Unassociated Document


    

      Exhibit
        10.6

      


      [LETTERHEAD
        OF ST. ELIAS MINES LTD.]

      


      


      February
        12, 2007

      


      HI
        HO SILVER RESOURCES INC.

      #
        11 -
        3045 Southcreek Road

      Mississauga,
        Ontario

      Canada
        L4X 2E9

      


      Attention:
        Mr. Frederick S. Fisher, President

      


      Dear
        Mr.
        Fisher:

      


      
        	Re:	
                Letter
                  Agreement between Hi Ho Silver Resources Inc. and St. Elias Mines
                  Ltd.
                  

                - on the South Rim
                  Project,
                  British Columbia 

              


      

       

      This
        letter sets forth the general terms pursuant to which it is proposed that
        Hi Ho
        Silver Resources Inc. (“Hi Ho Silver”) acquire from St. Elias Mines Ltd. (“St.
        Elias”) an option to earn an interest in the South Rim Project (as more
        particularly described below and referred to herein as the “Property”) in the
        Houston area of British Columbia. The parties hereto intend to enter into
        a
        formal agreement (the “Formal Agreement”), incorporating the terms herein and
        such further terms as the parties may agree upon. The terms of this Letter
        Agreement and the Formal Agreement may be subject to regulatory
        approval.

      


      PART
        I - THE PROPERTY

      


      The
        Property is comprised of various 12 mineral claims covering approximately
        5,352.572ha. located in the Omineca Mining Division of British Columbia and
        is
        more particularly described and set out in the attached Schedule
“A”.

      


      PART
        II - REPRESENTATIONS AND WARRANTIES OF ST. ELIAS

      


      St.
        Elias
        represents and warrants to Hi Ho Silver that the Property is validly located,
        duly recorded, in good standing and legally and beneficially owned by St.
        Elias,
        free and clear of any charges, liens, or encumbrances, surface rights
        restrictions or environmental hazards and that there are no underlying
        agreements in effect with respect to the Property.

      


      St.
        Elias
        represents and warrants to Hi Ho Silver that there are no claims against
        title
        to the Property, nor to the knowledge of St. Elias is there any basis therefore,
        St. Elias also represents and warrants to Hi Ho Silver that St. Elias has
        full
        right and authority to enter into this letter agreement and to carry out
        the
        transactions contemplated herein and all approvals required to be obtained
        in
        order for St. Elias to do so have been obtained.

      


      PART
        III - OPTION

      


      3.1 St.
        Elias, in consideration of the sum of $10, the receipt and sufficiency of
        which
        is hereby acknowledged, hereby grants to Hi Ho Silver the sole and exclusive
        right and option to acquire an undivided 51% interest in and to the Property
        (the “Option”). Hi Ho Silver can earn a 51% undivided interest in and to the
        Property by paying to St. Elias the aggregate sum of $40,000 in cash, issuing
        to
        St. Elias an aggregate of 200,000 common shares in the capital stock of Hi
        Ho
        Silver and by incurring $500,000 in Exploration Expenditures, to be paid
        and
        issued to St. Elias and to be incurred by Hi Ho Silver as follows:

      


      
        	(a)	
                the
                  sum of $40,000 to be paid to St. Elias on or before the dates indicated
                  below;

              


      

       

      
        	 	
                (i)

              	
                $10,000
                  within five business days from the signing of this Letter
                  Agreement;

              


      

       

      
        	
              	(ii)	
                $10,000
                  on or before February 12, 2008; and

              


      

       

      
        	
              	(iii)	
                $20,000
                  on or before February 12, 2009;

              


      

       


      
        
           

        

        
           

          
            

          

        

        
           

          -
            Page 2 -

        

      


      


       

      
        	
                (b)

              	
                cumulative
                  Exploration Expenditures of not less than $500,000, to be incurred
                  on or
                  before the dates indicated below:

              


      

       

      
        	 	
                (i)

              	
                Exploration
                  expenditures totaling $75,000 to be incurred on or before February
                  12,
                  2008;

              


