EXHIBIT
10.1

    CONVERTIBLE
DEBENTURE

    


    DATED:   April
27, 2009

    


    
      PRINCIPAL AMOUNT: US
$511,589.59

    

    


    INTEREST
RATE:  12.0% per annum compounded annually, not in
advance

    


    FOR
VALUABLE CONSIDERATION, WITS
BASIN PRECIOUS MINERALS INC., a Minnesota corporation (the “Corporation”), hereby
acknowledges itself indebted and promises to pay pursuant to the terms herein to
or to the order of CABO
DRILLING (AMERICA) INC., a Washington corporation formerly known as
Advanced Drilling, Inc., and its respective
successors and assigns (together, the “Lender”) the Principal Amount,
Expenses and Extension Fee at the Lender’s address as stated in Section 9.1 or
at such other place as the Lender may designate by notice in writing to the
Corporation, and to pay interest thereon from the date hereof at the Interest
Rate calculated in like money at the same place and should the Corporation at
any time make default in payment of any Principal Amount, Expenses, Extension
Fee or Interest, to pay interest on the amount in default both before and after
default and judgment at the Interest Rate in like money at the same place on the
same dates. The amounts owing under this Debenture will be payable by the
Corporation to the Lender as follows (except as otherwise specified in this
Debenture):

    


    
      	
               
      

            	
              (a)

            	
              payment
      of US$150,000.00 on the first anniversary of the date of issuance of this
      Debenture;

            


    

    


    
      	
               
      

            	
              (b)

            	
              payment
      of US$150,000.00 on the second anniversary of the date of issuance of this
      Debenture; and

            


    

    


    
      	
               
      

            	
              (c)

            	
              payment
      of the balance of any amounts owing to the Lender pursuant to this
      Debenture on the Maturity Date.

            


    

    


    The
Corporation may prepay the amounts owing to the Lender under this Debenture in
whole or in part, at any time and from time to time, without premium or penalty,
upon five (5) Banking Days notice in writing to the Lender, provided that the
Lender will continue to be entitled to exercise its conversion rights pursuant
to Article 6 hereunder during such notice period.


    


    ARTICLE
1

    INTERPRETATION

    


    1.1          Definitions.  In
this Debenture the following terms will have the following
meanings:

    


    
      	
               
      

            	
              (a)

            	
              “Available Shares” means
      the number of shares issuable to the Lender on full conversion of all
      amounts owing under this Debenture;

            


    

    


    
      	
               
      

            	
              (b)

            	
              “Banking Day” means any
      day on which banks are open for business in Vancouver, British
      Columbia;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        2

      

    

    


    
      	
               
      

            	
              (c)

            	
              “Commission” has the
      meaning set out in Section 4.1(g);

            


    

    


    
      	
               
      

            	
              (d)

            	
              “Common Shares” means
      common stock, par value $0.01 per share, of the
    Corporation;

            


    

    


    
      	
               
      

            	
              (e)

            	
              “Conversion Price Per
      Share” means US $0.20 per Common Share as adjusted by Section
      6.1(c);

            


    

    


    
      	
               
      

            	
              (f)

            	
              “Conversion Shares” has
      the meaning set out in Section
4.1(o);

            


    

    


    
      	
               
      

            	
              (g)

            	
              “Corporation” means Wits
      Basin Precious Minerals Inc., a Minnesota
  corporation;

            


    

    


    
      	
               
      

            	
              (h)

            	
              “Counsel” means an
      attorney, barrister or solicitor or firm of attorneys, barristers and
      solicitors acceptable to the
Lender;

            


    

    


    
      	
               
      

            	
              (i)

            	
              “Debenture”, “hereto, “herewith”, “hereof”, “hereby”, “hereunder” and other
      similar expressions refer to this Debenture and not any Article, Section,
      subsection or any portion thereof;

            


    

    


    
      	
               
      

            	
              (j)

            	
              “Deed of Trust” has the
      meaning set out in Section 2.2;

            


    

    


    
      	
               
      

            	
              (k)

            	
              “Demand Date” has the
      meaning set out in Section 6.2;

            


    

    


    
      	
               
      

            	
              (l)

            	
              “Environmental Laws”
      means all applicable domestic and foreign federal, state, provincial,
      municipal or local laws, statutes or ordinances pertaining to the
      environment, all applicable rules, regulations or the like promulgated
      under or pursuant to such laws, statutes or ordinances and all applicable
      Governmental Authorizations or Orders or the like issued or rendered by
      any Governmental Authorities under or pursuant to any such laws, statutes,
      ordinances, rules or regulations;

            


    

    


    
      	
               
      

            	
              (m)

            	
              “Exchange Act” has the
      meaning set out in Section 4.2(b);

            


    

    


    
      	
               
      

            	
              (n)

            	
              “Expenses” means all
      expenses reimbursable to the Lender by the Corporation pursuant to the
      terms of this Debenture, including but not limited to the amounts
      specified in Sections 4.2(b), 4.4(b) and
8.3;

            


    

    


    
      	
               
      

            	
              (o)

            	
              “Extension Fee” has the
      meaning set out in Section 6.2;

            


    

    


    
      	
               
      

            	
              (p)

            	
              “Event of Default” means
      each of the events referred to in Section
7.1;

            


    

    


    
      	
               
      

            	
              (q)

            	
              “Fundamental Change” has
      the meaning set out in Section
6.1(c);

            


    

    


    
      	
               
      

            	
              (r)

            	
              “Governmental Authority”
      means the governments of Canada and the United States, or the government
      of any state, province, municipality or other political subdivision
      thereof, and any entity exercising executive, legislative, judicial,
      regulatory or administrative functions, and any corporation or other
      entity owned or controlled (through stock or capital ownership or
      otherwise) by any of the
foregoing;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        3

      

    

    


    
      	
               
      

            	
              (s)

            	
              “Governmental Authorizations or
      Orders” mean all licences, permits, consents, orders, grants,
      quotas, commitments, rights, privileges, certificates, judgments, writs,
      injunctions, awards, determinations, directions, decrees, demands,
      material authorizations and approvals (including, without limitation,
      those relating to the environment, zoning, water and sewers) now in effect
      or hereafter entered into, from any and all Governmental
      Authorities;

            


    

    


    
      	
               
      

            	
              (t)

            	
              “Guarantor” means Hunter
      Bates Mining Corporation, a Minnesota
  corporation;

            


    

    


    
      	
               
      

            	
              (u)

            	
              “Guarantor Property”
      means all the property and assets of the Guarantor which at the particular
      time are subjected (or required by this Debenture to be subjected) to the
      Deed of Trust;

            


    

    


    
      	
               
      

            	
              (v)

            	
              “Hazardous Substance”
      means any substance, product, waste, pollutant, material, chemical,
      contaminant, dangerous good, constituent or other material which is or
      becomes listed, regulated, or addressed under any Environmental
      Law;

            


    

    


    
      	
               
      

            	
              (w)

            	
              “Hunter Bates Claims”
      means the lands listed in Schedule “A” attached
    hereto;

            


    

    


    
      	
               
      

            	
              (x)

            	
              “Interest” means the
      accrued and unpaid interest owing, from time to time, pursuant to this
      Debenture calculated at the Interest
Rate;

            


    

    


    
      	
               
      

            	
              (y)

            	
              “Interest Rate” means
      12.0% per annum compounded annually, not in
  advance;

            


    

    


    
      	
               
      

            	
              (z)

            	
              “Lender” means Cabo
      Drilling (America) Inc., a Washington
  corporation;

            


    

    


    
      	
               
      

            	
              (aa)

            	
              “Lien” means any
      mortgage, pledge, security interest, encumbrance, lien or charge of any
      kind, including any agreement to grant any of the foregoing, any
      conditional sale or other title retention agreement, any lease in the
      nature thereof, and the filing of or agreement to file any notice of
      security or financing statement under the applicable legislation of any
      jurisdiction in connection with any of the
  foregoing;

            


    

    


    
      	
               
      

            	
              (bb)

            	
              “Maturity Date” means
      the third anniversary of the date of issuance of this
      Debenture;

            


    

    


    
      	
               
      

            	
              (cc)

            	
              “Permitted Liens”
      means:

            


    

    


    
      	
               
      

            	
              (i)

