in effect
immediately before the record date, and the Exercise Price will be further
adjusted based upon the number of additional Shares actually delivered upon the
exercise of the rights, options or warrants, or issued upon the conversion or
exchange of the Convertible Securities, as the case may be.


 


(4)                                  If and whenever at any time from the date hereof to the Warrant Expiry
Time, the Company shall fix a record date for the issue of rights, options or
warrants to all or substantially all the holders of the outstanding Shares
entitling them, for a period expiring not more than 45 days after such record
date, to subscribe for or purchase Shares or Convertible Securities at a price
per Share (or having a conversion price per Share) not less than 95% of the
Current Market Price on the record date, the Exercise Price will not be
adjusted.


 


(5)                                  If and whenever at any time from the date hereof to the Warrant Expiry
Time the Company shall fix a record date for the making of an issue or
distribution to all or substantially all the holders of its outstanding Shares
of (a) shares or securities of any class, excluding Shares or Convertible
Securities referred to in paragraph 2(a), whether of the Company or any other
corporation, or (b) rights, options or warrants, excluding those referred
to in subsection (3) or (4), or (c) evidences of its
indebtedness, or (d) property, cash or other assets, excluding dividends
in the ordinary course or property distributed in lieu thereof at the option of
the Shareholders (any of such events being herein called a “Special Distribution”) then, in each such case, the Exercise
Price shall be adjusted on the record date to the number that is the product of
the Exercise Price in effect immediately before the record date and the
fraction:


 


22

















 


(i)                                     the numerator of which shall be the total number of Shares outstanding
immediately before the record date multiplied by the Current Market Price on
the day immediately before such record date, less the aggregate fair market
value (as determined by the Directors, subject to prior written approval of the
Exchange which determination, absent manifest error, shall be conclusive) of
the shares or rights, options or warrants or evidence of indebtedness or
property, cash or assets so distributed pursuant to such Special Distribution,
and


 


(ii)                                  the denominator of which shall be the total number of Shares outstanding
immediately before the record date multiplied by such Current Market Price.


 


The adjustment shall be made successively
whenever a record date is fixed, and shall become effective immediately after
the record date for the determination of Shareholders entitled to receive such
Special Distribution, provided that if two or more such record dates or dates
of announcement, as applicable, referred to in subsection (5) are
fixed within a period of 35 trading days, the adjustment shall be made
successively as if each of such record dates occurred on the earliest of such
record dates. To the extent that any Special Distribution is not so made, the Exercise
Price shall then be readjusted to the Exercise Price which would then be in
effect if the record date had not been fixed or to the Exercise Price which
would then be in effect based upon the shares or rights, options or warrants or
evidences of indebtedness or property, cash or assets actually distributed, as
the case may be.


 


(6)                                  On any adjustment of the Exercise Price pursuant to subsection (2), (3) or
(5), including any readjustment, the number of Shares purchasable on exercise
of a Warrant will be adjusted, effective at the same time as the adjustment of
the Exercise Price, by multiplying the number of Shares so purchasable
immediately before the adjustment by a fraction, the numerator of which shall
be the Exercise Price in effect immediately before the adjustment and the
denominator of which shall be the Exercise Price resulting from such
adjustment.


 


(7)                                  Subject to the prior written approval of the Exchange if and whenever at
any time from the date hereof to the Warrant Expiry Time there is:


 


(a)                                  a reclassification or redesignation of the Shares outstanding, a change
of Shares into other shares or securities, or any other capital reorganization
of the Company except as described in subsections (2), (3) and (5),


 


(b)                                 a consolidation, merger, arrangement or amalgamation of the Company with
or into another body corporate or other entity resulting in a reclassification
or redesignation of outstanding Shares or a change of Shares into other shares
or securities, or


 


23

















 


(c)                                  a transaction whereby all or substantially all the Company’s undertaking
and assets become the property of another corporation or other entity,


 


(any of those events being herein called a “Corporate Reorganization”), a holder who thereafter
exercises Warrants will be entitled to receive and will accept, for the
Exercise Price then in effect, in lieu of the Shares (and any other securities
to which Warrantholders are then entitled on the exercise of Warrants) to which
he would otherwise have been entitled on exercise immediately before the
Corporate Reorganization, the kind and amount of shares or other securities or
property (including cash) that he would have been entitled to receive as a
result of the Corporation Reorganization if, on the effective date thereof, he
had been the holder of the number of Shares (and any other securities to which
Warrantholders are then entitled on the exercise of Warrants) to which he would
have been entitled on the exercise of the Warrant or Warrants immediately
before the Corporation Reorganization.


 


(8)                                  As a condition precedent to taking any action that would require an
adjustment pursuant to subsection (7), the Company will take all action that,
in the opinion of counsel, is necessary in order that the Company, any
successor or any successor to its assets and undertaking, shall be obligated to
and may validly and legally issue as fully paid and non-assessable all the
Shares or other shares or securities or property to which Warrantholders will
be entitled on the exercise of Warrants thereafter.


 


(9)                                  Subject to the prior written consent of the Exchange, if necessary as a
result of any Corporate Reorganization, appropriate adjustments will be made in
the application of the provisions set forth in this Article 3 with respect
to the rights and interests of Warrantholders to the end that the provisions
set forth in this Article 3 will thereafter correspondingly be made
applicable as nearly as may reasonably be possible to any shares or other
securities or property thereafter deliverable on the exercise of a Warrant. Any
such adjustment will be made by and set forth in an amendment hereto approved
by the Directors and by the Warrant Agent, each acting reasonably, and will for
all purposes, absent manifest error, be conclusively deemed to be an
appropriate adjustment.


 


(10)                            Subject to the prior written consent of the Exchange, if the purchase
price provided for in any right, warrant or option issued in connection with a
Rights Offering is decreased, or the conversion price for Convertible
Securities issued in connection with a Share Reorganization is increased, the
Exercise Price shall forthwith be changed to whatever Exercise Price would have
been obtained had the adjustment made in connection with the issuance of all
such rights, warrants, options or Convertible Securities been made upon the
basis of the purchase price as so decreased or the conversion price as so
increased, provided that the provisions of this subparagraph shall not apply to
any increase or decrease resulting from provisions in any rights, warrants,
options or securities designed to prevent dilution if the increase or decrease
shall not have been proportionately 


 


24

















 


greater
than the change, if any, in the Exercise Price to be made at the same time
pursuant to the provisions of this section.


 


(11)                            Subject to the prior written consent of the Exchange, if and whenever at
any time before the Warrant Expiry Time the Company shall take any action
affecting or relating to the Warrants, other than any action described in this
section, which in the opinion of the Warrant Agent, acting reasonably and in
good faith, based upon the opinion of counsel, would prejudicially affect the
rights of any holders of Warrants, the Exercise Price will be adjusted in such
manner, if any, and at such time, as the Warrant Agent, may in its sole
discretion determine to be equitable in the circumstances to such holders.


 


3.7                                                                              Adjustment Rules for
Exercise Price


 


The following rules and procedures will be
applicable to adjustments made pursuant to Section 3.6:


 


(a)                                  the adjustments and readjustments provided for in Section 3.6 shall
be cumulative and, subject to paragraph (b), will apply (without duplication)
to successive issues, subdivisions, combinations, consolidations, distributions
and other events that require an adjustment;


 


(b)                                 no adjustment in the Exercise Price, or resulting adjustment in the
number of Shares issuable on exercise of Warrants, will be made unless the
adjustment would result in a change of at least 1% in the prevailing Exercise
Price and the number of Shares purchasable upon the exercise of the Warrants
would change by at least one one-hundredth of a Share; provided, that any
adjustment that would have been required to be made except for the provisions
of this paragraph will be carried forward and taken into account in the next
adjustment;


 


(c)                                  no adjustment will be made in respect of an event described in paragraph
3.6(2)(a) or subsections 3.6(3) or 3.6(5) if the Warrantholders
are entitled to participate in the event on the same terms, mutatis mutandis, as if they had exercised their Warrants
immediately before the effective date of or record date for the event, such
participation being subject to the prior written consent of the Exchange if so
required;


 


(d)                                 for the purposes of subsections (2), (3), (4) and (5) of Section 3.6,
there will be deemed not to be outstanding:


 


(i)                                     any Share owned by or held for the account of the Company,


 


(ii)                                  any Share owned by or held for the account of any Subsidiary of the
Company;


 


(e)                                  subject to the prior written consent of the Exchange, any dispute that
arises at any time with respect to any adjustment pursuant to this Indenture 


 


25

















 


will
be conclusively determined (as between the Company, the Warrantholders, the
Warrant Agent and all transfer agents and shareholders of the Company) by the
auditor of the Company or, if the auditor of the Company is unable or unwilling
to act, by such firm of independent chartered accountants as is selected by the
Directors and is acceptable to the Warrant Agent and any determination by them,
absent manifest error, will be binding on the Company, the Warrantholders, the
Warrant Agent and all transfer agents and Shareholders of the Company, and the
Company shall notify the Warrantholders thereof;


 


(f)                                    in the absence of a resolution of the Directors fixing the record date
for an event referred to in Section 3.6, the Company will be deemed to
have fixed as the record date therefor the date on which the event is effected
or such other date as may be required by law;


 


(g)                                 subject to the prior written consent of the Exchange if required as a
condition precedent to the taking of any action which would require an
adjustment in any of the rights under the Warrants, the Company will take any
action which, in the opinion of counsel to the Company, may be necessary in
order that the Company, or any successor to the Company or successor to the
undertaking or assets of the Company will be obligated to and may validly and
legally issue all the Shares or securities which the holders of the Warrants
would be entitled to receive thereafter and to exercise such Warrants in
accordance with the provisions hereof;


 


(h)                                 subject to Sections 7.2 and 7.3, the Warrant Agent shall not at any time
be under any duty or responsibility to any Warrantholder to determine whether
any facts exist which may require any adjustment contemplated by Section 3.6,
or with respect to the nature or extent of any such adjustment made, or with
respect to the method employed in making same. The Warrant Agent shall not be
accountable for the validity or value of any Shares delivered upon the exercise
or deemed exercise of any Warrants and shall not be responsible for any failure
of the Company to make any payment, or to issue or deliver any securities or
certificates represented hereby upon the exercise or deemed exercise of any
Warrants; and


 


(i)                                     if the Company, after the date hereof, shall take any action affecting
any Shares which in the opinion of the Directors acting reasonably and in good
faith would materially affect the rights of Warrantholders, the Exercise Price
and number of Shares issuable upon exercise of Warrants shall be adjusted in
such manner, if any, and at such time, as the Directors, in their sole
discretion acting reasonably and in good faith, may determine to be equitable
in the circumstances to adjust the rights of the Warrantholders to protect
against dilution in accordance with the intent and purposes of Section 3.6
and Section 3.7. Failure of the taking of action by the Directors so as to
provide for an adjustment in the Exercise Price before 


 


26

















 


the
effective date of any action by the Company affecting the Shares shall be
conclusive evidence (absent manifest error) that the Directors have determined
that it is equitable to make no adjustment in the circumstances, subject to the
prior written consent of the Exchange.


