EXPLORATION AND DEVELOPMENT AGREEMENT


     THIS  EXPLORATION  AND  DEVELOPMENT  AGREEMENT  is made  and  entered  into
effective as of November 30, 1997,  by and among  Silverado  Gold Mines Inc., an
Alaska  corporation,  whose  address for purposes  hereof is 505-1111 W. Georgia
Street, Vancouver,  British Columbia, Canada V6E 4M3 (hereinafter referred to as
"Silverado"),  Silverado Gold Mines Ltd., a company  incorporated under the laws
of  the  Province  of  British  Columbia,   Canada,  of  which  Silverado  is  a
wholly-owned  subsidiary,  whose address for purposes hereof is the same as that
of Silverado (hereinafter referred to as "SGM Ltd."), and Placer Dome U.S. Inc.,
a California  corporation,  whose address for purposes  hereof is 240 South Rock
Boulevard,  Suite 117, Reno, Nevada,  U.S.A.  89502 (hereinafter  referred to as
"PDUS").  Silverado,  SGM  Ltd.  and  PDUS  will  be  collectively  referred  to
hereinafter as the Parties."

                                    RECITALS

     A. Silverado and SGM Ltd. hold an undivided  100% leasehold  interest in or
exclusive option to purchase (i) certain state unpatented mining claims situated
in  the  North  Star  Borough,   Fairbanks  Mining  District,  Alaska,  as  more
particularly  described  in part 1 of  Exhibit A  attached  hereto  (the  "Range
Claims"),  pursuant to that certain  Working  Agreement  with Option to Purchase
dated August 30, 1980,  between  Range  Minerals  Corporation  and SGM Ltd.,  as
amended  and  assigned  to  Silverado  by those  Amendments  dated May 9,  1990,
February  1994 and December 5, 1997;  and (ii) certain state  unpatented  mining
claims situated in the North Star Borough, Fairbanks Mining District, Alaska, as
more  particularly  described  in  part 2 of  Exhibit  A  attached  hereto  (the
"Barelka/May  Claims"),  pursuant  to that  certain  Agreement  for  Conditional
Purchase and Sale of Mining Property dated May 12, 1979,  among Paul L. Barelka,
Donald J. May and Mark  Thoennes,  as vendors,  and SGM Ltd., as purchaser.  The
Barelka/May  Claims  and the  Range  Claims  will be  collectively  referred  to
hereinafter  as the  "Leased  Claims."  The  Leased  Claims,  together  with all
improvements  and all  easements,  rights-of-way,  water  rights,  and all other
appurtenances  thereto,  and together with any interest in real property  within
the Area of Mutual  Interest  (as defined in Section 1.3 and depicted on Exhibit
D) will be collectively referred to hereinafter as the "Property.

     B.  Silverado  is also the owner of an undivided  100%  interest in certain
machinery,  equipment  and  other  items  of  personal  property  used  on or in
connection  with the  Property,  as more  particularly  described  in  Exhibit B
attached  hereto  and  incorporated  herein  by  reference  (collectively,   the
"Personalty").

     C.  Silverado  and SGM Ltd.  desire  to grant to PDUS and PDUS  desires  to
acquire an exclusive right to explore, evaluate and develop the Property and, if
warranted,  to enter into a mining venture agreement pursuant to which Silverado
and PDUS would jointly conduct exploration,  development, mining, processing and
related activities on the Property, for the consideration and upon the terms and
conditions described herein.


<PAGE>


                                    AGREEMENT

     NOW,  THEREFORE,  for and in  consideration  of the sum of $400,000 paid to
Silverado  by PDUS  simultaneous  with  the  execution  of this  Agreement  (the
"Initial Payment),  and other good and valuable  consideration,  the receipt and
sufficiency of which the Parties hereby confirm and acknowledge,  and the mutual
promises,  covenants,  and conditions herein contained and recited,  the Parties
hereto agree as follows:


                                    ARTICLE 1
                                   DEFINITIONS

     As used in this  Agreement,  the  following  terms shall have the  meanings
assigned to them in this Article 1.

     1. 1  "Acquisition  Costs"  shall mean costs  incurred by PDUS in acquiring
property  interests within the Area of Mutual  Interest,  including direct costs
and expenses  incurred by PDUS in  conducting  negotiations  and due  diligence,
attorneys'  fees,  and all moneys paid by PDUS in  acquiring  and  holding  such
property interests.

     1.2  "Affiliate"  shall  mean  any  person,  partnership,   joint  venture,
corporation or other form of enterprise  which directly or indirectly  controls,
is controlled  by, or is under common  control with, a party to this  Agreement.
For purposes of the preceding sentence, "control" means possession,  directly or
indirectly, of the power to direct or cause direction of management and policies
through ownership of voting securities, contract, voting trust or otherwise.

     1.3 "Area of Mutual  Interest" means any interest in real property  located
within the exterior  boundaries  of the Property or within two aerial miles from
the exterior boundaries of the Property or the Silverado Adjacent Properties (as
defined in Section 1.13), but  specifically  excluding any real property located
within the exterior boundaries of the Silverado Adjacent Properties.

     1.4 "Agreement" shall mean this Exploration and Development Agreement,  the
recitals and all exhibits  attached  hereto and by this  reference  incorporated
herein.

     1.5 "Anniversary  Date" shall mean the date falling one or more years after
the Effective Date.

     1.6 "Effective Date" shall mean November 30, 1997.

     1.7  "Evaluation  Period"  shall mean the period of time  commencing on the
Effective Date and continuing  until PDUS has  relinquished its rights hereunder
or earned an undivided 51% interest in the Property.


<PAGE>


     1.8  Exploration,  Development and Related Work" shall mean and include all
operations and activities of PDUS on or relating to the Property for purposes of
determining ore reserves and mineralization,  and for purposes of development of
Valuable Minerals from the Property including,  without limitation, the right to
enter upon the Property for purposes of surveying, exploring, testing, sampling,
trenching, bulk sampling, prospecting and drilling for Valuable Minerals, and to
construct and use buildings, roads, power and communication lines, and to use so
much of the surface of the  Property in such manner as PDUS deems  necessary  to
the  enjoyment  of any rights and  privileges  to PDUS  hereunder  or  otherwise
necessary to effect the purposes of this Agreement.