            	
              Liens
      for taxes, assessments or governmental charges not then due and delinquent
      or in respect of which the Guarantor has furnished such security as the
      Lender may require and which are being contested in good faith by
      appropriate proceedings promptly initiated and diligently
      conducted;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Liens
      in the nature of zoning restrictions, easements and rights and
      restrictions of record on the use of real property, which do not
      materially interfere with the conduct of the business of the Guarantor and
      do not materially affect the value of the Guarantor Property subject to
      such Liens;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        4

      

    

    


    
      	
               
      

            	
              (iii)

            	
              undetermined
      or inchoate Liens, including unregistered construction Liens, incidental
      to current operations of the Guarantor which have not at such time been
      filed pursuant to laws against the Guarantor and which relate to
      obligations neither due nor
delinquent;

            


    

    


    
      	
               
      

            	
              (iv)

            	
              Liens
      in the form of security given to a public utility or any Governmental
      Authority in connection with the operations of the Guarantor in the
      ordinary course of its business;
and

            


    

    


    
      	
               
      

            	
              (v)

            	
              matters
      of record as of the date hereof, itemized on Schedule “C” hereto, save and
      except for the Subordinated Liens;

            


    

    


    
      	
               
      

            	
              (dd)

            	
              “Person” means an
      individual, a partnership, a corporation, a trust, an unincorporated
      organization, a government or any department, political subdivision or
      agency thereof and the heirs, executors, administrators or other legal
      representatives of an individual;

            


    

    


    
      	
               
      

            	
              (ee)

            	
              “Pre-Conversion Condition”
      means the occurrence of either of the
  following:

            


    

    


    
      	
               
      

            	
              (i)

            	
              the
      Corporation obtaining the approval of its shareholders to the amendment of
      the Corporation’s articles of incorporation to increase the number of
      authorized shares of Common Shares available for issuance such that it is
      legally capable of issuance of the maximum number of shares of Common
      Shares issuable upon a conversion of all amounts owing under this
      Debenture;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              the
      delivery to Counsel for the Lender of an opinion from Counsel for the
      Corporation opining that the Corporation has taken such steps as are
      necessary such that on conversion of all amounts owing under this
      Debenture the Corporation will have sufficient authorized capital to
      effect issuance of the Available Shares to the
  Lender;

            


    

    


    
      	
               
      

            	
              (ff)

            	
              “Principal Amount” means
      the face amount of this Debenture;

            


    

    


    
      	
               
      

            	
              (gg)

            	
              “Securities” has the
      meaning set out in Section 5.1(e);

            


    

    


    
      	
               
      

            	
              (hh)

            	
              “Securities Act” has the
      meaning set out in Section 4.2(b);

            


    

    


    
      	
               
      

            	
              (ii)

            	
              “Subordinated Liens”
      means the Liens listed in Schedule “B” attached
  hereto;

            


    

    


    
      	
               
      

            	
              (jj)

            	
              “Trigger Date” has the
      meaning set out in Section 6.2; and

            


    

    


    
      	
               
      

            	
              (kk)

            	
              “US Dollars” means the
      lawful currency of United
States.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        5

      

    

    


    1.2          Interpretation Not Affected by
Headings.  The division of this Debenture into Articles,
Sections and subsections and the insertion of headings are for convenience of
reference only and will not affect the construction or interpretation of this
Debenture.

    


    1.3          Applicable
Law.  This Debenture will be construed in accordance with the
laws of the State of Colorado and the federal laws of the United States
applicable therein, and will be treated in all respects as a Colorado
contract.

    


    1.4          Currency.  Unless
otherwise specified, all statements of or references to dollar amounts (without
more) in this Debenture will mean lawful money of the United
States.

    


    1.5          Banking Day.  If the
date upon which any act or payment hereunder is required to be done or made
falls on a day which is not a Banking Day, then such act or payment will be duly
performed or made if done on the next Banking Day.

    


    1.6          Number.   Words
importing the singular number only will include the plural and vice versa, words
importing the masculine gender will include the feminine and neuter genders and
words importing persons will include firms and corporations and vice
versa

    


    ARTICLE
2

    GUARANTEE

    


    2.1          Guarantee.  As an
inducement for entering into this Debenture, the Guarantor hereby guarantees
payment to the Lender of any and all indebtedness now or hereafter owing by the
Corporation to the Lender arising under this Debenture, including the Principal
Amount, the Interest, the Extension Fee and the Expenses due and owing from time
to time, and the performance of all of the obligations of the Corporation
hereunder on the following terms:

    


    
      	
               
      

            	
              (a)

            	
              the
      Lender, without exonerating in whole or in part the Guarantor, may grant
      time, renewals, extensions, indulgences, releases and discharges to, may
      take securities from and give the same and any or all existing securities,
      may abstain from taking securities from, or from perfecting securities of,
      may accept compositions from, and may otherwise deal with the Corporation
      and all other persons (including the Guarantor and any other guarantor)
      and securities, as the Lender may see fit, and that all dividends,
      compositions, and moneys received by the Lender from the Corporation or
      from any other persons or estates capable of being applied by the Lender
      in reduction of the debts and liabilities hereby guaranteed, will be
      regarded for all purposes as payments in gross, and the Lender will be
      entitled to prove against the estate of the Corporation upon any
      insolvency or winding-up in respect of the whole of said debts and
      liabilities, and the Guarantor will have no right to be subrogated to the
      Lender in respect of any such proof until the Lender will have received
      from such estate payment in full of its claim with
    interest;

            


    

    


    
      	
               
      

            	
              (b)

            	
              the
      Lender will not be obliged to give the Guarantor notice of default by the
      Corporation, and upon any default by the Corporation the Guarantor will be
      held bound directly to the Lender as principal debtor in respect of the
      payment of the amounts guaranteed
hereby;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        6

      

    

    


    
      	
               
      

            	
              (c)

            	
              the
      Lender will not be bound to exhaust its recourse against the Corporation
      or other parties or the securities it may hold before being entitled to
      payment from the Guarantor
hereunder;

            


    

    


    
      	
               
      

            	
              (d)

            	
              any
      change or changes in the name of the Corporation will not affect or in any
      way limit or lessen the liability of the Guarantor
    hereunder;

            


    

    


    
      	
               
      

            	
              (e)

            	
              should
      the Lender receive from the Guarantor a payment or payments in full or on
      account of the liability hereunder, the Guarantor will not be entitled to
      claim repayment against the Corporation or the Corporation's estate until
      the Lender's claims against the Corporation have been paid in full; and in
      case of liquidation, winding up or bankruptcy of the Corporation (whether
      voluntary or compulsory), the Lender will have the right to rank for its
      full claim and receive all dividends or other payments in respect thereof
      until its claim has been paid in full and the Guarantor will continue to
      be liable, up to the amount guaranteed less any payments made by the
      Guarantor, for any balance which may be owing by the Corporation to the
      Lender; and

            


    

    


    
      	
               
      

            	
              (f)

            	
              the
      Guarantor will make payment to the Lender of the amount of the debts and
      liabilities guaranteed hereby forthwith after demand therefore is made in
      writing in accordance with Article 9 and interest at a rate of 12% per
      annum, compounded annually, will accrue and be payable by the Guarantor to
      the Lender after such demand.

            


    

    


    2.2          Security.   To
secure the due payment of all amounts from time to time owing pursuant to this
Debenture and the due performance of the obligations of the Corporation and the
Guarantor contained herein but subject to the Permitted Liens, the Guarantor is
concurrently executing and delivering to the Lender a Deed of Trust to Public
Trustee, Mortgage, Security Agreement, Assignment of Production and Proceeds,
Financing Statement and Fixture Filing (the “Deed of Trust”).

    


    ARTICLE
3

    POSSESSION,
USE AND RELEASE OF THE GUARANTOR PROPERTY

    


    3.1          The Guarantor Entitled to
Possession.   Unless an Event of Default shall have
occurred, the Guarantor will be permitted to possess, use and enjoy all of the
Guarantor Property, as applicable, to take and use the moneys in any account
(subject to any other agreements it may have entered into with respect thereto)
and to receive and use the income and profits thereof including, without
limitation, amounts owed to it under accounts receivable now owned or hereafter
acquired in the ordinary course of business and for the purpose of carrying on
the same.  Notwithstanding the forgoing, the Corporation and/or the
Guarantor will not sell or dispose of any of the Guarantor Property, whether in
the ordinary course of business or otherwise, without the prior written consent
of the Lender.