 


3.8                                                                              Postponement of Issue of Shares, etc.


 


In any case in which Section 3.6 requires
an adjustment to take effect immediately after the effective date of or record
date for an event, and a Warrant is exercised after that date and before the
consummation of the event (which in the case of rights, options and warrants
will be the date the rights, options and warrants are issued), the Company may
postpone until consummation issuing to the Warrantholder such of the Shares,
securities or property to which he is entitled if the Warrant had been
exercised immediately before that date, provided however, that the Company will
deliver to the Warrantholder an appropriate instrument evidencing such holder’s
right to receive such additional Shares, securities or property upon the occurrence
and consummation of such event and the right to receive any dividend or other
distribution in respect of such additional Shares, securities or property
declared in favour of the holders of record of Shares or of such securities or
property on or after that date or such later date as such holder would, but for
the provisions of this Section, have become the holder of record of such
additional Shares or of such securities or property pursuant to Section 3.6.


 


3.9                                                                              Notice of Certain Events


 


(1)                                  At least 14 business days before the effective date of or record
date for any event referred to in Section 3.6, other than a subdivision or
consolidation of the Shares, that requires or might require an adjustment in
the subscription rights pursuant to a Warrant, including the Exercise Price and
the number of Shares purchasable on exercise of a Warrant, the Company will:


 


(a)                                  file with the Warrant Agent a certificate of the Company specifying the
particulars of the event and, to the extent determinable, any adjustment
required and the computation of the adjustment, and


 


(b)                                 give notice to the Warrantholders of the particulars of the event and,
to the extent, determinable, any adjustment required.


 


The notice need only set forth particulars as
have been determined at the date that notice is given.


 


(2)                                  If any adjustment for which a notice pursuant to subsection (1) is
given is not then determinable, the Company will promptly after the adjustment
is determinable:


 


(a)                                  file with the Warrant Agent a certificate of the Company showing the
computation of the adjustment, and


 


(b)                                 give notice to the Warrantholders of the adjustment.


 


27

















 


(3)                                  In the event of a subdivision or consolidation of the Shares, the
Company will, before giving effect thereto, file with the Warrant Agent a
certificate of the Company specifying the particulars of the subdivision or
consolidation and specifying the number of Shares purchasable upon exercise of
a Warrant after giving effect to such subdivision or consolidation.


 


3.10                                                                       No Fractional Shares


 


The Company will not, pursuant to Section 3.6
or under any other circumstances, be obligated to issue any fraction of a Share
upon the exercise of a Warrant or Warrants. To the extent that the holder of
one or more Warrants would otherwise have been entitled to receive on the
exercise or partial exercise thereof a fraction of a Share, that holder may
exercise such right in respect of the fraction only in combination with another
Warrant or Warrants that in the aggregate entitle the holder to purchase a
whole number of Shares. If not so exercised, the Company shall not pay any
amounts to the holder in satisfaction of the right to otherwise have received a
fraction of a Share.


 


3.11                                                                       Reclassification, Reorganizations, etc.


 


(1)                                  In case of:


 


(a)                                  any reclassifications or change of the Shares (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or consolidation);


 


(b)                                 any amalgamation, consolidation or merger of the Company with, or
amalgamation, consolidation or merger of the Company into, any other
corporation (other than an amalgamation, consolidation or merger in which the
Company is the continuing corporation and which does not result in any
reclassification or change, other than as aforesaid, of the Shares);


 


(c)                                  a reorganization of the Company; or


 


(d)                                 any sale, transfer or other disposition of all or substantially all of
the assets of the Company,


 


the Company or the corporation formed by the
amalgamation or the corporation into which the Company shall have been merged
or been consolidated or the reorganized Company, or the corporation which shall
have acquired such assets, as the case may be, shall execute and deliver to the
Warrant Agent a supplemental indenture providing that the holder of each
Warrant then outstanding shall have the right thereafter (until the Warrant
Expiry Time) to exercise Warrants only into the kind and amount of shares and
other securities and property (including cash) receivable upon such
reclassification, change, amalgamation, consolidation, merger, reorganization,
sale, transfer or other disposition by a holder of the number of Shares which
were purchasable upon the exercise of the Warrants had the Warrants been
exercised immediately before the reclassification, change,


 


28














 


amalgamation, consolidation, merger,
reorganization, sale, transfer or other disposition.


 


(2)                                  The supplemental indenture shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article.


 


(3)                                  The provisions of this section shall apply to successive
reclassifications, changes, amalgamations, consolidations, mergers,
reorganizations, sales, transfers or other dispositions.


 


ARTICLE 4

COVENANTS OF THE COMPANY


 


4.1                                                                               General Covenants


 


The Company represents, warrants and covenants
with the Warrant Agent for the benefit of the Warrantholders that:


 


(a)                                  it will at all times maintain its existence, carry on and conduct its
business in a proper, efficient and business-like manner and, in accordance
with good business practice, keep or cause to be kept proper books of account
in accordance with generally accepted accounting principles;


 


(b)                                 it is duly authorized to create and issue the Warrants to be issued
hereunder and the Warrant Certificates when issued and certified as herein
provided will be legal, valid, binding and enforceable obligations of the
Company;


 


(c)                                  subject to the provisions of this Indenture, it will cause the Shares
from time to time subscribed for and purchased pursuant to the exercise of
Warrants and the certificates representing such Shares to be duly issued and
delivered in accordance with the Warrants and the terms hereof;


 


(d)                                 at all times while any Warrants are outstanding it shall reserve and
there shall remain unissued and conditionally allotted out of its authorized
capital a number of Shares sufficient to enable the Company to meet its
obligations to issue Shares on the exercise of Warrants outstanding hereunder
from time to time;


 


(e)                                  upon the exercise by the holder of any Warrant of the right of purchase
provided for therein and herein and upon payment of the Exercise Price
applicable thereto for each Share in respect of which the right of purchase is
so exercised, all Shares issuable upon the exercise shall be issued as fully
paid and non-assessable;


 


(f)                                    it will use its commercial best efforts to ensure that the Warrants and
the Shares issuable upon exercise of the Warrants will be listed for trading on



 


29

















 


the
Exchange and, in respect of the Shares only, any other stock exchange on which
the Shares are then listed and posted for trading upon their issue;


 


(g)                                 the Company will use its commercial best efforts to maintain its status
as a “reporting issuer” (or the equivalent thereof) not in default of the
requirements of the Securities Laws in each of the Provinces of Canada, except
Quebec;


 


(h)                                 the issue of the Warrants does not and will not result in a breach by
the Company of, and does not and will not create a state of facts which, after
notice or lapse of time or both, will result in a breach by the Company of any
applicable laws, and does not and will not conflict with any of the terms,
conditions or provisions of the memorandum of the Company or the articles or resolutions
of the Company or any trust indenture, loan agreement or any other agreement or
instrument to which the Company is a party or by which it is contractually
bound on the date of this Indenture;


 


(i)                                     it shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged or delivered all other acts, deeds and assurances in law
as the Warrant Agent may reasonably require for better accomplishing and
effecting the intentions and provisions of this Indenture;


 


(j)                                     it will duly and punctually perform all of its covenants contained in
this Indenture governing the due authorization, creation and issue of the
Warrants and the Warrant Certificates, and the reservation, allotment and
issuance of the Shares issuable on the exercise thereof;


 


(k)                                  it will make all requisite filings under applicable laws and
regulations, including, without limitation, Securities Laws, including those
necessary to remain a reporting issuer not in default of the requirements of
the Securities Laws in the provinces of Canada in which it is a reporting
issuer and those required on the exercise of the Warrants;


 


(l)                                     for so long as any Warrants or the Shares issued on the exercise of
Warrants are outstanding, the Company will use its best efforts to remain a “foreign
issuer” within the meaning of Regulation S under the U.S. Securities Act;


 


(m)                               with respect to any notices to be given or other acts to be performed or
which may be given or performed by the Warrant Agent under or pursuant to this
Indenture, the Company shall provide to the Warrant Agent in a timely manner
all such information and documents as the Warrant Agent may reasonably request
and are within the knowledge or control of the Company in order to verify the
factual circumstances relating to such notices or acts and, if requested, such
notices or acts and, if requested, 


 


30

















 


such
information and documents shall be certified as correct by an officer of the
Company;


 


(n)                                 generally, it will well and truly perform and carry out all of the acts
or things to be done by it as provided in this Indenture and will not take any
action which might reasonably be expected to deprive holders of Warrants their
rights to acquire Shares on the exercise thereof; and


 


(o)                                 it will promptly notify the Warrant Agent of any
material default under the terms of this Indenture.


 


4.2                                                                               Securities Qualification
Requirements


 


(1)                                  If, in the opinion of either counsel to the Warrant Agent or counsel to
the Company, any instrument is required to be filed with, or any permission,
order or ruling is required to be obtained from, any governmental authority,
securities administrator or any other step is required under any federal or
provincial law of Canada or any other Qualifying Jurisdiction before the Shares
may be issued or delivered to an initial Warrantholder on the exercise of the
Warrants or resold by such Warrantholder, the Company covenants that it will
use its commercial best efforts to file such instrument, obtain such
permission, order or ruling or take all such other actions, at its expense, as
is required or appropriate in the circumstances.


 


(2)                                  The Company will give written notice of the issue of Shares pursuant to
the exercise of Warrants, in such detail as may be required, to each securities
administrator in each jurisdiction in which there is legislation requiring the
giving of any such notice.


 


4.3                                                                               Warrant Agent’s Remuneration and
Expenses


 


The Company will pay to the Warrant Agent from
time to time such remuneration for its services hereunder as may be agreed upon
between the Company and the Warrant Agent and will pay or reimburse the Warrant
Agent upon its request for all expenses, disbursements and advances properly
incurred or made by the Warrant Agent in the administration or execution of its
duties hereunder (including the reasonable compensation and the disbursements
of its counsel and all other advisors and assistants not regularly in its
employ), both before any default hereunder and thereafter until all duties of
the Warrant Agent shall be finally and fully performed, except any such
expense, disbursement or advance as may arise from the gross negligence or
fraud of the Warrant Agent, its servants or its agents or other advisors or
assistants aforesaid.


 


4.4                                                                               Notice to Warrantholders of
Certain Events


 


The Company covenants with the Warrant Agent
for the benefit of the Warrant Agent and the Warrantholders that, so long as
any of the Warrants are outstanding and capable of being exercised, it will
not:


 


31

















 


(a)                                  pay any dividend payable in shares of any class to the holders of its
Shares or make any other distribution (other than a cash distribution made as a
dividend out of retained earnings or contributed surplus legally available for
the payment of dividends) to the holders of its Shares;


 


(b)                                 offer to the holders of its Shares rights to subscribe for or to
purchase any Shares or shares of any class or any other securities, rights,
warrants or options;


 


(c)                                  make any repayment of capital on, or distribution of evidences of
indebtedness on any of its assets (excluding cash dividends) to the holders of,
its Shares;


 


(d)                                 amalgamate, consolidate or merge with any other person or sell or lease
the whole or substantially the whole of its assets or undertaking;


 


(e)                                  effect any subdivision, redivision, consolidation, reduction or
reclassification of its Shares; or


 


(f)                                    liquidate, dissolve or wind-up,


 


unless, in each such case, the Company shall
have given notice, in the manner specified in Section 2.12, to each
Warrantholder, of the action proposed to be taken and the date on which:
(i) the books of the Company shall close or a record shall be taken for
such dividend, repayment, distribution, subscription rights or other rights, warrants
or securities; or (ii) such subdivision, redivision, consolidation,
reduction, reclassification, amalgamation, merger, sale or lease, dissolution,
liquidation or winding-up shall take place, as the case may be, provided that
the Company shall only be required to specify in the notice those particulars
of the action as shall have been fixed and determined at the date on which the
notice is given. The notice shall also specify the date as of which the holders
of Shares of record shall participate in the dividend, repayment, distribution,
subscription of rights or other rights, warrants or securities, subdivision,
redivision, consolidation, reduction, reclassification,or shall be entitled to
exchange their Shares for securities or other property deliverable upon such
reclassification, amalgamation, merger, sale or lease, other disposition,
dissolution, liquidation or winding-up, as the case may be. The notice shall be
given, with respect to the actions described above not less than
14 business days before the record date or the date on which the Company’s
transfer books are to be closed with respect thereto.