     1.9 "Exploration and Development Expenses" shall mean and include all costs
or fees,  expenses,  liabilities  and charges paid or incurred by PDUS which are
related to Exploration,  Development and Related Work conducted  between October
1, 1997 and the Effective Date or during the  Evaluation  Period for the purpose
of  discovery,  location,  delineation,  evaluation or  development  of Valuable
Minerals from the Property, including without limitation:

          (a) 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);

          (b) All 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 Valuable  Minerals,  and other  activities,  operations  or work
performed in preparation for the removal of Valuable Minerals from the Property;

          (c) All Acquisition Costs;

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

          (e)  Salaries,  wages,  expenses and  benefits of PDUS'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


<PAGE>


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

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

          (g) Taxes and assessments, other than income taxes, assessed or levied
upon or against the Property or any  improvements  thereon  situated thereon for
which PDUS is responsible or for which PDUS reimburses Silverado;

          (h) 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 PDUS shall
be chargeable at rates no greater than the most favorable rental rates available
in the area of the Property;

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

          (j) Costs  incurred by PDUS in examining  and curing title to any part
of the  Property  or any  interest  in real  property  within the Area of Mutual
Interest,  in maintaining  the Property or any interest in real property  within
the Area of Mutual  Interest  whether through the performance of assessment work
or  otherwise,  in making  required  payments  under the  Leases,  in making the
payments  referred  to in  Section  2.7,  in  satisfying  surface  use or damage
obligations  to landowners,  or in conducting any analyses of the  environmental
conditions at the Property;

          (k) An additional 10% as overhead on all costs and expenses  described
in (a) through (j) above; and

          (l) Any other  reasonable  cost or expense  which may be  specifically
identified as qualifying as an Exploration and Development Expenditure.

     1.10 "Leases"  shall mean the mining leases or option  agreements  covering
the Leased Claims, as more particularly described in Recital A and parts 1 and 2
of Exhibit A.

     1.11 "Minimum Work Requirement"  shall mean expenditure of required minimum
amounts of Exploration  and Development  Expenses  during any applicable  Annual
Period or the entirety of the Evaluation Period, as set forth in Section 2.3(a),
or payment of any  applicable  sums in lieu thereof by PDUS  pursuant to Section
2.3(b) or (c) hereof.

     1.12 "Mining Venture  Agreement"  shall mean the mining venture  agreement,
together  with all  attachments  thereto,  a copy of which is  attached  to this
Agreement as Exhibit C, under which Silverado and PDUS may conduct  exploration,
development, mining, and production operations on the Property.


<PAGE>


     1.13 "Silverado  Adjacent  Properties" shall mean all of the existing state
unpatented  mining claims or other interests in real property owned by or in the
control of  Silverado  or SGM Ltd.  within the area  described  on the  attached
Exhibit D as the "Silverado  Adjacent  Properties," but not including any of the
claims listed on Exhibit A.

     1.14 "Valuable Minerals" shall mean all ores, minerals, mineral deposits or
mineral  substances  of every  kind or  character  located  in,  on or under the
Property.

     1.15 "$" shall mean United States currency.


                                    ARTICLE 2
                                 GRANT OF RIGHTS

     2.1  Rights  Granted.  Silverado  and SGM  Ltd.  hereby  grant  to PDUS the
exclusive right to enter upon the Property during the Evaluation  Period for the
purpose of conducting  Exploration,  Development and Related Work, and the right
to earn an undivided 51% interest in the Property by (a) making the cash payment
referred to in Section 2.2; (b) incurring a total of  $10,000,000 in Exploration
and  Development  Expenses  as set forth in  Section  2.3(a) or making  the cash
payments  referred  to in or pursuant to Section  2.3(b)  during the  Evaluation
Period; and (c) by purchasing a certain minimum number of shares of common stock
of SGM Ltd, as set forth in Section 2.4.

     2.2 Cash Payment. Upon execution of this Agreement, PDUS has paid Silverado
the sum of $400,000.


     2.3 Minimum Work Requirement.

          (a)  Exploration  and  Development   Expenses.   Upon  the  terms  and
conditions set forth herein,  PDUS shall have the obligation  during each Annual
Period to incur  Exploration and Development  Expenses in the minimum amount set
forth in  Table A below or to make the  payment  described  in  Section  2.3(b).
"Annual  Period"  shall  mean each  period of one year  during  the term of this
Agreement  which commences on the date of this Agreement or on an anniversary of
such  date.  Each  anniversary  of the  Effective  Date  shall  be  referred  to
hereinafter as an "Anniversary  Date." Any Exploration and Development  Expenses
incurred by PDUS in excess of the minimum  amounts set forth in the table during
any Annual  Period may be  carried  forward by PDUS and shall  apply as a credit
toward Exploration and Development Expenses in subsequent Annual Periods.


<PAGE>


                                     TABLE A
                              Minimum Work Schedule
Time Period                                           Minimum Work Requirement
-----------                                           ------------------------
                                                      In U.S. $

A. From the Effective Date through November30, 1998   1.0 million

B. December 1, 1998 -November 30, 1999                1.5 million

C. December 1, 1999-November 30, 2000                 2.0 million

D. December 1, 2000 -November 30, 2001                2.5 million

E. December 1, 2001 -November 30, 2002                3 million
                                                      -----------

                                                      10 million


          (b) In Lieu  Payments.  If PDUS  fails or  elects  not to  attain  the
Minimum Work  Requirement  during any Annual Period,  and if such failure is not
excused by force  majeure,  then, in order to keep this  Agreement in full force
and effect,  within 30 days after the end of such Annual Period,  PDUS may elect
to make a payment to Silverado which shall equal the sum of the required minimum
amount of Exploration and Development Expenses for the Annual Period in question
less the  Exploration  and  Development  Expenses  incurred  by PDUS during such
Annual Period.  Any such payment shall satisfy the Minimum Work  Requirement for
the Annual Period to which the payment  relates.  For the purpose of determining
whether PDUS has earned a 51% interest in the Property  pursuant to Section 2.1,
PDUS shall be deemed to have incurred Exploration and Development Expenses in an
amount equal to the Exploration and Development Expenses incurred by it plus any
cash payments made by it pursuant to this Section  2.3(b) or pursuant to Section
2.3(c) below.

