<PAGE>   1

                                                                    EXHIBIT 10.9

                                   ----------



                             OPTION TO PURCHASE WITH
                             -----------------------

                          EXPLORATION RIGHTS AGREEMENT
                          ----------------------------



                                    BETWEEN:



                                AZCO MINING INC.
                                ----------------



                                  AND EACH OF:
                                  ------------



             WILLIAM C. FORREST, HILDA F. FORREST and ELVIS L. GRAY
             ------------------------------------------------------



                                  DEVLIN JENSEN
                                  -------------
                            Barristers and Solicitors
                      Suite 2550, 555 West Hastings Street
                           Vancouver, British Columbia
                                     V6B 4N5



                                   ----------






<PAGE>   2

                             OPTION TO PURCHASE WITH

                          EXPLORATION RIGHTS AGREEMENT



        THIS OPTION TO PURCHASE WITH EXPLORATION RIGHTS AGREEMENT (the
"Agreement") is made and dated for reference effective as fully executed on this
_____ day of December, 1997.



BETWEEN:


        AZCO MINING INC., a corporation duly incorporated under the
        laws of the State of Delaware, U.S.A., and having an address
        for notice and delivery located at Suite 1250, 999 West
        Hastings Street, Vancouver, British Columbia, V6C 2W2

        ("Azco");

                                                               OF THE FIRST PART


AND:


        WILLIAM C. FORREST ("William Forrest"), HILDA F. FORREST ("Hilda
        Forrest") and ELVIS L. GRAY ("Gray"), and each having an address for
        notice and delivery located at c/o William C. Forrest, 867 East
        Minarets, Fresno, California, U.S.A., 93720

        (William Forrest, Hilda Forrest and Gray being hereinafter
        collectively referred to as the "Seller" as the context so
        requires);

                                                              OF THE SECOND PART


        (Azco and the Seller being hereinafter singularly also
        referred to as a "Party" and collectively referred to as the
        "Parties" as the context so requires).



<PAGE>   3
                                      -2-


        WHEREAS IN CONSIDERATION of the payments to be made pursuant to, the
mutual covenants contained in, and the mutual benefits to be derived from, this
Agreement, the Sellers and Azco hereby agree as follows:


                                    ARTICLE I

                    OPTION TO PURCHASE AND EXPLORATION RIGHTS


1.1 GRANT OF OPTION. The Seller grants to Azco the exclusive and irrevocable
option to purchase (the "Option") all or any portion of the Property (as defined
hereinbelow). As used in this Agreement, the term "Property" shall mean the
totality of all rights related to or included in the properties described in
Schedule "A" which is attached to and by this reference incorporated into this
Agreement including, without limitation, all minerals in, on and under the
Property and the land covered by the Property. The period of the Option shall be
from the date of this Agreement to February 1, 1999 (the "Option Period"),
unless extended pursuant to section "1.5" or Article "V" hereinbelow or sooner
terminated pursuant to sections "2.4", "8.1", "8.2" or "8.3" hereinbelow.


1.2 GRANT OF EXPLORATION RIGHTS. The Seller grants to Azco the full right and
authority, during the Option Period, to enter upon the Property and to conduct
such exploration and prospecting operations, as Azco may deem appropriate, to
determine the presence, location, quantity and value of minerals contained in
the Property with the intention that Azco's initial exploration efforts will be
a systematic and scientific evaluation of the Property. Such operations may
include, but shall not be limited to, mapping, sampling, including bulk
sampling, trenching, drilling, testing, assaying and conducting environmental
studies and other geochemical and geophysical exploration methods whether now
known or in the future developed, and Azco will use its reasonably best efforts
to explore the Property in conjunction with each of those certain November 13,
1997 and November 18, 1997 letters from the County of San Benito addressed to
William Rohtert while acting as an agent on behalf of Azco, August 13, 1997
Notice of Determination filed in San Benito County, October 1, 1997 San Benito
County Reclamation Agreement and May 21, 1997 approved Benitoite Gem Mine
Reclamation Plan respecting the Property (collectively, the "Reclamation Plan"),
a copy of which entire Reclamation Plan is attached as Schedule "B" to this
Agreement, failing which Azco will use its reasonably best efforts to secure
such permits and post such additional reclamation bonds as may be necessary, in
its sole and absolute discretion, for the exploration work intended to evaluate
the economic potential of the Property. Azco may establish drill sites and
construct such roads as may be necessary to the conduct of the foregoing
activities. Subject to section "8.6" hereinbelow, Azco may also mine and remove
such amount of minerals as Azco may deem appropriate for sampling, assaying,
testing and evaluation of the Property without exercising the Option; provided
that the total amount of material processed during the Option Period does not
exceed 500 cubic yards. In addition, Azco shall have the right:


        (a)     to use all easements and all rights-of-way for ingress and
                egress to and from the Property to which the Seller may be
                entitled;



<PAGE>   4
                                      -3-



        (b)     to make use of all available facilities located on the Property;


        (c)     to obtain all permits, approvals and other federal, state and
                local governmental authorizations as Azco deems necessary to
                conduct its mineral exploration activities;


        (d)     to exercise all other rights that are or may be incidental to
                any or all of the rights granted, expressly or implicitly, to
                Azco in this Agreement; and


        (e)     to the extent Seller possesses the title and authority to grant
                it, to possess and use all or any part of the Property together
                with all easements to, across and through the Property, for the
                purpose of exploring any adjoining or nearby property owned,
                controlled or operated by Azco.