    
      
         


      

      
        
        

        
          

        

      

      
         


        
          7

        

      

    

    


    3.2          Condemnation,
Expropriation.   In the event of any taking of any part of
the Guarantor Property by Governmental Authority by power of condemnation or
expropriation or other similar power or of any sale or conveyance by the
Guarantor with the prior written consent of the Lender in lieu of such taking
and in reasonable anticipation thereof where proceedings therefor might lawfully
be exercised to vest such property in the acquirer or expropriator for the same
purposes, the Lender will release the property so taken or acquired upon the
deposit with the Lender of a sum equal to the greater of (a) the net proceeds of
any such taking or exercise of such right of acquisition or in case of sale in
anticipation of such taking (which sale will require the written approval of the
Lender), the net proceeds of such sale and (b) the aggregate of the Principal
Amount, Interest, Extension Fee and Expenses owing to the Lender under this
Debenture.

    


    ARTICLE
4

    REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE CORPORATION AND THE GUARANTOR

    


    4.1          Representations and
Warranties.  The Corporation and the Guarantor jointly and
severally hereby covenant, represent and warrant to the Lender as follows (and
the Corporation and the Guarantor acknowledge that the Lender is relying upon
these covenants, representations and warranties in connection with entering into
this Debenture and the Guarantors guarantee of the Corporation’s obligations
hereunder) as at the date hereof and, with respect to paragraphs (a), (b), (d),
(e) and (o) also as long as any amounts remaining owing to the Lender pursuant
to this Debenture:

    


    
      	
               
      

            	
              (a)

            	
              Status.  The
      Corporation and the Guarantor are corporations duly incorporated and
      organized in accordance with, and are validly subsisting and in good
      standing under the laws of, each of their jurisdictions of incorporation
      respectively.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Corporate
      Power.  The Corporation and the Guarantor each has the
      corporate power to own their property and assets to carry on the business
      as presently carried on or proposed to be carried on by
      them.  The Corporation and the Guarantor are each duly qualified
      or licensed and in good standing as a corporation authorized to do
      business in each jurisdiction where they respectively carry on their
      business or where the nature of the business carried on or proposed to be
      carried on or where the location of its property and assets requires to be
      so licensed or qualified.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Power, Capacity, Due Execution
      and Enforceability.  The Corporation and the Guarantor
      each has full power, authority and capacity to execute, deliver and
      perform this Debenture.  This Debenture and the consummation of
      the transactions contemplated hereby by each of the Corporation and the
      Guarantor have been duly and validly authorized, executed and delivered by
      each of them.  Except as set forth on Schedule 4.1, the
      execution, delivery and performance of this Debenture and the consummation
      of the transactions contemplated hereby by each of the Corporation and the
      Guarantor (a) will not require the consent, approval or authorization of
      any Person or Governmental Authority (b) will not conflict with or result
      in a breach of the articles of incorporation or by-laws of either the
      Corporation or the Guarantor or give rise to a right to accelerate or
      terminate any contract to which either the Corporation or the Guarantor is
      a party or by which either the Corporation or the Guarantor may be bound
      or which relates to or may affect the business of either the Corporation
      or the Guarantor, (c) will not violate any law, rule, regulation, by-law,
      ordinance or Governmental Authorization or Order, (d) will not require any
      notice under any contract or to any Person or
      Governmental  Authority and (e) will not give rise to any Lien
      on any of the Guarantor Property other than Permitted
      Liens.  This Debenture constitutes (or will constitute when
      executed) a legally valid and binding obligation of each of the
      Corporation and the Guarantor in accordance with its terms subject to
      applicable bankruptcy, insolvency and other laws of general application
      affecting the enforcement of creditors’ rights generally and to general
      equitable principles.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        8

      

    

    


    
      	
               
      

            	
              (d)

            	
              Compliance with Laws, Permits
      and Licenses.  Each of the Corporation and the Guarantor
      has conducted and is conducting its business in material compliance with
      all applicable laws, rules, regulations, by-laws, ordinances and
      Governmental Authorizations or Orders.  Each of the Corporation
      and the Guarantor is not in material breach of such laws, regulations,
      approvals and Governmental Authorizations or Orders and each of the
      Corporation and the Guarantor is duly licensed, registered or qualified
      and duly possesses all material licenses, registrations, qualifications,
      consents, clearances and approvals, permits and quotas required in those
      jurisdictions in which the Corporation or the Guarantor, as applicable,
      carries on its business to enable such business to be carried on as now
      conducted and as now proposed to be conducted by it in the future and its
      property and assets to be owned, leased and operated.  All such
      material licenses, registrations, qualifications, consents, clearances,
      approvals, permits and quotas necessary to the conduct of each of the
      Corporation’s and the Guarantor’s business or for each of the Corporation
      and the Guarantor to own, lease and/or operate its property and assets are
      valid and subsisting and in good standing and none of the same contains or
      is subject to any term, provision, condition or limitation which may
      materially adversely change or terminate such license, registration,
      qualification, permit or quota by virtue of the completion of the
      transactions contemplated hereby and there is no proceeding, action or
      notice pending or threatened which may result in the revocation,
      cancellation, suspension or any material adverse modification
      thereof.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Title to
      Assets.  The Guarantor has good and marketable title,
      free and clear of any Liens, other than Permitted Liens or Liens ranking
      subordinate to the Liens created by the Deed of Trust, to the Guarantor
      Property or any part thereof.  The Hunter Bates Claims and all
      assets located on, used in connection with, or used in any mining or
      exploration operations related to the Hunter Bates Claims are owned
      legally and beneficially by the
Guarantor.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Subsidiaries.  The
      Guarantor is 100% owned by the
Corporation.

            


    

    


    
      	
               
      

            	
              (g)

            	
              No
      Guarantees.  Except as set forth on Schedule 4.1 or as
      otherwise disclosed in the Corporation’s public filings with the U.S.
      Securities and Exchange Commission (the “Commission”), the
      Corporation or the Guarantor is not a party to, or bound by, any contract
      of guarantee, indemnification, assumption or endorsement or any other like
      commitment of the obligations (contingent or otherwise) or indebtedness of
      any Person.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        9

      

    

    


    
      	
               
      

            	
              (h)

            	
              Absence of Undisclosed
      Liabilities or Indebtedness.  There are no liabilities or
      indebtedness of the Corporation or the Guarantor of any kind whatsoever
      whether or not accrued and whether or not determined or determinable,
      other than:

            


    

    


    
      	
               
      

            	
              (i)

            	
              liabilities
      disclosed or referred to or reflected in the Corporation’s public filings
      with the Commission; and

            


    

    


    
      	
               
      

            	
              (ii)

            	
              liabilities
      incurred in the ordinary course of business, none of which has either
      individually or in the aggregate been or will be materially adverse to the
      Corporation or the Guarantor, the results of their operations, their
      property or assets, financial condition or manner of conducting their
      business.

            


    

    


    
      	
               
      

            	
              (i)

            	
              Taxes.  The
      Corporation and the Guarantor each has filed all tax returns which are
      required to be filed by it and, except for taxes which are being contested
      and which give rise to no Liens, has paid all taxes (if any) which have
      become due as shown on such returns or any assessment received by it or
      any proposed assessment of which notice has been given to
      it.  The income tax liability of each of the Corporation and the
      Guarantor each has been paid or provided for in the accounts of each such
      corporation and there is no material outstanding matter of dispute or
      difference between the Corporation or the Guarantor and any federal,
      provincial, state, territorial or municipal taxing authority, agency or
      department.  All amounts required to be deducted or withheld by
      the Corporation and the Guarantor from employees under any applicable
      statute have been properly deducted and withheld and have been remitted to
      the appropriate authorities within the prescribed
  times.

            


    

    


    
      	
               
      

            	
              (j)

            	
              Litigation.  There
      is no action, suit or proceeding (whether or not purportedly on behalf of
      the Corporation or the Guarantor) pending or threatened in writing against
      or affecting the Corporation or the Guarantor before any court or before
      or by any Governmental Authority, in the United States, Canada or
      elsewhere, or before any arbitrator or board save and except for actions
      commenced by the Lender and/or its affiliates; and the Corporation and the
      Guarantor are each not in default with respect to any judgment, order,
      writ, injunction, decree or award of any court, arbitrator or Governmental
      Authority, in the United States, Canada or
  elsewhere.