          (c) Proof of Expenditures. PDUS shall provide Silverado with a written
statement  of  Exploration  and  Development  Expenditures,  certified  as being
complete  and  accurate by PDUS,  within sixty days after the end of each Annual
Period,  and shall make available for review by Silverado during normal business
hours,  for a period of six months after the end of each Annual  Period,  backup
invoices,  statements  and the like verifying  such  expenditures  promptly upon
Silverado's  written request. In connection with such a review, PDUS may satisfy
any annual  Minimum Work  Requirement  obligation by the payment to Silverado of
any agreed-upon deficiency within thirty days after any reported expenditure has
later been determined not to be a valid Exploration and Development Expenditure,
or the amount


<PAGE>


of required  Exploration and Development  Expenditures has later been determined
to be deficient.

     2.4 Stock Purchase Requirement.  In order to retain its right to earn a 51%
interest in the Property, PDUS shall have the obligation,  not later than twenty
days before each Anniversary Date of this Agreement,  to notify Silverado of its
intent to  purchase a certain  minimum  number of shares of common  stock of SGM
Ltd.  (collectively,  the  Stock),  as set  forth  in  Table B  below.  All such
purchases of Stock shall be completed as soon as  practicable  after the receipt
by  Silverado of PDUS's  notice of its  election to purchase the Stock,  and the
transfer of the required  payment and  certificates  representing  the number of
shares  of Stock  purchased  shall  occur on a date  mutually  agreeable  to the
parties, but in any event not later than November 30th of the year in question.

                                     TABLE B
                             Stock Purchase Schedule
                   

                                         Stock
                                         -----
                                         No. of shares&
                                         Purchasing Price
     Time Period                         In U.S. $
     ----------- 
     A. On or before November 30, 1998   1.0 million - 0.70

     B. On or before November 30, 1999   l.0 million - 1.25

     C. On or before November 30, 2000   1.0 million - 1.50

     D. On or before November 30, 2001   1.0 million - 2.00
                                         ------------------
                                         4 million shares at a total 
                                         price of $5,450,000

     2.5 Right to Enter into Mining Venture  Agreement.  Upon  completion of the
Minimum Work  Requirement  set forth in Section 2.3 above and  completion of the
purchase  of the Stock as set forth in  Section  2.4  above,  PDUS  shall  earn,
acquire and receive  from  Silverado  an undivided  51% of  Silverado's  and SGM
Ltd.'s interest in the Property,  as follows:  Upon such completion,  PDUS shall
promptly  give  Silverado  notice of same (in  accordance  with  Article 7) and,
within 15 days after the date of Silverado's  receipt of such notice,  Silverado
and SGM Ltd.  shall  execute and deliver to PDUS  recordable  conveyances  of an
undivided 51% of Silverado's and SGM Ltd.'s  interest in the Leased Claims,  the
Leases  and the  Personalty,  in the  forms of (a) the  Assignment  set forth as
Exhibit  E  attached  hereto  and  incorporated   herein  by  reference  (as  to
Silverado's  interest in the Leased Claims and the Leases);  and (b) the Bill of
Sale set forth as Exhibit F attached hereto and incorporated herein by reference
(as to the Personalty).  In addition, within 5 days after the date PDUS receives
such  conveyance  documents,  the Parties  shall  execute and deliver the Mining
Venture  Agreement.  Execution of the Mining Venture  Agreement shall constitute
the termination of this Agreement, and thereafter the rights and


<PAGE>


obligations  of the Parties with respect to the Property  shall be governed only
by the Mining Venture Agreement.  The Parties hereby agree that PDUS may, in its
sole  discretion,  accelerate  the schedule for  completion  of its Minimum Work
Requirement,  and in that  event,  PDUS may  accelerate  its  earning  of 51% of
Silverado's  and SGM Ltd.'s interest in the Property by purchasing the remaining
required  amounts of Stock,  at the price(s) set forth in Table B. Once PDUS has
completed its Minimum Work  Requirement and completed its purchase of the Stock,
PDUS shall be deemed  irrevocably and immediately,  subject to the provisions of
this  Section  2.5,  vested in an undivided  51% of  Silverado's  and SGM Ltd.'s
interest in the Property.

     2.6 Failure to Complete Minimum Work Requirement or Stock Purchase.

          (a) In the event  PDUS  elects  (which it may choose to do in its sole
discretion)  not to complete the Minimum Work  Requirement as defined in Section
2.3 above, PDUS shall give Silverado  written notice of such election,  and this
Agreement,  upon written  notice from Silverado to PDUS,  shall be  conclusively
deemed terminated in accordance with Article 9; provided,  however, that if PDUS
does not complete its Minimum Work  Requirement for the first Annual Period (and
such lack of completion does not result from the  determination  of a deficiency
as  described  in Section  2.3(c),  which  deficiency  is  rectified  by PDUS as
contemplated therein) and this Agreement terminates, PDUS shall pay to Silverado
the  difference  between  the  Exploration  and  Development  Expenses  actually
incurred by PDUS during the first  Annual  Period and  $1,000,000;  and provided
further that if PDUS has not terminated this Agreement prior to the commencement
of any  subsequent  Annual  Period,  then it will be obligated to incur at least
$200,000 in Exploration and Development  Expenses during that Annual Period, and
if this  Agreement  terminates  during  that  Annual  Period,  PDUS shall pay to
Silverado  the  difference  between the  Exploration  and  Development  Expenses
actually incurred by PDUS during the Annual Period in question and $200,000.