 


4.5                                                                               Closure of Share Transfer Books


 


The Company further covenants and agrees that
it will not during the period of any notice given under Section 4.4 close
its share transfer books or take any other corporate action which might deprive
the Warrantholders of the opportunity of exercising their Warrants; provided
that nothing contained in this section shall be deemed to affect the right of
the Company to do or take part in any of the things referred to in Section 4.4
or to pay any cash dividends on the shares of any class or classes in its
capital from time to time outstanding.


 


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4.6                                                                               Performance of Covenants by Warrant
Agent


 


If the Company shall fail to perform any of its
covenants contained in this Indenture, the Warrant Agent may notify the
Warrantholders of the failure on the part of the Company or may itself perform
any of the said covenants capable of being performed by it, but shall be under
no obligation to do so or to notify the Warrantholders. All sums expended or
advanced by the Warrant Agent in so doing shall be repayable as provided in Section 4.3.
No performance, expenditure or advance by the Warrant Agent shall be deemed to
relieve the Company of any default hereunder or of its continuing obligations
under this Indenture.


 


4.7                                                                               Representation and Warranty


 


The Company represents and warrants to the
Warrant Agent and the holders of the Warrants and/or Shares that as of the date
hereof it is a “foreign issuer” as that term is defined in Regulation S.


 


4.8                                                                               Currently Not Reporting in United
States


 


(1)                                  The Company confirms that as at the date of execution of this Indenture  it does not have a class of securities registered pursuant
to Section 12 of the Exchange Act or have a reporting obligation pursuant
to Section 15(d) of the Exchange Act.


 


(2)                                  The Company covenants that in the event that:


 


(a)                                  any class of its securities shall become registered pursuant to Section 12
of the Exchange Act or the Company shall incur a reporting obligation pursuant
to Section 15(d) of the Exchange Act, or


 


(b)                                 any such registration or reporting obligation shall be terminated by the
Company in accordance with the Exchange Act, the Company shall promptly deliver
to the Warrant Agent an Officers’ Certificate (in a form provided by the
Warrant Agent) notifying the Warrant Agent of such registration or termination
and such other information as the Warrant Agent may require at the time.  The Company acknowledges that the Warrant
Agent is relying upon the foregoing representation and covenants in order to
meet certain U.S. Securities and Exchange Commission obligations with respect
to those clients who are filing with the U.S. Securities and Exchange
Commission.


 


ARTICLE 5

MEETINGS OF WARRANTHOLDERS


 


5.1                                                                               Right to Convene Meeting


 


(1)                                  The Warrant Agent or the Company may at any time and from time to time,
and the Warrant Agent shall on receipt of a requisition in writing signed by
the holders of Warrants sufficient to purchase not less than 10% of the
aggregate 


 


33

















 


number
of Shares which would be purchased under the Warrants then outstanding and upon
being indemnified and funded to its reasonable satisfaction by the Company or
by the Warrantholders signing the requisition against the costs which may be
incurred in connection with the calling and holding of the meeting, convene a
meeting of the Warrantholders.


 


(2)                                  If the Warrant Agent fails to convene a meeting within 14 days
after receipt of the requisition and  indemnity and
funding referred to in subsection (1), the Company or the Warrantholders, as
the case may be, may convene the meeting.


 


(3)                                  Every meeting of Warrantholders shall be held in the City of Vancouver,
British Columbia.


 


5.2                                                                               Notice


 


(1)                                  At least ten business days’ prior notice specifying the place, day and
hour of meeting and the general nature of business to be transacted and
containing such information as is reasonably necessary to enable the
Warrantholders to make a reasoned decision on the matter shall be given before
any meeting of Warrantholders but it shall not be necessary to specify in the
notice the terms of any resolution to be proposed.


 


(2)                                  Notice of a meeting of Warrantholders shall be given to the
Warrantholders in the manner provided in Section 2.12. Notice shall be
given to the Company unless the meeting is convened by the Company and to the
Warrant Agent unless the meeting is convened by the Warrant Agent. Any accidental
omission in the notice of a meeting shall not invalidate any resolution passed
at the meeting.  The notice must be
signed by an appropriate officer of the Warrant Agent or of the Company, or the
person designated by the Warrantholders, as the case may be.


 


5.3                                                                               Chairman


 


The person, who need not be a Warrantholder,
nominated in writing by the Warrant Agent shall be entitled to act as the
chairman at any meeting of Warrantholders, but if no such person is nominated
or if the person nominated shall not be present within 15 minutes after the
time appointed for holding the meeting, the Warrantholders present in person
shall choose a person present to be chairman.


 


5.4                                                                               Quorum


 


(1)                                  At any meeting of the Warrantholders a quorum shall consist of one or
more Warrantholders present in person or by proxy holding not less than 10% of
the Warrants then outstanding.


 


(2)                                  If a quorum of the Warrantholders is not present within half an hour
from the time fixed for holding any meeting, the meeting, if convened by Warrantholders
or by a requisition of Warrantholders, shall be dissolved; but if otherwise
convened, the meeting shall stand adjourned without notice to the same day in
the next week 


 


34

















 


following
(unless that day is not a business day, in which case the meeting shall stand
adjourned to the next business day thereafter) at the same time and place. At
the adjourned meeting, the Warrantholders present in person or by proxy shall
form a quorum and may transact the business for which the meeting was
originally convened notwithstanding that they may not hold 10% of the Warrants
then outstanding.


 


5.5                                                                               Power to Adjourn


 


The chairman of any meeting at which a quorum
of Warrantholders is present may, with the consent of the meeting, adjourn any
meeting and no notice of the adjournment need be given except such notice, if
any, as the meeting may prescribe.


 


5.6                                                                               Show of Hands


 


Every question submitted to a meeting other
than a question to be resolved by an Extraordinary Resolution shall be decided
in the first place by a majority of the votes given on a show of hands and
unless a poll is duly demanded as herein provided, a declaration by the
chairman that a resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority shall be
conclusive evidence of that fact.


 


5.7                                                                               Poll


 


On every Extraordinary Resolution to be passed
at a meeting and on any other question submitted to a meeting when directed by
the chairman or when demanded by one or more of the Warrantholders acting in
person or by proxy, a poll shall be taken in the manner as the chairman shall
direct. Questions other than those to be resolved by Extraordinary Resolution
shall, if a poll be taken, be decided by the votes of the holders of a majority
of the Warrants represented at the meeting and voted on the poll. If at any
meeting a poll is so demanded as aforesaid on the election of a chairman or on
a question of adjournment, it shall be taken forthwith. If at any meeting a
poll is so demanded on any other question, or an Extraordinary Resolution is to
be voted upon, a poll shall be taken in such manner and either at once or after
an adjournment as the chairman directs. The result of a poll shall be deemed to
be the decision of the meeting at which the poll was demanded and shall be
binding on all holders of Warrants.


 


5.8                                                                               Voting


 


On a show of hands, every person who is present
and entitled to vote, whether as a Warrantholder or as proxy for one or more
absent Warrantholders or both, shall have one vote. On a poll, each
Warrantholder present in person or represented by a proxy duly appointed by
instrument in writing shall be entitled to one vote in respect of each Share
purchasable under Warrants of which he shall then be the holder. A proxy need
not be a Warrantholder. The chairman of any meeting shall be entitled both on a
show of hands and on a poll to vote in respect of the Warrants, if any, held or
represented by him but shall not be entitled to a casting vote in the case of
an equality of votes.


 


35

















 


5.9                                                                               Persons Entitled to be Present


 


The Company and the Warrant Agent by their
respective officers and directors and the counsel of the Company and the
Warrant Agent may attend any meeting of Warrantholders but shall have no vote
as such.


 


5.10                                                                        Regulations


 


The Warrant Agent, or the Company with the
approval of the Warrant Agent, may from time to time make or vary such
regulations as it shall think fit providing for and governing the following:


 


(a)                                  the setting of the record date for a meeting for the purposes of
determining the Warrantholders entitled to receive notice of and to vote at a
meeting;


 


(b)                                 the form of the instrument appointing a proxy (which shall be in writing),
the manner in which the same shall be executed and the form of any authority
under which a person executes a proxy on behalf of a Warrantholder;


 


(c)                                  the deposit certificates, instruments appointing proxies or authorities
at such place or places as the Warrant Agent (or the Company or Warrantholders
in case the meeting is convened by the Company or the Warrantholders, as the
case may be) may in the notice convening the meeting direct and the time (if
any) before the holding of the meeting or adjourned meeting at which the same
shall be deposited; and


 


(d)                                 generally for the calling of meetings of Warrantholders and the conduct
of business thereat.


 


Any regulations so made shall be binding and
effective and votes given in accordance therewith shall be valid and shall be
counted. Except as the regulations may provide, the only persons who shall be
recognized at any meeting as the holders of any Warrants, or as entitled to
vote or to be present at the meeting in respect thereof, shall be registered
Warrantholders and persons whom registered Warrantholders have by instrument in
writing duly appointed as their proxies.


 


5.11                                                                        Certain Powers Exercisable by
Extraordinary Resolution


 


In addition to all other powers conferred on
them by the other provisions of this Indenture or by law but subject to
obtaining the approval of the Exchange, the Warrantholders shall have the
following powers, exercisable from time to time by Extraordinary Resolution:


 


(a)                                  power to agree to any amendment, modification, abrogation, alteration,
compromise or arrangement of the rights of Warrantholders or the Warrant Agent
(subject to the Warrant Agent’s prior consent) in its capacity as warrant agent
hereunder or on behalf of the Warrantholders against the Company whether the
rights arise under this Indenture or otherwise;


 


36

















 


(b)                                 power to agree to any change in or omission from the provisions of the
Warrant Certificate and this Indenture or any ancillary or supplemental
instrument which may be agreed to by the Company and to authorize the Warrant
Agent to concur in and execute any ancillary or supplemental indenture
embodying any change or omission;


 


(c)                                  power to require the Warrant Agent, subject to compliance with Section 7.3,
to enforce any of the obligations of the Company under this Indenture or any
supplemental instrument or to enforce any of the rights of the Warrantholders
in any manner specified in an Extraordinary Resolution or to refrain from
enforcing any such covenant or right, upon the Warrant Agent being furnished
with such funding and indemnity as it may in its discretion reasonably require;


 


(d)                                 power to remove the Warrant Agent or its successor or successors in
office and to appoint a new Warrant Agent or Warrant Agents to take the place
of the Warrant Agent or Warrant Agents so removed;


 


(e)                                  power to waive and direct the Warrant Agent to waive any default on the
part of the Company in complying with any provision of this Indenture either
unconditionally or upon conditions specified in the Extraordinary Resolution;


 


(f)                                    power to restrain any Warrantholder from taking or instituting or
continuing any suit, action or proceeding against the Company for the
enforcement of any of the obligations of the Company under this Indenture and
in the Warrant Certificates or to enforce any right of the Warrantholders under
this Indenture and the Warrant Certificates;


 


(g)                                 power to amend, alter or repeal any Extraordinary Resolution previously
passed or consented to by Warrantholders;


 


(h)                                 power to appoint a committee with power and authority to exercise, and
to direct the Warrant Agent (upon the Warrant Agent being furnished with such
funding and indemnity as it may in its discretion reasonably require) to
exercise, on behalf of the Warrantholders, such powers of the Warrantholders as
are exercisable by extraordinary resolution; and


 


(i)                                     power to assent to any compromise or arrangement with any creditor or
creditors or any class or classes of creditors, whether secured or otherwise,
and with holders of any shares or other securities of the Company.