            


    

    


    
      	
               
      

            	
              (k)

            	
              Environmental
      Matters.  To the best of the knowledge of each of the
      Corporation and the Guarantor, each of the Corporation and the Guarantor
      and all of their respective properties, assets and operations are in full
      compliance in all material respects with all Environmental
      Laws.  Neither the Corporation nor the Guarantor are aware of,
      nor has either received notice of any past, present or future conditions,
      events, activities, practices or incidents which may interfere with or
      prevent the compliance or continued compliance of the Corporation and the
      Guarantor in all material respects with all Environmental
      Laws.  The Corporation and the Guarantor are not aware that any
      Hazardous Substances exist on, about or within or have been used,
      generated, stored, transported, disposed of on, or released from any of
      the properties or assets of any of the Corporation and the Guarantor other
      than in compliance in all material respects with all Environmental
      Laws.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        10

      

    

    


    
      	
               
      

            	
              (l)

            	
              Condition.  Except
      as set forth on Schedule 4.1, all tangible property and assets of the
      Guarantor are in good working order, reasonable wear and tear excepted,
      and neither require nor are reasonably expected to require any special or
      extraordinary expenditures to remain in such condition and are capable of
      being used for their intended purpose in the ordinary course of business
      consistent with past practice.

            


    

    


    
      	
               
      

            	
              (m)

            	
              Full
      Disclosure.  To the best knowledge of the Corporation and
      the Guarantor, neither the Corporation nor the Guarantor has any
      information or knowledge of any material facts not disclosed to the Lender
      relating to the Corporation, the Guarantor or their business or assets
      which could reasonably be expected to individually or in the aggregate be
      material to the Lender.

            


    

    


    
      	
               
      

            	
              (n)

            	
              No Act of
      Insolvency.  No proceedings or actions have been
      instituted by the Corporation or the Guarantor or any Person or threatened
      by any Person in connection with or relating to the solvency of the
      Corporation or the Guarantor.

            


    

    


    
      	
               
      

            	
              (o)

            	
              Shares Issuable Upon
      Conversion.  The Common Shares, when issued to the Lender
      upon conversion of and in accordance with this Debenture (the “Conversion Shares”),
      will be duly and validly issued, fully paid and nonassessable and in
      compliance with all applicable securities laws.  Such issuance
      will not give rise to preemptive rights, rights of first refusal or
      similar rights by any other security holders of the
      Corporation.

            


    

    


    4.2          Covenants -
Corporation.  The Corporation hereby covenants and agrees with
the Lender as follows:

    


    
      	
               
      

            	
              (a)

            	
              Payment on
      Demand.   The Corporation will duly and punctually
      pay or cause to be paid all amounts owing hereunder when
    due.

            


    

    


    
      	
               
      

            	
              (b)

            	
              To Remain a Reporting
      Corporation.  The Corporation shall cause its Common
      Shares to continue to be registered under Sections 12(b) or 12(g) of the
      Securities Exchange Act of 1934, as amended (the “Exchange Act”), to
      timely comply in all respects with its reporting and filing obligations
      under the Exchange Act, to comply with all requirements related to any
      registration statement filed pursuant to this Debenture, and to not take
      any action or file any document (whether or not permitted by the
      Securities Act of 1933, as amended (the “Securities Act”), or the
      rules promulgated thereunder) to terminate or suspend such registration or
      to terminate or suspend its reporting and filing obligations under the
      Exchange Act or Securities Act, except as permitted
  herein.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        11

      

    

    


    
      	
               
      

            	
              (c)

            	
              To Maintain Market for
      Securities.  The Corporation will take all action
      necessary to continue the listing or trading of its Common Shares on the
      OTC Bulletin Board or other exchange or market on which the Common Shares
      are trading.  With a view to making available to the Lender the
      benefits of Rule 144 promulgated under the Securities Act (“Rule 144”), the
      Corporation shall: (i) make and keep available adequate current public
      information, as those terms are understood and defined in Rule 144, at all
      times; (ii) use commercially reasonable efforts to file with the
      Securities and Exchange Commission (the “SEC”) in a timely manner
      all reports and other documents required of the Corporation under the
      Securities Act and the Exchange Act (at any time after the Corporation has
      become subject to such reporting requirements); (iii) take such further
      action as the Lender may reasonably request, all to the extent required
      from time to time to enable the Lender to sell the Conversion Shares
      without registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144; and (iv) furnish to Lender, so long as
      the Holder owns any Conversion Shares, forthwith upon request (A) to the
      extent accurate, a written statement by the Corporation that it has
      complied with the reporting requirements of Rule 144, the Securities Act
      and the Exchange Act (at any time after the Corporation has become subject
      to such reporting requirements); (B) a copy of the most recent annual or
      quarterly report of the Corporation and such other reports and documents
      so filed by the Corporation; and (C) such other information as may be
      reasonably requested in availing the Lender of any rule or regulation of
      the SEC that permits the selling of any such securities without
      registration.

            


    

    


    
      	
               
      

            	
              (d)

            	
              Perform Covenants and
      Obligations.  The Corporation will duly and punctually
      perform or observe, as the case may be, the covenants and obligations of
      the Corporation contained in this
Debenture.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Right of
      Inspection.  Without prejudice to Section 4.3(l), the
      Lender may, upon giving the Corporation two (2) Business Days notice in
      writing, examine and make copies of all books and records of the
      Corporation and the Lender may discuss the affairs, finances and accounts
      of the Corporation with the Corporation’s officers and
      accountants.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Insurance.  The
      Corporation will maintain policies of insurance, including but not limited
      to general liability insurance, in the ordinary course of business
      consistent with past practice.

            


    

    


    4.3          Negative
Covenants.  Unless approved by Lender, the Corporation
covenants that, during the term of this Debenture, it will not (and it will not
permit Guarantor to):

    


    
      	
               
      

            	
              (a)

            	
              No Prior
      Liens.  Without the prior written consent of the Lender,
      create or permit to be created any Lien (other than a Permitted Lien) upon
      the Guarantor Property or any part thereof ranking or purporting to rank
      in priority to or pari passu with the Liens created by the Deed of
      Trust;

            


    

    


    
      	
               
      

            	
              (b)

            	
              No Transfer of
      Guarantor.  Sell, assign or otherwise dispose of any of
      its interest in the Guarantor;

            


    

    


    
      	
               
      

            	
              (c)

            	
              No Issuances of Shares of
      Guarantor.  Without the prior written consent of the
      Lender, issue any shares other securities in the capital of the
      Guarantor;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        12

      

    

    


    
      	
               
      

            	
              (d)

            	
              No Sale of
      Assets.  Except in the ordinary course of business, sell,
      lease, assign or otherwise dispose of any of the Guarantor
      Property;

            


    

    


    
      	
               
      

            	
              (e)

            	
              No Surrender of
      Assets.  Except in the ordinary course of business,
      release, surrender or abandon the Guarantor Property or any part of parts
      thereof, or move the Guarantor Property or any part or parts thereof from
      their present location or
locations;

            


    

    


    
      	
               
      

            	
              (f)

            	
              No
      Redemptions.  Apply any of the Guarantor Property to the
      redemption or acquisition of any shares in the capital of the Corporation
      or the Guarantor;

            


    

    


    
      	
               
      

            	
              (g)

            	
              No Compromise to Rights of
      Lender.  Take any actions which negatively modify, amend
      or compromise the rights of the
Lender;

            


    

    


    
      	
               
      

            	
              (h)

            	
              Amendment of Charter
      Documents/Significant Transactions.  Take any of the
      following actions if such action would negatively effect the Lender’s
      rights hereunder or under the Deed of Trust without first obtaining
      consent of the Lender, which consent will not be unreasonably
      withheld:

            


    

    


    
      	
               
      

            	
              (i)

            	
              Except
      as provided in Section 6.1, take any action which modifies or amends the
      articles of incorporation or bylaws of the Corporation or the
      Guarantor;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Except
      as provided in Section 6.1, alter the capital structure of the Corporation
      or the Guarantor or make any changes to, or authorize any additional
      classes or series of shares in the share capital of the Corporation or the
      Guarantor, other than issuing additional Common
  Shares;