          (b) In the event PDUS fails to purchase the  required  amount of Stock
by the  required  date as set forth in  Section  2.4,  this  Agreement  shall be
conclusively  deemed terminated upon notice from Silverado to PDUS in accordance
with Article 9.

          (c) Other than as set forth in this Section 2.6,  Silverado  expressly
agrees that PDUS shall not be liable for any actual, incidental or consequential
damages  incurred by  Silverado  or SGM Ltd.  as a direct or indirect  result of
PDUS's  failure to (i) satisfy all or part of its Minimum  Work  Requirement  or
(ii) purchase the required amounts of Stock.

     2.7 Additional  Property.  Pursuant to the terms of that Agreement  between
Alaska  Gold  Company  and  Silverado  dated  October 30,  1997,  Silverado  has
purchased certain mining equipment, patented mining claims, and state unpatented
mining  claims (the "Sheep Creek  Property"),  as depicted on Exhibit D and more
particularly  described in Exhibit G attached hereto and incorporated  herein by
reference. At any time after the first Anniversary Date of this Agreement,  PDUS
shall have the option to notify  Silverado of PDUS's desire to include the Sheep
Creek Property in this Agreement.  Upon Silverado's  receipt of such notice from
PDUS,  the Sheep Creek  Property  shall be deemed  included  within the Property
subject to this


<PAGE>


Agreement.  Regardless  of  whether  PDUS  has  made  such an  election,  if the
Agreement  remains in effect,  PDUS shall  reimburse  Silverado,  not later than
thirty business days after the first Anniversary Date, for 70% of the $80,000 in
payments made by Silverado to Alaska Gold Company  pursuant to that Agreement on
October 30, 1997 and October 30, 1998, and, if the Agreement  remains in effect,
PDUS shall  reimburse  Silverado,  not later than thirty business days after the
second  Anniversary Date, for 70% of the third $40,000 payment made by Silverado
to Alaska  Gold  Company  pursuant  to that  Agreement.  Unless  and until  PDUS
provides notice to Silverado of its election to include the Sheep Creek Property
in the Property, all payments made by PDUS to Silverado pursuant to this Section
2.7 shall be deemed additional  consideration for Silverado's entering into this
Agreement,  and PDUS shall have no  ownership  or any other  interest  in and no
obligations or liabilities  pertaining to the Sheep Creek  Property.  During the
first year of the Evaluation Period,  Silverado shall (a) make available to PDUS
for its review all data and  information  pertaining to the Sheep Creek Property
in  Silverado's  possession or generated by or on behalf of  Silverado,  and (b)
allow PDUS access to the Sheep Creek Property for purposes of conducting work in
the nature of Exploration,  Development and Related Work. PDUS shall conduct all
such work on the Sheep Creek Property in compliance with applicable  laws, rules
and regulations and shall share the results of any such work with Silverado.

     2.8 Geological and Other Data. Upon execution of this Agreement,  Silverado
shall make available to PDUS all records, information and data in its possession
or reasonably available to it relating to title to the Property or environmental
conditions  at or pertaining to the  Property,  and all maps,  assays,  surveys,
technical  reports,  drill logs,  samples,  mine,  mill,  processing and smelter
records,   and  metallurgical,   geological,   geophysical,   geochemical,   and
engineering  data, and interpretive  reports derived  therefrom,  concerning the
Property,  and  PDUS,  at its sole risk and  expense,  may from time to time use
Silverado's  facilities at its offices and data center at the Silverado Adjacent
Properties to copy any such records,  information and data that PDUS desires. No
original records,  information or data shall be removed from Silverado's offices
or the data center at the  Silverado  Adjacent  Properties.  Silverado  makes no
representation  or warranty as to the accuracy,  reliability or  completeness of
any such records,  information  or data,  and PDUS shall rely on the same at its
sole risk.  In addition to the  foregoing,  Silverado  shall make  available for
review (but not copying) by PDUS, at reasonable times mutually  agreeable to the
parties  and  from  time to time  during  the  Evaluation  Period,  all data and
information  of  the  nature  described  in  this  Section  2.8  in  Silverado's
possession or available to it concerning the Silverado Adjacent Properties.


                                    ARTICLE 3
                   RIGHTS OF PDUS DURING THE EVALUATION PERIOD

     3.1 PDUS's  Rights.  During the  Evaluation  Period,  PDUS's  rights  shall
include, without limitation, the following:

          (a) PDUS may carry out such  operations  at the  Property  during  the
Evaluation Period as it may, in its sole discretion,  determine to be warranted,
and PDUS shall have


<PAGE>


exclusive  control of all exploration  and development  operations on or for the
benefit of the Property,  and of any and all equipment,  supplies,  machinery or
other assets purchased or otherwise acquired in connection with such exploration
or development operations; and

          (b) PDUS's rights shall include all other rights necessary or incident
to or for  its  performance  of its  operations  hereunder,  including,  but not
limited to the authority to apply for all necessary permits,  licenses and other
approvals  from the United  States of America,  the State of Alaska or any other
governmental  or other entity having  regulatory  authority over any part of the
Property.

          (c) PDUS shall have the exclusive right (to the extent permitted under
the Leases and with the prior written consent of Silverado,  which consent shall
not be  unreasonably  withheld)  to relocate,  amend,  apply for leases from the
State of Alaska,  defend  contests  or adverse  suits and  negotiate  settlement
thereof with respect to any or all of the Leased  Claims,  and  Silverado  shall
cooperate  with  PDUS and  shall  execute  any and all  documents  necessary  or
desirable in the opinion of PDUS to further such amendments,  relocations, lease
applications,  contests, adverse suits or settlements.  PDUS shall not be liable
in any manner  whatsoever  to  Silverado  for the loss of any Leased  Claim as a
result of such  amendment,  relocation,  contests or adverse  suits,  except for
PDUS' negligence.


