Exhibit 10.a


                         STOCK PURCHASE OPTION AGREEMENT


                                  BY AND AMONG


                        ANGLOGOLD (JERRITT CANYON) CORP.
                                       AND
                      ANGLOGOLD NORTH AMERICA INC., Seller

                                       AND

                     LEADVILLE MINING & MILLING CORPORATION
                                       AND
              LEADVILLE MINING & MILLING HOLDING CORPORATION, Buyer






                        Dated Effective December 15, 2000



<PAGE>


     THIS STOCK PURCHASE OPTION AGREEMENT (the "Agreement") is made effective as
of the 15th day of December, 2000, (the "Effective Date") by and among AngloGold
(Jerritt  Canyon) Corp. , a Delaware  corporation  and  AngloGold  North America
Inc., a Colorado corporation,  (collectively  "Seller"),  and Leadville Mining &
Milling  Corporation,  a Nevada  corporation,  and  Leadville  Mining &  Milling
Holding Corporation, a Nevada corporation,  (collectively,  "Buyer"). Seller and
Buyer are sometimes  individually  referred to herein as a "Party" and sometimes
collectively as the "Parties."

                                   WITNESSETH

     WHEREAS,  Seller  owns 100% of the  issued  and  outstanding  shares of the
capital  stock  of  Minera  Chanate,   S.A.  de  C.V.,  a  Mexican   corporation
incorporated by means of public instrument number 18,820,  executed on September
17,  1999,  before Mr.  Jose Maria  Morera  Gonzalez,  Notary  Public 102 of the
Federal District, registered with the Public Registry of Commerce of the Federal
District,  under  mercantile  folio  229861 on  November  4, 1997,  and with the
Mexican  Public  Mining  Registry  under  number 14,  pages 18 front to 20 back,
volume XXXV, book of Mining Corporations on January 30, 1998 ("Minera Chanate"),
consisting of 4,850,000 shares ("Chanate Shares"); and

     WHEREAS,  Buyer  desires  to obtain  from  Seller the  exclusive  option to
purchase all of the Chanate Shares from Seller, and Seller desires to grant such
an option to Buyer, upon the terms and conditions set forth in this Agreement.

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  Parties  hereby  agree as
follows:

                                    ARTICLE I

                                 THE TRANSACTION

     Section 1.1 Grant of Option and Purchase and Sale.

     Section 1.1.1 Grant of Option.  Seller hereby grants to Buyer the exclusive
and irrevocable option to purchase the Chanate Shares (the "Option"). The Option
must be exercised,  if at all, on or before the end of the Due Diligence  Period
(as defined in Section 1.1.3 below).

     Section 1.1.2 Purchase  Price.  Subject to the terms and conditions of this
Agreement,  if Buyer timely exercises the Option,  Seller hereby agrees to sell,
transfer,  assign  and  convey  to Buyer on the  Closing  Date,  as  hereinafter
defined,  all of the Chanate Shares,  and Buyer hereby agrees to purchase all of
the Chanate Shares from Seller and to pay Seller the following (collectively the
"Purchase Price"):

     (a) On or before one year  following  the Effective  Date,  Buyer shall pay
     Seller the sum of Fifty Thousand Dollars (US$50,000; all further references
     to dollars in this Agreement shall be to United States dollars).

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<PAGE>


     (b)  Following  the  commencement  of production of Products (as defined in
     Schedule  1.1.2) from any  portion of the  property  described  on Schedule
     2.2.11 (the  "Property")  Buyer shall pay Seller an  additional  sum, to be
     designated  by Seller prior to the Closing Date and not to exceed  Eighteen
     Million Eighteen Thousand Three Hundred Fifty Five Dollars (US$18,018,355),
     payable as follows:

          (i) Buyer  shall pay to  Seller  payments  based  upon  production  of
          Products  equal  to the  following  percentage  of "Net  Returns,"  as
          defined in Schedule 1.1.2(b)(i):

                        Gold Price (US$)                            NSR
                        ----------------                            ---
                        Less than US$300/oz.                         2%
                        $300/oz. to US$350/oz                        3%
                        Greater than US$350/oz                       4%

     (ii) Buyer shall pay to Seller  payments based upon  production of Products
     from the Property  equal to ten percent (10%) of "Net  Profits," as defined
     in Schedule 1.1.2(b)(ii);  provided, however that such payments shall in no
     event exceed in the aggregate the amount of US$1,000,000.

Each of the components of Purchase Price based upon  production of Products from
the  Property  set forth in Sections  1.1.2(b)(i)  and  (b)(ii) are  contractual
obligations of Buyer, shall automatically  terminate upon aggregating to a total
amount to be  designated  by Seller prior to the Closing  Date,  but in no event
exceeding  $18,018,355  (or upon  Seller's  exercise  of its  Back-In  Option as
described in Section 6.7),  and are not and shall not be construed to be royalty
payments. Notwithstanding the foregoing, if any withholding tax is determined to
be payable to the Mexican government or any other jurisdiction on such payments,
the full and timely  payment of such tax shall be the  obligation of Buyer,  but
the amount of any such tax paid by Buyer shall not be offset  against the amount
due Seller  hereunder.  The obligation to pay that portion of the Purchase Price
set  forth in  Section  1.1.2(b)(i)  shall  be an  obligation  running  with the
Concessions  (as defined in Section  1.1.5);  provided,  however,  that Buyer or
Minera Chanate shall no longer be  responsible  for making such payments for any
Concessions that are dropped (and not subsequently reacquired by Buyer or Minera
Chanate or a related  third party) or conveyed to an unrelated  third party in a
bona fide  arms-length  transaction.  The  obligation to pay that portion of the
Purchase  Price  set  forth  in  Section  1.1.2(b)(ii)  shall  not  apply to any
Concessions  sold by Buyer or Minera  Chanate to an  unrelated  third party in a
bona fide arms-length transaction.

     Section 1.1.3 Due Diligence  Period.  In consideration of the Five Thousand
Dollars  (US$ 5,000) paid by Buyer to Seller  prior to the  Effective  Date (the
receipt of which is hereby  acknowledged) and the other  consideration set forth
in Sections 1.1.5 and 1.1.6, Buyer shall have the exclusive right for the period
beginning on the date of execution of this Agreement and ending ninety (90) days
thereafter  (the "Due  Diligence  Period") to conduct  such  investigations  and
analyses as it deems  necessary  and  appropriate,  in its sole  discretion,  to
determine  whether  Buyer  wishes to exercise its Option to purchase the Chanate
Shares on the


                                      -3-
<PAGE>


terms herein provided.  During  the  Due  Diligence  Period,  Buyer  shall  have
reasonable access to inspect all records and data of Minera Chanate, and, to the
extent  Seller is  authorized  to provide such access,  to the  Property.  Buyer
understands  that Minera Chanate does not have any  employees.  Buyer shall have
the  right,  at its sole  cost,  to take  samples  directly  from the  Property,
including portions of existing drill core and drill cuttings, for the purpose of
checking  assays,  metallurgical  testing and any other testing that Buyer deems
appropriate.  All  data  and  information  made  available  by  Seller  to Buyer
hereunder  or obtained or generated by Buyer  concerning  Minera  Chanate or the
Property shall be maintained confidential by Buyer and shall not be disclosed to
any third party without  Seller's prior written consent (which consent shall not
be unreasonably  withheld),  except for  consultants  and financial  advisors of
Buyer who  agree to be bound by the  terms  hereof,  and  except  to the  extent
disclosure  is  required  by law or stock  exchange  rule.  The  parties  hereby
acknowledge  and agree that this Agreement will  constitute a material  contract
for Buyer,  and as such will be disclosed and attached to documents  Buyer files
with the United States Securities  Exchange Commission or otherwise makes public
under U.S. securities laws.

     Section  1.1.4  Notice to  Proceed  or  Terminate.  On or before  5:00 p.m.
Denver,  Colorado time on the last day of the Due Diligence Period,  Buyer shall
notify  Seller in writing  either  that it (a) elects to  purchase  the  Chanate
Shares on the terms herein  provided,  or (b) elects not to purchase the Chanate
Shares on the terms  herein  provided.  If Buyer  elects to purchase the Chanate
Shares, Buyer shall specify a Closing Date, as referred to in Section 5.1, which
shall be not more than thirty  (30) days  following  the date of the notice.  If
Buyer fails to make the  election  provided  for in this  Section  1.1.4,  or if
notice of such election is not timely received by Seller,  Buyer shall be deemed
to have chosen to purchase the Chanate Shares on the terms herein provided,  and
Seller shall specify a Closing Date  reasonably  satisfactory to Buyer. If Buyer
elects not to purchase  the Chanate  Shares on the terms herein  provided,  this
Agreement shall terminate, as provided in Section 7.2.

     Section  1.1.5  Buyer's  Obligations  for 2001  Holding  Costs.  As partial
consideration  for the rights granted to Buyer pursuant to Section 1.1.3,  Buyer
shall be  liable  for the  payment  of all  Holding  Costs  for the year 2001 in
respect of the  Property.  As used herein,  the term  "Holding  Costs" means all
payments  required  to be made to the Mexican  Secretaria  de Hacienda y Credito
Publico and thereafter filed with the Secretaria de Economia in January 2001 and
July 2001 in order to maintain each of the  concessions  comprising a portion of
the Property (the "Concessions") in good standing as valid concessions under the
laws of Mexico (or equivalent  termination  payments if any such Concessions are
dropped prior to July of 2001). A schedule of those Holding Costs is attached as
Schedule 1.1.5 hereto.  The term "Holding  Costs" also includes full  compliance
with any  filing or other  documentary  requirements  in  connection  with those
payments to maintain the Property in good  standing as valid  concessions  under
the laws of Mexico.  Seller hereby acknowledges receipt of a check from Buyer in
the amount of  $126,600,  which  funds the  Parties  agree are to be utilized by
Seller only for the payment of Holding Costs. The Parties  acknowledge and agree
that Seller has  arranged  for $68,000 to be allocated to the payment of Holding
Costs due during January 2001,  and Seller has arranged and is  responsible  for
the timely  payment of those Holding Costs and full and timely  compliance  with
any filing or other documentary  requirements  associated therewith (evidence of
which  shall be provided to Buyer as soon as  reasonably  practicable  after the
date such payments are due).


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<PAGE>

     The Parties agree that, if Buyer timely exercises the Option,  upon written
notice  from  Buyer,  Seller  shall  forward  $58,600  to an  address or account
designated  by  Buyer,  such  funds to then be  utilized  by Buyer  only for the
payment of Holding  Costs due during  July 2001.  Buyer  shall  arrange  for the
timely  payment of the entire  amount of Holding Costs due by the end of July of
2001  and full and  timely  compliance  with  any  filing  or other  documentary
requirements associated therewith (evidence of which shall be provided to Seller
at least three business days prior to the date such payments are due).

     Section 1.1.6  Indemnification.  Except to the extent arising from Seller's
gross negligence or willful misconduct,  Buyer shall indemnify,  defend and hold
harmless  Seller and its directors,  officers,  employees and agents and each of
the heirs,  executors,  successors  and assigns of any of the foregoing from and
against any and all actual out-of-pocket damages, liabilities, losses, costs and
expenses  (including  reasonable  attorneys' fees and expenses)  arising from or
related  to  Buyer's  or its  representatives'  activities  or  presence  on the
Property during the Due Diligence Period.


                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

     Section  2.1  Buyer's   Representations   and   Warranties.   Each  of  the
corporations  comprising  Buyer  hereby  jointly and  severally  represents  and
warrants  to  Seller  as  of  the  Effective  Date  (which  representations  and
warranties  shall remain true and correct as of and through the Closing Date) as
set forth  below:  Section  2.1.1 Due  Organization.  Buyer  consists of two (2)
corporations,  each of which is duly incorporated,  validly existing and in good
standing, under the laws of the jurisdiction(s) in which it was formed.

     Section 2.1.2 Due Authorization.  Each of the corporations comprising Buyer
has the full  corporate  power and  authority  to enter  into and  perform  this
Agreement and to consummate the transactions  contemplated hereby. The execution
and delivery of this Agreement by each of the corporations comprising Buyer, the
consummation of the  transactions  contemplated  hereby,  and the performance by
each of the corporations  comprising Buyer of all of its obligations  under this
Agreement  have been duly  authorized  and  approved by such  corporation.  This
Agreement has been executed and delivered by duly authorized officers of each of
the corporations comprising Buyer.

     Section 2.1.3  Enforceability.  This Agreement constitutes the legal, valid
and binding obligation of each of the corporations comprising Buyer, enforceable
against  each such  corporation  in  accordance  with its terms,  except as such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or other laws of general application referring to or
affecting  the  enforcement  of  creditors'  rights,  or  by  general  equitable
principles.

     Section  2.1.4 No  Conflict.  Neither the  execution  and  delivery of this
Agreement by either of the corporations  comprising  Buyer, nor the consummation
by  either  such


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<PAGE>


corporation  of the  transactions  contemplated  hereby,  will  conflict with or
result  in a  breach  of any of  the  terms,  conditions  or  provisions  of the
certificates of  incorporation,  articles of  incorporation,  by-laws,  or other
organizational  instruments of either of the corporations  comprising Buyer, any
law  applicable to it or any of its  properties or assets,  or any order,  writ,
injunction,  judgment or decree of any governmental authority or any arbitration
award applicable to it or its properties or assets.

     Section 2.1.5 No Contract  Conflict.  Neither the execution and delivery of
this  Agreement  by  either  of  the  corporations  comprising  Buyer,  nor  the
consummation by either such corporation of the transactions  contemplated hereby
will  conflict  with,  or result  in a breach  of or give  rise to a default  or
violation on the part of such corporation under any obligation,  lease, license,
agreement,  contract,  plan, or other  arrangement  to which it is a party or by
which it is bound.

     Section  2.1.6  No  Litigation  Conflict.  There  is  no  action,  suit  or
proceeding pending or, to the knowledge of either of the corporations comprising
Buyer,  threatened  against or affecting either of the  corporations  comprising
Buyer or any of its  properties  or assets,  at law or in equity,  or before any
governmental authority,  which would be reasonably likely to interfere with such
corporation's   ability  to  consummate  this  Agreement  or  the   transactions
contemplated hereby.

     Section  2.1.7   Regulatory   Approvals  and  Third  Party   Consents.   No
governmental  notice,  filing,  authorization,  approval,  order or  consent  is
required to be given, filed or obtained by either of the corporations comprising
Buyer from any governmental  authority or any third party in connection with the
execution, delivery and performance by such corporation of this Agreement or the
transactions contemplated hereby.

     Section 2.1.8 Investment  Intent.  If the Option is exercised,  each of the
corporations  comprising  Buyer will be acquiring the Chanate Shares for its own
account  for  investment  purposes  only and not with a view to,  or for sale or
resale in connection with, any public  distribution  thereof or with any present
intention  of  selling,  distributing,  or  otherwise  disposing  of the Chanate
Shares.  Each of the corporations  comprising Buyer is capable of evaluating the
merits  and  risks  of its  investment,  has the  capacity  to  protect  its own
interests,  and has the  financial  ability  to bear the  economic  risks of the
investment.

     Section 2.1.9 No Commissions.  Neither of the corporations comprising Buyer
has retained any broker, investment banker or other person or entity entitled to
any commission or similar  compensation in connection with this Agreement or the
transactions   contemplated   by   this   Agreement.


                                      -6-
<PAGE>

     Section  2.2  Seller's   Representations   and  Warranties.   Each  of  the
corporations  comprising  Seller  hereby  jointly and severally  represents  and
warrants to Buyer as of the Effective Date (which representations and warranties
shall  remain true and correct as of and through the Closing  Date) as set forth
below:

     Section 2.2.1 Due  Organization.  Seller consists of two (2)  corporations,
each of which is duly incorporated, validly existing and in good standing, under
the laws of the jurisdictions in which it was formed.