            


    

    


    
      	
               
      

            	
              (iii)

            	
              Create
      or reclassify any class of shares of the Corporation into shares with a
      preference or priority as to liquidation, dividends or assets in
      preference to the Common Shares;

            


    

    


    
      	
               
      

            	
              (iv)

            	
              Amalgamate,
      merge or consolidate with any other Person or acquire (whether through a
      stock or asset purchase) any other Person or sell, lease or convey all or
      substantially all of its assets to another
  Person;

            


    

    


    
      	
               
      

            	
              (v)

            	
              Take
      any action which would result in the sale, takeover, merger or
      reorganization or a “change in control” of the Corporation or the
      Guarantor;

            


    

    


    
      	
               
      

            	
              (vi)

            	
              Carry
      out or complete a Fundamental
Change;

            


    

    


    
      	
               
      

            	
              (i)

            	
              No
      Dividends.  At any time when the Corporation is in
      arrears of payment of principal or interest on this Debenture, the
      Corporation will not:

            


    

    


    
      	
               
      

            	
              (i)

            	
              declare
      or pay any dividends on any shares of the Corporation;
  or

            


    

    


    
      	
               
      

            	
              (ii)

            	
              call
      for redemption or purchase for cancellation or make any capital
      distribution with respect to any shares of the
  Corporation;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        13

      

    

    


    
      	
               
      

            	
              (j)

            	
              No
      Dissolutions.  Take any action to dissolve, liquidate or
      wind up the Corporation or the
Guarantor;

            


    

    


    
      	
               
      

            	
              (k)

            	
              No
      Continuations.  Continue or convert its corporate
      existence to another jurisdiction without first obtaining consent of the
      Lender, which consent will not be unreasonably withheld;
  or

            


    

    


    
      	
               
      

            	
              (l)

            	
              Disclosure of Material
      Non-Public Information.  Provide the Lender or its agents
      or Counsel with any information that the Corporation believes constitutes
      material non-public information, unless prior thereto the Lender shall
      have executed a written agreement regarding the confidentiality of use of
      such information (the Corporation understands and confirms that the Lender
      shall be relying on the foregoing representations in effecting
      transactions in securities of the
Corporation).

            


    

    


    4.4          Covenants -
Guarantor.  The Guarantor hereby covenants and agrees with the
Lender as follows:

    


    
      	
               
      

            	
              (a)

            	
              Maintenance of
      Properties.  The Guarantor will diligently maintain in
      its current condition with appropriate repair the real property and the
      tangible personal property and assets included in the Guarantor Property,
      reasonable wear and tear excepted, and will cause to be made all
      appropriate repairs, renewals and replacements thereof so as to preserve
      and protect such Guarantor Property in its current
    condition.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Lender Empowered to Perform
      Covenants.  If the Guarantor will fail to perform any of
      the covenants or fulfil any of the conditions contained in this Debenture
      required to be performed or fulfilled by the Guarantor, the Lender may in
      its discretion, and upon giving of notice to the Guarantor, perform any of
      the said covenants or fulfil any such condition capable of being performed
      by it and, if any such covenant or condition requires the payment or
      expenditure of money, it may make such payments or expenditures out of the
      Guarantor Property or with its own funds, or with money borrowed by or
      advanced to it for such purpose, but will be under no obligation so to do;
      and all sums so expended or advanced will be at once payable by the
      Corporation, will bear interest at the rate payable hereunder until paid,
      and will be secured by the Deed of Trust, provided that any such
      performance or payment will be without prejudice to any right that the
      Lender might have as a result of such
default.

            


    

    


    
      	
               
      

            	
              (c)

            	
              To Pay Rents and
      Taxes.   The Guarantor will pay all rents, taxes,
      rates, levies, assessments and government fees or dues lawfully levied,
      assessed or imposed by any Governmental Authority in respect of the
      Guarantor Property or any part thereof as and when the same will become
      due and payable, and will provide to the Lender, when requested, evidence
      establishing such payment.

            


    

    


    
      	
               
      

            	
              (d)

            	
              Perform Covenants and
      Obligations.  The Guarantor will duly and punctually
      perform or observe, as the case may be, the covenants and obligations of
      the Guarantor contained in this
Debenture.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        14

      

    

    


    
      	
               
      

            	
              (e)

            	
              Environmental
      Compliance.  The Guarantor will operate all property
      owned, leased or otherwise used by it such that no material obligation,
      including a clean-up or remedial obligation, will arise under any
      Environmental Law, provided however, that if any such claim is made or any
      such obligation arises, the Guarantor will immediately satisfy or contest
      such claim or obligation at its own cost and
  expense.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Right of
      Inspection.  The Lender may, upon giving the Guarantor
      two (2) Business Days notice in writing, examine and make copies of all
      books and records of the Guarantor and the Lender may discuss the affairs,
      finances and accounts of the Guarantor with the Guarantor’s officers and
      accountants and/or the Corporation’s officers and
    accountants.

            


    

    


    ARTICLE
5

    REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE LENDER

    


    5.1           Representations and
Warranties.  The Lender hereby covenants, represents and
warrants to the Corporation as follows (and the Lender acknowledges that the
Corporation is relying upon these covenants, representations and warranties and
connection with the Corporation’s issuance of this Debenture and the performance
of its obligations) as of the date hereof:

    


    
      	
               
      

            	
              (a)

            	
              Status.  The
      Lender is a corporation duly incorporated and organized in accordance
      with, and is validly subsisting and in good standing under the laws of its
      jurisdiction of incorporation.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Corporate
      Power.  The Lender has the corporate power to own its
      property and assets to carry on the business as presently carried on or
      proposed to be carried on by it.  The Lender is duly qualified
      or licensed and in good standing as a corporation authorized to do
      business in each jurisdiction where it carries on its business or where
      the nature of the business carried on or proposed to be carried on or
      where the location of its property and assets requires it to be so
      licensed or qualified.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Power, Capacity, Due Execution
      and Enforceability.  The Lender has the full power and
      capacity to execute, deliver and perform this Debenture.  This
      Debenture and the consummation of the transactions contemplated hereby by
      the Lender have been duly and validly authorized, executed and delivered
      by the Lender.  The execution, delivery and performance of this
      Debenture by the Lender and the consummation of the transactions
      contemplated hereby by the Lender (a) will not require the consent,
      approval or authorization of any Person or Governmental Authority (b) will
      not conflict with or result in a breach of the articles or by-laws of the
      Lender, (c) will not violate any law, rule, regulation, by-law, ordinance
      or Governmental Authorization or Order and (d) will not require any notice
      under any contract or to any Person or Governmental
    Authority.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        15

      

    

    


    
      	
               
      

            	
              (d)

            	
              Compliance with Laws, Permits
      and Licenses.  The Lender has conducted and is conducting
      its business in material compliance with all applicable laws, rules,
      regulations, by-laws, ordinances and Governmental Authorizations or
      Orders.  The Lender is not in material breach of such laws,
      regulations, approvals and Governmental Authorizations or Orders and the
      Lender is duly licensed, registered or qualified and duly possesses all
      material licenses, registrations, qualifications, consents, clearances and
      approvals, permits and quotas required in those jurisdictions in which the
      Lender carried on its business to enable such business to be carried on as
      now conducted.  All such material licenses, registrations,
      qualifications, consents, clearances, approvals, permits and quotas
      necessary to the conduct of Lender’s business are valid and subsisting and
      in good standing and none of the same contains or is subject to any term,
      provision, condition or limitation which may materially adversely change
      or terminate such license, registration, qualification, permit or quota by
      virtue of the completion of the transactions contemplated hereby and there
      is no proceeding, action or notice pending or threatened which may result
      in the revocation, cancellation, suspension or any material adverse
      modification thereof.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Acquisition for
      Investment.  The Lender is acquiring this Debenture
      solely for its own account and not with a view to or for sale in
      connection with distribution.  The Lender does not have a
      present intention to sell this Debenture or any Common Shares issued upon
      conversion of all or any portion of this Debenture (collectively, the
      “Securities”), nor
      a present arrangement (whether or not legally binding) or intention to
      effect any distribution of any of the Securities to or through any person
      or entity; provided, however, that by making the representations herein,
      the Lender does not agree to hold the Securities for any minimum or other
      specific term and reserves the right to dispose of the Securities at any
      time in accordance with Federal and state securities laws applicable to
      such disposition.  The Lender acknowledges that it (i) has such
      knowledge and experience in financial and business matters such that
      Lender is capable of evaluating the merits and risks of Lender’s
      investment in the Corporation, (ii) is able to bear the financial risks
      associated with an investment in the Securities and (iii) has been given
      full access to such records of the Corporation and the Guarantor and to
      the officers of the Corporation and the Guarantor as it has deemed
      necessary or appropriate to conduct its due diligence
      investigation.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Rule 144.  The
      Lender understands that the Securities must be held indefinitely unless
      such Securities are registered under the Securities Act or an exemption
      from registration is available.  The Lender acknowledges that it
      is familiar with Rule 144, and that the Lender has been advised that Rule
      144 permits resales only under certain circumstances.  The
      Lender understands that to the extent that Rule 144 is not available, the
      Lender will be unable to sell any Securities without either registration
      under the Securities Act or the existence of another exemption from such
      registration requirement.