                                    ARTICLE 4
                OBLIGATIONS OF PDUS DURING THE EVALUATION PERIOD

     4.1 Conduct of Operations  by PDUS at the  Property.  All of the work which
may be performed by PDUS  hereunder  shall be performed in accordance  with good
mining practices,  but the timing, nature, manner and extent of any exploration,
development or any other operations or activities hereunder shall be in the sole
discretion of PDUS, and there shall be no implied  covenant to begin or continue
any such operations or activities.

     4.2  Indemnity.  Except as to damages  sustained by Silverado  while on the
Property  pursuant to Section 4.5, PDUS agrees to indemnify  and hold  Silverado
harmless from and against any loss, liability, expense or damage it may incur to
third  persons  or  corporations  for injury to or death of persons or damage to
property  which is the result of PDUS  conducting any operations at the Property
during the Evaluation Period.

     4.3 Insurance.  PDUS agrees to carry such  insurance,  covering all persons
working  at or on  the  Property  for  PDUS,  as  will  fully  comply  with  the
requirements  of the  statutes  of the State of Alaska  pertaining  to  worker's
compensation and occupational disease and disabilities as are now in force or as
may be hereafter amended or enacted.  In addition,  during the Evaluation Period
PDUS agrees to carry  liability  insurance with respect to its operations at the
Property in reasonable amounts in accordance with accepted industry practices.


<PAGE>


     4.4  Compliance  with Laws.  PDUS  agrees to conduct and perform all of its
operations  at  the  Property  during  the  Evaluation   Period  in  substantial
compliance with all valid and applicable  federal,  state and local laws,  rules
and regulations, including, without limitation, such laws, rules and regulations
pertaining to social security,  unemployment  compensation,  wages and hours and
conditions of labor,  and PDUS shall indemnify and hold Silverado  harmless from
payment of any damages occasioned by PDUS's failure to comply with said laws.

     4.5 Inspection.  During the Evaluation Period, Silverado and its authorized
agents, at Silverado's sole risk and expense, shall have the right,  exercisable
during regular business hours, at a mutually convenient time, in compliance with
PDUS's  safety rules and  regulations,  and in a reasonable  manner so as not to
interfere  with PDUS's  operations,  to go upon the  Property for the purpose of
confirming that PDUS is conducting its operations in the manner required by this
Agreement.  Silverado shall indemnify and hold PDUS harmless from all claims for
damages arising out of any death,  personal injury or property damage  sustained
by Silverado, its agents or employees, while in or upon the Property, whether or
not Silverado,  its agents or employees are in or upon the Property  pursuant to
this  Section  4.5,  unless such death,  injury or damage is due to PDUS's gross
negligence or wilIful misconduct.  If requested by PDUS,  Silverado,  its agents
and employees will confirm in writing their waiver of claims against PDUS.

     4.6 Taxes.  During the Evaluation Period,  PDUS, shall,  within thirty days
after  receipt of evidence of payment,  reimburse  Silverado  for payment of all
taxes  levied or assessed  upon or against the Property  and any  facilities  or
improvements  located thereon,  excluding severance and income taxes.  Silverado
shall be  responsible in the first instance for the timely and proper payment of
all such taxes not later than  thirty days prior to the date such  payments  are
due,  and shall  provide  PDUS with  evidence of such  payment  within five days
thereafter.  If Silverado does not timely  provide such  evidence,  PDUS may pay
such taxes on Silverado's behalf.

     4.7 Liens and Encumbrances.  PDUS shall keep the title to the Property free
and clear of all liens and encumbrances resulting from its operations hereunder;
provided,  however,  that PDUS may refuse to pay any claims asserted  against it
which it  disputes  in good  faith.  At its sole cost and  expense,  PDUS  shall
contest any suit, demand or action commenced to enforce such a claim and, if the
suit,  demand or action is decided by a court or other authority of ultimate and
final  jurisdiction  against PDUS or the Property,  PDUS shall  promptly pay the
judgment and shall post any bond and take all other action  necessary to prevent
any sale or loss of the Property or any part thereof.

     4.8  Reclamation and  Remediation.  If this Agreement is terminated and the
Parties do not enter into the Mining Venture  Agreement,  PDUS shall reclaim the
surface of the Property,  and perform  remediation  work as to the subsurface of
the Property,  to the extent disturbed by PDUS during the Evaluation  Period, in
accordance  with  applicable  federal  and state  laws,  rules and  regulations.
Silverado  hereby agrees to grant to PDUS such access to the Property  following
termination  as  is  reasonably  necessary  to  complete  such  reclamation  and
restoration  work. In the event this  Agreement is terminated  and Silverado has
identified any particular portions of the


<PAGE>


Property disturbed by PDUS which Silverado desires to work on, and in connection
therewith  desires that PDUS refrain from  performing  required  restoration  or
reclamation  work,  Silverado shall provide written notice to PDUS,  identifying
those  parcels,  and PDUS agrees to negotiate with Silverado in good faith as to
the  possibility  of leaving  those  parcels  unreclaimed  (provided  that, at a
minimum,  Silverado  will agree to replace all bonds or other  surety  posted by
PDUS in  connection  with  required  reclamation  and  remediation  work on such
parcels,  and Silverado  will indemnify  PDUS for any costs,  losses,  claims or
damages  arising  from  Silverado's  failure to  subsequently  perform  required
reclamation and restoration  work on those parcels in accordance with applicable
federal, state and local laws, rules and regulations).