1.3 OPERATIONS. Azco agrees to conduct its operations in a manner as to not
unreasonably interfere with the operations of the Seller as contemplated in
section "1.7" hereinbelow and so long as Azco is able to fulfill the essential
purposes desired to be obtained by it in this Agreement. The Parties will
mutually discuss the location of operations of both Parties and each Party will
make reasonable attempts to notify the other Party prior to any excavation work
being conducted on the Property.


1.4 OWNERSHIP AND PROCESSING OF GEMS. The Benitoite minerals and their matrix
material mined by Azco during the Option Period (collectively, the "Minerals")
will be placed in inventory by Azco, and should Azco elect to exercise its
Option to acquire the Property all such Minerals will be absolutely conveyed to
Azco by the Seller at that time. If the Property is not purchased by Azco during
the Option Period the Minerals will be returned by Azco to the Seller forthwith.
Azco will, during the Option Period and subject to the following restrictions,
maintain the sole and absolute right to process any such Minerals in any manner
it may determine reasonable in the circumstances, provided that, at all times,
any such process reasonably complies with standard industry practices in
connection with the preparation of polished goods and, provided further, that
Azco uses its reasonably best efforts to seek the maximum yield in connection
with any such Minerals. In this regard it is hereby also expressly acknowledged
and agreed by the Parties hereto that, during the Option Period, any facetable
stone greater than six carats in weight or any specimen exceeding U.S. $5,000 in
wholesale value, will only be processed in such a manner as may be mutually
agreed by both Parties, from time to time, acting reasonably. All such stones or
specimens will be kept in a mutually acceptable storage facility with a dual key
access, of which each Party will hold one key.


1.5 COOPERATION BY THE SELLER AND ASSESS TO THE PROPERTY. During the Option
Period the Seller agrees to cooperate with Azco in Azco's investigation of the
Property by consulting with Azco with respect to the Property and Azco's
possible 



<PAGE>   5
                                      -4-



operations on the Property. The Seller further agrees to use its reasonably best
efforts to assist Azco in the exercise of all rights that are or may be
incidental to any or all of the rights granted, expressly or implicitly, to Azco
in this Agreement including, without limitation, the necessary securement of all
easements and all rights-of-way for ingress and egress to and from the Property
presently available to the Seller; provided, however, that, notwithstanding the
Seller's reasonably best efforts as aforesaid, the Seller does not hereby
warrant or guarantee the availability of any said easements and rights-of-way to
Azco from third parties who previously may have permitted said use or assess to
the Seller. The Seller also agrees to use its reasonably best efforts to assist
Azco with the provision of basic technical, gemological and legal and historical
information and support which may assist Azco in its evaluation of the Property.


1.6 NON-REFUNDABLE PAYMENT. Immediately upon the receipt by Azco of its
requisite Insurance and Certificate of Qualification in accordance with sections
"4.2" and "4.4" hereinbelow and, in any event, on or before 20 days from the due
and complete execution of this Agreement, Azco shall pay to the Seller the sum
of U.S. twenty thousand dollars (U.S. $20,000) as a non-refundable payment which
may not be applied as against the purchase price of the Option in conjunction
with section "2.2" hereinbelow.


1.7 SELLER'S CONTINUED OPERATIONS. Notwithstanding the powers, rights and
authorities granted to Azco in section "1.2" hereinabove, the Seller shall have
the right to conduct operations on the Property under the following conditions:


        (a)     the Seller may conduct mining operations on the Property over a
                combined 30-day period between January 1, 1998 and May 1, 1998,
                it being acknowledged and agreed that said combined 30-day
                period shall not include those number of days that it may
                require the Seller to first set up its respective mining
                equipment and machinery on the Property, to repair any such
                mining equipment and machinery on the Property and to complete
                certain site preparation work in respect of its proposed mining
                operations on the Property; provided, however, that any said set
                up, repair and site preparation work does not require more than
                a combined 30 days to complete; and


        (b)     the Seller's operations shall be limited to the mining of a
                maximum of 1,000 cubic yards of material processed.


                                   ARTICLE II

                             EXERCISE OF THE OPTION


2.1 EXERCISE OF OPTION. Azco may exercise the Option with respect to the
Property on or before the end of the Option Period, that being on or before
February 1, 1999 unless extended pursuant to section "1.5" hereinabove or
Article "V" hereinbelow, 



<PAGE>   6
                                      -5-



by notice to the Seller in accordance with section "9.2" hereinbelow utilizing
any method of communication that will provide an accurate record of its
dispatch.


2.2 PURCHASE PRICE. The total purchase price of the Property shall be U.S. one
million and five hundred thousand dollars (U.S. $1,500,000), unencumbered by
royalty, payable by Azco to the Seller in accordance with section "9.1"
hereinbelow.