 


5.12                                                                        Definition of “Extraordinary
Resolution”


 


The expression “Extraordinary
Resolution” when used in this Indenture means a resolution passed at
a meeting (including an adjourned meeting) of Warrantholders duly convened and
held in accordance with the provisions of this Indenture at which there are 


 


37

















 


Warrantholders present in person or represented
by proxy representing at least 25% of the aggregate number of the then
outstanding Warrants and carried by the affirmative vote of Warrantholders
representing not less than 66 2/3% of the aggregate number of then outstanding
Warrants represented at the meeting and voted on such resolution or by the
consent in writing, which may be in one or more instruments, of the holders
representing not less than 66 2/3% of the aggregate number of Warrants then
outstanding.


 


5.13                                                                        Resolutions Binding on all
Warrantholders


 


Every resolution and every Extraordinary
Resolution duly passed at a meeting of the Warrantholders duly convened and
held or any consent in writing in accordance with Section 5.17 shall be
binding upon all the Warrantholders (including their successors and assigns)
whether or not present or represented or voting at the meting or signatories to
the consent, as the case may be, and each of the Warrantholders and the Warrant
Agent, subject to the provisions for its indemnity contained in this Indenture,
shall be bound to give effect thereto.


 


5.14                                                                        Holdings by Company Disregarded


 


In determining whether the requisite number of
Warrantholders are present for the purpose of obtaining a quorum or have voted
or consented to any resolution, Extraordinary Resolution, consent, waiver or
other action under this Indenture, Warrants owned by the Company or any
Subsidiary of the Company shall be deemed to be not outstanding.


 


5.15                                                                        Minutes


 


Minutes of all resolutions and proceedings at
every meeting of Warrantholders shall be made and duly entered in books to be
provided for that purpose by the Warrant Agent at the expense of the Company
and any minutes signed or purported to be signed by the chairman of the
meeting, or by the chairman of the next succeeding meeting of Warrantholders,
shall be prima facie evidence of the matters
therein stated and, until the contrary is proved, every meeting for which
minutes have been made shall be deemed to have been duly convened and held and
all resolutions passed or proceedings taken thereat to have been duly passed
and taken.


 


5.16                                                                        Powers Cumulative


 


Any one or more of the powers or combination of
the powers in this Indenture exercisable by the Warrantholders by Extraordinary
Resolution or otherwise may be exercised from time to time and the exercise of
any one or more of the powers or any combination of powers from time to time
shall not be deemed to exhaust the rights of the Warrantholders to exercise the
same or any other power or powers or combination of powers then or any power or
powers or combinations of powers thereafter.


 


5.17                                                                        Instruments in Writing


 


All actions that may be taken and all powers
that may be exercised by the Warrantholders at a meeting held as hereinbefore
in this Article provided may also be taken and exercised by Warrantholders
entitled to acquire 66 2/3% of the aggregate number of Shares that can be
acquired pursuant to all of the then outstanding Warrants by an instrument in
writing,


 


38














 


signed in one or more counterparts by
Warrantholders in person or by attorney duly appointed in writing and the
expression “resolution” or “Extraordinary Resolution” respectively when used in
this Indenture shall include an instrument so signed.


 


ARTICLE 6

SUPPLEMENTAL INDENTURES AND SUCCESSOR COMPANIES


 


6.1                                                                               Provision for Supplemental
Indenture for Certain Purposes


 


From time to time the Company and the Warrant
Agent may, subject to the provisions of this Indenture and the obtaining of the
prior written consent of the Exchange, and shall, when so directed by this
Indenture, execute and deliver by their proper officers or directors, as the
case may be, indentures or instruments supplemental hereto, which thereafter
shall form part hereof, for any one or more or all of the following purposes:


 


(a)                                  adding hereto such additional covenants and enforcement provisions as in
the opinion of counsel are necessary or advisable and are not in the opinion of
the Warrant Agent, based on the opinion of counsel, prejudicial to the interest
of the Warrantholders as a group;


 


(b)                                 giving effect to any Extraordinary Resolution passed as provided in
Article 5;


 


(c)                                  making any modification in the form of Warrant Certificate which, in the
opinion of the Warrant Agent, based on the opinion of counsel, does not affect
the substance thereof;


 


(d)                                 making any additions to, deletions from or alterations of the provisions
of this Indenture which, in the opinion of the Warrant Agent based on the
opinion of counsel, do not materially and adversely affect the interests of the
Warrantholders and are necessary or advisable in order to incorporate, reflect
or comply with any Applicable Legislation;


 


(e)                                  for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguities, defective
provisions, errors or omissions herein, provided that in the opinion of the
Warrant Agent, based on the advice of counsel, the rights of the Warrant Agent
or of the Warrantholders, as a group, are in no way prejudiced thereby;


 


(f)                                    evidencing the succession of successor companies to the Company  and the assumption by any successor of the covenants of and
obligations assumed by such successor companies; and


 


(g)                                 setting forth any adjustments resulting from the application of the
provisions of Article 3 hereof.


 


39

















 


6.2                                                                               Successor Companies


 


Subject to Section 3.9, nothing in this
Indenture shall prevent any consolidation, reorganization, amalgamation,
arrangement or merger of the Company with or into any other body corporate,
bodies corporate, or person, or a conveyance or transfer of all or
substantially all the property and assets of the Company as an entirety to any
body corporate or person lawfully entitled to acquire and operate the same;
provided, however, that the body corporate formed by such consolidation,
amalgamation or arrangement or into which such merger shall have been made or
the person which acquires by conveyance or transfer all or substantially all
the property and assets of the Company as an entirety shall execute and deliver
to the Warrant Agent before or contemporaneously with such consolidation,
reorganization, amalgamation, arrangement, merger, conveyance or transfer and
as a condition precedent thereto, an agreement supplemental hereto wherein the
due and punctual performance and observance of all the covenants and conditions
of this Indenture to be performed or observed by the Company shall be assumed
by such successor body corporate or person. The Warrant Agent shall be entitled
to receive and shall be fully protected in relying upon an opinion of counsel
that any such consolidation, reorganization, amalgamation, arrangement, merger,
conveyance or transfer and any supplemental agreement executed in connection
therewith, complies with the provisions of this section.


 


6.3                                                                               Successor Body Corporate
Substituted


 


Subject to Section 3.9, in case the
Company, pursuant to Section 6.2 hereof, shall be consolidated,
amalgamated, reorganized, arranged or merged with or into any other body
corporate or bodies corporate or person or shall convey or transfer all or
substantially all of the property and assets of the Company as an entirety to
another body corporate or person, the successor body corporate or person formed
by such consolidation, reorganization, arrangement or amalgamation or into
which the Company shall have been merged or which shall have received a
conveyance or transfer as aforesaid shall succeed to and be substituted for the
Company hereunder with the same effect as nearly as may be possible as if it
had been named herein as the party of the first part. Such changes may be made
in the Warrants as may be appropriate in view of such consolidation,
amalgamation, reorganization, arrangement, merger, conveyance or transfer.


 


ARTICLE 7

CONCERNING THE WARRANT AGENT


 


7.1                                                                               Rights and Duties of Warrant
Agent


 


(1)                                  No trust is intended to be, or is or will be, created hereby and the
Warrant Agent shall owe no duties hereunder as a trustee.


 


(2)                                  In the exercise of the rights, duties and obligations prescribed or
conferred by the terms of this Indenture, the Warrant Agent will act honestly
and in good faith and will exercise that degree of care, diligence and skill
that a reasonably prudent warrant agent would exercise in comparable
circumstances.


 


40

















 


(3)                                  No provision of this Indenture will be construed to relieve the Warrant
Agent from liability for its own gross negligence or fraud.


 


(4)                                  The obligation of the Warrant Agent to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the Warrant
Agent or the Warrantholders hereunder shall be conditional upon the
Warrantholders furnishing, when required by notice in writing by the Warrant
Agent, sufficient funds to commence or continue such act, action or proceeding
and an indemnity reasonably satisfactory to the Warrant Agent to protect and
hold harmless the Warrant Agent against the costs, charges and expenses and
liabilities to be incurred thereto and any loss and damage it may suffer by
reason thereof.


 


(5)                                  No provision of this Indenture shall require the Warrant Agent to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers.


 


(6)                                  The Warrant Agent may, before commencing or at any time during the
continuance of such act, action or proceeding require the Warrantholders at
whose instance it is acting to deposit with the Warrant Agent the Warrant
Certificates held by them, for which Warrant Certificates the Warrant Agent
shall issue receipts.


 


7.2                                                                               Evidence, Experts and Advisors


 


(1)                                  In addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Company will furnish to the Warrant Agent such
additional evidence of compliance with any provision hereof and in such form as
is prescribed by Applicable Legislation or as the Warrant Agent reasonably
requires by written notice to the Company.


 


(2)                                  In the exercise of any right or duty hereunder the Warrant Agent, if it
is acting in good faith, may rely, as to the truth of any statement or the
accuracy of any opinion expressed therein, on any statutory declaration,
opinion, report, certificate or other evidence furnished to the Warrant Agent
pursuant to a provision hereof or Applicable Legislation or pursuant to a
request of the Warrant Agent.


 


(3)                                  Whenever Applicable Legislation requires that evidence referred to in
subsection (1) be in the form of a statutory declaration, the Warrant
Agent may accept the statutory declaration in lieu of a certificate of the
Company required by any provision hereof.


 


(4)                                  Any statutory declaration may be made by one or more officers or
Directors of the Company.


 


(5)                                  Proof of the execution of an instrument in writing by a Warrantholder
may be made by the certificate of a notary public, or other officer with
similar powers, that the person signing the instrument acknowledged to him the
execution thereof, 


 


41

















 


or
by an affidavit of a witness to the execution, or in any other manner that the
Warrant Agent considers adequate.


 


(6)                                  The Warrant Agent may employ or retain such counsel, accountants,
engineers, appraisers or other experts or advisers as it reasonably requires
for the purpose of discharging its duties hereunder and may pay reasonable
remuneration for all services so performed by any of them payable by the
Company in accordance with Section 4.3, without taxation of costs of any
counsel and will not be responsible for any misconduct or negligence on the
part of any of them who has been selected with due care by the Warrant
Agent.  The Warrant Agent may act and
rely and shall be protected in acting and relying in good faith on the opinion,
advice or information from any outside counsel, accountant or other expert
retained by the Company or by the Warrant Agent, relating to any matter arising
in the administration of this Indenture.


 


(7)                                  The Warrant Agent may as a condition precedent to any action to be taken
by it under this Indenture require such opinions, statutory declarations,
reports, certificates or other evidence as it, acting reasonably, considers
necessary or advisable in the circumstances.


 


7.3                                                                               Documents, Moneys, etc. Held
by Warrant Agent


 


(1)                                  Any security, document of title or other instrument that may be at any
time held by the Warrant Agent subject to the terms hereof may be placed in the
deposit vaults of the Warrant Agent or of any Canadian chartered bank or
deposited for safekeeping with such bank.