            


    

    


    
      	
               
      

            	
              (g)

            	
              General.  The
      Lender understands that the Securities are being offered and sold in
      reliance on a transactional exemption from the registration requirements
      of federal and state securities laws and the Corporation is relying upon
      the truth and accuracy of the representations, warranties, agreements,
      acknowledgments and understandings of the Lender set forth herein in order
      to determine the applicability of such exemptions and the suitability of
      the Lender to acquire the Securities.  The Lender understands
      that no United States federal or state agency or any government or
      governmental agency has passed upon or made any recommendation or
      endorsement of the Securities.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        16

      

    

    


    
      	
               
      

            	
              (h)

            	
              No General
      Solicitation.  The Lender acknowledges that the
      Securities were not offered to the Lender by means of any form of general
      or public solicitation or general advertising, or publicly disseminated
      advertisements or sales literature, including (i) any advertisement,
      article, notice or other communication published in any newspaper,
      magazine, or similar media, or broadcast over television or radio, or (ii)
      any seminar or meeting to which the Lender was invited by any of the
      foregoing means of communications.  The Lender, in making the
      decision to acquire the Securities, has relied upon independent
      investigation made by it and has not relied on any information or
      representations made by third
parties.

            


    

    


    
      	
               
      

            	
              (i)

            	
              Accredited
      Investor.  The Lender is an “accredited investor” (as
      defined in Rule 501 of Regulation D), and the Lender has such experience
      in business and financial matters that it is capable of evaluating the
      merits and risks of an investment in the Securities.  The Lender
      is not required to be registered as a broker-dealer under Section 15 of
      the Exchange Act and the Lender is not a broker-dealer.  The
      Lender acknowledges that an investment in the Securities is speculative
      and involves a high degree of risk.

            


    

    


    
      	
               
      

            	
              (j)

            	
              Certain
      Fees.  The Lender has not employed any broker or finder
      or incurred any liability for any brokerage or investment banking fees,
      commissions, finders’ structuring fees, financial advisory fees or other
      similar fees in connection with this Debenture or the transactions
      contemplated hereby.

            


    

    


    
      	
               
      

            	
              (k)

            	
              Legend.  The
      Lender acknowledges and agrees that, until such time as the Conversion
      Shares may be sold by the Lender pursuant to Rule 144, each certificate
      representing the Conversion Shares shall be stamped or otherwise imprinted
      with a legend substantially in the following form (in addition to any
      legend required by applicable state securities or “blue sky”
      laws):

            


    

    


    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR WITS BASIN PRECIOUS MINERALS INC. SHALL HAVE RECEIVED
AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.


    
      
         


      

      
        
        

        
          

        

      

      
         


        17

      

    

    


    
      	
               
      

            	
              (l)

            	
              Dismissal of
      Claims.  The Lender (formerly known as Advanced Drilling,
      Inc.) and its affiliates, have, on or prior to the date hereof, dismissed
      with prejudice and withdrawn or cancelled any complaint and/or notice of
      lis pendens filed relating to or pertaining any interests in the Hunter
      Bates Claims or any assets related thereto to the satisfaction of the
      Corporation and Guarantor, in their good faith
  discretion.

            


    

    


    ARTICLE
6

    CONVERSION

    


    6.1          Conversion at the Demand of
Lender.  Upon and subject to the provisions and conditions
herein contained, the Lender will have the right, at any time prior to the
Maturity Date or such time when this Debenture is fully repaid, to convert any
portion of the amounts owing under this Debenture, into Common Shares of the
Corporation at the Conversion Price Per Share subject to the
following:

    


    
      	
               
      

            	
              (a)

            	
              Procedure for
      Conversion.  If the Lender wishes to convert all or a
      portion of the amount owing under this Debenture into Common Shares (with
      the amount the Lender wishes to convert being referred to as the “Conversion Amount”), the
      Lender will deliver notice in writing to such effect (the “Conversion
      Notice”).  The Lender will indicate in the Conversion
      Notice the number of Common Shares to which the Lender is entitled upon
      conversion.  Within 10 Business Days after delivery of the
      Conversion Notice the Corporation will cause to be issued that number of
      whole Common Shares, as applicable, as equals the Conversion Amount in
      respect of which the conversion right is exercised (as specified in the
      Conversion Notice) divided by the Conversion Price Per
    Share.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Mandatory
      Conversion.  If the closing market price of the Common
      Shares exceeds US $0.50 per Common Share for thirty (30) consecutive
      Business Days, then the Corporation has the option to require the
      conversion of any remaining amounts owing hereunder at the Conversion
      Price Per Share.  If the Corporation wishes to exercise its
      option to require the conversion of any remaining amounts outstanding then
      the Corporation must provide notice in writing to the Lender (the “Mandatory Conversion
      Notice”).  Within 10 Business Days after delivery of the
      Mandatory Conversion Notice the Corporation will cause to be issued that
      number of whole Common Shares, as applicable, as equals the balance then
      remaining owing under the Debenture divided by the Conversion Price Per
      Share.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Adjustment of Conversion Price
      Per Share.  If and whenever at any time after the date
      this Debenture is issued, the Corporation will (i) subdivide or
      re-divide its then outstanding Common Shares into a greater number of
      Common Shares, (ii) reduce, combine or consolidate its then outstanding
      Common Shares into a lesser number of Common Shares or (iii) issue Common
      Shares (or securities exchangeable for or convertible into Common Shares)
      to the holders of all or substantially all of its then outstanding Common
      Shares by way of a stock dividend or other distribution (any of such
      events herein called a “ Fundamental Change”),
      then the Conversion Price Per Share will be adjusted effective
      immediately after the effective date of any such event in (i) or (ii)
      above or the record date at which the holders of Common Shares are
      determined for the purpose of any such dividend or distribution in (iii)
      above, as the case may be, by multiplying the Conversion Price Per Share
      by a fraction, the denominator of which will be the number of Common
      Shares outstanding immediately after giving effect to such Fundamental
      Changes including, in the case where securities exchangeable for or
      convertible into Common Shares are distributed, the number of Common
      Shares that would be outstanding if such securities were exchanged for or
      converted into Common Shares and the numerator of which will be the number
      of Common Shares outstanding on such effective date or record date, as the
      case may be, before giving effect to such Fundamental
    Changes.

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        18

      

    

    


    
      	
               
      

            	
              (d)

            	
              No
      Restrictions.  Except as set forth in Section 5.1(f), the
      Corporation covenants that any Common Shares issued on conversion pursuant
      to this Section 6.1 will not be subject to any trading restrictions at the
      time of issuance.