2.3 CLOSING. If Azco exercises the Option the closing (the "Closing") and the
transfer of title to the Property from the Seller to Azco shall occur on the day
which is 10 days following the exercise of the Option by Azco, or on such
earlier or later day as may be agreed to in advance and in writing by each of
the Parties hereto, and will be closed at the offices of solicitors for Azco,
Devlin Jensen, Barristers and Solicitors, located at Suite 2550, 555 West
Hastings Street, Vancouver, British Columbia, V6B 4N5, at 2:00 p.m. (Vancouver
time), or at such other location and at such other time as may be agreed to in
advance and in writing by the Parties hereto, on the day of Closing. As soon as
conveniently possible after the due and complete execution of this Agreement the
Seller shall execute and deliver to Devlin Jensen, or to such other mutually
acceptable escrow agent (the "Escrow Agent") as may be agreed to in advance and
in writing by the Parties hereto, all such documents, resolutions and
instruments as may be necessary, in the opinion of solicitors for Azco, acting
reasonably, to transfer title to the Property to Azco free and clear of all
title defects, liens and encumbrances (collectively, the "Transfer Documents"),
there to be held in escrow by the Escrow Agent until the day of Closing as
provided for herein. At the Closing the following shall occur:


        (a)     the Escrow Agent shall deliver to Azco the Transfer Documents;


        (b)     Ad valorem, property and other taxes and assessments imposed
                upon the Property shall be prorated between the Seller and Azco
                as of the date of Closing and the Seller shall be charged for
                all such taxes and assessments prior to the day of Closing; and


        (c)     the Parties shall execute and deliver such other documents and
                shall take such other action as may be necessary to carry out
                their obligations under this Agreement.


        Without in any manner limiting the extent of the foregoing, it is hereby
acknowledged and agreed by the Parties hereto that if Azco exercises the Option
in accordance with the terms of this Agreement then Azco shall, without any
further act, have acquired all of the Seller's right, entitlement and interest
in and to the Property.


2.4 NON-EXERCISE OF OPTION. Notice of waiver to the Seller or the failure of
Azco to dispatch a notice prior to the expiration of the Option Period will
constitute an irrevocable waiver of the Option and the Parties thereafter will
be released from the terms of this Agreement, except that Azco shall have the
rights contained in section "8.4" 



<PAGE>   7
                                      -6-



hereinbelow and shall comply with the provisions of sections "8.5" and "8.6"
hereinbelow.


                                   ARTICLE III

                             TITLES AND INFORMATION


3.1 SELLER'S WARRANTIES. The Seller represents and warrants to Azco that the
Seller is lawfully seized of the entire undivided interest in and to the
Property as described in Schedule "A" which is attached hereto, and that:


        (a)     the Seller has the right and power to convey the same for the
                purposes of this Agreement;


        (b)     the same are free from all title defects and all prior liens or
                encumbrances, other than as may be described in Schedule "A"
                which is attached hereto;


        (c)     Azco shall have quiet and peaceful possession of the Property;


        (d)     the Seller will defend title to the Property against all persons
                who may claim the same; and


        (e)     the Seller has not committed, nor will the Seller during the
                continuance of this Agreement commit, without the prior written
                consent of Azco, any act or acts which will encumber or cause a
                lien to be placed against the Property.


3.2 TITLE DEFECTS. If title to any of the Property is less than as warranted in
section "3.1" hereinabove, Azco may undertake to cure any such defects or to
defend or to initiate litigation to perfect, defend or cure title to the
Property. Azco, at any time, may withdraw from or discontinue any title
litigation or any steps it may have taken to perfect, defend or cure title. Azco
shall not be liable to the Seller if Azco is unsuccessful in, withdraws from or
discontinues title litigation or other curative work. The Seller agrees to
cooperate fully with Azco in any and all steps undertaken by Azco to remedy
title defects.


                                   ARTICLE IV

                              CONDUCT OF OPERATIONS



<PAGE>   8
                                      -7-



4.1 STANDARD OF PERFORMANCE. Azco shall cause all exploration work to be done in
a careful, safe and good miner-like manner, and to conform in all respects to
applicable governmental rules, regulations and statutes; provided, however, that
Azco may use any method it deems reasonable, including experimental or
innovative methods, in sampling, evaluating and recovering minerals from the
Property in exercising the rights granted in section "1.2" hereinabove, and
shall not be liable to the Seller in any way if such methods do not result in
full recovery of the minerals being evaluated, or full maximization of the value
thereof. Further, Azco shall conduct its operations under this Agreement in a
manner that will not unreasonably damage the surface of the Property and, in the
event the Option is not exercised, shall reclaim, in accordance with applicable
rules, regulations and statutes, all portions of the surface of the Property
that it has disturbed by its operations.