 


(2)                                  Unless herein otherwise expressly provided, any money held pending the
application or withdrawal thereof under any provision of this Indenture may be
deposited in the name of the Warrant Agent in any Canadian chartered bank at
the rate of interest (if any) then current on similar deposits or:


 


(a)                                  deposited in the deposit department of the Warrant Agent or of any other
loan or trust company authorized to accept deposits under the laws of Canada or
a province thereof, or


 


(b)                                 upon the written direction of the Company may be invested in securities
issued or guaranteed by the Government of Canada or a province thereof or in
obligations, maturing not more than one year from the date of investment, of
any Canadian chartered bank or loan or trust company.


 


(3)                                  Unless the Company is in default hereunder, all interest or other income
received by the Warrant Agent in respect of deposits and investments will
belong to the Company.


 


42

















 


7.4                                                                               Action by Warrant Agent to
Protect Interests


 


The Warrant Agent shall have power to institute
and to maintain such actions and proceedings as it may consider necessary or
expedient to preserve or protect its interests and the interests of the
Warrantholders.


 


7.5                                                                               Warrant Agent not Required to
give Security


 


The Warrant Agent shall not be required to give
any bond or security in respect of the execution of the terms and powers of
this Indenture or otherwise in respect of the premises.


 


7.6                                                                               Protection of Warrant Agent


 


By way of supplement to the provisions of any
law for the time being relating to the Warrant Agent, it is expressly declared
and agreed that:


 


(a)                                  the Warrant Agent shall not be liable for or by reason of any
representations, statements of fact or recitals in this Indenture (except the
representation contained in Section 7.8 and by virtue of the
countersignature of the Warrant Agent on the Warrant Certificates) or required
to verify the same, but all such representations, statements or recitals are
and shall be deemed to be made by the Company;


 


(b)                                 the Warrant Agent shall not be obligated to see or to require evidence
of registration (a filing or renewal thereof) of this Indenture or any
instrument ancillary or supplemental hereto;


 


(c)                                  the Warrant Agent shall not be bound to give notice to any person or
persons of the execution hereof;


 


(d)                                 the Warrant Agent shall not incur any liability or responsibility
whatever or be in any way responsible for the consequence of any breach on the
part of the Company of any obligation herein contained or of any acts of the
directors, officers, employees or agents of the Company;


 


(e)                                  the Company shall indemnify and hold harmless the Warrant Agent and its
agents, employees, directors and officers and all of their respective
representatives, heirs, successors and assigns from and against any and all
liabilities, losses, costs (including any and all reasonable legal fees and
disbursements), claims, actions or demands whatsoever which may be brought against
the Warrant Agent or which it may suffer or incur in connection with or arising
out of the performance of its duties and obligations under this Indenture, save
only in the event of the gross negligence, wilful misconduct or fraud of the
Warrant Agent. It is understood and agreed that this indemnification shall
survive the termination or discharge of this Indenture or the resignation or
removal of the Warrant Agent;


 


43

















 


(f)                                    the Warrant Agent shall not be bound to give any notice or to do or take
any act, action or proceeding by virtue of the powers conferred on it hereby
unless and until it shall have been required so to do under the terms hereof
nor shall the Warrant Agent be required to take notice of any default of the
Company hereunder unless and until notified in writing of the default (which
notice must specify the nature of the default) and, in the absence of that
notice, the Warrant Agent may for all purposes hereunder conclusively assume
that no default by the Company hereunder has occurred. The giving of any notice
shall in no way limit the discretion of the Warrant Agent hereunder as to
whether any action is required to be taken in respect of any default hereunder;


 


(g)                                 the Warrant Agent is not at any time under any duty or responsibility to
a Warrantholder to determine whether any facts exist which require any
adjustment contemplated by Section 3.6 or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making the same;


 


(h)                                 the Warrant Agent is not accountable with respect to the validity or
value (or the kind or amount) of any Shares or other securities or property
which may at any time be issued or delivered upon the exercise of the rights
attaching to any Warrant; and


 


(i)                                     the Warrant Agent is not responsible for any failure of the Company to
make any cash payment or any failure of the Company to issue, transfer or
deliver Shares or certificates for the same upon the exercise and surrender of
any Warrants for the purpose of the exercise of such rights or to comply with
any of the covenants contained in this Section 7.


 


7.7                                                                               Replacement of Warrant Agent


 


(1)                                  The Warrant Agent may resign its agency and be discharged from all
further duties and liabilities hereunder, except as otherwise provided in this
Indenture, by giving to the Company and the Warrantholders not less than
45 days’ notice in writing or, if a new Warrant Agent has been appointed,
such shorter notice as the Company accepts as sufficient.


 


(2)                                  The Warrantholders by Extraordinary Resolution may at any time remove
the Warrant Agent and appoint a new Warrant Agent.


 


(3)                                  If the Warrant Agent so resigns or is so removed or is dissolved,
becomes bankrupt, goes into liquidation or otherwise becomes incapable of
acting hereunder, the Company will forthwith appoint a new Warrant Agent unless
a new Warrant Agent has already been appointed by the Warrantholders.


 


44

















 


(4)                                  Failing appointment by the Company, the retiring Warrant Agent or any
Warrantholder may apply to the British Columbia Supreme Court for the
appointment of a new Warrant Agent.


 


(5)                                  Any new Warrant Agent so appointed by the Company or by the Court will
be subject to removal by Extraordinary Resolution of the Warrantholders.


 


(6)                                  Any new Warrant Agent appointed under any provision of this section must
be a corporation authorized to carry on the business of a trust company in the
Qualifying Jurisdictions in Canada.


 


(7)                                  On any appointment, the new Warrant Agent will be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as Warrant Agent without any further assurance, conveyance, act or deed,
but there will be immediately executed, at the expense of the Company, all such
conveyances or other instruments as, in the opinion of counsel, are necessary
or advisable for the purpose of assuring the powers, rights, duties and
responsibilities to the new Warrant Agent.


 


(8)                                  On the appointment of a new Warrant Agent, the Company will promptly
give notice thereof to the Warrantholders.


 


(9)                                  A corporation into or with which the Warrant Agent is merged or
consolidated or amalgamated, or a corporation succeeding to the business of the
Warrant Agent, will be the successor to the Warrant Agent hereunder without any
further act on its part or on the part of any party hereto if the corporation
would be eligible for appointment as a new Warrant Agent under
subsection (6).


 


(10)                            A Warrant Certificate certified but not delivered by a predecessor
Warrant Agent may be delivered by the new or successor Warrant Agent in the
name of the predecessor Warrant Agent or successor Warrant Agent.


 


7.8                                                                               Conflict of Interest


 


(1)                                  The Warrant Agent represents to the Company that at the time of the
execution and delivery hereof no material conflict of interest exists between
its role as a fiduciary hereunder and its role in any other capacity and if a
material conflict of interest arises hereafter it will, within 90 days after
ascertaining that it has a material conflict of interest, either eliminate the
conflict of interest or resign its agency hereunder.


 


(2)                                  Subject to subsection (1), the Warrant Agent in its personal or any
other capacity may buy, lend upon and deal in securities of the Company and
generally may contract and enter into financial transactions with the Company
or any subsidiary of the Company without being liable to account for any profit
made thereby.


 


45

















 


7.9                                                                               Acceptance of Appointment


 


The Warrant Agent hereby accepts the agency in
this Indenture declared and provided for and agrees to perform them on the
terms and conditions herein set forth and agrees to hold all rights, interests
and benefits contained herein for and on behalf of those persons who become
holders of Warrants from time to time issued pursuant to this Indenture.


 


7.10                                                                        Accounts


 


(1)                                  The Company hereby represents to the Warrant Agent that any account to
be opened by, or interest to held by, the Warrant Agent in connection with this
Indenture, for or to the credit of the Company, either (i) is not intended
to be used by or on behalf of any third party; or (ii) is intended to be
used by or on behalf of a third party, in which case the Company agrees to
complete and execute forthwith a declaration in the form prescribed by the
Warrant Agent as to the particulars of such third party.


 


(2)                                  The Warrant Agent shall retain the right not to act and shall not be
liable for refusing to act if, due to a lack of information or for any other
reason whatsoever, the Warrant Agent, in its sole judgment, determines that
such act might cause it to be in non-compliance with any applicable anti-money
laundering or anti-terrorist legislation, regulation or guideline. Further,
should the Warrant Agent, in its sole judgment, determine at any time that its
acting under this Indenture has resulted in its being in non-compliance with
any applicable anti-money laundering or anti-terrorist legislation, regulation
or guideline, then it shall have the right to resign on 10 days written notice
to the Company, provided (i) that the Warrant Agent’s written notice shall
describe the circumstances of such non-compliance; and (ii) that if such
circumstances are rectified to the Warrant Agent’s satisfaction within such 10
day period, then such resignation shall not be effective.


 


ARTICLE 8

GENERAL


 


8.1                                                                               Satisfaction and Discharge of
Indenture


 


This Indenture shall expire and terminate on
the earlier of:


 


(a)                                  the date by which there has been delivered to the Warrant Agent for
exercise or destruction all Warrant Certificates theretofore countersigned
hereunder, or


 


(b)                                 the 61st day following the Warrant Expiry Date,


 


and if all Shares required to be issued in
compliance with the provisions hereof have been issued and delivered hereunder,
this Indenture will cease to be of further effect and the Warrant Agent, on
demand of and at the cost and expense of the Company and on delivery to the
Warrant Agent of a certificate of the Company stating that all conditions
precedent to the satisfaction and discharge of this Indenture have been
complied with and on payment to the Warrant Agent of the 


 


46

















 


fees and other remuneration payable to the
Warrant Agent, will execute proper instruments acknowledging satisfaction of
and discharging this Indenture.


 


8.2                                                                               Sole Benefit of Parties and
Warrantholders


 


Nothing in this Indenture expressed or implied
will give or be construed to give to any person other than the parties hereto
and the Warrantholders, as the case may be, any legal or equitable right,
remedy or claim under this Indenture, or under any covenant or provision herein
contained, all covenants and provisions being for the sole benefit of the
parties hereto and the Warrantholders.


 


8.3                                                                               Discretion of Directors


 


Any matter to be determined by the Directors
will be determined by the Directors in their sole discretion and a
determination so made, absent manifest error, will be conclusive.


 


8.4                                                                               Privacy


 


The parties acknowledge that federal and/or provincial legislation that addresses the protection of
individuals’ personal information (collectively, “Privacy Laws”)
applies to obligations and activities under this Indenture. Despite any other
provision of this Indenture, neither party shall take or direct any action that
would contravene, or cause the other party to contravene, applicable Privacy
Laws. The Company shall, before transferring or causing to be transferred
personal information to the Warrant Agent, obtain and retain required consents
of the relevant individuals to the collection, use and disclosure of their
personal information, or shall have determined that such consents either have
previously been given upon which the parties can rely or are not required under
the Privacy Laws. The Warrant Agent shall use commercially reasonable efforts
to ensure that its services hereunder comply with Privacy Laws.


 


8.5                                                                               Force Majeure


 


No party shall be liable to the other, or held in breach
of this Indenture, if prevented, hindered, or delayed in the performance or
observance of any provision contained herein by reason of act of God, riots,
terrorism, acts of war, epidemics, governmental action or judicial order,
earthquakes, or any other similar causes (including, but not limited to,
mechanical, electronic or communication interruptions, disruptions or
failures).  Performance times under this
Indenture shall be extended for a period of time equivalent to the time lost
because of any delay that is excusable under this Section.


 


47

















 


8.6                                                                               Counterparts and Formal Date


 


This Indenture may be executed in several
counterparts, each of which when so executed will be deemed to be an original,
and the counterparts together will constitute one and the same instrument and
notwithstanding the date of their execution will be deemed to bear the date set
out at the top of the first page of this Indenture.