      

       

      
        	 	
                (ii)

              	
                Exploration
                  expenditures totaling $200,000 to be incurred on or before February
                  12,
                  2009; and

              


      

       

      
        	 	
                (iii)

              	
                Exploration
                  expenditures totaling $225,000 to be incurred on or before February
                  12,
                  2010;

              


      

       

      
        	
                (c)

              	
                the
                  issuance of 200,000 common shares in the capital of Hi Ho Silver
                  to St.
                  Elias on or before the dates indicated
                  below:

              


      

       

      
        	 	
                (i)

              	
                100,000
                  common shares within ten (10) business days of regulatory approval
                  of the
                  Formal Agreement;

              


      

       

      
        	 	
                (ii)

              	
                100,000
                  common shares on or before February 12,
                  2008;

              


      

       

      3.2 Exploration
        expenditures incurred by any date in excess of the amount of exploration
        expenditures required to be incurred by such date pursuant to paragraph 3.1(b)
        shall be carried forward to the succeeding period or periods and qualify
        as
        exploration expenditures for such succeeding period or periods. If exploration
        expenditures are less than the amount of exploration expenditures required
        to be
        incurred by any date, Hi Ho Silver may pay the deficiency to St. Elias in
        cash
        by the required date in order to maintain the Option. Such payments in cash
        in
        lieu of exploration expenditures shall be deemed to be exploration expenditures
        for the purposes of paragraph 3.1(b). If Hi Ho Silver fails to complete
        exploration expenditures before the required dates referred to in 3.1(b)
        and
        fails to pay the deficiency in cash as referred to herein the option shall
        cease
        and become null and void without further notice and Hi Ho Silver will have
        no
        further claim or rights to the Property.

      


      Hi
        Ho
        Silver shall have exercised the Option and shall have fully earned a 51%
        interest in and to the Property, by making all of the cash payments, share
        issuances and incurring all of the exploration expenditures pursuant to section
        3.1 and upon such occurrence, St. Elias will immediately take all reasonable
        and
        necessary steps to transfer an undivided 51% interest in and to the Property
        to
        Hi Ho Silver.

      


      PART
        IV - OPERATOR AND ACCESS

      


      4.1 Hi
        Ho
        Silver shall have the exclusive right to manage and operate the exploration
        programs as operator (the “Operator”) during the period of the Option. An
        Operators fee of 8% of total exploration expenditures incurred shall be charged
        by Hi Ho Silver and will qualify as an Exploration expenditure pursuant to
        paragraphs 3.1(b).

      


      4.2 A
        fully
        executed bill of sale transfering 51% intetrest in the Property to Hi Ho
        Silver
        will be provided by St. Elias at the time of signing of the Formal Agreement.
        This bill of sale shall be held in trust and released to Hi Ho Silver upon
        the
        completion by Hi Ho Silver of all the terms set out in paragraph 3.1
        herein.

      


      PART
        V - JOINT VENTURE

      


      5.1 At
        any
        time after Hi Ho Silver has earned either the 51% interest in the Property,
        Hi
        Ho Silver and St. Elias shall be entered into a joint venture agreement.
        Terms
        of the joint venture agreement will be based upon recognized industry standards
        with each party responsible for contributing their respective percentages
        of
        exploration and development costs. The majority owner of the property will
        be
        the operator of the Joint Venture. Straight line dilution will occur to either
        party not contributing their respective share of costs. Should either party
        have
        their interest reduced to 10% or less then their interest shall automatically
        be
        converted to a 0.5% Net Smelter Return.

      


      PART
        VI - MAINTENANCE OF CLAIMS

      


      6.1 During
        the Option period, Hi Ho Silver will be responsible for maintaining all mineral
        claims that comprise the Property in good standing with respect to Ministry
        of
        Energy Mines and Petroleum Resources annual assessment requirements. The
        costs
        associated with this will qualify as an exploration expenditure pursuant
        to
        paragraph 3.1(b).

      


      PART
        VII -TERMINATION FOR DEFAULT.