4.2 INDEMNIFICATION AND INSURANCE. Azco shall assume all liability to third
parties in connection with its exploration on the Property and, except as
provided in section "6.1" hereinbelow, shall indemnify the Seller against any
and all liability that may arise out of Azco's operations on the Property. Azco
shall, at all times during the continuance of this Agreement, at its sole cost
and expense, procure and maintain in full force and effect a policy or policies
of comprehensive public liability insurance issued by an insurer which is
acceptable to the Seller, such approval not to be unreasonably withheld,
insuring against loss, damage or liability for injury to or death of persons or
loss or damage to property occurring upon the Property in an amount of not less
than U.S. one million dollars (U.S. $1,000,000) for each person injured or
killed, and not less than U.S. one million dollars (U.S. $1,000,000) for
property damage. Said policy or policies of insurance shall name Azco and the
Seller as insured as their respective interests may appear. Azco shall also,
again at all times during the continuance of this Agreement, at its sole cost
and expense, procure and maintain in full force and effect worker's compensation
insurance and such other insurance to cover personnel and all of their
operations upon the Property in an amount and form as may be required by law;
and Azco shall comply with all laws and regulations pertaining to the
performance of work on the Property. Copies of all insurance policies provided
for herein shall be furnished to the Seller when purchased, and Azco shall
obtain a written obligation on the part of its insurance carriers to notify the
Seller in writing prior to the cancellation of any policy provided for in this
Agreement. In the event that Azco shall fail to either procure or maintain any
insurance policy required by this Agreement and such shall continue for period
of 10 days from the receipt of written notice by Azco of such failure, the
Seller may terminate this Agreement, immediately, without further obligation or
liability to Azco. Azco shall not commence any mining or exploration operations
upon the Property without procuring the insurance policies (collectively, the
"Insurance") as herein required, and shall cease all operations upon the
Property should a policy of Insurance required by this Agreement be canceled or
terminated.


4.3 PERMITS. The Seller understands that Azco may make efforts to obtain permits
and other authorization of every kind and nature whatsoever from governmental or
private entities as may be necessary to conduct mineral exploration activities.
While Azco shall be solely responsible in these efforts, the Seller agrees to
assist and cooperate fully with Azco in any and all such endeavors upon Azco's
request.



<PAGE>   9
                                      -8-



4.4 CERTIFICATE OF QUALIFICATION. Prior to the commencement of any operations or
activities upon the Property Azco shall obtain a "Certificate of Qualification"
authorizing it to transact intra-state business in California, as provided for
in sections 2105 et seq. of the California Corporations Code, and Azco shall
provide the Seller with a copy thereof. Azco shall additionally notify the
Seller in writing forthwith should such Certificate of Qualification be
surrendered or should Azco be disqualified in any manner from doing business in
the State of California. All operations and activities of Azco shall cease
during any period of disqualification.


4.5 LIENS, TAXES. During the Option Period Azco shall keep the title to the
Property free and clear of all valid liens and encumbrances resulting from its
exploration operations under this Agreement and shall pay when due all taxes and
assessments attributable to its operations under this Agreement or imposed upon
any property or improvements placed by Azco on the Property for its own use.
Azco may refuse to pay and may contest any claim, taxes or assessments asserted
against or imposed upon it that it disputes in good faith, but shall not permit
all or any portion of the Property to sold at any time for such taxes or
assessments. If the claim is finally resolved against Azco or the taxes or
assessments are finally determined to be valid, Azco shall pay the same upon
such final determination.


4.6 SUBROGATION. Azco, at its option, shall have the right to redeem for the
Seller, by payment of any mortgage, taxes or other liens on the Property in the
event of default or non-payment by the Seller. If Azco pays any such mortgage,
taxes or other liens Azco shall be subrogated to rights of the holder of the
mortgage or lien and may deduct any amount so paid from any payment due to the
Seller under this Agreement. Further, if Azco exercises the Option Azco shall
have the right to retain and repay itself from the referenced purchase price.


4.7 NO IMPLIED COVENANT. Azco does not make any express or implied covenant,
agreement or condition relating to the exploration of the Property. Whether or
not any such exploration shall at any time be conducted, and the nature, manner
and extent of such operations, shall be determined by Azco in its sole and
absolute discretion.


                                    ARTICLE V

                                  FORCE MAJEURE


5.1 DEFINITION OF FORCE MAJEURE. The Option Period and the time for removal of
equipment pursuant to section "8.4" hereinbelow shall be extended for a period
of time equivalent to the period or periods of force majeure. The term "force
majeure" as used in this Agreement includes any cause of any kind or nature
whatsoever beyond Azco's reasonable control including, but not being limited
to,: laws, ordinances, governmental regulations, restraint or court order;
inability to obtain equipment, material, power or fuel or unusual delays in
obtaining permits; labor shortages, labor disturbances, strikes, lock-outs and
other industrial disturbances to the extent that it or they are beyond the
control of Azco; failure of carriers to transport or furnish facilities for
transportation; 



<PAGE>   10
                                      -9-



acts of God, acts of the public enemy, war, blockage, riot, insurrection,
lightning, fire, storm, flood, inclement weather, washout, explosion and
breakage; or accident of machinery or facilities.


5.2 REMOVAL OF EVENT OF FORCE MAJEURE. Azco shall exercise reasonable diligence
to remove an event of force majeure as quickly as possible, but shall not be
required to settle strikes, lock-outs or other labor difficulties contrary to
its wishes, accept unusual or onerous permit conditions, or to challenge the
validity of any governmental order, request, law or regulation.