     4.9  Claim  Maintenance  Fees  and  Maintenance  of  Title.  PDUS  shall be
obligated  to perform  all  required  assessment  work and pay all  rental  fees
required to be paid during the Evaluation Period in order to maintain the Leased
Claims (and any mining claims  acquired  within the Area of Mutual  Interest) in
good  standing,  and to make all  required  filings  and  recordings  associated
therewith.  PDUS shall have no liability  for the loss of any Leased  Claims (or
any mining claims acquired within the Area of Mutual Interest),  whether through
third party relocation,  governmental  action or operation of law, as the result
of a deficiency in the performance of assessment work, so long as the assessment
work  actually  performed by PDUS during the  Evaluation  Period is performed in
good faith and in accordance with industry standards, and is of such a character
and value as could  reasonably  be expected to satisfy the  requirements  of the
mining laws of the United States or the State of Alaska. In addition, PDUS shall
make all required  payments under the Leases during the Evaluation  Period,  and
shall take all such other actions as it believes necessary to preserve, perfect,
or maintain  title to the Leased Claims (and any mining claims  acquired  within
the Area of Mutual  Interest) during the Evaluation  Period,  and shall pay such
fees, rentals,  royalties and renewal payments or other charges as it reasonably
deems necessary to do so; provided,  however,  that PDUS shall not be liable for
the loss of any of the Leased Claims (or any mining claims  acquired  within the
Area of Mutual Interest),  whether through third party relocation,  governmental
action or  operation  of law,  resulting  from any  defect  in title  (including
without  limitation  failure to adhere to the required  location  procedures  or
claim maintenance requirements) not created by PDUS.


                                    ARTICLE 5
            REPRESENTATIONS AND WARRANTIES OF SILVERADO AND SGM LTD.

     5.1  Representations  and  Warranties.  Silverado and SGM Ltd.  jointly and
severally  represent  and warrant to PDUS as of the date hereof as follows,  and
covenant  that these  representations  and  warranties  will be true and correct
through the Evaluation Period:

          (a)  Organization  and  Standing.  Silverado  is  a  corporation  duly
organized, validly existing, and in good standing under the laws of the State of
Alaska. SGM Ltd. is a corporation duly organized,  validly existing, and in good
standing under the laws of the Province of British Columbia, Canada.

<PAGE>


          (b) Corporate Power.  Each of Silverado and SGM Ltd. has the requisite
power and  authority (i) to enter into this  Agreement and all other  agreements
contemplated hereby, and (ii) to carry out and perform its obligations under the
terms and provisions of this Agreement and all agreements contemplated hereby.

          (c)  Authorization.  All  requisite  corporate  action  on the part of
Silverado  and SGM  Ltd.,  and  their  officers,  directors,  and  shareholders,
necessary for the execution, delivery, and performance of this Agreement and all
other agreements of Silverado and SGM Ltd. contemplated hereby, have been taken.
This Agreement and all agreements and instruments  contemplated  hereby are, and
when executed and delivered,  will be, legal,  valid, and binding obligations of
Silverado and SGM Ltd.  enforceable against Silverado and SGM Ltd. in accordance
with their  respective  terms.  The execution,  delivery and performance of this
Agreement will not violate any provision of law; any order of any court or other
agency of  government;  or any  provision of any  indenture,  agreement or other
instrument to which  Silverado or SGM Ltd. is a party or by which its properties
or assets are bound; or be in conflict with, result in a breach of or constitute
(with  due  notice  and  lapse  of time) a  default  under  any such  indenture,
agreement or other instrument. There is no law, rule or regulation, nor is there
any judgment,  decree or order of any court or governmental authority binding on
Silverado or SGM Ltd. which would be  contravened  by the  execution,  delivery,
performance,  or  enforcement  of this  Agreement or any instrument or agreement
required hereunder.  Notwithstanding the foregoing, no representation is made as
to (i) the remedy of specific  performance or other  equitable  remedies for the
enforcement of this Agreement or any other agreement contemplated hereby or (ii)
rights  to  indemnity   under  this  Agreement  for  securities  law  liability.
Additionally,   this   representation  is  limited  by  applicable   bankruptcy,
insolvency,  moratorium,  and other similar laws affecting  generally the rights
and remedies of creditors and secured parties.

          (d)  Royalties.  Except  as set  forth  in the  Leases,  there  are no
royalties or other burdens on production affecting the Property.

          (e)  Permits  and  Licenses.   Silverado  has  obtained  all  permits,
licenses, approvals, authorizations and qualifications of all federal, state and
local  authorities  required  for it to  carry  on its  operations  at or on the
Property.  Silverado is not in  violation  of and has no  liability  (other than
liability  for  compliance  with  existing  permits and laws,  including but not
limited to performance of reclamation) under any statute,  rule or regulation of
any governmental authority applicable to the Property,  other than violations or
liability,  if any,  which have not  resulted and will not at any time result in
any material loss or liability.

          (f) Title to the Leased Claims.

               (i)  Silverado  and  SGM  Ltd.  represent  that  Silverado  is in
exclusive  possession of and holds either an undivided 1 00% leasehold  interest
in or an exclusive option to purchase the Leased Claims.  Silverado and SGM Ltd.
further  represent  and warrant that,  to the best of their  knowledge,  (A) the
Leased Claims were properly  located and  monumented;  (B) location  notices and
certificates  have been  properly  posted  and  recorded  for each of the Leased
Claims; (C) all filings required to maintain the Leased Claims in good standing,
including  evidence of annual  assessment  work,  have been timely and  properly
made; (D) assessment work,  performed reasonably and in good faith in accordance
with accepted  industry  practice,  which  Silverado  believes was sufficient to
satisfy all requirements for holding the Leased Claims was performed through the
assessment  year  ending  September  1, 1997;  (E) all  required  annual  rental
payments  necessary to maintain the Leased Claims  through the  assessment  year
ending  September 1, 1998,  have been timely and  properly  made to the State of
Alaska;  and (F) the lessors under the Leases own an undivided 1 00% interest in
the Leased Claims.

               (ii) Silverado and SGM Ltd. represent and warrant that the Leased
Claims  are free and clear of all liens and  encumbrances  including  any lease,
right or license,  except taxes not yet due and payable,  arising by, through or
under  Silverado  or SGM Ltd.,  and, to the best of their  knowledge,  any other
third party.

               (iii) Silverado makes no representation  or warranty  whatsoever,
express or implied, as to the existence of any discovery of Valuable Minerals on
any of the Leased Claims.