      
        
           

        

        
           

          
            

          

        

        
           

          -
            Page 3 -

        

      


      


      


      7.1 Prior
        to
        exercise of the Option as provided for herein, and except as provided for
        in
        paragraph 3.2 if Hi Ho is in default of any of its obligations hereunder
        the St.
        Elias may immediately give written notice to Hi Ho of such default, and Hi
        Ho
        shall than have a period of 30 days to remedy such default. If Hi Ho does
        not
        remedy the default with the 30 days aforesaid, the Formal Agreement and the
        Option shall, at St. Elias option and upon written notice to Hi Ho, terminate
        forthwith.

      


      PART
        VIII - GENERAL

      


      Unless
        otherwise expressly indicated to the contrary, all references to dollar amounts
        contained in this Letter Agreement are references to Canadian
        dollars.

      


      It
        would
        be appreciated if you could review this proposal. If the terms as presented
        are
        acceptable to you, please sign the attached duplicate of this Letter Agreement
        and return the same to my attention at your earliest convenience. This Letter
        Agreement will then form a binding agreement in principle and the basis for
        a
        detailed Formal Option Agreement between Hi Ho Silver and St.
        Elias.

      


      Sincerely,

      
        	 	
                AGREED
                  TO and ACCEPTED

              
	
                ST.
                  ELIAS MINES LTD.

              	
                this
                  12th
                  day of February, 2007

              
	 	 
	 	
                HI
                  HO SILVER RESOURCES INC.

              
	
                s/s
                  Lori
                  McClenahan

              	 
	
                Lori
                  McClenahan

              	 
	
                President

              	
                /s/
                  Frederick
                  Fisher

              
	 	
                Frederick
                  S. Fisher

              
	 	
                President

              


      

      


      


      This
        is
        page 3 of the Letter Agreement dated February12, 2007 to Hi Ho Silver Resources
        Inc. (“Hi Ho Silver”) from St. Elias Mines Ltd. (“St. Elias”).


      
        
           

        

        
           

          
            

          

        

        
           

          -
            Page 4 -

        

      


      SCHEDULE
        "A"

      


      To
        that
        Letter Agreement to HI
        HO SILVER RESOURCES INC.
        from
ST.
        ELIAS MINES LTD.,
        dated
        the 12th
        day of
        February, 2007.

      


      All
        mineral claims that comprise the Property are located in the Omineca Mining
        Division of British Columbia

      


      


      
        	
                TENURE
                  NUMBER

              	
                CLAIM
                  NAME

              	
                ANNIVERSARY
                  DATE

              	
                SIZE
                  (Ha)

              
	
                541334

              	
                Coles
                  Lake South

              	
                Sept.
                  15, 2007

              	
                231.078

              
	
                545733

              	
                West
                  Lake Gossan

              	
                Nov.
                  22, 2007

              	
                481.104

              
	
                545736

              	
                West
                  Side

              	
                Nov.
                  22, 2007

              	
                481.199

              
	
                545737

              	
                South
                  Rim

              	
                Nov.
                  22, 2007

              	
                461.953

              
	
                545738

              	
                Camp
                  Zone

              	
                Nov.
                  22, 2007

              	
                481.341

              
	
                545739

              	
                Augie

              	
                Nov.
                  22, 2007

              	
                462.221

              
	
                545740

              	
                Center
                  View

              	
                Nov.
                  22, 2007

              	
                481.472

              
	
                545741

              	
                Mo

              	
                Nov.
                  22, 2007

              	
                481.369

              
	
                545742

              	
                Amethyst

              	
                Nov.
                  22, 2007

              	
                462.361

              
	
                545744

              	
                South
                  Zone

              	
                Nov.
                  22, 2007

              	
                481.635

              
	
                545745

              	
                East
                  Lake

              	
                Nov.
                  22, 2007

              	
                481.219

              
	
                545764

              	
                Coles
                  Lake South

              	
                Nov.
                  22, 2007

              	
                365.62

              
	
                Total
                  size (Ha)

              	 	 	
                5352.572