                                   ARTICLE VI

                         INSPECTION AND CONFIDENTIALITY


6.1 INSPECTION. During the continuance of this Agreement the Seller and its
respective representatives shall have the right to enter onto the Property,
without the written permission of or notice to Azco, to inspect the Property and
to protect, exercise or investigate any rights of the Seller under this
Agreement; provided, however, that the Seller shall not unreasonably hinder or
interrupt the operations and activities of Azco during any such time of
inspection. The Seller shall inspect such operations at its own risk and expense
and shall indemnify Azco, and its affiliated and direct and indirect parent
corporations and their respective directors, partners, officers, employees,
agents and corporate affiliates, from and against any loss, damage, claims or
demand by reason of injury to or the presence of the Seller, its agents,
representatives, licensees or guests arising from such inspection.


6.2 REPORTS. Each Party shall provide the other with quarterly reports
summarizing activities on the Property and stating quantities of gems and other
materials removed from the Property.


6.3 CONFIDENTIALITY. The Seller agrees that during the Option Period and, if the
Option is exercised at all times thereafter, to treat all information acquired
under this Agreement as confidential and not to use the name of Azco in any
document or press release or disclose any information that may be obtained under
this Agreement to third parties or to the public without first having obtained
the written approval of Azco as to the form and content of any such disclosure
or release. The Seller further agrees not to use, sell, give, disclose or
otherwise make available to third parties or to the public at any time any
knowledge or information that the Seller may obtain relating to internal
proprietary techniques and methods used by Azco.


                                   ARTICLE VII

                      ASSIGNMENT AND RIGHT OF FIRST REFUSAL



<PAGE>   11
                                      -10-



7.1 ASSIGNMENT BY THE SELLER. The Seller shall not assign any right or interest
in the Property or this Agreement during the Option Period.


7.2 ASSIGNMENT OR TRANSFER BY AZCO. Azco shall have the right at any time to
assign or transfer all or any portion of its rights under this Agreement;
provided, however, that prior to any such assignment or transfer Azco shall
first provide the Seller with an accurate and detailed statement of the proposed
assignee's or transferee's financial background and expertise in the mining
industry; with the Seller thereby maintaining the right to approve any such
assignee or transferee, such consent not to be unreasonably withheld.


                                  ARTICLE VIII

                                   TERMINATION


8.1 BY SELLER. At the election of the Seller the failure of Azco to make or
cause to be made any of the payments required by this Agreement or to keep or
perform any covenant on its part to be kept or performed according to the terms
or provisions of this Agreement shall constitute an event of default. Upon an
event of default the Seller shall give to Azco written notice of default,
clearly denominated as a notice of default, specifying the particular default or
defaults relied on by it. Azco shall have a reasonable time (which in any case
shall not be less than 10 calendar days) after receipt of such notice in which
to contest, cure or commence to cure the alleged default or defaults. If Azco
contests that default occurred, it shall so advise the Seller in writing. If
Azco contests the default the matter shall be submitted to a court of competent
jurisdiction, and Azco shall not be deemed in default until the matter shall
have been determined finally by the court and all appeals have been taken or
waived. Upon Azco's failure to cure the default the Seller may declare, by
written notice to Azco, termination of this Agreement.


8.2 BY AZCO. Notwithstanding any provisions herein to the contrary, Azco may at
any time terminate and surrender this Agreement as to all or any portion of the
Property by giving written notice thereof to the Seller. Promptly thereafter
Azco shall deliver to the Seller a properly executed release of the portion of
the Property being released. Upon full or partial surrender of this Agreement
Azco shall be relieved of all obligations as to the Property or portion of the
Property being released, except obligations that have accrued prior to surrender
and the obligation to restore the surface disturbed by Azco's operations.


8.3 BANKRUPTCY OR RECEIVERSHIP BY AZCO. Azco agrees that in the event that all
or substantially all of its assets, either individually or severally, are placed
in the hands of a receiver or trustee, and such receivership or trusteeship
continues for a period of 30 days, or should Azco, either individually or
severally, make an assignment for the benefit of creditors or be adjudicated a
bankrupt, or should it, individually or severally, institute any proceedings
under any bankruptcy legislation, whether of Canada or the United States of
America, as the same now exists or under any amendments thereof which may
hereafter be enacted, then this Agreement or any rights granted to Azco
hereunder shall 



<PAGE>   12
                                      -11-



not become an asset in any such proceedings, and the Seller, at the Seller's
option, may terminate this Agreement and Azco shall have no further rights
hereunder.


8.4 REMOVAL OF EQUIPMENT. Upon termination of this Agreement, except upon Azco's
exercise of the Option, Azco shall have three months after termination to remove
from the Property all buildings, improvements, equipment and all personal
property of every kind and nature erected or placed in or upon the Property by
it. If Azco is hampered by force majeure, as defined in Article "V" hereinabove,
the time for removal shall be extended by the period of force majeure. Any such
property not removed within the time provided in this section shall become the
sole property of the Seller, and Azco shall have no further right, title or
interest with respect to it; provided, however, that Azco shall remain liable
for all unpaid taxes, liens and encumbrances on such removal property and shall
indemnify the Seller for the cost of removal of any such buildings,
improvements, equipment and personal property.