            


    

    


    6.2          Capital
Alteration.  The Corporation’s issuance of Common Shares
pursuant to any voluntary or forced conversion in accordance with Section 6.1
above will be subject to satisfaction by the Corporation of the Pre-Conversion
Condition.  If the Corporation has not satisfied the Pre-Conversion
Condition as at issuance of this Debenture, then the Corporation will use its
commercially reasonable best efforts to, on or prior to the date that is ninety
(90) days after the date of issuance of this Debenture (the “Trigger Date”), satisfy the
Pre-Conversion Condition.  If the Corporation is not able to satisfy
the Pre-Conversion Condition, then on the final day of each seven (7) day period
following the Trigger Date that the Corporation is unable to satisfy the
Pre-Conversion Condition, until the date that is fifty-six (56) days after the
Trigger Date (the “Demand
Date”), the Corporation will be required to pay the Lender as liquidated
damages (and not as a penalty) an amount equal to 2% of the outstanding
Principal Amount and Interest as of such day, payable in cash or shares of
Common Shares (valued at a conversion price of Conversion Price Per Share) at
the option of the Corporation (the “Extension Fee”) and if (i) at
any time after the Trigger Date the Corporation has not paid the Extension Fee
when due and (ii) there has been no prior conversion or other payment or full
satisfaction of the amounts owing under this Debenture, then the Lender may
demand repayment by the Corporation of all of then outstanding amounts owing
under this Debenture by providing the Corporation seven (7) days written
notice.  For greater certainty, the failure of the Corporation to
satisfy payment to the Lender upon such demand being made will constitute an
Event of Default under Section 7.1 entitling the Lender to exercise any and all
remedies available to it as a consequence of such default.  If the
Pre-Conversion Condition is satisfied by obtaining shareholder approval to the
amendment of the Corporation’s articles of incorporation to increase the number
of authorized shares, then the Corporation will implement and give effect to the
increase to the number of authorized shares as soon as reasonably practicable
following obtaining shareholder approval.

    


    ARTICLE
7

    DEFAULT

    


    7.1          Events of
Default.   An Event of Default shall have occurred (and
continued through any applicable cure period) upon the occurrence of any of the
following:

    


    
      	
               
      

            	
              (a)

            	
              the
      default by the Corporation or the Guarantor in the payment of any amounts
      payable hereunder, as and when the same falls
  due;

            


    


    
      
         


      

      
        
        

        
          

        

      

      
         


        19

      

    

    


    
      	
               
      

            	
              (b)

            	
              the
      default by the Guarantor under the Deed of Trust, and such default is not
      cured (if capable of cure) within five (5) Banking Days of receiving
      written notice from the Lender in connection
  therewith;

            


    

    


    
      	
               
      

            	
              (c)

            	
              the
      Corporation will neglect to carry out or observe any other covenant or
      condition herein contained and on its part to be observed, and the
      Corporation fails to cure, or diligently commence and continue to cure to
      the satisfaction of the Lender acting reasonably, such default within five
      (5) Banking Days of receiving written notice from the Lender in connection
      therewith;

            


    

    


    
      	
               
      

            	
              (d)

            	
              the
      failure of the Corporation to satisfy the Pre-Conversion Condition on or
      before the Demand Date;

            


    

    


    
      	
               
      

            	
              (e)

            	
              the
      commission of an act of bankruptcy by the Corporation or the Guarantor, or
      the making by the Corporation or the Guarantor of a proposal or general
      assignment for the benefit of either of their creditors or other
      acknowledgement of the Corporation or the Guarantor of
      insolvency;

            


    

    


    
      	
               
      

            	
              (f)

            	
              the
      enforceability of an execution, sequestration, extent or any other process
      of any court against the Corporation or the Guarantor, or the levy of a
      distress or analogous process upon its property or assets or any part
      thereof unless the execution, sequestration, extent or other process of
      the court or distress or analogous process is in good faith disputed by
      the Corporation or the Guarantor;

            


    

    


    
      	
               
      

            	
              (g)

            	
              the
      failure by the Corporation or the Guarantor to perform or observe any of
      the covenants, conditions or agreements to be performed or observed by
      them hereunder within five (5) Banking Days of receiving written notice
      from the Lender in connection therewith;
or

            


    

    


    
      	
               
      

            	
              (h)

            	
              the
      making of any representation or warranty by the Corporation or the
      Guarantor herein which was incorrect as of the date made, and such
      representation or warranty is not cured (if capable of cure) within five
      (5) Banking Days of receiving written notice from the Lender in connection
      therewith.

            


    

    


    ARTICLE
8

    VARIOUS
PROVISIONS

    


    8.1          Release of
Security.  Upon satisfaction by the Corporation of all amounts
owing hereunder, the Lender will release its security in accordance with section
4.1 of the Deed of Trust.

    


    8.2          No Waiver.  This
Debenture may not be amended except by a writing executed by the Lender, the
Corporation and the Guarantor. No consent or waiver by the Lender will be
effective unless made in writing and signed by an authorized officer of the
Lender.  Any indulgence or forbearance or failure by the Lender to
insist on the strict and timely performance of any provision of this Debenture
will not affect the future right of the Lender to insist on the strict and
timely performance of the same or any other provision of this Debenture
thereafter.


    
      
         


      

      
        
        

        
          

        

      

      
         


        20

      

    

    


    8.3          Costs and
Expenses.  The Corporation agrees to pay to the
Lender:

    


    
      	
               
      

            	
              (a)

            	
              all
      professional fees incurred by the lender in negotiating the terms of and
      in entering into this Debenture, including but not limited to all
      professional fees incurred in preparing and negotiating the Term Sheet
      evidencing the business terms of the Debenture, negotiating and finalizing
      the form of this Debenture, and all documents to be prepared ancillary
      thereto, together with all professional fees incurred by the Lender in
      registering a mechanics lien against the Corporation, preparing and filing
      a Complaint and Lis Pendens and discharging same, all of which
      professional fees shall be for an amount no greater than US $60,000.00;
      the parties hereby acknowledge and agree that US$60,000.00 has been
      included in the Principal Amount for the payment of such professional
      fees; and

            


    

    


    
      	
               
      

            	
              (b)

            	
              forthwith
      upon demand, all reasonable costs, charges and expenses (including legal
      fees and expenses on a solicitor and his own client basis) of or incurred
      by the Lender in connection with the administration or enforcement of its
      rights hereunder, including all such costs, charges and expenses incurred
      in connection with the taking possession, protecting, preserving,
      collecting or realizing upon all or any part of the Guarantor Property,
      which costs, charges and expenses will not be subject to any
      cap.

            


    

    


    The
Corporation also agrees to pay to the Lender interest on all appropriate
professional fees, costs, charges and expenses of or incurred by it from the
date such costs, charges and expenses occurred. All such sums payable pursuant
to this Section 8.3 will be added to the Principal Amount of the indebtedness
contemplated herein and will be paid out in accordance with the terms of this
Debenture and shall be secured by the Deed of Trust as if forming part of the
original Principal Amount contemplated herein.

    


    8.4          Remedies Subject to Applicable
Law.  All rights, remedies and powers provided herein may be
exercised or enforced only to the extent that the exercise or enforcement
thereof does not violate any applicable provision of law and all the provisions
of this Debenture are intended to be subject to all applicable mandatory
provisions of law which may be controlling in the circumstances and to be
limited to the extent necessary so that they will not render this Debenture
invalid, unenforceable or not entitled to be recorded, registered or filed under
the provisions of any applicable law. Any provision hereof contrary to
applicable law will be deemed to be ineffective and will be severable from and
not invalidate any other provision of this Debenture.

    


    8.5          No
Merger.   The acceptance and holding of this Debenture
will not constitute any merger or in any way limit or affect the rights of the
Lender under any other security held for the payment and performance of any
indebtedness or liability of the Corporation.

    


    8.6          Time of the
Essence.  Time is of the essence of the provisions of this
Debenture.


    
      
         


      

      
        
        

        
          

        

      

      
         


        21

      

    

    


    ARTICLE
9

    NOTICES

    


    9.1          Notices.  Any notice
given pursuant to the provisions of this Debenture will be in writing and will
be validly and effectively given if addressed to the Corporation
at:

    


    Wits
Basin Precious Minerals Inc.

    900 IDS
Center

    80 South
8th
Street

    Minneapolis,
MN  55402-8773

    USA

    


    Attention:
President

    Facsimile:
(612) 395-5276

    


    and to
the Guarantor at:

    


    Hunter
Bates Mining Corporation

    900 IDS
Center

    80 South
8th
Street

    Minneapolis,
MN  55402-8773

    USA

    


    Attention:
President

    Facsimile:
(612) 395-5276

    


    and to
the Lender at:

    


    Cabo
Drilling (America) Inc.