     Section 2.2.2 Due Authorization. Each of the corporations comprising Seller
has the full  corporate  power and  authority  to enter  into and  perform  this
Agreement and to consummate the transactions  contemplated hereby. The execution
and delivery of this Agreement by each of the  corporations  comprising  Seller,
the consummation of the transactions contemplated hereby, and the performance by
each of the corporations  comprising Seller of all of its obligations under this
Agreement  have been duly  authorized  and  approved by such  corporation.  This
Agreement has been duly executed and  delivered by duly  authorized  officers of
each of the corporations comprising Seller.

     Section 2.2.3  Enforceability.  This Agreement constitutes the legal, valid
and binding obligation of each of the corporations comprising Seller enforceable
against it in accordance with its terms,  except as such  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
other laws of general  application  referring to or affecting the enforcement of
creditors' rights, or by general equitable principles.

     Section  2.2.4 No  Conflict.  Neither the  execution  and  delivery of this
Agreement by either of the corporations  comprising Seller, nor the consummation
by either of the corporations comprising Seller of the transactions contemplated
hereby, will conflict with or result in a breach of any of the terms, conditions
or provisions of the certificates of  incorporation,  articles of incorporation,
by-laws of such  corporation,  any law  applicable  to it or its  properties  or
assets, or any order, writ,  injunction,  judgment or decree of any governmental
authority or any arbitration award applicable to it or its properties or assets.

     Section 2.2.5 No Contract  Conflict.  Neither the execution and delivery of
this  Agreement  by  either  of the  corporations  comprising  Seller,  nor  the
consummation by either such corporation of the transactions contemplated hereby,
will  conflict  with or  result  in a breach  of or give  rise to a  default  or
violation on the part of such corporation under any obligation,  lease, license,
agreement,  contract,  plan, or other  arrangement  to which it is a party or by
which it is bound.

     Section  2.2.6  No  Litigation  Conflict.  There  is  no  action,  suit  or
proceeding pending or, to the knowledge of either of the corporations comprising
Seller,  threatened  against or affecting  either such corporation or any of its
properties or assets, at law or in equity, or before any governmental authority,
which would be  reasonably  likely to interfere  with its ability to  consummate
this Agreement or the transactions contemplated hereby.


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<PAGE>

     Section  2.2.7   Regulatory   Approvals  and  Third  Party   Consents.   No
governmental  notice,  filing,  authorization,  approval,  order or  consent  is
required to be given, filed or obtained by either of the corporations comprising
Seller from any governmental authority or any third party in connection with the
execution,  delivery and performance by it of this Agreement or the transactions
contemplated hereby.

     Section 2.2.8 Title to Stock.  Each of the corporations  comprising  Seller
has good and valid title to those of the Chanate  Shares shown on the records of
Minera Chanate to be owned by it, 4,849,999 by AngloGold  (Jerritt Canyon) Corp.
and one by AngloGold North America Inc., free and clear of any encumbrance,  and
has the right,  power,  authority and capacity to sell and transfer such Chanate
Shares  to  Buyer  in  the  manner  provided  herein,  free  and  clear  of  any
encumbrance.  The Chanate  Shares are not subject to any voting  trust or voting
agreement, nor is any proxy in effect with respect to any of the Chanate Shares.
The Chanate Shares represent all of the issued and outstanding shares of capital
stock of Minera Chanate.

     Section  2.2.9  Articles  of   Incorporation,   Bylaws.   The  Articles  of
Incorporation  and By-Laws of Minera  Chanate,  which will be made  available to
Buyer for its inspection as soon as reasonably practicable following the date of
execution of this  Agreement,  are  complete and correct,  have not been amended
since the  Effective  Date,  and are in full force and  effect.

     Section 2.2.10  Financial  Statements.  Attached as Schedule 2.2.10 are the
existing  statements of assets and  liabilities  of Minera Chanate as of and for
the years ended  December  31,  1997,  December  31, 1998 and  December 31, 1999
(collectively,  the "Financial Statements").  To the best of Seller's knowledge,
the  Financial  Statements  present  fairly  and  accurately,  in  all  material
respects,  the assets,  liabilities,  expenses and financial condition of Minera
Chanate at December  31, 1997,  1998 and 1999,  and its  operating  revenues and
direct  expenses  and cash flows for each of the three years ended  December 31,
1997, 1998 and 1999, in conformity with Mexican  generally  accepted  accounting
principles consistently applied.

     Section 2.2.11 Real Property and Mining Concessions.  The attached Schedule
2.2.11  lists  all  real  property   interests  ("Real   Property")  and  mining
concessions  held or to be held by Minera  Chanate prior to the Closing.  To the
best of the  knowledge of each of the  corporations  comprising  Seller,  Minera
Chanate holds title to the Real Property and to each of those  Concessions  free
and clear of all claims, liens,  encumbrances and defects arising by, through or
under it or either of those  corporations.  To the best of  knowledge of each of
the corporations comprising Seller, Minera Chanate has performed all actions and
made all  payments  necessary  to keep  each of the  Concessions  identified  on
Schedule  2.2.11 in good standing under the Mexican  Mining Law ("Ley  Minera"),
the  Regulations  of the Mining Law  ("Reglamento  de la Ley  Minera"),  and the
administrative  rules derived  therefrom,  through the date of execution of this
Agreement.

     Section 2.2.12 Environmental  Compliance.  To the best of knowledge of each
of the  corporations  comprising  Seller,  (a)  Minera  Chanate  is in  material
compliance  with all  applicable  environmental  laws,  and (b) there are no (i)
adverse environmental  conditions at any of the Concessions or any other portion
of the Property,  or (ii)  administrative  proceedings for environmental  issues
pending before any Mexican authorities with jurisdiction.


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<PAGE>

     Section  2.2.13  Compliance  with  Laws.  To the  knowledge  of each of the
corporations  comprising Seller,  Minera Chanate is in material  compliance with
all laws,  rules and regulations of all governmental  authorities  applicable to
its existence, business, operations and assets.

     Section 2.2.14 Licenses,  Permits,  Approvals.  To the knowledge of each of
the  corporations  comprising  Seller,  Minera  Chanate  possesses all licenses,
permits and  governmental  approvals  and  authorizations  which are required in
order to operate its business as currently operated.

     Section 2.2.15 Minera Chanate  Assets and  Liabilities.  To the best of the
knowledge of each of the corporations comprising Seller, Minera Chanate (a) owns
no assets other than the Real Property and the Concessions, (b) is subject to no
liabilities  or obligations  other than those imposed by law in connection  with
the maintenance of the Concessions, property taxes payable on the Real Property,
or as reflected in the Financial  Statements,  (c) has no employees,  (d) to the
extent it had  employees  in the  past,  has paid  those  former  employees  the
severance and other amounts  required by applicable  Mexican labor laws, and (e)
has not entered into any oral or written  agreements (other than those set forth
on Schedule 2.2.15).

     Section  2.2.16 No  Commissions.  Neither  of the  corporations  comprising
Seller has  retained  any broker,  investment  banker or other  person or entity
entitled to any  commission  or similar  compensation  in  connection  with this
Agreement or the transactions contemplated by this Agreement.

     Section  2.2.17  Capitalization.  The  authorized  capital  stock of Minera
Chanate consists of 4,850,000 shares of common stock, no par value, all of which
have been issued and are  outstanding.  All of the Chanate Shares have been duly
authorized and validly  issued,  and are fully paid and  nonassessable,  are not
subject to any  preemptive  right,  were not issued in violation of the terms of
any agreement or other understanding binding upon Minera Chanate,  Seller or, to
the knowledge of Seller,  any other person,  and were issued in compliance  with
all applicable  securities  laws.  There are no securities  convertible  into or
exchangeable  for the stock of  Minera  Chanate,  and  there are no  outstanding
securities,   options,  warrants,  rights,  agreements,   calls,  subscriptions,
commitments,  demands or  understandings of any character  whatsoever,  fixed or
contingent, that directly or indirectly (a) call for the issuance, sale or other
disposition  of any capital  stock of Minera  Chanate;  (b)  obligate  Seller or
Minera Chanate to grant, offer or enter into any of the foregoing; or (c) relate
to the voting or control of any capital stock of Minera Chanate.

     Section 2.2.18  Constitutional  Documents;  Agreements.  The constitutional
documents,  minute books, capital variations book and stock record book (ledger)
of Minera  Chanate,  which will be made  available for Buyer's review as soon as
reasonably  practicable after the execution of this Agreement,  are complete and
correct in all material  respects,  and accurately reflect all formal actions of
the  shareholders  or other owners and boards of  directors  or other  governing
bodies of Minera Chanate during its existence.


                                       -9-
<PAGE>


     Section  2.2.19  Royalties.  Except  as  payable  under  the  terms of this
Agreement,  there are no advance or production  royalties  payable in connection
with the production of ores or minerals of any kind derived from the Property.

     Section  2.2.20   Absence  of  Changes  or  Events.   Except  as  otherwise
contemplated or permitted by this Agreement, since December 31, 1999 and through
the date of  execution  of this  Agreement,  Minera  Chanate has  conducted  its
operations  and  maintained  its assets and  performed,  paid and discharged its
liabilities  only in the  ordinary  course  of  business  consistent  with  past
practices,  and no events or conditions  have occurred or been  discovered  that
are,  individually or in the aggregate,  reasonably  expected to have a material
adverse effect on Minera Chanate.

     Section  2.2.21 Bank  Relationships.  Schedule  2.2.21,  to be delivered by
Seller to Buyer at or prior to the  Closing,  sets  forth:  (a) the names of all
banks and other financial  institutions that are depositories of funds of Minera
Chanate;  (b) the  names of all  persons  authorized  to draw or sign  checks or
drafts upon such accounts;  (c) the names and locations of any  institutions  in
which Minera Chanate has safety deposit boxes or lockbox accounts; (d) the names
of the persons having access to such safety  deposit boxes or lockbox  accounts;
and (e) the  names of all  officers  of Minera  Chanate  who,  according  to the
records of banks or other lending institutions,  are authorized and empowered to
make any borrowings on behalf of Minera Chanate.

     Section 2.2.22 Powers of Attorney.  Except as set forth on Schedule 2.2.22,
there is no executed  power of attorney to which Minera  Chanate is a party that
will remain in effect following the Closing Date.

     Section 2.2.23 Tax and Accounting Matters.  Minera Chanate has timely filed
all Tax  Returns  that it was  required to file,  and all such Tax Returns  were
correct and  complete  in all  material  respects,  and all Taxes owed by Minera
Chanate  have  been  paid.  The term "Tax  Return"  shall  refer to any  return,
information  return,  or report with  respect to Taxes.  "Taxes"  shall mean all
national,  provincial,  local and foreign taxes, assessments,  levies, and other
governmental  charges,  including  without  limitation  income,  gross receipts,
license, payroll,  employment,  severance, ad valorem,  property, excise, stamp,
premium,  environmental,  customs  duties,  capital stock,  franchise,  profits,
withholding,  social security (and similar taxes), unemployment,  real property,
personal property,  sales, use, transfer,  registration,  value added,  minimum,
estimated  taxes,  together  with any interest  penalties,  additions to tax and
other assets  thereon or related  thereto.  The assets of Minera Chanate are not
subject to any encumbrances  with respect to Taxes other than Taxes that are not
yet due and payable.  Minera Chanate is not a party to any tax allocation or tax
sharing  agreement,  and has no liability for the Taxes of any other person as a
transferee or successor, by contract, or otherwise. There is no material dispute
or claim concerning  Minera Chanate's  liability for Taxes either (a) claimed or
raised by any authority in writing, or (b) as to which Seller has any knowledge.
Seller  does  not  reasonably  expect  that any  taxing  authority  will  assess
additional  Taxes  with  respect  to any Tax  Returns  have been filed by Minera
Chanate.  To the best of the  knowledge of Seller,  Minera  Chanate has complied
with all the accounting  requirements  of applicable  Mexican tax and commercial
laws.


                                       10
<PAGE>


                                  ARTICLE III

                            COVENANTS AND AGREEMENTS

     Section 3.1 Joint Covenants and Agreements.

     Section 3.1.1  Consents of Others.  If Buyer elects to purchase the Chanate
Shares as  provided  in Section  1.1.4,  each  Party  shall  thereafter  use its
reasonable  efforts  prior to the  Closing  to take,  or cause to be taken,  all
actions  and to do,  or  cause to be  done,  all  things  necessary,  proper  or
advisable  to  consummate  and make  effective  as promptly as  practicable  the
transactions  contemplated hereby, and to cooperate with the other in connection
with the foregoing, to obtain all authorizations,  consents and permits required
of them to permit  them to  consummate  the  transactions  contemplated  by this
Agreement.

     Section 3.1.2 Publicity.  Subject to requirements of law and the applicable
rule of any stock  exchange and the  provisions  of Section  1.1.3,  the Parties
shall consult in advance of all public announcements in respect to the existence
or subject matter of this Agreement. The content of any such announcements shall
require the agreement of the Parties prior to publication, such agreement not to
be unreasonably withheld or delayed.

     Section 3.2 Covenants and Agreements of Seller.

     Section 3.2.1 Ordinary Course of Business. Except as otherwise contemplated
by this Agreement,  as may be necessary to effect the transactions  contemplated
by this  Agreement,  until the  Closing,  the Seller  shall  ensure  that Minera
Chanate conducts its business in the ordinary course in a manner consistent with
past practice.

     Section 3.2.2  Exclusivity.  Until the Closing Date,  unless this Agreement
shall have been  terminated  pursuant to Article VII, Seller shall not and shall
cause  Minera  Chanate  and  each  of  their  respective  officers,   directors,
employees, representatives and agents not to (a) directly or indirectly solicit,
initiate,   authorize  the  solicitation  of,  respond  to  or  enter  into  any
discussions with any person other than Buyer involving the possible  acquisition
of all or part of Minera Chanate or the Property; (b) enter into any transaction
with any person, other than Buyer,  involving the possible acquisition of all or
part of Minera Chanate or the Property; or (c) participate in any discussions or
negotiations  or  furnish  any  information  to any person  with  respect to the
possible acquisition of all or part of Minera Chanate or the Property.

     Section 3.2.3 Transfer of Concessions. Seller agrees, prior to the Closing,
to cause its  wholly-owned  subsidiaries  to convey to Minera Chanate all right,
title and interest in and to those  Concessions  not  currently  owned by Minera
Chanate (as indicated on Schedule 2.2.11).


                                       11
<PAGE>


     Section  3.3  Covenants  and  Agreements  of Buyer.  Buyer  agrees that any
activities it conducts on the Property during the Due Diligence  Period shall be
conducted in accordance with applicable federal, state and local laws, rules and
regulations, and in accordance with accepted industry practices.

                                   ARTICLE IV

                       CONDITIONS PRECEDENT TO THE CLOSING

     Section 4.1 Conditions Precedent to Buyer's Obligations. The obligations of
Buyer to  consummate  the  transactions  contemplated  under  Section  1.1.4 are
subject  to the  fulfillment  of the  following  conditions  on or  prior to the
Closing Date (unless waived in writing in the sole discretion of Buyer):

          Section 4.1.1 Accuracy of Warranties and Performance of Covenants.

          (a) The  representations  and  warranties of Seller  contained  herein
     shall be accurate in all material  respects when made and as of the Closing
     Date.  Seller shall have  performed all of its  obligations  and shall have
     complied with each and all of the covenants and  agreements  required to be
     performed or complied with on or prior to the Closing Date.

          (b) Buyer's sole and exclusive  remedy,  in law or in equity,  for any
     claim,  in contract,  tort,  or  otherwise,  related to or arising out of a
     failure of a condition  precedent or a breach by Seller of a representation
     contained in Article II (but not for a unilateral decision by Seller not to
     proceed with the Closing)  which  renders  Buyer  unwilling to complete the
     Closing,  shall be to refuse to complete  the Closing;  provided,  however,
     that in such an event  Seller shall be obligated to refund to Buyer (a) all
     portions  of the  Purchase  Price  previously  paid by  Buyer,  and (b) all
     Holding Costs paid or forwarded by Buyer.