8.5 OBLIGATION UPON TERMINATION. Upon termination of this Agreement pursuant to
either sections "2.4", "8.1" or "8.3" hereinabove Azco shall be under no further
obligation or liability under this Agreement to the Seller from and after the
date of termination, except for the following:


        (a)     Azco shall perform obligations and satisfy liabilities to the
                Seller or third parties respecting the Property that have
                accrued prior to the date of termination and resulted, directly
                or indirectly, from Azco's operations hereunder;


        (b)     Azco shall restore the surface of the Property pursuant to
                section "4.1" hereinabove and Article "X" hereinbelow resulting
                from Azco's activities thereon; and


        (c)     Azco shall furnish to the Seller one set of all information and
                data in Azco's possession relating to the quantity and quality
                of minerals which Azco has not already provided under Article
                "VI" hereinabove.


         Azco shall not be obligated, however, to furnish to the Seller
interpretative data or reports or internal proprietary information. Any use or
reliance by the Seller upon the data provided by Azco shall be at the Seller's
sole risk and Azco makes no express or implied representations or warranties
with respect thereto.


8.6 RETURN OF PRODUCTS. If Azco does not exercise the Option, or if the Option
is otherwise terminated in accordance with the terms of this Agreement, Azco
will forthwith return to the Seller all gemstones remaining in its possession
taken from the Property, whether cut or uncut, together with any processed or
unprocessed rock, drill core or cuttings in its possession taken from the
Property.



<PAGE>   13
                                      -12-



8.7 ATTORNEY'S FEES AND COSTS. If any legal action, including arbitration or
mediation, is brought to enforce or interpret this Agreement, the prevailing
Party hereto shall be entitled to recover reasonable attorney's fees and costs
of the action in addition to any other relief granted in any such proceedings.


                                   ARTICLE IX

                              NOTICES AND PAYMENTS


9.1 METHOD OF MAKING PAYMENTS. Any payments required to be made by Azco to the
Seller hereunder may be made by cheque payable jointly to the individuals that
comprise the Seller, and may be personally delivered to any of such individuals
or deposited in the United States mail, postage prepaid, and registered or
certified with return receipt requested, and addressed to the Seller at the
address shown below. The personal delivery or the deposit in the mail by Azco of
any such payment on or before its due date shall be deemed timely thereof. Upon
making payment Azco shall be relieved of any responsibility for the distribution
of such payment between the individuals that comprise the Seller and any of the
Seller's successors or assigns.


9.2 NOTICE. Any required notice or communication shall be in writing and shall
be effective when personally delivered or when addressed and sent by registered
mail:


         If to Seller:   William C. Forrest, Hilda F. Forrest, and Elvis L. Gray
                         c/o William C. Forrest
                         867 East Minarets
                         Fresno, California
                         U.S.A., 93720; and


         If to Azco:     Azco Mining Inc.
                         Suite 1250, 999 West Hastings Street
                         Vancouver, British Columbia
                         V6C 2W2;


and deposited, postage prepaid, and registered or certified with return receipt
requested, in the United States mail. Either the Seller or Azco may, by notice
to the other Party given as aforesaid, change its mailing address for future
notices.


                                    ARTICLE X

                             RESTORATION OF SURFACE



<PAGE>   14
                                      -13-


10.1 RECLAMATION. Azco agrees that, upon termination, it shall reclaim the
Property which it has disturbed, as required by applicable federal, state and
local law.


                                   ARTICLE XI

                                 INDEMNIFICATION


11.1 INDEMNIFICATION. The Parties hereto agree to indemnify and save each other
Party hereto, including their respective affiliates and their respective
directors, officers, employees and agents (each such party being an "Indemnified
Party") harmless from and against any and all losses, claims, actions, suits,
proceedings, damages, liabilities or expenses of whatever nature or kind,
including any investigation expenses incurred by any Indemnified Party, to which
an Indemnified Party may become subject by reason of the terms and conditions of
this Agreement.


11.2 NO INDEMNIFICATION. This indemnity will not apply in respect of an
Indemnified Party in the event and to the extent that a court of competent
jurisdiction in a final judgment shall determine that the Indemnified Party was
grossly negligent or guilty of willful misconduct.


11.3 CLAIM OF INDEMNIFICATION. The Parties hereto agree to waive any right they
might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.


11.4 NOTICE OF CLAIM. In case any action is brought against an Indemnified Party
in respect of which indemnity may be sought against any of the Parties hereto,
the Indemnified Party will give relevant Party hereto prompt written notice of
any such action of which the Indemnified Party has knowledge and such Party will
undertake the investigation and defense thereof on behalf of the Indemnified
Party, including the prompt employment of counsel acceptable to the Indemnified
Parties affected and the payment of all expenses. Failure by the Indemnified
Party to so notify shall not relieve any Party hereto of such Party's obligation
of indemnification hereunder unless (and only to the extent that) such failure
results in a forfeiture by any Party hereto of substantive rights or defenses.


11.5 SETTLEMENT. No admission of liability and no settlement of any action shall
be made without the consent of each of the Parties hereto and the consent of the
Indemnified Parties affected, such consent not to be unreasonable withheld.