    3rd
Floor, 120 Lonsdale Avenue

    North
Vancouver, BC  V7M 2E8

    Canada

    


    Attention:
President

    Facsimile:
(604) 983-8056

    


    With a
copy to:

    


    Synergy
Business Lawyers

    Suite
2480 – 1066 West Hastings Street

    Vancouver,
BC  V6E 3X2

    Canada

    


    Attention:
Darcy L. Wray

    Facsimile:
(604) 685-8187

    


    and
delivered personally or sent by telex, telegram, telecopy or similar means of
recorded communication or mailed in Canada by registered mail and will be deemed
to have been validly and effectively given (i) when delivered personally to such
address (ii) on the first Banking Day next following the sending of such notice
by telex, telegram, telecopy or similar means of recorded communication or (iii)
72 hours following the mailing of the same. Either party may from time to time
notify the other in writing of a change of address for service in the manner set
forth herein which thereafter, until changed by like notice, will be the address
of such party for all purposes of this Debenture.


    
      
         


      

      
        
        

        
          

        

      

      
         


        22

      

    

    


    ARTICLE
10

    SUPPLEMENTAL
DOCUMENTATION

    


    10.1         Further
Assurances.  At any time and from time to time, upon the
written request of the Lender, and at the sole expense of the Corporation, the
Corporation will promptly and duly execute and deliver such further instruments
and documents and take such further action as the Lender may reasonably request
for the purpose of obtaining or preserving the full benefits of this Debenture
and of the rights and powers herein granted including, without limitation, the
filing of any copies of this Debenture or any notice with respect thereto in any
jurisdiction in connection with the perfection of the Lien created
hereby.

    


    The
Corporation further agrees that the Lender will have the right to require the
form of this Debenture be amended or supplemented (i) to reflect any changes in
the laws of any relevant jurisdiction, whether arising as a result of statutory
amendments, court decisions or otherwise; (ii) to facilitate the registration of
appropriate forms of this Debenture in all appropriate jurisdictions; or (iii)
if the Corporation amalgamates with any other Person or enters into any
corporate reorganization, permitted hereunder, in each case in order to confer
upon the Lender the Lien intended to be created hereby, except that in no event
will the Lender require that any such amendment be effected or that any such
supplementary security be granted if the result thereof would be to grant to the
Lender greater rights than is otherwise contemplated in this
Debenture.

    


    10.2         Correction of Manifest
Errors.  The parties hereto may correct typographical, clerical
and other manifest errors in this Debenture provided that such correction will,
in the opinion of the Lender, in no way prejudice the rights of the Lender
hereunder, and the parties hereto may execute all such documents as may be
necessary to correct such errors.

    


    ARTICLE
11

    MISCELLANEOUS

    


    11.1         Debenture
Legislation.  In this Section 11.1, the term “applicable
legislation” means the provisions, if any, of any statute of Colorado, and the
regulations under any such statute, relating to debentures and to the rights,
duties and obligations of trustees under trust indentures, to the extent that
such provisions are at the time in force and applicable to this
Debenture.

    


    If and to
the extent that any provision of this Debenture limits, qualifies or conflicts
with a mandatory requirement of applicable legislation, such mandatory
requirement will prevail to the extent of such limitation, qualification or
conflict without invalidating the remaining provisions of this Debenture or
affecting the validity or enforceability of such provision in any other
jurisdiction.  The Corporation and the Lender agree that each will at
all times in relation to this Debenture and any action to be taken hereunder,
observe and comply with and be entitled to the benefits of applicable
legislation.


    
      
         


      

      
        
        

        
          

        

      

      
         


        23

      

    

    


    Any
statutory declaration required by applicable legislation may be made by one or
more of the officers of the Corporation.

    


    11.2        Acknowledgment of
Receipt.  The Corporation acknowledges receipt of an executed
copy of the Debenture.

    


    11.3        Financing
Statements.  The Corporation waives all rights to receive from
the Lender a copy of any financing statement, financing change statement or
verification statement filed, issued or obtained at any time in respect of this
Debenture.

    


    11.4        Waiver.  To the full
extent permitted by law, the Corporation:

    


    
      	
               
      

            	
              (a)

            	
              waives
      all of the rights, benefits and protections given by the provisions of any
      existing or future statute which impose limitations upon the powers,
      rights or remedies of a secured party or upon the methods of realization
      of security, including any seize or sue or anti-deficiency statute or any
      similar provisions of any other statute;
and

            


    

    


    
      	
               
      

            	
              (b)

            	
              agrees
      that it will not at any time insist upon, claim, plead, or take any
      benefit or advantage of any appraisement, valuation, stay, extension,
      moratorium, redemption, or similar law now or hereafter in force in order
      to prevent, delay, or hinder the enforcement of this Debenture and the
      Corporation for itself and all who claim through it, so far as it or they
      now or in the future may lawfully do
so.

            


    

    


    11.5        Pledge of
Debenture.  This Debenture may be transferred and assigned,
deposited with and pledged by the Corporation to the Lender as a general and
collateral security for the payment and performance of its future indebtedness
and obligation and liabilities and, when redelivered to the Corporation or its
nominees, will forthwith be cancelled; but this Debenture will not be deemed to
have been redeemed by reason of the Corporation having ceased to be in debt
while this Debenture was so assigned, deposited or pledged and no payment will
reduce the amount secured under the Deed of Trust unless specifically
appropriated to and noted on this Debenture at the time of payment.

    


    11.6        Further
Advances.   Neither the issue and delivery of this
Debenture nor the advance of any funds hereunder will obligate the Lender to
advance any further funds hereunder.

    


    11.7        Security
Additional.  This security is in addition to and not in
substitution for any other security now or hereafter held by the Lender and no
payment to the Lender will constitute payment under this Debenture unless
specifically so appropriated by the Lender by notation of such payment on this
Debenture.

    


    11.8        Survival of Representations and
Warranties.  All representations and warranties made by the
Corporation and/or the Guarantor hereunder shall survive the delivery of this
Debenture so long as any amounts owing under this Debenture remain
outstanding.


    
      
         


      

      
        
        

        
          

        

      

      
         


        24

      

    

    


    11.9        Assignment.  Neither
the Corporation or the Guarantor, on one hand, or the Lender, on the other hand,
will assign this Debenture or their respective rights or obligations under this
Debenture to any person without the express written consent of the other party,
which consent may not be withheld unreasonably.

    


    11.10      Forum for
Disputes.  The parties agree that any action brought by any
party under or in relation to this Debenture, will be brought exclusively in a
court located in the State of Colorado.

    Each
party irrevocably agrees to and submits to the jurisdiction and venue of any
such court and waives any objection to venue laid therein, including any
objection based on an assertion of inconvenience of such forum or forum non
conveniens.


    
      
         


      

      
        
        

        
          

        

      

      
         


        25

      

    


    IN WITNESS WHEREOF the
Corporation has caused this Debenture to be duly executed and delivered as of
the date set out below.

    
      


      
        	 
      	
                Execution
      Date

              	 
      
	
                Officer
      Signature

                 

                ____________________________

                Signature

                ____________________________

                Print
      Name

                ____________________________

                Address

                ____________________________

                Professional
      Capacity

              	
                Y

                 

                 

                09

              	
                M

                 

                 

                04

              	
                D

                 

                 

                28

              	
                 

                WITS BASIN
      PRECIOUS

                MINERALS INC. by
      its

                Authorized
      Signatory

                 

                 

                /s/
      Mark D. Dacko

                Print
      Name

                Mark
      D. Dacko

              


      

      


      
        	
                Officer
      Signature

                 

                ____________________________

                Signature

                ____________________________

                Print
      Name

                ____________________________

                Address

                ____________________________

                Professional
      Capacity

              	
                Y

                 

                 

                09

              	
                M

                 

                 

                04

              	
                D

                 

                 

                28

              	
                 

                HUNTER BATES
      MINING

                CORPORATION by
      its

                Authorized
      Signatory

                 

                 

                /s/
      Mark D. Dacko

                Print
      Name

                Mark
      D. Dacko

              	 
      
	 
      	 
      	 
      
	
                Officer
      Signature

              	 
      	 
      
	
                 

                ____________________________

                Signature

                ____________________________

                Print
      Name

                ____________________________

                Address

                ____________________________

                Professional
      Capacity

              	
                Y

                 

                 

                09

              	
                M

                 

                 

                04

              	
                D

                 

                 

                28

              	
                 

                CABO
      DRILLING (AMERICA) INC.

                by
      its Authorized Signatory

                 

                /s/
      John Versfelt

                Print
      Name

                John
      Versfelt