     Section  4.1.2  Absence  of  Litigation.  No  suit  or  proceeding  by  any
governmental  authority  or third party  seeking to restrain  enjoin,  hinder or
obtain damages on account of the consummation of the  transactions  contemplated
under this  Agreement  shall be pending.  Section 4.2  Conditions  Precedent  to
Seller's  Obligations.  The obligations of Seller to consummate the transactions
contemplated hereby are subject to fulfillment of the following conditions on or
prior to the Closing Date (unless  waived in writing in the sole  discretion  of
Seller):

     Section 4.2.1 Accuracy of Warranties and Performance of Covenants.


          (a) The representations and warranties of Buyer contained herein shall
     be accurate in all material  respects when made and as of the Closing Date.
     Buyer shall have performed in all material  respects all of its obligations
     and complied in


                                       12
<PAGE>

     all material  respects with each and all of the  covenants  and  agreements
     required to be performed or complied with on or prior to the Closing Date.

          (b) Seller's sole and exclusive remedy,  in law or in equity,  for any
     claim,  in  contract,  tort or  otherwise,  related to or arising  out of a
     failure of a condition  precedent or a breach by Buyer of a  representation
     contained in Article II which renders  Buyer unable or Seller  unwilling to
     complete the Closing, shall be to refuse to complete the Closing; provided,
     however,  that in such an event  Seller  shall be  entitled  to retain  all
     payments and funds for Holding Costs previously made by Buyer to Seller.

     Section  4.2.2  Absence  of  Litigation.  No  suit  or  proceeding  by  any
governmental  authority  or third party  seeking to restrain  enjoin,  hinder or
obtain damages on account of the consummation of the  transactions  contemplated
under this Agreement shall be pending.

                                   ARTICLE V

                                   THE CLOSING

     Section 5.1 The Closing Date.  Subject to the terms of this Agreement,  the
consummation of the transactions  contemplated by this Agreement (the "Closing")
shall take place at such time and place as the Parties shall  mutually  agree on
the date specified in the notice to proceed delivered  pursuant to Section 1.1.4
(or if the  conditions  to  Closing  shall not be  satisfied  on such  date,  as
promptly as  practicable  following  the  satisfaction  or waiver  thereof) (the
"Closing Date"), or on such other date as the Parties shall mutually agree.

     Section 5.2 Deliveries at the Closing.

     Section  5.2.1  Buyer's  Execution  and Delivery of Documents  and Payment.
Buyer shall deliver or execute and deliver, as the case may be, to Seller all of
the following:

          A  receipt,  duly  executed  by Buyer,  acknowledging  receipt  of the
     certificates representing the Chanate Shares; and

          Any other documents reasonably requested by Seller.

     Section 5.2.2  Seller's  Execution and Delivery of Documents.  Seller shall
deliver  or  execute  and  deliver,  as the  case may be,  to  Buyer  all of the
following:

     The  resignations  of all  of  Minera  Chanate's  directors,  officers  and
attorneys-in-fact;

          Minera  Chanate's  by-laws,   minute  books,  stock  ledger,   capital
     variations book,  powers of attorney and all similar  corporate records (to
     the extent not previously delivered to Buyer);


                                       13
<PAGE>

          To the extent not  previously  delivered to Buyer,  (a) any and all of
     Minera  Chanate's  accounting  and tax documents and records;  (b) original
     titles  of the  Concessions  and any and all  documents  pertaining  to the
     Concessions; (c) any and all documents pertaining to the Real Property; (d)
     any and all documents  pertaining to the  performance  of Minera  Chanate's
     obligations with the National Registry of Foreign Investment and in general
     with  the  Mexican  Secretaria  de  Economia;  (e) any  and  all  documents
     pertaining to the  performance  of Minera  Chanate's  obligations  with the
     Mexican customs authorities;  and (f) in general, any and all documentation
     belonging to Minera Chanate or in its  possession  for any reason,  even if
     not specifically identified above.

          One or more  certificates  duly  endorsed by Seller and in proper form
     for  transfer to Buyer,  or  accompanied  by duly  executed  stock  powers,
     evidencing all of the Chanate Shares; and

          Any other documents reasonably requested by Buyer.

     Section 5.2.3 Minera Chanate's  Execution and Delivery of Documents.  Buyer
shall cause Minera Chanate to execute and deliver to Seller the following:

          A document  suitable  for  filing  with the  appropriate  governmental
     agencies and in a form mutually agreeable to the Parties, evidencing Minera
     Chanate's  guarantee of the  obligation to pay that portion of the Purchase
     Price set forth in Sections 1.1.2(b)(i) and (ii).

     Section 5.3 Simultaneous  Closing.  All actions taken at the Closing are to
be  part  of a  simultaneous  transaction,  and no  action  is to be  considered
completed  until all actions  necessary to be completed at the Closing have been
completed.

                                   ARTICLE VI

                    POST-CLOSING AGREEMENTS AND OTHER MATTERS

     Section  6.1  Post-Closing  Agreements.  From and  after the  Closing,  the
Parties shall have the respective  rights and obligations which are set forth in
the remainder of this Article VI.

     Section 6.2 Mutual  Assistance  and Further  Assurances.  The Parties shall
cooperate with each other, and make available the reasonable assistance of their
employees to each other, for a period of sixty (60) days after the Closing.  The
Parties shall execute such further documents,  and perform such further acts, as
may be necessary to effect the transactions  contemplated  hereby,  on the terms
herein  contained  and  otherwise  to comply  with the terms of this  Agreement;
provided,  that,  except as contemplated  by this  Agreement,  no Party shall be
required to waive any right or incur any obligation in connection therewith.

     Section 6.3  Reports.  On or before  January 30th each year  following  the
Closing  Date,  Buyer or Minera  Chanate  will  furnish  to Seller a summary  of
activities on or with respect to the Property, that shall include a statement of
all Project Costs (as defined in Section  6.7(a))  incurred


                                       14
<PAGE>

during the preceding year and the total quantity of Drill Inferred Resources (as
defined in Section 6.7(a)) that Buyer or Minera Chanate has determined  exist on
or in the Property.

     Section 6.4 Survival of Representations,  Warranties, Covenants, Agreements
and   Indemnifications.   The   representations,   warranties,   covenants   and
indemnification  obligations  contained  in this  Agreement  shall  survive  the
Closing and be  enforceable  for a period of  twenty-four  (24) months and shall
thereafter  be of no force or effect,  except as they relate to claims for which
written notice,  specifying with  particularity  the facts underlying the claim,
has been provided prior to the expiration of the twenty-four (24) month survival
period.

     Section  6.5  Indemnification  by  Seller.  Subject  to  Section  6.4,  and
notwithstanding  the provisions of Section  4.1.1(b),  each of the  corporations
comprising  Seller  shall  jointly  and  severally  indemnify,  defend  and hold
harmless Buyer and Minera Chanate and their directors,  officers,  employees and
agents and each of the heirs,  executors,  successors  and assigns of any of the
foregoing  (collectively,  the "Buyer Indemnified Parties") from and against any
and all actual out-of-pocket damages, liabilities,  penalties, losses, costs and
expenses (including  reasonable  attorneys' fees and expenses in connection with
any third party proceeding relating thereto)  (collectively,  "Losses") incurred
by the Buyer  Indemnified  Parties to the extent arising from: (a) the breach or
inaccuracy of any representations or warranties made by Seller herein or (b) any
failure to comply, in whole or in part, with the covenants or agreements made by
Seller herein.

     Section  6.6  Indemnification  by  Buyer.   Subject  to  Section  6.4,  and
notwithstanding  the provisions of Section  4.2.1(b),  each of the  corporations
comprising Buyer shall jointly and severally indemnify, defend and hold harmless
Seller and its directors, officers, employees and agents, and each of the heirs,
executors,  successors  and assigns of any of the foregoing  (collectively,  the
"Seller  Indemnified  Parties") from and against any and all Losses  incurred by
the  Seller  Indemnified  Parties  to the extent  arising  from:  (a) the future
businesses,  assets,  liabilities,  operations  or other  activities  of  Minera
Chanate  arising  after  the  Closing,  (b)  the  breach  or  inaccuracy  of any
representations  or warranties made by Buyer herein,  (c) any failure to comply,
in whole or in part, with the covenants or agreements  made by Buyer herein,  or
(d) from the imposition of a withholding tax (but not the imposition of a tax on
income or  capital  gains)  of the  nature  described  in  Section  1.1.2 by any
authority of the  Republic of Mexico upon the payments of the Purchase  Price to
be made to Seller pursuant to Sections 1.1.2(b)(i) or (ii).

     Section 6.7 Back-In and Share Repurchase Option.


     (a) Buyer hereby grants to Seller the right to designate a Mexican  company
     wholly  owned by Seller  to  receive a  one-time  option,  on the terms and
     conditions  provided in this  Section  6.7, to purchase  fifty-one  percent
     (51%) of the outstanding shares of Minera Chanate (or the equivalent rights
     or interests in order to vest in Seller a 51% interest in the Property,  if
     the Property is no longer  held,  in whole or in part,  by Minera  Chanate,
     excluding  any  Concessions  or  portions of the  Property  which have been
     dropped or sold in a bona fide  arms-length  transaction  to a third  party
     unrelated to Buyer) for a purchase price equal to two (2) times the Project
     Costs (Seller's  "Back-In Option").  As used herein,  "Project Costs" means
     all reasonable, documented costs for those activities


                                       15
<PAGE>

     conducted to ascertain the existence,  location,  extent or quantity of one
     of more deposits of gold-bearing  ore (or other ores and minerals) on or in
     either the El Chanate  Property or any Additional  Property (as those terms
     are defined  below),  incurred by Buyer or Minera Chanate during the period
     commencing  on the  Effective  Date and  ending on the date on which  Buyer
     receives  notice from Seller  that  Seller  wishes to exercise  its Back-In
     Option.  Project Costs shall specifically include all costs or fees, taxes,
     expenses,  liabilities  and  charges  paid or  incurred  by Buyer or Minera
     Chanate  which are related to  exploration,  development  and related  work
     conducted after the Effective Date for the purposes of discovery, location,
     delineation,  evaluation or development of  gold-bearing  ores and minerals
     from the Property, consisting of:

               (i) All costs and expenses incurred in conducting exploration and
          prospecting activities, including, without limitation, the preparation
          of feasibility studies, the active pursuit of required federal,  state
          or local  authorizations  or permits and the  performance  of required
          environmental  protection or  restoration  obligations,  the building,
          maintenance  and repair of roads,  drill site  preparation,  drilling,
          tracking,  digging  test pits,  shaft  sinking,  acquiring,  diverting
          and/or transporting water necessary for exploration,  logging of drill
          holes  and  drill  core,  completion  and  evaluation  of  geological,
          geophysical,  geochemical or other exploration data and preparation of
          interpretive  reports,  and surveying and laboratory costs and charges
          (including assays or metallurgical analyses and tests);

               (ii) All costs and expenses  incurred in  conducting  development
          activities on or in connection  with the Property,  the active pursuit
          of required federal,  state or local  authorization or permits and the
          performance  of  required  environmental   protection  or  restoration
          obligations,   pre-stripping  and  stripping,   the  construction  and
          installation of a mill, leach pads or other  beneficiation  facilities
          for minerals,  and other  activities,  operations or work performed in
          preparation for the removal of minerals from the Property;

               (iii) All costs of acquiring  additional real property  interests
          (including  without  limitation  rights to use the surface) within the
          Property and in the vicinity of the Property to the extent  reasonably
          necessary to facilitate the conduct of activities on the Property;

               (iv)  All  costs   incurred  in   performing   any   reclamation,
          restoration  or other work  required  by any  federal,  state or local
          agency or authority;

               (v) Salaries,  wages,  expenses and benefits of Buyer's or Minera
          Chanate's  employees or consultants  engaged in operations relating to
          the Property,  including salaries and fringe benefits of those who are
          temporarily  assigned to and directly employed on work relating to the
          Property  for the periods of time such  employees  are engaged in such
          activities and reasonable


                                       16
<PAGE>

          transportation  expenses  for all such  employees  to and  from  their
          regular place of work to the Property;

               (vi) All costs  incurred in connection  with the  preparation  of
          feasibility  studies and economic and technical analyses pertaining to
          the  Property,  whether  carried out by Buyer or Minera  Chanate or by
          third parties under contract with Buyer or Minera Chanate;

               (vii) Taxes and assessments, other than income taxes, assessed or
          levied  upon or  against  the  Property  or any  improvements  thereon
          situated thereon for which Buyer or Minera Chanate is responsible;

               (viii) Costs of material, equipment and supplies acquired, leased
          or hired, for use in conducting  exploration or development operations
          relating to the Property;  provided, however, that equipment owned and
          supplied by Buyer  shall be  chargeable  at rates no greater  than the
          most favorable rental rates available in the area of the Property;

               (ix) Costs and expenses of  establishing  and  maintaining  field
          offices, camps and housing facilities;

               (x) Costs  incurred by Buyer or Minera  Chanate in examining  and
          curing title to any part of the Property and in defending title to and
          maintaining  the  Property,   in  satisfying  surface  use  or  damage
          obligations  to  landowners,  or in  conducting  any  analyses  of the
          environmental conditions at the Property; and

               (xi) An additional  amount as overhead,  not to exceed the lesser
          of (A) five  percent  (5%) or (B) Buyer's or Minera  Chanate's  actual
          overhead on all costs and expenses  described in items (i) through (x)
          above.

          Project  Costs  specifically  exclude any costs not set forth in items
          (i) through (xi) above, and in particular exclude all costs related to
          obtaining financing.

               As used in this Agreement,  "Drill  Indicated  Resources" means a
          deposit  or  deposits  of  gold-bearing  ore  within  either  (1)  the
          Concessions  comprising  the El Chanate  Property,  as  identified  on
          Schedule 2.2.11,  or (2) the Concessions  comprising any one of the El
          Antimonio,  Banco de Oro, La Gloria,  Sierra del Alamo,  Lista Blanca,
          San Felix,  Aries or Gato  Properties  (collectively,  the "Additional
          Properties" and individually, an "Additional Property"), as identified
          on Schedule 2.2.11.

     (b) At the time, if ever,  that Buyer or Minera  Chanate either (i) makes a
     good faith determination (in accordance with industry  standards),  for any
     purpose,  that  the  Drill  Indicated  Resources  on and in the El  Chanate
     Property or any individual Additional Property are greater than two million
     (2,000,000)  troy ounces of contained  gold,  or (ii) has, on an aggregated
     basis, mined, produced and sold,


                                       17
<PAGE>

     from the El Chanate  Property  or any  individual  Additional  Property,  a
     number of ounces  of gold  that,  when  combined  with the Drill  Indicated
     Resources for that  particular  property,  exceeds two million  (2,000,000)
     ounces,  Buyer shall give Seller  prompt  notice of such  determination  (a
     "Contained  Resources  Notice").  The Contained  Resources  Notice shall be
     accompanied by a detailed statement of Project Costs. Seller shall have one
     hundred  and  eighty  (180)  days  following  the  receipt  of a  Contained
     Resources  Notice  ("Seller's  Option  Period")  to  determine  whether  to
     exercise the Back-In Option.  During  Seller's Option Period,  Seller shall
     have the right to conduct  such  investigations  and  analyses  as it deems
     necessary and appropriate,  in its sole discretion, to determine whether to
     exercise  such  option,  including  the right (i) to  inspect  and copy all
     records,  reports  and data of Buyer and  Minera  Chanate  relating  to the
     Property,  (ii) to  inspect,  to the  extent  Minera  Chanate  or  Buyer is
     authorized to provide such access, the Property,  and (iii) to have Buyer's
     and Minera  Chanate's  books and records  relating to Project Costs audited
     (at Seller's sole expense).  Seller shall have the right, at its sole cost,
     to take samples directly from the Property,  including portions of existing
     drill  core  and  drill  cuttings,  for the  purpose  of  checking  assays,
     metallurgical  testing and any other testing that Seller deems appropriate.
     All data and information made available by Buyer to Seller pursuant to this
     Section or obtained or generated by Seller concerning Minera Chanate or the
     Property shall be maintained confidential by Seller and, except as required
     by law or applicable  stock  exchange  rule,  shall not be disclosed to any
     third party without  Buyer's prior written consent (which consent shall not
     be unreasonably withheld), except for consultants and financial advisors of
     Buyer who agree to be bound by such confidentiality restrictions. Buyer and
     Minera Chanate hereby disclaim any representation,  warranty or covenant as
     to  the  accuracy,  reliability  or  completeness  of  any  such  data  and
     information, and Seller shall rely on the same at its sole risk.