11.6 LEGAL PROCEEDINGS. Notwithstanding that the relevant Party hereto will
undertake the investigation and defense of any action, an Indemnified Party will
have the right to employ separate counsel in any such action and participate in
the defense thereof, 



<PAGE>   15
                                      -14-


but the fees and expenses of such counsel will be at the expense of the
Indemnified Party unless:


        (a)     employment of such counsel has been authorized by the relevant
                Party hereto; or


        (b)     the relevant Party hereto has not assumed the defense of the
                action within a reasonable period of time after receiving notice
                of the action; or


        (c)     the named parties to any such action include that any Party
                hereto and the Indemnified Party shall have been advised by
                counsel that there may be a conflict of interest between any
                Party hereto and the Indemnified Party; or


        (d)     there are one or more legal defenses available to the
                Indemnified Party which are different from or in addition to
                those available to any Party hereto.


11.7 CONTRIBUTION. If for any reason other than the gross negligence or bad
faith of the Indemnified Parties (or any of them) being the primary cause of the
loss claim, damage, liability, cost or expense, the foregoing indemnification is
unavailable to the Indemnified Parties (or any of them) or insufficient to hold
them harmless, the relevant Parties hereto shall contribute to the amount paid
or payable by the Indemnified Parties as a result of any and all such losses,
claim, damages or liabilities in such proportion as is appropriate to reflect
not only the relative benefits received by any Party hereto on the one hand and
the Indemnified Parties on the other, but also the relative fault of the parties
and other equitable considerations which may be relevant. Notwithstanding the
foregoing, the relevant Party or Parties hereto shall in any event contribute to
the amount paid or payable by the Indemnified Parties, as a result of the loss,
claim, damage, liability, cost or expense (other than a loss, claim, damage,
liability, cost or expenses, the primary cause of which is the gross negligence
or bad faith of the Indemnified Parties or any of them), any excess of such
amount over the amount of the fees actually received by the Indemnified Parties
hereunder.


                                   ARTICLE XII

                                     GENERAL


12.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement to date
between the Parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties hereto with respect to the subject matter of this Agreement. No
modification of this Agreement shall be effective unless in writing and executed
by each of the Parties to this Agreement.



<PAGE>   16
                                      -15-



12.2 ENUREMENT. This Agreement will enure to the benefit of and will be binding
upon the Parties hereto, their respective heirs, executors, administrators and
assigns, but nothing contained in this Agreement shall be construed as a consent
by the Seller to any assignment or transfer of this Agreement or of any interest
hereunder by Azco except as provided for in section "7.2" hereinabove.


12.3 SCHEDULES. The Schedules to this Agreement are hereby incorporated by
reference into this Agreement in their entirety.


12.4 TIME OF THE ESSENCE. Time will be of the essence of this Agreement.


12.5 REPRESENTATION. It is hereby acknowledged by each of the Parties hereto
that, as between the Parties herein, Devlin Jensen acts solely for Azco, and
that the individuals comprising the Seller have each been advised by Devlin
Jensen and Azco to obtain independent legal advice with respect to their
respective reviews and execution of this Agreement.


12.6 APPLICABLE LAW. This Agreement shall be deemed to have been made and
entered into in the County of Fresno, State of California, and the Seller and
Azco agree that the County of Fresno or the County of San Benito (situs of the
Property), State of California, shall be the situs for any proceedings, whether
in law or equity, brought pursuant to this Agreement. Furthermore, the governing
law of this Agreement shall be that of the State of California.


12.7 FURTHER ASSURANCES. The Parties hereto hereby, jointly and severally,
covenant and agree to forthwith, upon request, execute and deliver, or cause to
be executed and delivered, such further and other deeds, documents, assurances
and instructions as may be required by the Parties hereto or their respective
counsel in order to carry out the true nature and intent of this Agreement. In
addition, the Seller hereby agrees to execute any and all documentation as may
be necessary in order to record Azco's rights under this Agreement.


12.8 CURRENCY. All payments required to be made pursuant to the provisions of
this Agreement shall be made in lawful currency of the United States.


12.9 SEVERABILITY AND CONSTRUCTION. Each Article, section, paragraph, term and
provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to which any Party
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain 



<PAGE>   17
                                      -16-



otherwise intelligible (all of which shall remain binding on the Parties and
continue to be given full force and agreement as of the date upon which the
ruling becomes final).


12.10 CAPTIONS. The captions, section numbers and Article numbers appearing in
this Agreement and in any index hereto, if any, are inserted for convenience of
reference only and shall in no way define, limit, construe or describe the scope
or intent of this Agreement nor in any way affect this Agreement.


12.11 SURVIVAL. To the extent necessary to effectuate the intention of the
parties, this Agreement shall survive (i) the exercise of the Option and the
delivery of all deeds and other instruments at the Closing and (ii) the
termination of this Agreement.


12.12 COUNTERPARTS. This Agreement may be signed by the Parties hereto in as
many counterparts as may be necessary, each of which so signed shall be deemed
to be an original, and such counterparts together shall constitute one and the
same instrument and notwithstanding the date of execution will be deemed to bear
the execution date as set forth on the front page of this Agreement.