               (iv)   Silverado  and  SGM  Ltd.  have  conducted  all  of  their
operations on the Leased Claims in compliance with the Leases, the Leases are in
frill force and effect, and there are no defaults or events that could give rise
to a default in existence thereunder.

          (g)  Environmental  Compliance.  To  the  best  of  the  knowledge  of
Silverado and SGM Ltd.,  there is no condition or activity at the Property which
constitutes  a nuisance or which would  result in a  violation  of or  liability
under applicable federal, state or local laws, orders,  regulations,  directives
or restrictions  concerning  protection of the environment or health and safety.
Silverado  has not received any notice of violation or any consent  order issued
under applicable federal, state or local laws, orders,  regulations,  directives
or restrictions  concerning protection of, the environment and health and safety
to which the Property or Silverado's  operations  thereon are now subject or may
become  subject.  There  are no  pending  or,  to the best of the  knowledge  of
Silverado or SGM Ltd.,  threatened  proceedings  by or before any court or other
governmental  authority  with respect to  operations  on or the ownership of the
Property  alleged to be, or to have been, in violation of, or to be the basis of
liability  under,  any federal,  state or local law,  order,  rule,  regulation,
ordinance,  directive or restriction concerning protection of the environment or
health and safety,  and Silverado and SGM Ltd. are not aware of any "release" of
any "hazardous substance" (as those terms are defined in the U.S.  Comprehensive
Environmental Response,  Compensation and Liability Act of 1980, as amended) at,
from or affecting the Property.

          (h) Material  Contracts and  Commitments.  Silverado has performed all
material  obligations  required to be  performed by it under any  contracts  and
commitments  affecting  the  Property  to  which  it is a  Party,  and is not in
default,  and will not be in  default  as a result  of the  consummation  of the
transactions  contemplated  herein, under any contract,  agreement,  commitment,
mortgage, indenture, loan agreement, lease, license, or other instrument


<PAGE>


to which it is a Party,  including,  without  limitation,  the Leases.  True and
correct copies of all such  agreements and  commitments,  as amended,  have been
provided to PDUS.

          (i) Legality. Silverado is not in material violation of any law, rule,
ordinance,  or other governmental  regulation,  including,  without  limitation,
those  relating  to zoning,  condemnation,  mining,  reclamation,  environmental
matters, equal employment,  and federal, state, or local health and safety laws,
rules,  and  regulations,  the lack of  compliance  with which could  materially
adversely affect the Property.

          (j) Litigation  and Claims.  To the best of knowledge of Silverado and
SGM Ltd.,  there are no  actions,  suits or  proceedings  pending or  threatened
against or affecting the Property,  including any actions, suits, or proceedings
being prosecuted by any federal, state or local department,  commission,  board,
bureau,  agency, or  instrumentality.  To the best of knowledge of Silverado and
SGM Ltd., Silverado is not subject to any order, writ,  injunction,  judgment or
decree  of any  court or any  federal,  state or local  department,  commission,
board, bureau, agency, or instrumentality which relates to the Property.

          (k)  Consents.  Silverado  and SGM Ltd.  have  obtained all  consents,
approvals,  authorizations,  declarations,  or filings  required by any federal,
state,  local,  or other  authority,  stock  exchange or any other third  party,
including,  without  limitation,  any  consents  required  under the Leases,  in
connection with the valid execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby.

          (l) Taxes.  All federal,  state and local  excise,  property and other
taxes and assessments  pertaining to or assessed  against the Property have been
timely and properly paid.

          (m)  Brokerage  or Finder's  Fee.  All  negotiations  relative to this
Agreement  and the  transactions  contemplated  hereby  have been  carried on by
Silverado  and SGM Ltd.  in such  manner as not to give rise to any valid  claim
against PDUS or any other third party for a brokerage commission,  finder's fee,
or other fee or commission arising by reason of the transactions contemplated by
this Agreement.

          (n) The Stock. On the date of this Agreement,  the authorized  capital
stock of SGM Ltd.  consists of  100,000,000  Cmmon Stock,  75,077,493  shares of
which  are  issued  and  outstanding  and none of which  are held in SGM  Ltd.'s
treasury.  SGM Ltd. has  outstanding  convertible  debentures,  warrants,  stock
options and contracts convertible or exchangeable for an aggregate of 10,232,923
shares of its capital stock. The Stock has been duly authorized for issuance and
reserved  therefor and, when issued,  all of the Shares shall be validly issued,
fully paid and  nonassessable  shares of freely  tradeable  capital stock of SGM
Ltd.,  free and clear of all liens,  charges  and  encumbrances.  There does not
exist any preemptive right in favor of any person with respect to the Stock.

          (o) U.S.  Reports.  Since  November 30, 1994,  and through the Closing
Date,  SGM Ltd.  has, to the best of its  knowledge,  filed all required  forms,
reports and documents  with the U.S.  Securities  and Exchange  Commission  (the
"SEC")  required to be filed by it pursuant to the federal  securities  laws and
the SEC rules and regulations thereunder, all of which have complied as to their
respective  filing  dates and, if  applicable,  effective  dates in all material
respects with all  applicable  requirements  of the  Securities  Act of 1933, as
amended (the  "Securities  Act") and the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange Act"), and the rules promulgated thereunder. None of such
forms,  reports or  documents,  including,  without  limitation,  any  financial
statements  or  schedules  included  therein,  at the time  filed or at the time
effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not misleading.