     (c) The Parties hereby agree that any dispute arising under this Agreement,
     including  without  limitation  a dispute  as to  whether  Drill  Indicated
     Resources at the El Chanate Property or any individual  Additional Property
     are greater than two million  (2,000,000)  ounces,  shall be subject to the
     informal dispute resolution procedure set forth in this Section 6.7(c). The
     Party asserting the existence of a dispute as to the  interpretation of any
     provision of this Agreement or the performance by the other Party of any of
     its obligations hereunder shall notify the other Party of the nature of the
     asserted dispute. Within seven (7) business days of receipt of such notice,
     a designated  representative  of Buyer and a designated  representative  of
     Seller shall  arrange for a personal or telephone  conference in which they
     use good faith efforts to resolve such dispute. If those individuals are


                                       18
<PAGE>

     unable to resolve the dispute, they shall jointly prepare and, within seven
     business days after their  conference,  circulate to the President of Buyer
     and the CEO of Seller a  memorandum  outlining  in  reasonable  detail  the
     nature of the dispute.  Within five (5) business days after receipt of that
     memorandum,  the  individuals to whom that  memorandum was addressed  shall
     arrange for a personal or  telephone  conference  in which they  attempt to
     resolve  such  dispute.  If those  individuals  are unable to  resolve  the
     dispute,  either Party may proceed  with any legal remedy  available to it;
     provided, however, that the Parties agree that any statement made as to the
     subject matter of the dispute in any of the conferences referred to in this
     Section 6.7(c) shall not be used in any legal proceeding  against the Party
     that made such statement.

     (d) During Seller's Option Period, Buyer and Seller shall negotiate in good
     faith,  with the advice of their legal and tax  advisors,  to determine how
     best to structure the business arrangement that would exist between them or
     their  subsidiaries  if  Seller  were to  exercise  the  Back-In  Option to
     accomplish  the business and tax  objectives  of both  Parties.  Unless the
     Parties  otherwise  mutually  agree,  upon exercise of the Back-In  Option,
     Seller or its  designee  under  Section  6.7(a)  shall pay Buyer  twice the
     amount of the Project  Costs and shall receive  fifty-one  percent (51%) of
     the capital stock of Minera  Chanate and the business  arrangement  between
     the parties shall be set forth in a shareholders agreement,  subject to the
     principles set forth in Section  6.7(e);  provided that, if the Property is
     no longer  held,  in whole or in part,  by Minera  Chanate and has not been
     dropped or sold in a bona fide  arms-length  transaction  to a third  party
     unrelated  to Buyer,  upon  exercise of the  Back-In  Option  Seller  shall
     receive rights or interests  sufficient to vest in Seller a 51% interest in
     the Property and the same rights contemplated in Section 6.7(e).

     (e) If Seller timely exercises its Back-In Option,  the Parties shall enter
     into a mutually  acceptable  shareholders'  or similar  agreement using the
     concepts of the Rocky  Mountain  Mineral Law  Foundation  Forms 5 and 5A as
     models, governed to the maximum extent possible by the laws of the State of
     Colorado,  but subject to the modifications  agreed upon by the Parties and
     any requirements to ensure that the agreement is valid and enforceable,  to
     the extent  necessary,  under  applicable  Mexico federal,  state and local
     laws.

     (f) Seller may elect to  exercise  its  Back-In  Option at any time  during
     Seller's  Option Period by notice to Buyer.  If Buyer timely  exercises its
     Back-In Option,  the closing of the business  arrangement  agreed to by the
     Parties  pursuant to Section 6.7(d) and the execution of the  shareholders'
     or  similar  agreement  shall  be held  within  sixty  (60)  business  days
     thereafter.

     (g) None of the  provisions of this Section 6.7 shall be deemed to prohibit
     Buyer or Minera Chanate from commencing  commercial production of a deposit
     or deposit of ores and  minerals  from all or any  portion of either the El
     Chanate  Property or any one or more of the Additional  Properties,  to the
     extent that the Drill Indicated  Resources  contained therein are less than
     two million (2,000,000) troy ounces of contained gold.

     Section 6.8 Maintenance of Concessions  Included in the Property.  If Buyer
chooses to cause  Minera  Chanate to drop any,  but not all, of the  Concessions
that are part of the  Property at any time,  Buyer  shall offer to convey  those
Concession(s) it intends to drop to Seller not less


                                       19
<PAGE>

than  ninety  (90) days  prior to the date on which any  payment  and/or  filing
requirement  must be made to maintain such  Concession(s)  as valid,  and Seller
shall have the  option,  exercisable  for a period of thirty (30) days after its
receipt of such notice, to accept assignment of such  Concession(s) to a Mexican
company to be  designated  by Seller at no cost to Seller  other  than  payments
required to maintain the validity of the  Concession(s).  If,  subsequent to the
date one year after the Effective Date, Buyer chooses to cause Minera Chanate to
drop all of the Concessions that comprise the Property, Buyer shall offer either
to  reconvey  all of the stock of Minera  Chanate to Seller or such  Concessions
that  comprise the Property as Seller may choose,  without cost to Seller,  such
offer to be made not less than  ninety  (90) days prior to the date on which any
payment and/or filing  requirement must be made to maintain the validity of such
Concessions  (provided that Buyer shall have no such reconveyance  obligation if
Seller does not notify Buyer of its  election to  reacquire  all of the stock of
Minera Chanate or any particular  Concessions  within thirty (30) days after its
receipt of such offer).  If Buyer chooses to cause Minera Chanate to drop all of
the  Concessions  in the  manner  set forth in the  preceding  sentence  between
December 16, 2001 and February 1, 2002,  and Seller  timely  elects to reacquire
all of the stock of Minera Chanate,  this Agreement  shall be deemed  rescinded,
although  Buyer shall have no right to recover any Holding  Costs or its initial
$5,000 payment made to Seller.  If Buyer chooses to cause Minera Chanate to drop
all of the  Concessions  that  comprise  the  Property  on or  prior to one year
following the Effective Date,  Buyer shall notify Seller on or prior to the date
one year  following the Effective  Date,  and Seller may elect to reacquire,  by
written notice to Buyer within thirty (30) days after its receipt of such offer,
all of the issued and  outstanding  stock of Minera  Chanate  for no  additional
consideration,  in which case this Agreement shall be deemed rescinded, although
Buyer  shall have no right to recover any  Holding  Costs or its initial  $5,000
payment made to Seller.  Regardless  of whether  Seller  elects to reacquire the
stock of Minera Chanate pursuant to the preceding  sentence,  Buyer's obligation
to make the  $50,000  payment  to Seller set forth in  Section  1.1.2  shall not
apply.  The provisions of this Section 6.8 shall be a covenant  running with the
Concessions.

     Section  6.9.  Notification.  Any  Party  who  has a claim  giving  rise to
indemnification  liability  pursuant to this Agreement (an "Indemnified  Party")
whether resulting from a claim by a third party or otherwise,  shall give prompt
notice to the other Party (the  "Indemnifying  Party") of such  claim,  together
with a reasonable description thereof.  Failure to provide such notice shall not
relieve the Indemnifying Party of any of its obligations hereunder except to the
extent materially prejudiced thereby. With respect to any claim by a third party
against any Party to this Agreement  which is subject to  indemnification  under
this Agreement, the Indemnifying Party shall be afforded the opportunity, at its
expense,  to defend  or  settle  the  claim if it  utilizes  counsel  reasonably
satisfactory to the  Indemnified  Party,  and promptly  commences the defense of
such claim and pursues such defense with diligence;  provided, however, that the
Indemnifying  Party  shall  secure the consent of the  Indemnified  Party to any
settlement,  which consent shall not be unreasonably  withheld.  The Indemnified
Party may participate in the defense of any claim at its expense,  and until the
Indemnifying  Party has agreed to defend such claim,  the Indemnified  Party may
file any motion,  answer or other pleading or take such other action as it deems
appropriate to protect its interests or those of the  Indemnifying  Party. If an
Indemnifying  Party  does not  elect  to  contest  any  third-party  claim,  the
Indemnifying  Party shall be bound by the results  obtained with respect thereto
by the Indemnified Party, including any settlement of such claim.


                                       20
<PAGE>

     Section 6.10. Limitation.  Notwithstanding  anything in this Agreement that
would appear to the contrary, under no circumstances shall an Indemnifying Party
have any liability to any Indemnified  Party in an aggregate amount greater than
US$250,000.

                                  ARTICLE VII

                                   TERMINATION

     Section 7.1  Termination.  This  Agreement may be  terminated  prior to the
Closing as follows:

     Section 7.1.1 Mutual Consent. Upon the mutual written consent of Seller and
Buyer; or

     Section 7.1.2 Pursuant to Section 1.1.4.  By notice  delivered to Seller by
Buyer pursuant to Section 1.1.4; or

     Section  7.1.3  Litigation.  By Seller or Buyer if an  injunction  or other
order shall have been issued by a  governmental  authority,  which  restrains or
otherwise makes unlawful the  consummation of the  transactions  contemplated by
this  Agreement  and such  injunction or other order shall have become final and
non-appealable;  provided  however  that no Party shall be entitled to terminate
this  Agreement in reliance on this Section  7.1.3 if such  injunction  or order
shall have resulted from a breach by such Party of this Agreement.

     Section  7.2 Effect of  Termination.  In the event of  termination  of this
Agreement,  this Agreement and the proposed transactions  contemplated hereunder
shall  terminate  and,  each Party  hereto shall have no further  obligation  or
liability hereunder, provided, however, that:

          (a)  Seller  shall  retain  the US$  5,000  paid to it by Buyer on the
     Effective Date;

          (b) Buyer shall remain  obligated to pay the Holding Costs due by July
     31, 2001, as set forth in Section 1.1.5, and Buyer's indemnity  obligations
     under Section  1.1.6 and the  provisions  of Sections  8.11,  8.12 and 8.13
     shall survive such  termination  for a period of twenty-four  (24) months ;
     and

          (c)  within  thirty  (30) days  after such  termination,  Buyer  shall
     deliver to Seller all  factual,  non-interpretive  data  generated by Buyer
     with respect to the Property and all data, information, documents and other
     materials  furnished  to or obtained  by Buyer  regarding  the  Property or
     Minera   Chanate,   but  Buyer  shall  not  be  deemed  to  have  made  any
     representations   or  warranties  as  to  the  accuracy,   reliability   or
     completeness  of any data delivered to Seller  pursuant to this Section 7.2
     and Buyer  shall not be liable on account  of any use  thereof by Seller or
     any third party.


                                       21
<PAGE>


                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section 8.1 Exclusivity of  Representations  and  Warranties;  Relationship
Between the Parties. Notwithstanding anything in this Agreement to the contrary,
it is the  explicit  intent and  understanding  of the Parties  that none of the
Parties nor any of their respective representatives is making any representation
or warranty whatsoever,  oral or written,  express or implied,  other than those
set forth in this  Agreement  and that none of the  Parties  is  relying  on any
statement, representation or warranty, oral or written, express or implied, made
by any  other  Party  or  such  other  Party's  representatives  except  for the
representations and warranties expressly set forth in this Agreement.  EXCEPT AS
OTHERWISE  SPECIFICALLY  SET  FORTH IN THIS  AGREEMENT,  THE  PARTIES  EXPRESSLY
DISCLAIM ANY IMPLIED WARRANTY OR  REPRESENTATION  AS TO TITLE,  OWNERSHIP,  USE,
POSSESSION,  VALUE,  NATURE  OF  MINERAL  RESERVES  OR  RESOURCES,  MINEABILITY,
CONDITION,   LIABILITIES,  FUTURE  RESULTS,   MERCHANTABILITY,   FITNESS  FOR  A
PARTICULAR PURPOSE, SUITABILITY OR OTHERWISE.

     Section 8.2 Entire Agreement.  This Agreement,  together with the Schedules
attached  hereto,  constitutes  the entire  agreement  between  the  Parties and
supersedes   any  and  all  other  prior  or   contemporaneous   understandings,
negotiations  or  agreements  between the Parties  relating to the  transactions
contemplated  hereby,  and shall be binding upon and inure to the benefit of the
Parties hereto and their respective legal representatives.

     Section 8.3 Amendments. Any amendment, supplement, variation, alteration or
modification  to this  Agreement must be made in writing and duly executed by an
authorized  representative  or agent of each of the Parties hereto.

     Section  8.4  Severability.  Any  provision  of  this  Agreement  which  is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability  in any  other  jurisdiction  shall  not  invalidate  or render
unenforceable such provision in any other jurisdiction. Each Party hereby waives
the  benefit  of any law  which  renders  any  provision  hereof  prohibited  or
unenforceable in any respect.

     Section 8.5  Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
be deemed to constitute one and the same instrument.

     Section 8.6 No Waiver.  The failure in any one or more instances of a Party
to insist upon performance of any of the terms,  covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or to
waive any breach of any of the terms, covenants or conditions of this Agreement,
shall not be  construed  as a  subsequent  waiver of any such terms,  covenants,
conditions, rights or privileges, but the same shall continue and remain in full
force and effect as if no such  forbearance  or waiver had  occurred.  No waiver
shall  be  effective  unless  it is  in  writing  and  signed  by an  authorized
representative of the waiving Party.


                                       22
<PAGE>

     Section 8.7  Assignment.  This Agreement and all the rights and obligations
granted  hereby  shall bind and inure to the  benefit of the  Parties  and their
respective successors and assigns, it being expressly agreed that this Agreement
shall not be assigned nor shall any rights or obligations  arising  hereunder be
transferred by one Party without the prior written consent of the other Parties;
provided, however, that no such consent shall be required (a) in the event of an
assignment by a Party to an affiliate or subsidiary  entity, (b) in the event of
a corporate  reorganization,  merger or  consolidation  in which either Party is
involved, or (c) to the extent such an assignment is made in connection with the
granting of a security interest for financing purposes.

     Section 8.8 Fees,  Costs and Expenses.  Each Party shall be responsible for
its own  fees,  costs  and  expenses  incurred  by it in  connection  with  this
Agreement and the  transactions  contemplated  hereby.  In the event that either
Party  is  required  to  enforce  its  rights  hereunder   through   litigation,
arbitration or similar  process,  the  substantially  prevailing  Party shall be
entitled  to recover  its  reasonable  attorneys'  fees,  costs and  expenses in
addition to any other award.

     Section  8.9 No Third Party  Beneficiaries.  Nothing in this  Agreement  is
intended to create,  nor shall  anything in the Agreement be deemed to create or
have created, any third party beneficiary rights.

     Section 8.10  Construction.  Words importing the singular shall include the
plural and vice versa, and words importing a gender shall include other genders.
Whenever the context may require,  any pronoun shall  include the  corresponding
masculine,  feminine  or  neuter  form.  The  words  "include,"  "includes"  and
"including"  shall be deemed to be followed by the phrase "without  limitation."
The headings  contained in this Agreement are inserted for convenience  only and
shall not  constitute  a part hereof or affect any  interpretation  hereof.  All
references herein to articles,  sections,  and subsections shall be deemed to be
references to articles,  sections and  subsections of this Agreement  unless the
context shall  otherwise  require.  References in this  Agreement to any article
shall include all sections, subsections,  paragraphs in such article; references
in this Agreement to any section shall include all subsections and paragraphs in
such section;  and references in this Agreement to any subsection  shall include
all paragraphs in such subsection. The exhibits and attachments to the Schedules
form an integral part of the Schedules and are incorporated by reference for all
purposes as if set forth fully  therein.  This  Agreement  shall be construed in
accordance  with its fair  meaning and shall not be construed  strictly  against
either Party, without regard to which Party drafted this Agreement.