12.13 NO PARTNERSHIP OR AGENCY. The Parties have not created a partnership and
nothing contained in this Agreement shall in any manner whatsoever constitute
any Party the partner, agent or legal representative of any other Party, nor
create any fiduciary relationship between them for any purpose whatsoever. No
Party shall have any authority to act for, or to assume any obligations or
responsibility on behalf of, any other party except as may be, from time to
time, agreed upon in writing between the Parties or as otherwise expressly
provided.


12.14 MULTIPLE OWNERSHIP; GENDER. The term "Seller" as used in this Agreement
applies individually and collectively to all owners of the Property executing
this Agreement or counterparts of it. The obligations of the individuals that
comprise the Seller as of the time of execution of this Agreement and hereafter
shall be joint and several. The reference to the Seller in the neuter gender
herein shall mean and refer to all Parties constituting the Seller, whether
male, female, corporation, partnership, trust, estate or other entity.


12.15 CONSENTS AND WAIVERS. No consent or waiver expressed or implied by any
Party in respect of any breach or default by any other Party in the performance
by such Party of its obligations hereunder shall:


        (a)     be valid unless it is in writing and stated to be a consent or
                waiver pursuant to this section;


        (b)     be relied upon as a consent to or waiver of any other breach or
                default of the same or any other obligation;



<PAGE>   18
                                      -17-



        (c)     constitute a general waiver under this Agreement; or


        (d)     eliminate or modify the need for a specific consent or waiver
                pursuant to this section in any other or subsequent instance.


        IN WITNESS WHEREOF the Parties hereto have hereunto set their respective
hands and seals in the presence of their duly authorized signatories effective
on the day and year first above written.


The CORPORATE SEAL of                                )
AZCO MINING INC.                                     )
was hereunto affixed in the presence of:             )
                                                     )          (C/S)
_____________________________________________________)
Authorized Signatory                                 )


SIGNED, SEALED and DELIVERED by                      )
WILLIAM C. FORREST                                   )
in the presence of:                                  )
                                                     )
_____________________________________________________)  ______________________
Witness Signature                                    )    WILLIAM C. FORREST
                                                          ------------------
                                                     )
                                                     )
_____________________________________________________)  ----------------------
Witness Name and Address                             )  Social Security Number


SIGNED, SEALED and DELIVERED by                      )
HILDA C. FORREST                                     )
in the presence of:                                  )
                                                     )
                                                     )
_____________________________________________________)  ______________________
Witness Signature                                    )     HILDA F. FORREST
                                                           ----------------
                                                     )
                                                     )
_____________________________________________________)  ----------------------
Witness Name and Address                             )  Social Security Number


SIGNED, SEALED and DELIVERED by                      )
ELVIS L. GRAY                                        )
in the presence of:                                  )
                                                     )
_____________________________________________________)  ______________________
Witness Signature                                    )     ELVIS L. GRAY
                                                           -------------




<PAGE>   19
                                      -18-



_____________________________________________________)  ----------------------
WITNESS NAME AND ADDRESS                             )  SOCIAL SECURITY NUMBER



<PAGE>   20
                                      -19-



                            EXECUTION ACKNOWLEDGMENTS




STATE OF        _________________________________)
                                                 )        ss.
COUNTY OF       _________________________________)


        On this _____ day of December, 1997, personally appeared before me, a
Notary Public, in and for the State and County aforesaid, personally known to me
(or proved to me on the basis of satisfactory evidence) to be _______________, a
Director of AZCO MINING INC., a Delaware corporation, who acknowledged that he
executed the above instrument on behalf of Azco Mining Inc.


                                            ____________________________________
                                                       NOTARY PUBLIC

                                            Residing at:________________________

                                            My Commission Expires:______________




STATE OF        _________________________________)
                                                 )        ss.
COUNTY OF       _________________________________)


        On this _____ day of December, 1997, personally appeared before me, a
Notary Public, in and for the State and County aforesaid, personally known to me
(or proved to me on the basis of satisfactory evidence) to be WILLIAM C. FORREST
who acknowledged that he executed the above instrument.



                                            ____________________________________
                                                       NOTARY PUBLIC

                                            Residing at:________________________

                                            My Commission Expires:______________



<PAGE>   21
                                      -20-



STATE OF        _________________________________)
                                                 )        ss.
COUNTY OF       _________________________________)


        On this _____ day of December, 1997, personally appeared before me, a
Notary Public, in and for the State and County aforesaid, personally known to me
(or proved to me on the basis of satisfactory evidence) to be HILDA F. FORREST
who acknowledged that she executed the above instrument.



                                            ____________________________________
                                                       NOTARY PUBLIC

                                            Residing at:________________________

                                            My Commission Expires:______________




STATE OF        _________________________________)
                                                 )        ss.
COUNTY OF       _________________________________)


        On this _____ day of December, 1997, personally appeared before me, a
Notary Public, in and for the State and County aforesaid, personally known to me
(or proved to me on the basis of satisfactory evidence) to be ELVIS L. GRAY who
acknowledged that he executed the above instrument.



                                            ____________________________________
                                                       NOTARY PUBLIC

                                            Residing at:________________________

                                            My Commission Expires:______________