 


IN WITNESS WHEREOF the parties hereto have
executed this indenture as of the date first written above.


 


	
   

  	
  TERRANE METALS CORP.  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  “Basil
  Huxham”  

  
	
   

  	
   

  	
  Name: Basil Huxham  

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE TRUST COMPANY OF
  CANADA  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  “Karl Burgess”  

  
	
   

  	
   

  	
  Name: Karl Burgess  

  
	
   

  	
   

  	
  Title: Professional, Corporate Trust  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  “Gabriel Ducharme”  

  
	
   

  	
   

  	
  Name: Gabriel Ducharme  

  
	
   

  	
   

  	
  Title: Professional, Corporate Trust

  



 


48






 










 


SCHEDULE “A” TO INDENTURE


 


FORM OF NON-U.S.
WARRANT CERTIFICATE


 


This
Certificate, and the Common Share Purchase Warrants evidenced hereby, will be
void and of no value unless exercised on or before 5:00 p.m. (Pacific
time) on April 16, 2011.


 


TERRANE METALS CORP.


Incorporated in the Province of British Columbia


 


	
   

  	
  CUSIP
  No.:

  	
  88103A124

  
	
   

  	
  ISIN No.:

  	
  CA88103A1241

  



 


	
  NO.

  	
  WARRANTS

  



 


COMMON SHARE PURCHASE WARRANTS


 


THIS
IS TO CERTIFY THAT for value received                                  
, the registered holder hereof is entitled for each whole Warrant represented
hereby to purchase one fully paid and non-assessable common share (“Common
Share”) in the capital of Terrane Metals Corp. (the “Company”) at a price per
share of Cdn. $1.50, subject to adjustment as hereinafter referred to.


 


Such
right to purchase may be exercised by the registered holder hereof at any time
on the date of issue hereof up to and including 5:00 p.m. (Pacific time)
on April 16, 2011 (the “Warrant Expiry Time”) by surrender of this Warrant
Certificate to Computershare Trust Company of Canada (the “Warrant Agent”) at
the principal transfer offices of the Warrant Agent in Vancouver, British
Columbia, together with the subscription form set forth on the reverse hereof,
duly executed and completed for the number of Common Shares which the holder
hereof is entitled to purchase and the purchase price of such Common Shares as
herein provided.


 


This
Warrant Certificate and such payment shall be deemed not to have been
surrendered and made except upon personal delivery thereof or, if sent by post
or other means of transmission, upon actual receipt thereof by the Warrant
Agent at the office specified above.


 


The
purchase price of Common Shares subscribed for hereunder shall be paid by
certified cheque, money order or bank draft in lawful money of Canada payable
to the order of the Company at par in the city where this Warrant Certificate
is delivered.


 


Certificates
for the Common Shares subscribed for will be mailed to the persons specified in
the subscription form at their respective addresses specified therein or, if so
specified in such subscription form, delivered to such persons at the office
where the applicable Warrant Certificate was surrendered, within five business
days after the due surrender of such Warrant


 

















 


Certificate
and payment as aforesaid.  In the event
of a purchase of a number of Common Shares fewer than the number which can be
purchased pursuant to this Warrant Certificate, the holder shall be entitled to
receive without charge a new Warrant Certificate in respect of the balance of
such Warrants.


 


This
Warrant Certificate and other Warrant Certificates are issued under and
pursuant to a certain warrant indenture (herein referred to as the “Indenture”)
dated April 16, 2010 between the Company and the Warrant Agent, to which
Indenture and any instruments supplemental thereto reference is hereby made for
a description of the terms and conditions upon which such Warrant Certificates
are issued and are to be held all to the same effect as if the provisions of
the Indenture and all instruments supplemental thereto were herein set forth,
to all of which provisions the holder of this Warrant Certificate by acceptance
hereof assents.  The Company will furnish
to the holder of this Warrant Certificate, upon request and without charge, a
copy of the Indenture.  Capitalized terms
not otherwise defined herein have the meaning ascribed to them in the
Indenture.  In the event of any conflict
or inconsistency between the provisions of this Warrant Certificate and the
provisions of the Indenture, the provisions of the Indenture shall govern.


 


Subject
to the Company’s right to purchase the Warrants under the Indenture and to any
restriction under applicable law or policy of any applicable regulatory body,
the Warrants and Warrants Certificates and the rights thereunder shall only be
transferable by the registered holder hereof in compliance with the conditions
prescribed in the Indenture and the due completion, execution and delivery of a
Transfer Form set forth on the reverse hereof in accordance with the terms
of the Indenture.


 


The
holding of this Warrant Certificate shall not constitute the holder hereof a
holder of Common Shares nor entitle him to any right of interest in respect
thereof.


 


The
Indenture provides for adjustment in the number of Common Shares to be
delivered upon the exercise of the right of purchase hereby granted and to the
Exercise Price in certain events therein set forth.


 


The
Indenture contains provisions making binding upon all holders of Warrants
outstanding thereunder resolutions passed at meetings of such holders held in
accordance with such provisions by the warrantholders entitled to purchase a
specified majority of the Common Shares which may be purchased pursuant to all
then outstanding Warrants.


 


The
holder of this Warrant Certificate may at any time up to and including the
Warrant Expiry Time upon the surrender hereof to the Warrant Agent at its
principal transfer offices in Vancouver, British Columbia, and payment of any
charges provided for in the Indenture, exchange this Warrant Certificate for
other Warrant Certificates entitling the holder to subscribe in the aggregate
for the same number of Common Shares as is expressed in this Warrant
Certificate.


 


This
Warrant Certificate shall not be valid for any purpose whatever unless and
until it has been countersigned by the Warrant Agent for the time being under
the Indenture.


 


2

















 


Nothing
contained herein or in the Indenture shall confer any right upon the holder
hereof or any other person to subscribe for or purchase any Common Shares of
the Company at any time subsequent to the Warrant Expiry Time. After the
Warrant Expiry Time this Warrant Certificate and all rights thereunder shall be
void and of no value.


 


Time
is of the essence hereof.


 


IN WITNESS WHEREOF the Company has caused this
Warrant Certificate to be executed and Computershare Trust Company of Canada
has caused this Warrant Certificate to be countersigned by an authorized
officer.


 


 


	
   

  	
   

  	
  TERRANE
  METALS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Countersigned
  by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
					



 


3

















 


EXERCISE FORM


 


TO:         Terrane
Metals Corp. c/o


 


Computershare
Trust Company of Canada


510 Burrard Street, 2nd Floor,
Vancouver, British Columbia, V6C 3B9


 


The
undersigned registered holder of the within Warrant Certificate, subject to
that certain warrant indenture (the “Indenture”) dated as of April 16,
2010 between Terrane Metals Corp. and Computershare Trust Company of Canada, as
Warrant Agent, hereby:


 


a)                          subscribes for
                     
common shares (“Common Shares”) (or such number of Common Shares or other
securities or property to which such subscription entitles the undersigned in
lieu thereof or in addition thereto under the Indenture) of Terrane Metals
Corp. at the price per share of Cdn. $1.50 (or such adjusted price which may be
in effect under the provisions of the Indenture) and in payment of the exercise
price encloses a certified cheque, money order or bank draft, in any case in
lawful money of Canada payable at par in the City of Vancouver to Terrane
Metals Corp.; and


 


b)                         delivers
herewith the above-mentioned Warrant Certificate entitling the undersigned to
subscribe for the above-mentioned number of Common Shares.


 


The
undersigned hereby directs that the said Common Shares be registered as
follows:


 


	
  Name(s) in full

  	
   

  	
  Address(es) 

  (including Postal Code)

  	
   

  	
  Number(s) of

  Common Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


The
undersigned represents that it has had access to such current public
information concerning Terrane Metals Corp. as it considered necessary in
connection with its investment decision.


 


4

















 


DATED
this               
day of                 
, 20        .


 


Signature
of Warrantholder guaranteed by:


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Warrantholder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name of Warrantholder)*

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address
  of Warrantholder in full)

  



 






(*The
name of the Warrantholder must correspond with the name upon the face of the
certificate in every particular and Terrane Metals Corp. reserves the right to
require reasonable assurance that such signature is genuine and effective.)


 


5














 


TRANSFER
FORM


 


FOR value received I/we (the “Transferor”)
hereby sell, assign, and transfer unto:


 




	
   

  
	
  (Name of Transferee)

  
	
   

  
	
   

  
	
  (Address of Transferee)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Social Insurance Number)      

  
	
   

  
	
   

  	
   Warrants
  of

  
	
  (Quantity & Class)

  	
   

  
	
   

  






 


TERRANE
METALS CORP. (the “Company”)


 


	
  represented
  by:

  	
   

  
	
  (List Certificate Numbers)

  
	
   

  
	
  and
  the undersigned hereby irrevocably constitutes and appoints:

  
	
   

  
	
   

  
	
  (Leave Blank)

  



 


the
attorney to transfer the said Warrants on the books of the Company with full
power of substitution in the premises.


 


DATED
this              
day of               ,
20          .


 


Signature
Guaranteed By:


 


	
   

  	
   

  
	
   

  	
  (Signature of Warrantholder)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name of Warrantholder, Please Print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Capacity of Authorized Representative)

  



 


6

















 


Terms and Conditions


 


The Warrants are issued
subject to the terms and conditions of the Indenture.  A copy of the Indenture may be obtained, free
of charge, at the offices of Computershare Trust Company of Canada, 510 Burrard
Street, 2nd Floor, Vancouver, British Columbia,
V6C 3B9.


 


Instructions


 


1.                                      The signature on the Exercise Form and Transfer Form
must correspond with the name as written upon the face of the certificate, in
every particular, without alteration or enlargement, or change whatever.


 


2.                                      For transfers within Canada, the signature must be
guaranteed by a Canadian schedule 1 chartered bank, major Trust Company or by a
member firm of an acceptable Medallion Signature Guarantee Program (STAMP,
SEMP, MSP). The stamp must bear the words “Signature Medallion Guaranteed”.


 


3.                                      If Common Shares are issued to a person other than the registered
Warrantholder, the signature of that person must be signature guaranteed as if
it were a transfer under paragraphs 2 or 3.


 


4.                                      If the Exercise Form and Transfer Form are signed by a
trustee, executor, administrator, curator, guardian, attorney, officer of a
Company or any person acting in a fiduciary or representative capacity, the
Warrant Certificate must be accompanied by evidence of authority to sign
satisfactory to the Warrant Agent and the Company.


 


7

















 


SCHEDULE “B” TO INDENTURE


 


FORM OF U.S. WARRANT
CERTIFICATE


 


THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY
STATE SECURITIES LAWS.  THE HOLDER
HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF TERRANE METALS
CORP. (THE “COMPANY”) THAT THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES
ACT, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES
ACT PROVIDED BY RULE 144 UNDER THE U.S. SECURITIES ACT, IF APPLICABLE, AND IN
COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, OR (D) PURSUANT TO
ANOTHER EXEMPTION FROM REGISTRATION UNDER U.S. SECURITIES LAWS AND ANY
APPLICABLE STATE SECURITIES LAWS. 
PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C) OR (D) ABOVE, THE
HOLDER OF THE SECURITIES HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF
RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY. DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT
OF TRANSACTIONS ON A CANADIAN STOCK
EXCHANGE.  PROVIDED THAT THE COMPANY IS A
FOREIGN ISSUER WITHIN THE MEANING OF REGULATION S UNDER THE U.S. SECURITIES ACT
AT THE TIME OF SALE, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM
THE REGISTRAR AND TRANSFER AGENT OF THE COMPANY UPON DELIVERY OF THIS
CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE
COMPANY’S REGISTRAR AND TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT SUCH
SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.