     Section  8.11  Consent to  Jurisdiction  and Related  Matters.  Each of the
Parties  hereby  irrevocably  and  unconditionally  submits,  for itself and its
property,  to the exclusive  jurisdiction of any Colorado State court or Federal
court sitting in the State of Colorado and any appellate court from any thereof,
in any action or proceeding  arising out of or relating to this Agreement or the
transactions  contemplated  hereby  or for  recognition  or  enforcement  of any
judgment  relating  thereto,  and each of the  Parties  hereby  irrevocably  and
unconditionally  agrees  that  all  claims  in  respect  of any such  action  or
proceeding  may be heard and  determined in such Colorado State court or, to the
extent permitted by law, in such Federal court.  Each of the Parties agrees that
a

                                       23
<PAGE>

final  judgment in any such action or proceeding  shall be conclusive and may be
enforced in other  jurisdictions  by suit on the judgment of in any other manner
provided by law.

     Each of the Parties hereby irrevocably and  unconditionally  waives, to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising out of or relating to this  Agreement or the  transactions  contemplated
hereby in the Federal  District Court for the District of Colorado.  Each of the
Parties hereby  irrevocably and  unconditionally  waives,  to the fullest extent
permitted by law, the defense of any  inconvenient  forum to the  maintenance of
such action or proceeding in any such court.

     Section 8.12 Notices. All notices and other communications  hereunder shall
be in  writing  and shall be deemed to have  been  duly  given  when  personally
delivered,  five (5) business days after mailing when mailed by certified  mail,
return  receipt  requested,  postage  pre-paid,  or one (1)  business  day after
sending via overnight courier service, or when receipt is confirmed when sent by
facsimile.  Such notices or other  communications shall be sent to the following
addresses, unless other addresses are subsequently specified in writing:

                  Buyer:
                  Leadville Mining and Milling Corporation
                  Leadville Mining and Milling Holding Corporation
                  76 Beaver Street, Suite 500
                  New York, New York 10005
                  Attention:  Director of Investor Relations
                  Fax No.:  (212) 344-5158
                  Tel. No.:  (212) 344-4537

                  Seller:
                  AngloGold North America Inc.
                  AngloGold (Jerritt Canyon) Corp.
                  5251 DTC Parkway, Suite 700
                  Englewood, CO 80111
                  Attention: Land Manager
                  Fax No.: (303) 889-0707
                  Tel. No.: (303) 889-0700

     Section 8.13 Governing Law; Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED
BY AND CONTROLLED AS TO ITS VALIDITY, ENFORCEMENT, INTERPRETATION, CONSTRUCTION,
EFFECT AND IN ALL OTHER  RESPECTS BY THE LAWS OF THE STATE OF COLORADO  (WITHOUT
GIVING  EFFECT TO ANY  CHOICE OR  CONFLICT  OF LAW  PROVISION  OR RULE  THEREOF)
APPLICABLE  TO CONTRACTS  MADE AND TO BE  PERFORMED IN THAT STATE.

     Section 8.14 Payments.  All currency amounts provided for in this Agreement
refer to the lawful  currency of the United States of America.  Any late payment
hereunder  shall be


                                       24
<PAGE>


subject  to  interest  calculated  from the date due  until  the date paid at an
interest  rate  equal  to two  percent  (2%)  above  the rate  charged  by Chase
Manhattan Bank, New York City, New York, to its best customers.

     Section 8.15 Savings Clause. Any right or option to acquire any interest in
real property under this  Agreement must be exercised,  if at all, so as to vest
such  interest in the  acquireror  within 21 years after the death of any of the
living children or grandchildren  of Robert F. Kennedy,  former Attorney General
of the United States.

     IN WITNESS WHEREOF,  the Parties have executed this Agreement  effective on
the date first above written.

                                  SELLER:

                                  ANGLOGOLD NORTH AMERICA INC.

                                  By:    /s/ Jim Konadina
                                         ---------------------------------------
                                  Name:      Jim Konadina
                                         ---------------------------------------
                                  Title:     CEO
                                         ---------------------------------------

                                  ANGLOGOLD (JERRITT CANYON)

                                  CORP.

                                  By:    /s/ Jim Konadina
                                         ---------------------------------------
                                  Name:      Jim Konadina
                                         ---------------------------------------
                                  Title:     President
                                         ---------------------------------------


                                       25
<PAGE>



                                  BUYER:

                                  LEADVILLE MINING & MILLING CORPORATION

                                  By:    /s/ Gifford A. Dieterle
                                         ---------------------------------------
                                  Name:      Gifford A. Dieterle
                                         ---------------------------------------
                                  Title:     President
                                         ---------------------------------------

                                  LEADVILLE MINING & MILLING HOLDING CORPORATION

                                  By:    /s/ Gifford A. Dieterle
                                         ---------------------------------------
                                  Name:      Gifford A. Dieterle
                                         ---------------------------------------
                                  Title:     President
                                         ---------------------------------------


                                       26
<PAGE>


                              SCHEDULE 1.1.2(b)(i)

                             Net Returns Calculation

     1.   Purchase Price Payment Measured by Net Returns

     As part of the Purchase Price,  assuming it exercises the Option,  Buyer or
Minera  Chanate  on  Buyer's  behalf  shall pay to Seller  pursuant  to  Section
1.1.2(b)(i)  an amount based upon a percentage of the Net Value (as  hereinafter
defined) of  Products  mined,  removed  and sold (or deemed sold as  hereinafter
described)  from the Property.  For purposes of this  Agreement:  (i) "Products"
shall mean Precious Metals and Other Products; (ii) "Precious Metals" shall mean
gold,  silver,  platinum and palladium in any form;  and (iii) "Other  Products"
shall mean all other  metallic and  non-metallic  minerals of every kind except:
(a) Precious Metals and (b) oil, gas,  casinghead gas and associated  liquid and
gaseous hydrocarbon substances.

     The payments of the Purchase  Price based on net smelter  returns  provided
for in Section  1.1.2(b)(i) of the Agreement  shall be based upon: (a) the value
of dore produced from ores and minerals  mined from the Property,  determined at
the Property or at such other facility producing such dore, sold or deemed sold,
determined  by  reference  to  published  prices for refined gold and silver and
other Precious Metals (as hereinafter  defined),  and (b) the value of all Other
Products produced from ores and minerals mined from the Property,  determined at
the Property or at such other facility  producing  such Product,  sold or deemed
sold, determined by reference to published prices for such Other Products all as
hereinafter  provided.  It is acknowledged that to the extent it is necessary to
process,  treat or upgrade  Precious  Metals or Other  Products at a location or
locations not on the Property before they are sold or deemed to be sold, then in
order to determine  the value of such Precious  Metals or Other  Products of the
Property or other facility producing dore or Other Products,  all costs incurred
or  deemed  to be  incurred  by Buyer or  Minera  Chanate  with  respect  to the
transporting, processing, treatment or upgrading of the Precious Metals or Other
Products  after they have been  processed  shall be deducted  from the  proceeds
received or deemed to be received by Buyer or Minera Chanate as hereinafter  set
forth.

     2.   Net Value and Related Definitions

     As used  herein,  "Net Value"  means the Gross Value of Precious  Metals or
Other  Products,   less  Allowable  Deductions.   As  used  herein,   "Allowable
Deductions"  means (i) with  respect to Precious  Metals all costs,  charges and
expenses paid or incurred by Producer  after  production of dore,  and (ii) with
respect to Other Products,  all costs,  charges and expenses paid or incurred by
Producer after production of concentrates, whether at the Property or elsewhere,
in either case for the transportation, processing, treatment or upgrading of the
dore or concentrates such costs, charges and expenses to include the following:

     (a) charges for treatment in the smelting and refining processes (including
handling,  processing,  interest  and  provisional  settlement  fees,  sampling,
assaying and representation costs, penalties and other processor deductions);

                                      -1-
<PAGE>

     (b) actual costs of transportation (including freight, insurance, security,
transaction taxes,  handling,  port,  demurrage,  delay, and forwarding expenses
incurred  by  reason  of or in the  course  of such  transportation)  of dore or
concentrates from the Property or other facility  producing dore or concentrates
to the place of additional treatment and to the place of sale;

     (c) actual sales and brokerage  costs of Precious  Metals or Other Products
for which are based on  proceeds  received by Buyer as  hereinafter  provided in
Section 3(d) below,  and an allowance for reasonable  sales and brokerage  costs
for refined Precious Metals  hereinafter  provided in Sections 3(a), (b) and (c)
below; and

     (d) all governmental royalties,  mining,  severance,  net proceeds or other
taxes or  assessments  attributable  to the production of ores and minerals from
the Property.

     As used herein,  "Producer"  means the  corporation or entity that produces
Products from the Property.

     3.   Gross Value and Related Definitions

     As used herein, "Gross Value" shall have the following meanings:

     (a) If  Producer  causes  refined  gold which  meets or  exceeds  generally
accepted commercial  standards for the sale of refined gold (it being understood
that the  specifications for refined gold published by the London Metal Exchange
presently meet such  standards) to be produced from ores and minerals mined from
the  Property  and, if Section  3(d) shall not be  applicable,  for  purposes of
determining  the payment due  Seller,  the refined  gold shall be deemed to have
been  sold at the  Monthly  Average  Gold  Price  for the  month in which it was
refined,  and the Gross Value shall be determined by multiplying Gold Production
during the calendar  month by the Monthly  Average  Gold Price.  As used in this
Agreement,  "Gold  Production" means the quantity of refined gold in troy ounces
outturned  to  Producer's  pool  account  (or to a  third-party  account for the
benefit  of  Producer)  by an  independent  third-party  refinery  from ores and
minerals  mined from the Property on either a  provisional  or final  settlement
basis each calendar  month. As used herein,  "Monthly  Average Gold Price" means
the average London Bullion Market  Association P.M. Gold Fix for a troy ounce of
refined  gold of a quality  that is equal to or less than the quality of refined
gold produced from the ores and minerals and meeting the standards applicable to
the  refined  gold for  which  the Gross  Value is to be  determined  hereunder,
calculated  by  dividing  the sum of all such prices  reported  for the month in
question by the number of days for which such prices were reported.

     If the London  Bullion  Market  Association  P.M. Gold Fix ceases or quotes
prices for refined gold of a quality that is greater than the quality of refined
gold  for  which  the  Gross  Value  is  being  determined  hereunder,  all such
references  shall be replaced with  references to prices of gold of a comparable
quality for immediate delivery in the most nearly comparable  established market
selected by Producer as such prices are  published in "Metals Week" or a similar
publication.


                                      -2-
<PAGE>

     (b) If Producer  causes  refined  silver  which meets or exceeds  generally
accepted  commercial  standards  for  the  sale  of  refined  silver  (it  being
understood  that the  specifications  for refined  silver  published  by Handy &
Harman  presently  meet such  standards)  to be produced  from ores and minerals
mined from the  Property  and,  if Section  3(d)  shall not be  applicable,  for
purposes of  determining  the payment due Seller,  the refined  silver  shall be
deemed to have been sold at the Monthly  Average  Silver  Price for the month in
which it was refined,  and the Gross Value shall be  determined  by  multiplying
Silver Production during the calendar month by the Monthly Average Silver Price.
As used herein, "Silver Production" means the quantity of refined silver in troy
ounces outturned to Producer's pool account (or to a third-party account for the
benefit  of  Producer)  by an  independent  third-party  refinery  from ores and
minerals  mined from the Property on either a  provisional  or final  settlement
basis each calendar month. As used herein,  "Monthly Average Silver Price" means
the  average New York Silver  Price as  published  daily by Handy & Harman for a
troy  ounce of  refined  silver of a  quality  that is equal to or less than the
quality  of refined  silver  produced  from the ores and  minerals  meeting  the
standards  applicable  to the refined  silver for which the Gross Value is to be
determined hereunder, calculated by dividing the sum of all such prices reported
for the  calendar  month in question by the number of days for which such prices
were reported.

     If the Handy & Harman  quotation ceases or quotes prices for refined silver
of a quality  that is greater  than the quality of refined  silver for which the
Gross Value is being determined hereunder, all such references shall be replaced
with  references  to  prices of silver of a  comparable  quality  for  immediate
delivery in the most nearly comparable  established  market selected by Producer
as published in "Metals Week" or a similar publication.

     (c) If Producer  causes refined or processed  Precious  Metals,  other than
refined gold and refined silver,  which meet or exceed commercial  standards for
the sale of such Precious Metals, or refined or processed Other Products,  to be
produced  from ores and minerals  mined from the  Property,  and if Section 3(d)
shall not be  applicable,  for purposes of  determining  the Gross Value of such
Precious  Metals  (other than  refined  gold and  refined  silver) or refined or
processed Other Products  hereunder,  the same shall be deemed to have been sold
at the  Monthly  Average  Metal Price for the same for the month in which it was
refined, and the Gross Value shall be determined by multiplying Metal Production
of the same during the calendar month by the Monthly Average Metal Price for the
same.  As used herein,  "Metal  Production"  means the quantity of such Precious
Metals  (other than  refined  gold and refined  silver) or refined or  processed
Other Products in standard commercial units outturned to Producer's pool account
(or to a  third-party  account for the benefit of  Producer)  by an  independent
third-party  refinery from ores and minerals mined from the Property on either a
provisional  or final  settlement  basis each  calendar  month.  As used herein,
"Monthly Average Metal Price" means the price for each such standard  commercial
unit of such  Precious  Metals  (other than refined gold and refined  silver) or
refined or processed  Other  Products for immediate  delivery in an  established
market  selected by Producer as such price is  published  in "Metals  Week" or a
similar publication.

     (d) If  Producer  sells raw ores of  Precious  Metals or Other  Products or
concentrates  or dore  produced  from  such  ores and  minerals  mined  from the
Property, then the Gross Value shall be calculated as set forth in Section 3(a),
(b) and (c), except that Gold Production,  Silver Production or Metal Production
shall,  in each case,  be equal to the amount of


                                      -3-
<PAGE>


gold,  silver,  other Precious  Metals and Other Products  contained in such raw
ores,  concentrates  or dore sold in the specified  month  multiplied by (i) the
recovery rate for such gold,  silver,  other Precious  Metals and Other Products
contractually determined between Producer and a third party processor or (ii) if
there  is not a  specifically  contracted  recovery  rate,  then  by an  assumed
recovery rate equal to the average actual recovery rate  experienced by Producer
from the  beneficiation of such ores and minerals for such gold,  silver,  other
Precious Metals and Other Products for the latest  calendar  quarter ended prior
to such  month.  In the  event  that  such  ores and  minerals  have not been so
beneficiated  by Producer  during any such calendar  quarter,  the recovery rate
shall be the actual recovery rate  experienced by the purchaser of such ores and
minerals determined in good faith by Producer.

     (e)  Where  outturn  of  Precious  Metals or Other  Products  is made by an
independent  third-party  refinery on a provisional basis, the Gross Value shall
be based upon the amount of such provisional  settlement,  but shall be adjusted
in subsequent  statements  to account for the amount of such Precious  Metals or
Other Products established by final settlement by such refinery.

     4.   Forward Sales

     Seller  acknowledges  that  Producer  shall  have  the  right  (but not the
obligation)  to market and sell or refrain from selling  Products mined from the
Property  in  any  manner  it may  elect.  Accordingly,  Gross  Value  shall  be
determined as provided in Section 3 of this Schedule  irrespective of any actual
selling arrangements entered into by Producer,  specifically including,  but not
limited to, forward sales, futures trading or commodity options trading, and any
other price hedging,  price  protection and speculative  arrangements  which may
involve the possible  delivery of ores and minerals and Precious Metals or Other
Products  produced from ores and minerals  mined from the  Property,  and Seller
shall have neither the right nor the  obligation  to  participate  in any way in
profits or losses arising from the same.

     5.   Measurement of Products

     All ores and minerals  mined from the Property shall be weighed or measured
and sampled in accordance with sound mining and metallurgical  practices,  after
which Producer may mix or commingle such ores and minerals,  Precious  Metals or
Other  Products  mined  from the  Property  with  ores or other  materials  from
properties other than the Property.

     6.   Payment

     Net Value shall be determined on a calendar month basis. The payment of the
Purchase  Price  measured by such Net Value shall be made to Seller on or before
the tenth business day following the last day of each calendar  quarter.  At the
time of  payment,  Buyer  shall  deliver  to  Seller  a  statement  showing,  in
reasonable  detail,  the quantities and grades of the refined  Precious  Metals,
dore,  concentrates,  Other  Products or ores and minerals  produced and sold or
deemed to be sold by  Producer in the  preceding  quarter;  the Average  Monthly
Price  determined,  as herein  provided,  for refined  Precious Metals and Other
Products on which the payment is due; Allowable Deductions;  and other pertinent
information,  in reasonable  detail,  to explain the


                                      -4-
<PAGE>

calculation  of the payment with respect to each month in such quarter.  Payment
to Seller  shall be made in cash or by  check,  or upon 48 hours  prior  written
notice from Seller,  by wire transfer to the account specified by Seller in such
notice. In the event a payment is not due for any quarter, Producer shall not be
required to provide Seller with any statement hereunder.

     Such  quarterly  statement  shall also list the quantity and quality of any
Precious  Metals dore in  inventory,  if any, for more than ninety (90) days. No
payment shall be due with respect to ores and minerals, Precious Metals or Other
Products  mined from the Property or stockpiles of the same unless and until the
same are actually sold or deemed sold as expressly set for the above.

     7.   Assignment of Payments

     Seller may transfer,  pledge, mortgage, charge or otherwise encumber all or
any part of its right,  title and  interest  in and to the  payments  to be made
pursuant to Section 1.1.2; provided, however, that Buyer or Minera Chanate shall
be under no  obligation  to make its payments  hereunder  to any such  assignee,
transferee, pledgee or other third party until Buyer's receipt of written notice
concerning  the transfer,  pledge,  mortgage,  charge or other  encumbrance  and
provided  further that in no event shall Buyer or Minera Chanate be obligated to
deliver payment or notices pursuant to this Agreement to more than one entity or
location.

     8.   No Covenants

     The Parties agree that in no event,  whether arising from Buyer's agreement
to pay a portion of the Purchase  Price to Seller based upon a percentage of the
Net Value of Products  mined,  removed and sold from the Property or  otherwise,
shall Buyer or Minera Chanate have any duty or  obligation,  express or implied,
to explore for,  develop,  mine or produce  ores,  minerals or Products from the
Property,  and the  timing,  manner,  method and  amounts  of such  exploration,
development,  mining or production,  if any, shall be in the sole  discretion of
Buyer or Minera Chanate.


                                      -5-
<PAGE>


                              SCHEDULE 1.1.2(b)(ii)

                             Net Profits Calculation

     1.   Purchase Price Payment Measured by Net Profits

     As part of the Purchase Price,  assuming Buyer exercises the Option,  Buyer
or Minera  Chanate on Buyer's  behalf  shall pay to Seller  pursuant  to Section
1.1.2(b)(ii)  an  amount  equal  to ten  percent  (10%) of the Net  Profits  (as
hereafter  defined) from  operations of the Property on the terms and conditions
specified in this Schedule.

     2.   Net Profits Definition

     As used herein, "Net Profits" for any Year means Gross Proceeds accrued for
that Year less the sum of: (i)  Operating  Costs  incurred  or accrued  for that
Year, (ii) the  Exploration  and Development  Charge incurred or accrued in that
Year, and (iii) the aggregate amount, if any, of the unrecovered  Operating Loss
from any prior Year or Years.

     3.   Payback Definition.

     As used herein,  "Payback" means the first day of the first month following
the  month in which  Buyer or  Minera  Chanate  has  received  cumulative  Gross
Proceeds  in an amount  equal to all of their  collective  costs,  expenses  and
capital expenditures  (including Operating Costs and Exploration and Development
Expenditures)   incurred  in  the   exploration  and  development  of,  and  the
construction of facilities and acquisition of equipment in preparation of mining
and  processing  metals,  minerals  products and minerals  from,  the  Property,
incurred  or  expended  from the  Effective  Date of the  Agreement  through the
Commencement  of  Commercial   Production,   including  without  limitation  the
applicable Overhead Charge.

     (a) Net Profits  Interest Payable Prior to Payback.  Prior to Payback,  the
percentage of Net Profits  payable to Seller as a portion of the Purchase  Price
shall be calculated based on the average London Bullion Market  Association P.M.
Gold Fix for a troy ounce of refined  gold of a quality that is equal to or less
than the quality of refined gold produced from the ores and minerals and meeting
the standards  applicable to the refined gold for which Gross Proceeds are to be
determined hereunder, calculated by dividing the sum of all such prices reported
for the Year in  question  by the  number of days for  which  such  prices  were
reported  (the  "Yearly  Average  Gold  Price"),  as follows:  (i) if the Yearly
Average Gold Price is less than US$300/oz.,  eighty percent (80%) of Net Profits
shall  be  dedicated  to the  recoupment  by  Buyer or  Minera  Chanate  of such
unreimbursed  expenses  as have been  incurred  or accrued by Minera  Chanate or
Buyer for the benefit of the Property,  from and after the Effective Date of the
Agreement,  and Seller shall  receive a pro rata portion of ten percent (10%) of
twenty percent (20%) (two percent of one hundred  percent) of Net Profits;  (ii)
if the Yearly  Average Gold Price is between  US$300 and US$350,  fifty  percent
(50%) of Net Profits  shall be  dedicated to the  recoupment  by Buyer or Minera
Chanate of such unreimbursed expenses as have been incurred or accrued by Minera
Chanate or Buyer for the benefit of the  Property  from and after the  Effective
Date of the  Agreement,  and  Seller  shall  receive a pro rata  portion  of ten
percent (10%) of fifty  percent  (50%) (five percent of one hundred  percent) of
Net  Profits;  and (iii) if the Yearly


                                      -1-
<PAGE>


Average  Gold Price is greater  than US $350/oz.,  twenty  percent  (20%) of Net
Profits shall be dedicated to the  recoupment by Buyer or Minera Chanate of such
unreimbursed  expenses  as have been  incurred  or accrued by Minera  Chanate or
Buyer for the benefit of the Property from and after the  Effective  Date of the
Agreement,  and Seller shall  receive a pro rata portion of ten percent (10%) of
eighty percent (80%) (eight percent of one hundred percent) of Net Profits.

     (b) Net Profits Interest Payable after Payback. After Payback, Seller shall
be  entitled  to receive an amount  equal to ten  percent  (10%) of one  hundred
percent (100%) of the Net Profits.

     4.   Gross Proceeds Definition

     As used herein,  "Gross Proceeds" shall have the following meanings for the
following categories of metals, minerals products and minerals produced and sold
by Buyer or Minera Chanate (collectively, "Producer"):

     (a) If  Producer  causes  refined  gold which  meets or  exceeds  generally
accepted commercial  standards for the sale of refined gold (it being understood
that the  specifications for refined gold published by the London Metal Exchange
presently meet such  standards) to be produced from ores and minerals mined from
the  Property  and, if Section  3(d) shall not be  applicable,  for  purposes of
determining  the payment due  Seller,  the refined  gold shall be deemed to have
been  sold at the  Monthly  Average  Gold  Price  for the  month in which it was
refined,  and the  Gross  Proceeds  shall  be  determined  by  multiplying  Gold
Production  during the calendar month by the Monthly Average Gold Price. As used
in this Agreement,  "Gold Production" means the quantity of refined gold in troy
ounces outturned to Producer's pool account (or to a third-party account for the
benefit  of  Producer)  by an  independent  third-party  refinery  from ores and
minerals  mined from the Property on either a  provisional  or final  settlement
basis each calendar  month. As used herein,  "Monthly  Average Gold Price" means
the average London Bullion Market  Association P.M. Gold Fix for a troy ounce of
refined  gold of a quality  that is equal to or less than the quality of refined
gold produced from the ores and minerals and meeting the standards applicable to
the refined gold for which the Gross  Proceeds are to be  determined  hereunder,
calculated  by  dividing  the sum of all such prices  reported  for the month in
question by the number of days for which such prices were reported.

     If the London  Bullion  Market  Association  P.M. Gold Fix ceases or quotes
prices for refined gold of a quality that is greater than the quality of refined
gold for which the Gross  Proceeds  are  being  determined  hereunder,  all such
references  shall be replaced with  references to prices of gold of a comparable
quality for immediate delivery in the most nearly comparable  established market
selected by Producer as such prices are  published in "Metals Week" or a similar
publication.

     (b) If Producer  causes  refined  silver  which meets or exceeds  generally
accepted  commercial  standards  for  the  sale  of  refined  silver  (it  being
understood  that the  specifications  for refined  silver  published  by Handy &
Harman  presently  meet such  standards)  to be produced  from ores and minerals
mined from the  Property  and,  if Section  3(d)  shall not be  applicable,  for
purposes of  determining  the payment due Seller,  the refined  silver  shall be
deemed


                                      -2-
<PAGE>


to have been sold at the Monthly  Average Silver Price for the month in which it
was refined,  and the Gross Proceeds  shall be determined by multiplying  Silver
Production  during the calendar month by the Monthly  Average  Silver Price.  As
used herein,  "Silver  Production"  means the quantity of refined silver in troy
ounces outturned to Producer's pool account (or to a third-party account for the
benefit  of  Producer)  by an  independent  third-party  refinery  from ores and
minerals  mined from the Property on either a  provisional  or final  settlement
basis each calendar month. As used herein,  "Monthly Average Silver Price" means
the  average New York Silver  Price as  published  daily by Handy & Harman for a
troy  ounce of  refined  silver of a  quality  that is equal to or less than the
quality  of refined  silver  produced  from the ores and  minerals  meeting  the
standards  applicable to the refined  silver for which the Gross Proceeds are to
be  determined  hereunder,  calculated  by  dividing  the sum of all such prices
reported for the calendar month in question by the number of days for which such
prices were reported.

     If the Handy & Harman  quotation ceases or quotes prices for refined silver
of a quality  that is greater  than the quality of refined  silver for which the
Gross  Proceeds is being  determined  hereunder,  all such  references  shall be
replaced  with  references  to  prices of silver  of a  comparable  quality  for
immediate delivery in the most nearly comparable  established market selected by
Producer as published in "Metals Week" or a similar publication.

     (c) If Producer  causes refined or processed  Precious  Metals,  other than
refined gold and refined silver, which meets or exceeds commercial standards for
the sale of such Precious Metals, or refined or processed Other Products,  to be
produced  from ores and minerals  mined from the  Property,  and if Section 3(d)
shall not be applicable,  for purposes of determining the Gross Proceeds of such
Precious  Metals  (other than  refined  gold and  refined  silver) or refined or
processed Other Products  hereunder,  the same shall be deemed to have been sold
at the  Monthly  Average  Metal Price for the same for the month in which it was
refined,  and the  Gross  Proceeds  shall be  determined  by  multiplying  Metal
Production  of the same during the calendar  month by the Monthly  Average Price
for the same.  As used  herein,  "Metal  Production"  means the quantity of such
Precious  Metals  (other than  refined  gold and  refined  silver) or refined or
processed  Other Products in standard  commercial  units outturned to Producer's
pool  account  (or to a  third-party  account  for the benefit of Producer by an
independent  third-party refinery from ores and minerals mined from the Property
on either a provisional or final  settlement  basis each calendar month. As used
herein,  "Monthly  Average  Metal Price" means the price for each such  standard
commercial  unit of such  Precious  Metals  (other than refined gold and refined
silver) or refined or  processed  Other  Products for  immediate  delivery in an
established  market  selected by Producer as such price is  published in "Metals
Week" or a similar publication.

     (d) If  Producer  sells raw ores of  Precious  Metals or Other  Products or
concentrates  or dore  produced  from  such  ores and  minerals  mined  from the
Property,  then the Gross  Proceeds  shall be calculated as set forth in Section
3(a),  (b) and (c),  except that Gold  Production,  Silver  Production  or Metal
Production  shall, in each case, be equal to the amount of gold,  silver,  other
Precious Metals and Other Products  contained in such raw ores,  concentrates or
dore sold in the  specified  month  multiplied by (i) the recovery rate for such
gold, silver, other Precious Metals and Other Products contractually  determined
between  Producer  and a  third  party  processor  or  (ii)  if  there  is not a
specifically contracted recovery rate, then by an assumed recovery rate equal to
the average actual recovery rate experienced by Producer from the


                                      -3-
<PAGE>

beneficiation  of such ores and minerals for such gold,  silver,  other Precious
Metals and Other  Products for the latest  calendar  quarter ended prior to such
month. In the event that such ores and minerals have not been so beneficiated by
Producer during any such calendar quarter, the recovery rate shall be the actual
recovery rate experienced by the purchaser of such ores and minerals  determined
in good faith by Producer.

     (e)  Where  outturn  of  Precious  Metals or Other  Products  is made by an
independent  third-party  refinery on a provisional  basis,  the Gross  Proceeds
shall be based  upon the  amount of such  provisional  settlement,  but shall be
adjusted in  subsequent  statements  to account for the amount of such  Precious
Metals or Other Products established by final settlement by such refinery.

     (f) Seller  acknowledges  that  Producer  shall have the right (but not the
obligation)  to market and sell or refrain from selling  Products mined from the
Property  in any  manner it may  elect.  Accordingly,  Gross  Proceeds  shall be
determined as provided in Section 3 of this Schedule  irrespective of any actual
selling arrangements entered into by Producer,  specifically including,  but not
limited to, forward sales, futures trading or commodity options trading, and any
other price hedging,  price  protection and speculative  arrangements  which may
involve the possible  delivery of ores and minerals and Precious Metals or Other
Products  produced from ores and minerals  mined from the  Property,  and Seller
shall have neither the right nor the  obligation  to  participate  in any way in
profits or losses arising from the same.

     5.   Operating Costs and Related Definitions

     As used  herein,  "Operating  Costs"  shall  mean the sum of Mining  Costs,
Milling and Processing  Costs,  General and  Administrative  Costs,  Selling and
Delivery Costs, Interest, and Taxes.

     As used herein,  "Mining  Costs"  shall mean costs and expenses  accrued or
incurred in accordance with generally accepted  accounting  principles by Minera
Chanate or Buyer after Commencement of Commercial  Production (as defined below)
in exploring for, developing, mining, extracting,  removing, and transporting to
the Mill (as  hereinafter  defined) or other  processing  site,  including  heap
leaching  sites,  ores or minerals  produced from the  Property.  Such costs and
expenses shall include, without limitation,  those incurred for labor (including
salaries, wages, costs and benefits),  machinery operation, fuel, explosives and
other  materials,   exploration  drilling,   developmental  or  ore  delineation
drilling,  depreciation  and  amortization  of mining  equipment  and  machinery
acquired (or altered or modified) after  Commencement of Commercial  Production,
and a reasonable allowance for future costs anticipated to be incurred by Minera
Chanate or Buyer in reclaiming the Property in accordance with applicable  laws,
regulations and agreements.  Mining Costs shall not include  depletion or income
taxes.