 


THESE
WARRANTS AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S.
SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE EXERCISED
IN THE UNITED STATES OR BY OR ON BEHALF OF A U.S. PERSON OR A PERSON IN THE
UNITED STATES UNLESS AN EXEMPTION IS AVAILABLE FROM THE REGISTRATION
REQUIREMENTS OF THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.  “UNITED STATES” AND “U.S. PERSON”
ARE AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT.  THESE WARRANTS MAY BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS.


 


This
Certificate, and the Common Share Purchase Warrants evidenced hereby, will be
void and of no value unless exercised on or before 5:00 p.m. (Pacific time) on April 16, 2011.


 


TERRANE METALS CORP.


Incorporated in the Province of British Columbia


 


	
   

  	
  CUSIP
  No.:

  	
  88103A132

  
	
   

  	
  ISIN No.:

  	
  US 88103A1328

  



 


	
  NO.

  	
  WARRANTS

  



 


COMMON SHARE PURCHASE WARRANTS


 


THIS
IS TO CERTIFY THAT for value received                         
, the registered holder hereof is entitled for each whole Warrant represented
hereby to purchase one 


 


8

















 


fully
paid and non-assessable common share (“Common Share”) in the capital of Terrane
Metals Corp. (the “Company”) at a price per share of Cdn. $1.50, subject to
adjustment as hereinafter referred to.


 


Such
right to purchase may be exercised by the registered holder hereof at any time
on the date of issue hereof up to and including 5:00 p.m. (Pacific time) on
April 16, 2011 (the “Warrant Expiry Time”) by surrender of this Warrant
Certificate to Computershare Trust Company of Canada (the “Warrant Agent”) at
the principal transfer offices of the Warrant Agent in Vancouver, British
Columbia, together with a Subscription Form in the form attached hereto as
Schedule “A”, duly executed and completed for the number of Common Shares which
the holder hereof is entitled to purchase and the purchase price of such Common
Shares as herein provided.


 


This
Warrant Certificate and such payment shall be deemed not to have been
surrendered and made except upon personal delivery thereof or, if sent by post
or other means of transmission, upon actual receipt thereof by the Warrant
Agent at the office specified above.


 


The
purchase price of Common Shares subscribed for hereunder shall be paid by
certified cheque, money order or bank draft in lawful money of Canada payable
to the order of the Company at par in the city where this Warrant Certificate
is delivered.


 


Certificates
for the Common Shares subscribed for will be mailed to the persons specified in
the subscription form at their respective addresses specified therein or, if so
specified in such subscription form, delivered to such persons at the office
where the applicable Warrant Certificate was surrendered, within five business
days after the due surrender of such Warrant Certificate and payment as
aforesaid.  In the event of a purchase of
a number of Common Shares fewer than the number which can be purchased pursuant
to this Warrant Certificate, the holder shall be entitled to receive without
charge a new Warrant Certificate in respect of the balance of such Warrants.


 


This
Warrant Certificate and other Warrant Certificates are issued under and
pursuant to a certain warrant indenture (herein referred to as the “Indenture”)
dated April 16, 2010 between the Company and the Warrant Agent, to which
Indenture and any instruments supplemental thereto reference is hereby made for
a description of the terms and conditions upon which such Warrant Certificates
are issued and are to be held all to the same effect as if the provisions of
the Indenture and all instruments supplemental thereto were herein set forth,
to all of which provisions the holder of this Warrant Certificate by acceptance
hereof assents.  The Company will furnish
to the holder of this Warrant Certificate, upon request and without charge, a
copy of the Indenture.  Capitalized terms
not otherwise defined herein have the meaning ascribed to them in the
Indenture.  In the event of any conflict
or inconsistency between the provisions of this Warrant Certificate and the
provisions of the Indenture, the provisions of the Indenture shall govern.


 


Subject
to the Company’s right to purchase the Warrants under the Indenture and to any
restriction under applicable law or policy of any applicable regulatory body,
the Warrants and Warrants Certificates and the rights thereunder shall only be
transferable by the registered holder hereof in compliance with the conditions
prescribed in the Indenture and the due completion, 


 


9

















 


execution
and delivery of a Transfer Form in the form attached hereto as Schedule “B”, in
accordance with the terms of the Indenture.


 


The
holding of this Warrant Certificate shall not constitute the holder hereof a
holder of Common Shares nor entitle him to any right of interest in respect
thereof.


 


The
Indenture provides for adjustment in the number of Common Shares to be
delivered upon the exercise of the right of purchase hereby granted and to the
Exercise Price in certain events therein set forth.


 


The
Indenture contains provisions making binding upon all holders of Warrants
outstanding thereunder resolutions passed at meetings of such holders held in
accordance with such provisions by the warrantholders entitled to purchase a
specified majority of the Common Shares which may be purchased pursuant to all
then outstanding Warrants.


 


The
holder of this Warrant Certificate may at any time up to and including the
Warrant Expiry Time upon the surrender hereof to the Warrant Agent at its
principal transfer offices in Vancouver, British Columbia, and payment of any
charges provided for in the Indenture, exchange this Warrant Certificate for
other Warrant Certificates entitling the holder to subscribe in the aggregate
for the same number of Common Shares as is expressed in this Warrant
Certificate.


 


This
Warrant Certificate shall not be valid for any purpose whatever unless and
until it has been countersigned by the Warrant Agent for the time being under
the Indenture.


 


Nothing
contained herein or in the Indenture shall confer any right upon the holder
hereof or any other person to subscribe for or purchase any Common Shares of
the Company at any time subsequent to the Warrant Expiry Time. After the
Warrant Expiry Time this Warrant Certificate and all rights thereunder shall be
void and of no value.


 


Time
is of the essence hereof.


 


U.S.
Securities Matters


 


The
Warrants represented by this Warrant Certificate may not be exercised in the
United States or by or on behalf of a U.S. Person or a person in the United
States unless exemptions from the registration requirements of the U.S.
Securities Act and any applicable state securities laws are available, and the holder
of this Warrant Certificate may be required to provide the Company with an
opinion of counsel reasonably satisfactory to the Company to that effect (“United
States” and “U.S. Person” are as defined in Regulation S of the U.S. Securities
Act of 1933, as amended (the “U.S. Securities Act”); provided that
institutional “accredited investor” that satisfies one of the criteria of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the U.S. Securities Act, that
purchased units (“Units”), with each Unit consisting of one share of common
stock of the Company and one-half of one Warrant, in the Company’s offering of
Units that closed on or about April 16, 2010, will not be required to deliver
an opinion of counsel in connection with its due exercise of Warrants on its
own behalf, at a time when such holder certifies that it remains an
institutional “accredited investor”.


 


10

















 


The
Warrants and the Common Shares issuable upon exercise of the Warrants have not
be registered under the U.S. Securities Act or under any state securities laws,
and may not be transferred in the United States or to a U.S. Person unless the
Warrants and the Common Shares issuable upon exercise thereof, as applicable,
have been registered under the U.S. Securities Act and the securities laws of
all applicable states or an exemption from such registration requirements is
available.


 


The
certificates representing the Common Shares issued to U.S. Persons, to persons
in the United States or to persons for the account or benefit of a U.S. Person
or a person in the United States, as well as any certificates issued in
exchange of or in substitution for such certificates, upon exercise of the
Warrants will bear a legend in substantially the following form:


 


“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “U.S. SECURITIES ACT”) OR UNDER ANY STATE SECURITIES LAWS.  THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF TERRANE METALS CORP. (THE “COMPANY”) THAT
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 UNDER THE
U.S. SECURITIES ACT, IF APPLICABLE, AND IN COMPLIANCE WITH APPLICABLE U.S.
STATE SECURITIES LAWS, OR (D) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION
UNDER U.S. SECURITIES LAWS AND ANY APPLICABLE STATE SECURITIES LAWS.  PROVIDED THAT IN THE CASE OF TRANSFERS
PURSUANT TO (C) OR (D) ABOVE, THE HOLDER OF THE SECURITIES HAS FURNISHED TO THE
COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE
SATISFACTORY TO THE COMPANY. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD
DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON A CANADIAN STOCK EXCHANGE. 
PROVIDED THAT THE COMPANY IS A FOREIGN ISSUER WITHIN THE MEANING OF
REGULATION S UNDER THE U.S. SECURITIES ACT AT THE TIME OF SALE, A NEW
CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE REGISTRAR AND TRANSFER
AGENT OF THE COMPANY UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED
DECLARATION, IN A FORM SATISFACTORY TO THE COMPANY’S REGISTRAR AND TRANSFER
AGENT AND THE COMPANY, TO THE EFFECT THAT SUCH SALE OF THE SECURITIES
REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S
UNDER THE U.S. SECURITIES ACT.”


 


provided, that if, at
the time the Company is a “foreign issuer,” as defined in Regulation S, the
Securities are being sold in compliance with the requirements of Rule 904 of
Regulation S and in compliance with Canadian local laws and regulations, the
legend may be removed by providing a declaration to the Company and the Company’s
transfer agent in the form set forth in Schedule “C” hereto (or in such other
form as the Company may prescribe from time to time);


 


provided
further, that, notwithstanding the foregoing, the Company’s transfer agent may
impose additional requirements for the removal of legends from securities sold
in compliance with Rule 904 of Regulation S in the future;


 


provided further, that, if any of the
Securities are being sold pursuant to Rule 144 of the U.S. Securities Act, the
legend may be removed by delivering to the Company and the Company’s transfer
agent an opinion of counsel of recognized standing in form and substance 


 


11

















 


satisfactory
to the Company, to the effect that the legend is no longer required under
applicable requirements of the U.S. Securities Act or state securities laws.


 


IN WITNESS WHEREOF the Company has caused this
Warrant Certificate to be executed and Computershare Trust Company of Canada
has caused this Warrant Certificate to be countersigned by an authorized
officer.


 


 


	
   

  	
  TERRANE
  METALS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Countersigned
  by:

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE
  TRUST COMPANY OF CANADA

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
					



 


12














 


Schedule “A”


 


EXERCISE FORM


 


TO:         Terrane
Metals Corp. c/o


 


Computershare
Trust Company of Canada


510 Burrard Street, 2nd Floor,
Vancouver, British Columbia, V6C 3B9


 


The
undersigned registered holder of the within Warrant Certificate, subject to
that certain warrant indenture (the “Indenture”) dated as of April 16, 2010
between Terrane Metals Corp. and Computershare Trust Company of Canada, as
Warrant Agent, hereby:


 


a)                                     subscribes for                  common shares (“Common Shares”) (or such
number of Common Shares or other securities or property to which such
subscription entitles the undersigned in lieu thereof or in addition thereto
under the Indenture) of Terrane Metals Corp. at the price per share of Cdn.
$1.50 (or such adjusted price which may be in effect under the provisions of
the Indenture) and in payment of the exercise price encloses a certified
cheque, money order or bank draft, in any case in lawful money of Canada
payable at par in the City of Vancouver to Terrane Metals Corp.; and


 


b)                                     delivers herewith the above-mentioned Warrant
Certificate entitling the undersigned to subscribe for the above-mentioned
number of Common Shares.