     As used  herein,  "Milling  and  Processing  Costs"  shall  mean  costs and
expenses incurred after Commencement of Commercial  Production by Minera Chanate
or Buyer in milling,  treating or processing ores and minerals produced from the
Property at  processing  and treatment  sites,  including  heap leaching  sites,
and/or at Producer's mill or central processing facility utilized by Producer to
process ores and minerals produced from the Property (hereinafter referred to as


                                      -4-
<PAGE>


the "Mill"),  if any. The Producer shall be entitled to depreciation of Mill and
other processing and treatment  facilities and equipment acquired (or altered or
modified) after  Commencement of Commercial  Production;  capital costs incurred
prior to the  Commencement  of Commercial  Production  are subject to recoupment
under the definition of  "Exploration  and Development  Expenditures"  set forth
below.  "Milling and Processing Costs" shall also include all costs, charges and
expenses paid or incurred by Minera  Chanate or Buyer,  as the case may be, with
respect to such  products for  treatment in the smelting and refining  processes
(including  handling,  processing,  interest,  and provisional  settlement fees,
representation costs, penalties, and other processor deductions);  and sales and
brokerage  costs  and  actual  costs  of  transportation   (including   freight,
insurance,  transaction taxes, handling, port, demurrage,  delay, and forwarding
expenses incurred by reason of or in the course of such transportation) of ores,
minerals,  concentrates  or other  products  from the  Property  to the place of
treatment and then to the place of sale.

     As used  herein,  "General and  Administrative  Costs" shall mean costs and
expenses  incurred by Minera  Chanate or Buyer and  reasonably  allocable to the
administration  of  the  Property  and  the  production  of  ores  and  minerals
therefrom, including the lesser of (a) an additional five percent (5%) charge or
(b) Producer's actual overhead costs as an allowance for overhead (the "Overhead
Charge"),  but not including any general and administrative  costs incurred with
respect to operations of Producer or its affiliates not directly  related to the
administration  of the  Property  or to the  production  of  ores  and  minerals
therefrom.  General and Administrative Costs shall include,  without limitation,
insurance costs,  contract services and consulting  expenses,  costs incurred in
connection with environmental and project  permitting and compliance,  including
costs of acquiring and maintaining bonds, the accrual of a cash reserve equal to
three (3) months'  cash  outlays as budgeted,  legal,  auditing  and  regulatory
costs,  expenses,  liabilities  and  charges  incurred  in  connection  with  or
resulting from matters arising out of operations on the Property or as necessary
to protect the  interests of Producer and Seller in the  Property,  all costs of
acquisition  of  surface  rights  used  in  connection  with  mining,   milling,
processing,  treatment and other  operations  conducted in  connection  with the
Property,  all  costs  payable  to  any  governmental  agency  to  maintain  the
Concessions,  and any and all advance royalties,  production royalties, or other
payments of any nature whatsoever payable to third parties, including to Seller,
having an interest in the Property.

     As used herein,  "Selling and Delivery Costs" shall mean costs and expenses
incurred by Minera  Chanate or Buyer in or in  connection  with the marketing of
ores and  minerals  from the Property and the delivery of such ores and minerals
to points of ultimate delivery to customers.

     As used herein,  "Interest" shall mean any interest cost actually  incurred
in any bona fide financing  transaction  directly  related to the development or
operation of, or the  acquisition of equipment in connection with operations on,
the  Property,  as well as costs  (such as  lender's  commitment  or facility or
attorneys'  fees) actually  incurred in connection with such  financing.  In the
event that such a financing  transaction  is with an affiliate of Producer,  the
terms  of  such  transaction  shall  provide  for  a  reasonable   reduction  of
outstanding  indebtedness  and shall not be less  favorable to Minera Chanate or
Buyer  than that  which  would have been  applicable  with  respect to a similar
financing  transaction with an unaffiliated third party and, in any event, at an
interest rate not greater than two percentage points higher than that charged by
Chase


                                      -5-
<PAGE>


Manhattan Bank,  N.A., New York, New York,  with respect to short-term  loans to
its most  preferred  commercial  customers  (commonly  referred to as the "prime
rate").

     As used herein,  "Taxes" shall mean all taxes levied against  operations on
the Property and/or levied against the Property,  excluding income taxes imposed
upon profits,  but including  government royalties and mining, and severance and
net proceeds taxes.

     Where any Operating Costs are incurred with respect to the mining, milling,
processing,  selling,  or  delivering  of ores and  minerals  produced  from the
Property  in  conjunction  with the mining,  milling,  processing,  selling,  or
delivering  of ores and minerals  produced from other  properties  controlled by
Buyer or Minera Chanate, such Operating Costs shall be allocated and apportioned
in accordance with generally accepted practices in the mining industry.

     6.   Exploration and Development Charge Definition

     As used herein, "Exploration and Development Charge" shall mean in any Year
a proportion  of total  Exploration  and  Development  Expenditures  incurred or
accrued  to date  determined  by  amortization  on a unit of  production  basis,
according to generally accepted accounting principles.

     "Exploration and Development  Expenditures"  shall mean the total costs and
expenses  incurred  by  Minera  Chanate  or Buyer  with  respect  to  examining,
exploring,  and  developing  the Property and all other rights and  interests in
surface and mineral property and all matters connected  therewith incurred after
the  Effective  Date,  and  prior  to  Commencement  of  Commercial  Production,
including,  without limitation,  costs and expenses incurred with respect to the
construction  of processing  and treatment  facilities,  including heap leaching
facilities, and of the Mill (if any) or related facilities,  together with costs
and  expenses  relating to  geological,  geochemical  and  geophysical  studies,
feasibility  studies,  exploration  and  developmental  drilling,  sampling  and
assaying,  mine  design and  development,  the cost of any mining  equipment  or
machinery purchased prior to Commencement of Commercial  Production,  compliance
with  environmental  and regulatory  requirements  (including  attorneys' fees),
pre-production stripping, the construction of roads connecting the Property to a
central road system,  and any other costs or expenses which would be included in
the definition of Mining Costs and/or Milling and Processing Costs if such costs
or expenses are incurred after Commencement of Commercial Production.  It is the
intention of the Parties that, in  calculating  Net Profits,  Producer  shall be
limited to a single  recovery of capital either by recoupment of Exploration and
Development  Expenditures  through the Exploration and Development  Charge or by
depreciation  of capital costs included  within the  definitions of Mining Costs
and/or Milling and  Processing  Costs.  If the costs and expenses  incurred with
respect to construction of processing and treatment  facilities,  including heap
leaching  facilities,  and of  the  Mill  (if  any)  or  other  Exploration  and
Development  Expenditures  benefit the  development of other mineral  properties
controlled by Producer,  such Exploration and Development  Expenditures shall be
allocated and  apportioned by Producer,  as the case may be, in accordance  with
generally-accepted  accounting  principles as applied in the mining industry for
the purpose of computing the NPI Payments pursuant to the terms hereof.


                                      -6-
<PAGE>

     7.   Operating Losses and Related Definitions

     As used herein, "Operating Loss" in any Year means the excess of the sum of
Operating Costs and the Exploration and Development  Charge incurred and accrued
in that Year over Gross Proceeds accrued in that Year.

     As used herein,  "Year" or "Years" shall mean a calendar  year, but for the
first Year shall begin at the Commencement of Commercial Production.

     As used herein,  "Commencement of Commercial Production" shall occur when a
mine  and  processing   facilities  have  been  constructed  upon  the  Property
substantially  in accordance with the feasibility  study upon which a production
decision was based, and all development activities pertaining to the development
of a mine on the Property,  including,  without  limitation,  pre-stripping  and
operational and environmental permitting,  have been completed, and the operator
of the mine has milled or  otherwise  processed  ore mined and removed  from the
Property for a start-up period of not less than ninety (90)  consecutive days at
a rate of not less than  seventy-five  percent (75%) of the designed capacity of
the processing facilities for the mine.

     8.   Payment

     The payment of the portion of the  Purchase  Price due  pursuant to Section
1.1.2(b)(ii) shall be made on an annual basis sixty (60) days following the last
day of the Year in which the same accrued.  Such payments shall be made by check
and shall be accompanied by a settlement sheet showing in reasonable  detail the
quantities  and  grades of the  refined  metals,  dore,  concentrates,  or other
mineral  products  sold or deemed  sold by Producer  in the  preceding  calendar
quarter;  the average  monthly price  determined as herein  provided for refined
metals on which such  payments are due; the proceeds of sale,  costs,  and other
deductions;  and other pertinent information in sufficient detail to explain the
calculation of the payment.

     9.   No Covenants

     The parties agree that in no event,  whether arising from Buyer's agreement
to pay a portion of the Purchase  Price to Seller from ten percent  (10%) of Net
Profits or otherwise, shall Minera Chanate or Buyer have any duty or obligation,
express or implied,  to explore for, develop,  mine or produce ores, minerals or
Products from the Property,  and the timing,  manner, method and amounts of such
exploration,  development,  mining or  production,  if any, shall be in the sole
discretion of Minera Chanate or Buyer.


                                      -7-
<PAGE>


                                 SCHEDULE 2.2.10
                              Financial Statements


<PAGE>




                            Minera Chanate, S. A. de
                            C.V.

                            Financial Statements for the year ended December
                            31, 1998 and for the Period from September 17
                            (Date of Establishment) to December 31, 1997, and
                            Independent Auditors' Report



                                    1 OF 11
<PAGE>


Deloitte &
      Touche            --------------------------------------------------------
      [LOGO]            Galaz, Gomez Morfin,         TeIefono: (52) 52-83-77-77
                        Chavero, Yamazaki, S.C.      Fax: (52) 52-83-76-00
                        Jaime Balmes No. 11          www.deloate.com.mx
                        Edificio B, Polanco
                        11510 Mexico, D.F.

INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders of
 Minera Chanate, S. A. de C. V.:

We have audited the accompanying balance sheet of Minera Chanate, S. A. de C. V.
as of  December  31, 1998 and 1997 ,and the related  statements  of  operations,
changes in stockholders'  equity and changes in financial  position for the year
ended December 31, 1998 and period from September 17 (date of  establishment) to
December 31, 1997, all expressed in Mexican pesos.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audit.

Except as  mentioned  in the  following  paragraph,  we  conducted  our audit in
accordance with auditing standards generally accepted in Mexico. Those standards
require  that we plan and  perform  the audit to obtain a  reasonable  assurance
about whether the financial  statements  are free of material  misstatement  and
that they are  prepared  in  accordance  with  accounting  principles  generally
accepted in Mexico.  An audit  includes  examining,  on a test  basis,  evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management  as well  as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

We were unable to verify the  determination  of the  revaluation of land and its
effect on the revaluation surplus arising from the split mentioned in Note 2. As
a result, we were unable to obtain sufficient  evidence to express an opinion on
said balance at December 31, 1998 and 1997.

As mentioned in Note 1, the accompanying  financial  statements do not recognize
the effects of  inflation in financial  information,  as required by  accounting
principles  generally accepted in Mexico.  These effects are material due to the
amount and aging of  nonmonetary  assets,  stockholders'  equity and the average
monetary position maintained during the Company's existence.

As mentioned in Note 1 to the financial  statements  for the year ended December
31, 1998, the Company had a loss of $ 32,655,758 ; furthermore,  at that date it
has an accrued deficit of $167,331,046.  In addition, the Company has lost, more
than two-thirds of its common stock which, in accordance with the Mexican, could
give cause for early  dissolution of the entity at the request of any interested
third party.  These  factors,  among  others,  indicate  that the Company may be
unable to  continue  operations.  The  financial  statements  do not include any
adjustment  related  to the  valuation  and  classification  of  assets  and the
classification  and  amount of  liabilities,  which  might be  necessary  if the
Company were unable to continue as a going concern.

Deloitte Touche
Tohmatsu


                                    2 of 11
<PAGE>




Due to the limited scope of our work, as mentioned in paragraph  three,  and the
importance  of failure  to  recognize  the  effects of  inflation  in  financial
information, as explained in the preceding paragraph, we refrain from expressing
an opinion on the  financial  statements  of Minera  Chanate,  S. A. de C. V. at
December 31, 1998, take as a whole.



/s/ C.P. Jorge Lopez Rodrigo
-----------------------------
C.P. Jorge Lopez Rodrigo

July 16, 1999



                                    3 of 11

<PAGE>



MINERA CHANATE, S. A. DE C. V.

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM SEPTEMBER 17 (DATE OF
ESTABLISHMENT) TO DECEMBER 31,1997
--------------------------------------------------------------------------------


                                          1998                       1997

OPERATING EXPENSES                     $1,668,887                $    2,846

EXCHANGE LOSS                          30,986,916                 5,040,756

OTHER INCOME                                   45                     --
                                      -----------                ----------
NET LOSS                              $32,655,758                $5,943,602
                                      ===========                ==========

See accompanying notes to financial statements.


                                    4 of 11
<PAGE>


MINERA CHANATE, S.A. DE C. V.

BALANCE SHEET
DECEMBER 31, 1998 AND 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

ASSETS                                                        1998                1997
<S>                                                             <C>                <C>
CURRENT ASSETS:
  Cash                                                    $      3,172        $     10,498
  Exploration y Mineria
     Independencia, S.A. de C.V. Affiliate                       --              1,661,750
  Recoverable value added tax                                      703                --
                                                          ------------        ------------
       Total current assets                                      3,875           1,672,248

LAND  (Note 2)                                             160,000,000         160,000,000
                                                          ------------        ------------
TOTAL                                                     $160,003,875        $161,672,248
                                                          ============        ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Income tax                                              $        469        $       --

LONG-TERM DEBT
  Independence Mining Co. Inc. - Holding company           167,736,472         136,749,556
                                                          ------------        ------------

  Total Liabilities                                        167,736,941         136,749,556
                                                          ------------        ------------

STOCKHOLDERS' EQUITY (Note 3);
  Commmon stock                                              4,850,000           4,850,000
  Deficit                                                 (167,331,046)       (134,675,288)
  Revaluation surplus                                      154,747,980         154,747,980
                                                          ------------        ------------
    Total stockholders' equity                               7,733,066          24,922,692
                                                          ------------        ------------
TOTAL                                                     $160,003,875        $161,672,248
                                                          ============        ============

See accompanying notes to financial statements.

</TABLE>


                                    5 of 11
<PAGE>



MINERA CHANATE, S. A. DE C. V.

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Notes I and 4)
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM SEPTEMBER 17 (DATE OF
ESTABLISHMENT) TO DECEMBER 31, 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                    Total
                            Common                              Revolution        Stockholders'
                            Stock            Deficit              Surplus            Equity
<S>                         <C>              <C>                <C>               <C>
OPENING BALANCE
      AFTER SPLIT           $4,850,000       $129,631,686)      $154,747,980      $29,966,294

     Net loss                                  (5,043,602                          (5,043,602)
                            ----------       -------------      ------------      -----------
BALANCE, DECEMBER
      31, 1997              $4850,000        $(134,675,288)     $154,747,980      $24,922,692

      Net loss                                 (32,655,758                        (32,655,758)
                            ----------       -------------      ------------      -----------
BALANCE, DECEMBER
      31, 1998              $4,850,000       $(167,331,046)     $154,747,980      $(7,733,066)
                            ==========       =============      ============      ===========
</TABLE>

See accompanying notes to financial statements.


                                    6 of 11
<PAGE>


MINERA CHANATE, S. A. DE C. V.

STATEMENT OF CHANGES IN FINANCIAL POSITION
YEAR ENDED DECEMBER 31, 1998 AND PERIOD FROM SEPTEMBER 17 (DATE OF
ESTABLISHMENT) TO DECEMBER 31, 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                    1998                 1997
<S>                                                             <C>                  <C>
OPERATING ACTIVITIES:
Net loss                                                        $ (32,655,758)       $(5,043,602)

Changes in current assets and liabilities:
     Exploracion y Mineria Independencia - Affiliate                1,661,750         (1,661,750
     Recoverable value added tax                                         (703)             --
     Income tax                                                           469              --
     Independence Mining Co, Inc. - Holding company                30,986,916        136,749,556
                                                                 -------------      ------------
          Net resources provided by operating activities               (7,326)       130,044,204

FINANCING ACTIVITIES:
       Split of common stock                                             --           29,966,294


INVESTING ACTIVITIES:                                                    --         (160,000,000)
                                                                 -------------      ------------
       Split of fixed assets - Net

CASH
(Decrease) increase                                                    (7,326)            10,498
Beginning of year                                                      10,498              --
                                                                 -------------      ------------

End of year                                                      $      3,172       $     10,498
                                                                 ============       ============

</TABLE>



                                    7 of 11

See accompanying notes to financial statements.



<PAGE>


MINERA CHANATE, S. A. DE C. V.

NOTES TO FINANCIAL STATEMENTS
PERIOD FROM SEPTEMBER 17 (DATE OF ESTABLISHMENT TO DECEMBER 31 1998
--------------------------------------------------------------------------------


1.   GOING CONCERN

     The financial statements have been prepared on a going concern basis, which
     in considers the  realization  of assets and  liquidation of liabilities in
     the ordinary  course of business,  and does not include any  adjustment for
     the  recovery  and  classification  of assets and  liabilities  which might
     result from this uncertainty.  As presented in the financial  statements at
     December  31,  1998,  the Company has an accrued  deficit of  $167,331,046,
     total liabilities  exceed current assets by $167,333,066,  and a deficiency
     in stockholders'  equity of $7,733,066.  Furthermore,  the Company has lost
     more has  two-thirds of its common  stock,  which,  in accordance  with the
     Mexican Law,  this could give cause for the early  disolution of the entity
     at the request of any interested third parry. These factors,  among others,
     indicate that the Company  might be unable to continue as a going  concern.
     Continuation as a going concern depends on the Company's  ability to obtain
     additional  financing from its stockholders or third parties,  as required,
     and timely pay its obligations and generate operations.

2.   NATURE OF BUSINESS AND BASIS OF PRESENTATION

     Nature of  Business  - Minera  Chanate,  S. A. de C. V. (the  Company)  was
     established on September 17, 1997,  from the split of Exploraci6n y Mineria
     Independencia,  S. A. de C. V. and is engaged  in the  mining-metallurgical
     industzy  in general  and in  executing  all kinds of acts to  achieve  its
     corporate  purpose.  The company has no  employees  and is in  preoperating
     period. The opening balances after split are as follows:

     Balance sheet:

     Land                                               $     160,000,000
     Other assets                                               1,675,095
                                                        -----------------
     Total assets                                       $     161,675,095
                                                        =================

     Liabilities                                        $     131,708,801
     Stockholders' equity                               -----------------
        Common stock                                            4,850,000
        Deficit                                              (129,631,686)
        Revaluation surplus                                   154,747,980
                                                        -----------------
     Stockholders' equity                                      29,966,294
                                                        -----------------
     Total liabilities and stockholders' equity         $     161,675,095
                                                        =================

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Significant  accounting  policies - The Company's  accounting  policies are
     with  generally  accepted  accounting  principles  and  are  summarized  as
     follows:

                                    8 of 11

<PAGE>

     a.   Recognition  of the effects of inflation in  financial  information  -
          Application  of the  guidelines of Bulletin B-10  "Recognition  of the
          Effects of Inflation in Financial Information",  issued by the Mexican
          Institute of Public Accountants is mandatory in the preparation of its
          financial statements.  However, the Company decided not to apply these
          guidelines in the preparation of its financial statements,  which were
          prepared on the basis of original historical values.

     b.   Land - Land is stated at acquisition cost plus the revaluation  effect
          determined by the Company.

     c.   Income tax - Income tax is  recognized in results of the year in which
          incurred, and is adjusted for the effects of temporary items which are
          nonrecurring and expected to reverse in a definite period.

4.   STOCKHOLDERS' EQUITY

     a.   Common stock at par value at December 31, 1998 is as follows:

                                          Number of
                                            Shares               Par Value

         Fixed capital                    4,850,000              $4,850,000
                                          =========              ==========


     b.   Stockholders' equity, except restated capital paid in and tax retained
          earnings,  will incur dividend tax, payable by the Company, in case of
          distribution.  Due to  amendments  to the  Income  Tax Law,  effective
          January  1,  1999,  this  tax is  incurred  at the 35%  rate,  and any
          dividends paid to individuals or entities  resident abroad are subject
          to 5% withholding tax, which in both cases is calculated in accordance
          with the procedure  established in said law, however,  deficit must be
          firstly redeemed,  in accordance with accounting  principles generally
          accepted in Mexico.

5.   FOREIGN CURRENCY BALANCES AND TRANSACTIONS

     Foreign currency  transactions are recorded at the exchange rate applicable
     at the transaction  date.  Monetary  assets and liabilities  denominated in
     foreign  currency  are  valued  in  Mexican  pesos  at  the  exchange  rate
     applicable at the date of the financial  statements.  Exchange fluctuations
     are taken into income currently.

     a.   At December 31, 1998, balances  denominated in foreign currency are as
          follows:

                                                                Mexican Peso
               Currency                 Balance                 Equivalent

          U.S. dollars
           Liabilities                 16,949,413               $167,736,472
                                       ==========               ============


                                    9 of 11

<PAGE>


     b.   Exchange  rates  in  effect  at  the  balance  sheet  date  and of the
          independent auditors' report, respectively,  were as follows:


                                         December 31,                 July 16,
                                       1998       1997                  1999

             Bank dollar               $ 9.89     $8.06                $ 9.50

5.   INCOME TAX AND TAX ON ASSETS

     a.   For the years,  ended december 31, 1998 and 1997 the Company  incurred
          tax loss of $19,238,827 and $4,247,780,  which differs from accounting
          result mainly due to deductible interest and exchange loss.

     b.   In  conformity  with the Tax on Assets Law, the Company is  discharged
          from paying tax on assets, because it is in preoperating period.

     c.   At  December  31,  1998,  the Company  has tax loss  carryforwards  of
          $217,541,819  (restated  values for tax  purposes)  as a result of the
          split  of  Exploraci6n  y  Minerfa  Independiencia,  S.  A.  de C.  V.
          splitting  party  (from  years  1991 to 1997),  which  consist  of the
          following:

                          Year           Year of
                       Generated       Expiration          Amount

                          1998             2008          $ 20,872,203
                          1997             2007             4,599,071
                          1996             2006            29,504,478
                          1995             2005            64,467,053
                          1994             2004            66,252,595
                          1993             2003            22,477,506
                          1992             2002             8,733,551
                          1991             2001               635,362
                                                        -------------
                                                        $ 217,541,819
                                                        =============

6.   CONTINGENCIES

     Year 2000 (Unaudited)

     The  Company is not in the  process of  updating  its  computer  systems to
     ensure  compliance  with the  requirements  of the year 2000.  The  process
     includes all reviews, testing and changes to financial,  administrative and
     operating systems and includes coordination with customers and suppliers to
     avoid a possible interruption of operations.

                                     ******

                                    10 of 11
<PAGE>

                            MINERA CHANATE SA DE CV
                                 BALANCE SHEET
                               DECEMBER 31, 1999
                                  (UNAUDITED)
                               (IN MEXICAN PESOS)
<TABLE>
<CAPTION>


               ASSETS                           LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT ASSETS:                            CURRENT LIABILITIES:
---------------------                      -----------------------------------------
<S>                             <C>                                                      <C>
Cash and Investements           11,164     Intercompanies                                161,395,698
Value Added Tax Reeceivable      1,423                                                   -----------

    TOTAL CURRENT ASSETS        12,587                   TOTAL CURRENT LIABILITIES       161,395,698

EQUIPMENT:                                 TOTAL LIABILITIES                             161,395,698
                           160,000,000
                           -----------
    TOTAL EQUIPMENT        160,000,000

OTHER ASSETS:                              STOCKHOLDERS EQUITY:
---------------------                      -----------------------------------------
                                           Fixed Common Stock                              4,850,000
TOTAL ASSETS               160,012,587     Current value surplus                         154,747,980
                                           Deficit from previous year                   -167,331,045
                                           Profit of the year                              6,349,954
                                                                                         -----------
                                                         TOTAL STOCKHOLDERS EQUITY        -1,383,111
                                                                                         -----------
                                              TOTAL LIABILITIES AND STOCKHOLDERS EQUITY  160,012,587
                                                                                         ===========
</TABLE>


<PAGE>

                                 SCHEDULE 2.2.11

                      Real Property and Mining Concessions

Real Property

Rural property consisting of 466 Has. in Altar, Sonora, purchased on January 27,
1998, by public deed 19,591  granted by Mr. Jose Maria Morera  Gonzalez,  Notary
Public  102 of the  Federal  District,  registered  at the  Public  Registry  of
Property of Caborca,  Sonora,  under number 36026,  book one,  volume 169 of the
real estate registry section on May 7, 1998.


Mining Concessions

<TABLE>
<CAPTION>
      Lot                                    Title                       Has.                 Property
      ---                                    -----                       ----                 --------
<S>                                          <C>                      <C>                     <C>
      San Jose*                              200718                     96.0000               El Chanate
      Las dos Virgen                         184213                    132.2350               El Chanate
      Rono #1                                206408                     82.1902               El Chanate
      Rono #3                                198040                    197.2180               El Chanate
      La Cuchilla                            196945                    172.0000               El Chanate
      Elsa                                   197010                   2035.3996               El Chanate
      Elba*                                  199046                    669.9594               El Chanate
      Elisa                                  197138                     78.4717               El Chanate
      Ema*                                   199050                    331.5057               El Chanate
      Ena*                                   199045                    190.0000               El Chanate
      Eva                                    197007                    416.8961               El Chanate
      Mirsa                                  198242                     20.5510               El Chanate
      Mony                                   196078                   2159.2501               El Chanate
      Olga                                   198249                     60.5866               El Chanate
      Edna*                                  199668                     24.0423               El Chanate
      Sol                                    201148                      5.2093               El Antimonio
      Susy                                   201149                     27.6548               El Antimonio
      Susy I Fraccion 1                      202656                      4.2110               El Antimonio
      Susy I Fraccion 2                      202657                     29.0532               El Antimonio
      Luna*                                  200711                      2.9402               El Antimonio
      Luna I*                                200674                      3.0000               El Antimonio
      Elena                                  201970                    529.2185               El Antimonio
      Elena I                                201954                    589.3471               El Antimonio
      Elena IV                               201957                    371.1251               El Antimonio
      Elena VII Fraccion 1                   201834                       .1302               El Antimonio
</TABLE>

                                      -1-
<PAGE>

<TABLE>
<CAPTION>
      Lot                                    Title                       Has.                 Property
      ---                                    -----                       ----                 --------
<S>                                       <C>                        <C>                      <C>
      Elena VII Fraccion 2                   201835                      4.0216               El Antimonio
      Elena VIII Fraccion 1                  202650                     27.6331               El Antimonio
      Elena VIII Fraccion 2                  202649                       .0524               El Antimonio
      Bolivia*                               200919                     23.4235               El Antimonio
      Elena VI                               201829                    338.5172               El Antimonio
      Elena II                               201955                    231.8353               El Antimonio
      Elena III                              201956                     52.0000               El Antimonio
      Elena V                                201959                    487.3869               El Antimonio
      Oly II                                 202849                  1,910.5887               El Antimonio
      Oly IV                                 206527                      2.8536               El Antimonio
      Oly III                                206971                     97.1572               El Antimonio
      Oly V                                  206972                  1,876.9151               El Antimonio
      La Union VI                            208080                    132.9714               El Antimonio
      Susy II                                209357                      5.8377               El Antimonio
      Luna IV                             (not issued)                                        El Antimonio
      Elena VII Fraccion 3                (not issued)                                        El Antimonio
      Elena VII Fraccion 4                (not issued)                                        El Antimonio
      Morfeo                                 209146                     64.0000               El Antimonio
      La Union IV                            209015                    229.0251               El Antimonio
      La Union V                             209014                    454.2937               El Antimonio
      Auro*                                  199375                    474.4163               Banco de Oro
      Auro Fraccion I*                       199376                    123.0000               Banco de Oro
      Bonita*                                200665                    252.0000               Banco de Oro
      Bona I                                 200666                    583.1037               Banco de Oro
      Triny*                                 200712                    130.0000               Banco de Oro
      Bonita I*                              200883                    100.0000               Banco de Oro
      Bona III                               201193                    110.4989               Banco de Oro
      Bona                                   201199                    613.9314               Banco de Oro
      Maria                                  201892                     36.0000               Banco de Oro
      Bona II Fraccion 1                     202651                     32.3554               Banco de Oro
      Bona II Fraccion 2                     202652                      5.0000               Banco de Oro
      Bonita II                              202658                    399.5819               Banco de Oro
      Auro III                               206586                      2.2668               Banco de Oro
      Auro I                                 208079                     30.0000               Banco de Oro
</TABLE>


                                      -2-
<PAGE>
<TABLE>
<CAPTION>
      Lot                                    Title                       Has.                 Property
      ---                                    -----                       ----                 --------
<S>                                       <C>                       <C>                       <C>
      Auro IV                                208078                    100.0000               Banco de Oro
      Luz*                                   202063                     21.0000               La Gloria
      Goya 1*                                208172                 11,600.0000               La Gloria
      Goya 3*                                209083                     50.0000               La Gloria
      Alamo*                                 199517                     32.7710               Sierra del Alamo
      Eclipse                                200972                    514.0000               Sierra del Alamo
      Chante 1 Fraccion 1                    208173                     45.0116               Sierra del Alamo
      Chante 1 Fraccion 2                    208174                     42.2374               Sierra del Alamo
      Sol 1                                  208077                      3.1954               Sierra del Alamo
      La Blanca                              197822                     99.6038               Lista Blanca
      Blanca IV                              201194                    300.0000               Lista Blanca
      Blanca I                               201227                    243.8939               Lista Blanca
      Blanca II                              201228                    263.9452               Lista Blanca
      Blanca III                             201229                    434.0000               Lista Blanca
      Blanca V                               201833                     21.1494               Lista Blanca
      Diana                                  201958                    270.5523               San Felix
      Tauro I                                201960                      4.0461               San Felix
      Tauro                                  202687                      4.2912               San Felix
      Tauro II                            (not issued)                                        San Felix
      Diana 2                                209467                      4.2234               San Felix
      Lobo                                   201952                 12,741.4980               San Felix
      Aries*                                 200668                 12,349.0000               Aries
      Aries I Fraccion 1                     203294                  5,319.6830               Aries
      Aries I Fraccion 2                     203295                    107.5471               Aries
      Aries 4                                206862                     12.0656               Aries
      Aries 2                                206863                  5,504.0000               Aries
      Aries 3                                207076                  4,112.0000               Aries
      Gato I                                 201727                    405.0000               Gato
      Gato                                   201728                    408.8419               Gato
      Gato II                                202459                    394.9492               Gato
      Gato III                               202460                    796.9454               Gato
      Gato IV                                208076                     52.1758               Gato
      San Pedro*  **                         189165                     27.0000               Pilar de Moris
      Fiona**                                210180                   9150.0000               Pilar de Moris
</TABLE>


                                      -3-
<PAGE>

<TABLE>
<CAPTION>
      Lot                                    Title                       Has.                 Property
      ---                                    -----                       ----                 --------
<S>                                       <C>                         <C>                     <C>
      Fiona Frac 1                        (not issued)                                        Pilar de Moris
      Fiona IV                            (not issued)                                        Pilar de Moris
      Fiona V                             (not issued)                                        Pilar de Moris
      Fiona V Fraccion 1                  (not issued)                                        Pilar de Moris
      El Pino**                              209763                   1996.0913               Pilar de Moris
      Cosmos II**                            208616                     48.4681               Emisa
      Paredones I**                          209147                     91.0000               Emisa
      Cosmos 3**                             209466                    139.0162               Emisa
      Tauro III**                            210277                     39.0000               Emisa
      Triny II**                             208955                     76.7219               Emisa
      Triny III**                            210617                    104.0633               Emisa
      Luna III**                             210616                      9.0003               Emisa
      Rio 15**                               208154                   9928.2338               La Dicha
</TABLE>

       *signifies exploitation concession
      **to be assigned to Minera Chanate, S.A. de C.V.



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