 


The
undersigned hereby directs that the said Common Shares be registered as
follows:


 


	
  Name(s)
  in full

  	
   

  	
  Address(es) 

  (including Postal Code)

  	
   

  	
  Number(s) of

  Common Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


The
undersigned represents that it has had access to such current public
information concerning Terrane Metals Corp. as it considered necessary in
connection with its investment decision.


 


The
undersigned further represents, warrants and certifies as follows (one (only) of the following must be checked):


 


o                                    A.            The undersigned holder (i) at the
time of exercise of the Warrants is not in the United States; (ii) is not a “U.S.
person” (a “U.S. Person”, as defined in Regulation S under the United States
Securities Act, as amended (the “U.S. Securities Act”), and is not


 

















 


exercising
the Warrants on behalf of a U.S. Person or a person in the United States; and (iii)
did not execute or deliver this exercise form in the United States; OR


 


o                                    B.            The undersigned holder (i) purchased
the Warrants directly from the Company pursuant to a written subscription
agreement for the purchase of Units, with each Unit consisting of one share of
common stock of the Company and one-half of one Warrant, in the Company’s
offering of Units that closed on or about April 16, 2010, (ii) is exercising
the Warrants solely for its own account and not on behalf of any other person;
and (iii) was an institutional “accredited investor” that satisfies one of the
criteria of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the U.S.
Securities Act, both on the date the Units were purchased and on the date of
exercise of the Warrants; OR


 


o                                    C.            The undersigned holder has delivered
to the Company an opinion of counsel (which will not be sufficient unless it is
from counsel of recognized standing and in form and substance satisfactory to
the Company) to the effect that an exemption from the registration requirements
of the U.S. Securities Act and applicable states securities laws is available
for the issuance of the Common Shares, or such other evidence of such
exemptions satisfactory to the Company.


 


Unless
Box A above is checked, a legend restricting transfer under the U.S. Securities
Act and applicable state securities laws will be placed on the certificate
representing the Common Shares acquired upon exercise of the Warrants.


 


DATED
this                   day of                              , 20         .


 


Signature
of Warrantholder guaranteed by:


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Warrantholder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print
  Name of Warrantholder)*

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address
  of Warrantholder in full)

  



 






(*The
name of the Warrantholder must correspond with the name upon the face of the
certificate in every particular and Terrane Metals Corp. reserves the right to
require reasonable assurance that such signature is genuine and effective.)


 


2

















 


Notes:


 


Certificates
for Common Shares will not be registered or delivered to an address in the
United States unless Box B or C above is checked.


 


If
Box C is to be checked, holders are encouraged to consult with the Company in
advance to determine that the legal opinion tendered in connection with exercise
will be satisfactory in form and substance to the Company.


 


Terms and Conditions


 


The Warrants are issued
subject to the terms and conditions of the Indenture.  A copy of the Indenture may be obtained, free
of charge, at the offices of Computershare Trust Company of Canada, 510 Burrard
Street, 2nd Floor, Vancouver, British Columbia, V6C 3B9.


 


Instructions


 


1.                                      The signature on the Exercise Form must correspond
with the name as written upon the face of the certificate, in every particular,
without alteration or enlargement, or change whatever.


 


2.                                      If Common Shares are issued to a person other than the
registered Warrantholder, (i) the signature of that person must be signature
guaranteed by a Canadian schedule 1 chartered bank, major Trust Company or by a
member firm of an acceptable Medallion Signature Guarantee Program (STAMP,
SEMP, MSP), and the stamp must bear the words “Signature Medallion Guaranteed”,
and (ii) the Transfer Form set forth in Schedule “B” to the Warrant Certificate
must be completed.


 


3.                                      If the Exercise Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a company or any person
acting in a fiduciary or representative capacity, the Warrant Certificate must
be accompanied by evidence of authority to sign satisfactory to the Warrant
Agent and the Company.


 


3

















 


Schedule “B”


 


TRANSFER
FORM


 


FOR value received I/we (the “Transferor”)
hereby sell, assign, and transfer unto:


 


	
   

  
	
  (Name of Transferee)

  
	
   

  
	
  (Address of Transferee)

  
	
   

  
	
   

  
	
   

  
	
  (Social Insurance Number)

  
	
   

  
	
   

  	
   Warrants of

  
	
  (Quantity & Class)

  	
   

  



 


TERRANE
METALS CORP. (the “Company”)


 


	
  represented
  by:

  	
   

  
	
  (List Certificate Numbers)

  



 


and
the undersigned hereby irrevocably constitutes and appoints:


 


	
   

  
	
  (Leave Blank)

  



 


the
attorney to transfer the said Warrants on the books of the Company with full
power of substitution in the premises.


 


DATED
this            day of                        , 20        .


 


	
  Signature
  Guaranteed By:

  	
   

  
	
   

  	
  (Signature of Warrantholder)

  
	
   

  	
   

  
	
   

  	
  (Name of Warrantholder, Please Print)

  
	
   

  	
   

  
	
   

  	
  (Capacity of Authorized Representative)

  



 

















 


Transferee
Certification


 


The undersigned transferee
hereby certifies that (check one):


 


o            said transferee was not offered the
Warrants in the United States and is not in the United States or a “U.S. Person”
(as defined in Regulation S under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”)),
and is not acquiring the Warrants for the account or benefit of a person in the
United States or a U.S. Person; or


 


o            enclosed herewith is an opinion of
counsel (which the transferee understands must be satisfactory to the Company)
to the effect that no violation of the U.S. Securities Act or applicable
securities laws will result from transfer, exercise or deemed exercise of the
Warrants.


 


It is understood that the
Company may require additional evidence necessary to verify the foregoing.


 


	
   

  	
   

  
	
  Signature of Transferee

  



 


Terms and Conditions


 


The Warrants are issued
subject to the terms and conditions of the Indenture. A copy of the Indenture
may be obtained, free of charge, at the offices of Computershare Trust Company
of Canada, 510 Burrard Street, 2nd Floor, Vancouver, British Columbia, V6C 3B9.


 


Instructions


 


1.                                The signature on the Transfer Form must correspond
with the name as written upon the face of the certificate, in every particular,
without alteration or enlargement, or change whatever.


 


2.                                The signature must be guaranteed by a Canadian
schedule 1 chartered bank, major Trust Company or by a member firm of an
acceptable Medallion Signature Guarantee Program (STAMP, SEMP, MSP). The stamp
must bear the words “Signature Medallion Guaranteed”.


 


3.                                If the Transfer Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a company or any person
acting in a fiduciary or representative capacity, the Warrant Certificate must
be accompanied by evidence of authority to sign satisfactory to the Warrant
Agent and the Company.


 


2






 










 


Schedule “C”


 


FORM OF DECLARATION
FOR REMOVAL OF LEGEND


 


TO:         TERRANE
METALS CORP. (the “Issuer”)

and its Transfer Agent

COMPUTERSHARE TRUST COMPANY OF CANADA


 


The undersigned (A) acknowledges that the
sale of the securities of the Issuer to which this declaration relates is being
made in reliance on Rule 904 of Regulation S under the United States
Securities Act of 1933, as amended (the “1933 Act”), and (B) certifies
that (1) the undersigned is not (a) an “affiliate” of the Issuer (as
that term is defined in Rule 405 under the 1933 Act, except any officer or
director of the Issuer who is an affiliate solely by virtue of holding such
position) (b) a “distributor” as defined in Regulation S or (c) an
affiliate of a distributor; (2) the offer of such securities was not made
to a person in the United States and either (a) at the time the buy order
was originated, the buyer was outside the United States, or the seller and any
person acting on its behalf reasonably believed that the buyer was outside the
United States, or (b) the transaction was executed on or through the
facilities of the TSX Venture Exchange or another designated offshore
securities market (as such term is defined in Regulation S under the 1933 Act)
and neither the seller nor any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the United States; (3) neither
the seller nor any affiliate of the seller nor any person acting on their
behalf has engaged or will engage in any directed selling efforts in the United
States in connection with the offer and sale of such securities; (4) the
sale is bona fide and not for the purpose of “washing off” the resale
restrictions imposed because the securities are “restricted securities” (as
that term is defined in Rule 144(a)(3) under the U. S. Securities
Act); (5) the seller does not intend to replace such securities with
fungible unrestricted securities; and (6) the contemplated sale is not a
transaction, or part of a series of transactions, which, although in technical
compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the U. S. Securities Act. Terms used herein have the
meanings given to them by Regulation S under the 1933 Act.


 


Dated                       20        .


 


	
   

  	
  X

  	
   

  
	
   

  	
  Signature of individual (if Seller is an individual)

  
	
   

  	
   

  
	
   

  	
  X

  	
   

  
	
   

  	
  Authorized signatory (if Seller is not an individual)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of Seller (please
  print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of authorized signatory (please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Official
  capacity of authorized signatory (please print)

  



 

















 


Affirmation by Seller’s
Broker-Dealer


 


We have read the foregoing representations of
our customer,                                          
(the “Seller”) dated                                 
, with regard to the sale, for such Seller’s account, of the                               
represented by certificate number                                     
of the Company described therein, and we hereby affirm that, to the best of our
knowledge and belief, the facts set forth therein are full, true and correct.


 


	
   

  	
   

  	
   

  
	
   

  	
  Name of Firm

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  



 


Dated:             20        .


 


2

















 


SCHEDULE
“C” TO INDENTURE


 


Form of
Letter to be Delivered by

Original U.S. Purchaser upon


Exercise
of Warrants


 


Terrane Metals Corp.


 


- and -


 


Computershare Trust
Company of Canada, as Warrant Agent


 


Dear Sirs/Mesdames:


 


We are delivering this
letter in connection with the purchase of common shares (the “Shares”) of Terrane Metals Corp. (the “Company”)
upon the exercise of warrants of the Company (the “Warrants”),
issued under the warrant indenture dated as of April 16, 2010 between the
Company and Computershare Trust Company of Canada.


 


We hereby confirm that:


 


(a)                                  we are an “accredited investor”
within the meaning of Rule 501 (a) of Regulation D under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”);


 


(b)                                 we are purchasing the Shares for
our own account;


 


(c)                                  we have such knowledge and
experience in financial and business matters that we are capable of evaluating
the merits and risks of purchasing the Shares;


 


(d)                                 we are not acquiring the Shares
with a view to distribution thereof or with any present intention of offering
or selling any of the Shares, except (i) to the Company, (ii) outside
the United States in accordance with Rule 904 of Regulation S under the
U.S. Securities Act and in compliance with applicable local laws and
regulations, (iii) in accordance with the exemption from registration
under the U.S. Securities Act provided by Rule 144, if available, and in
accordance with applicable state securities laws, or (iv) pursuant to
another exemption from registration under the U.S. Securities Act and any
applicable state securities laws, and in the case of (iii) or (iv) above,
after providing a legal opinion satisfactory to the Company;


 


(e)                                  we acknowledge that we have had
access to such financial and other information as we deem necessary in
connection with our decision to purchase the Shares; and


 


(f)                                    we acknowledge that we are not
purchasing the Shares as a result of any general solicitation or general
advertising, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio, television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising.


 


3

















 


We understand that the
Shares are being offered in a transaction not involving any public offering
within the United States within the meaning of U.S. Securities Act and that the
Shares have not been and will not be registered under the U.S. Securities
Act.  We further understand that any
Shares acquired by us will be in the form of definitive physical certificates
and that such certificates will bear a legend reflecting the substance of
paragraph (d) above.


 


We acknowledge that you
will rely upon our confirmations, acknowledgements and agreements set forth
herein, and we agree to notify you promptly in writing if any of our
representations or warranties herein ceases to be accurate or complete.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name of Purchaser)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


4