          (p)  Reporting  Issuer.  SGM Ltd.  is a  reporting  issuer  under  the
provisions of the Securities Act (British Columbia) and is not in default of any
of the requirements of said Act relating to continuous disclosure. Since January
1, 1994,  SGM Ltd. has to the best of its  knowledge  filed with the  applicable
provincial securities law authorities all forms, reports, schedules,  definitive
proxy statements and other documents (the "Reports") required to be filed by SGM
Ltd.  and has made  copies  of such  documents  available  to PDUS.  As of their
respective  dates,  the  Reports  complied  in all  material  respects  with the
applicable   requirements  of  the  Canadian  and  provincial  laws,  rules  and
regulations  applicable to such Reports, and, as of their respective dates, none
of the Reports  contained any untrue  statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary to make the
statements  made therein,  in light of the  circumstances  under which they were
made, not  misleading.  Except to the extent that  information  contained in any
Report has been  revised or  superseded  by a later  Report  filed and  publicly
available prior to the date of this Agreement (a "Filed Document"),  none of the
Reports  contains any untrue  statement of a material fact or omits to state any
material  fact  required to be stated  therein or necessary in order to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  The financial  statements of SGM Ltd.  included in the Reports
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements,  have been prepared in accordance with Canadian generally accepted
accounting  principles applied on a consistent basis during the periods involved
(except  as may be  indicated  in the notes  thereto),  and fairly  present  the
consolidated financial position of SGM Ltd. and its consolidated subsidiaries as
of the dates thereof and the  consolidated  results of their operations and cash
flows for the periods then ended (subject,  in the case of unaudited statements,
to  normal  year-end  audit  adjustments).  Except  as set  forth  in the  Filed
Documents,  neither  SGM  Ltd.  nor any of its  subsidiaries  has  any  material
liabilities,  debts or obligations  (whether  accrued,  absolute,  contingent or
otherwise) required to be set forth on a consolidated  balance sheet of SGM Ltd.
and its consolidated subsidiaries or in the notes thereto.

          (q) Absence of Certain  Changes.  Since  November 30, 1996 and through
the Effective Date,  except as set forth in Section 5.1(r) below,  there has not
been:

               (i) any material adverse change, however caused, in the business,
assets,  liabilities (actual or contingent),  results of operations,  prospects,
financial or other condition or operations of SGM Ltd.;

               (ii)  any  change  in SGM  Ltd.'s  authorized  or  actual  equity
capitalization;

               (iii) any damage,  destruction or casualty  loss,  materially and
adversely  affecting the business,  assets,  liabilities (actual or contingent),
results of operations,  prospects, or financial or other condition or operations
of SGM Ltd., whether or not insured;

               (iv) any  incurrence  of  long-term  debt or any  other  material
liability or obligation,  actual or contingent,  other than current  liabilities
incurred  in the  ordinary  and usual  course of business  consistent  with past
practices;

               (v) entry into,  or agreement or  commitment  to enter into,  any
agreement,   commitment  or  transaction  (including,  without  limitation,  any
borrowing,  capital  expenditure or financing or any amendment,  modification or
termination of any existing agreement,  commitment or transaction) other than in
the ordinary and usual course of business consistent with past practices; or

               (vi) any agreement with respect to any of the foregoing.

          (r) Presence of Certain  Changes.  After November 30, 1996,  Silverado
entered into  agreements by which it purchased the Ester Dome LaTeko property in
the  Fairbanks  Mining  District,  Alaska and  Silverado  located 40  additional
unpatented  mining claims at the Nolan property in the Wiseman Mining  District,
Alaska.

          (s)  Representations.  No statements,  warranties,  or representations
made by Silverado or SGM Ltd. herein contain any untrue  statement of a material
fact or omit to state a material fact  necessary in order to make the statements
made, in light of the circumstances  under which such statements were or will be
made, not misleading.


                                    ARTICLE 6
                     REPRESENTATIONS AND WARRANTIES OF PDUS

     6.1 Representations and Warranties of PDUS. PDUS represents and warrants to
Silverado as of the date hereof as follows,  and covenants that if the Option is
exercised these  representations  and warranties will be true and correct on the
Closing Date:

          (a) Organization  and Standing.  PDUS is a corporation duly organized,
validly  existing,  and  in  good  standing  under  the  laws  of the  State  of
California.

          (b) Qualification.  PDUS is duly qualified to do business in the State
of Alaska.

<PAGE>


          (c)  Corporate  Power.  PDUS has the  requisite  corporate  power  and
authority (i) to enter into this Agreement and all other agreements contemplated
hereby,  and (ii) to carry out and perform its  obligations  under the terms and
provisions of this Agreement and all agreements contemplated hereby.

          (d) Authorization. All requisite corporate action on the part of PDUS,
and its  officers  and  directors,  necessary  for the  execution,  delivery and
performance  of this  Agreement and all other  agreements  of PDUS  contemplated
hereby  have been taken.  This  Agreement  and all  agreements  and  instruments
contemplated  hereby,  when executed and  delivered by PDUS,  will be the legal,
valid, and binding  obligations of PDUS  enforceable  against PDUS in accordance
with their terms. The execution, delivery and performance of this Agreement will
not  violate any  provision  of law;  any order of any court or other  agency of
government; or any provision of any indenture,  agreement or other instrument to
which PDUS is a Party or by which its  properties or assets are bound;  or be in
conflict with, result in a breach of or constitute (with due notice and lapse of
time) a default under any such indenture,  agreement or other instrument.  There
is no law, rule or regulation, nor is there any judgment, decree or order of any
court or  governmental  authority  binding on PDUS which would be contravened by
the  execution,  delivery,  performance  or enforcement of this Agreement or any
instrument or agreement required hereunder.  Notwithstanding  the foregoing,  no
representation  is made as to (i) the remedy of  specific  performance  or other
equitable  remedies for the enforcement of this Agreement or any other agreement
contemplated  hereby or (ii)  rights  to  indemnity  under  this  Agreement  for
securities  law  liability.  Additionally,  this  representation  is  limited by
applicable bankruptcy,  insolvency, moratorium, and other similar laws affecting
generally the rights and remedies of creditors and secured parties.

          (e)  Brokerage  or Finder's  Fee.  All  negotiations  relative to this
Agreement and the transactions  contemplated hereby have been carried on by PDUS
in such manner as not to give rise to any valid claim  against  Silverado or any
third party for a brokerage commission,  finder's fee or other fee or commission
arising by reason of the transactions contemplated by this Agreement.

          (f) Representations. No statements, warranties or representations made
by PDUS herein contain any untrue  statement of material fact or omit to state a
material  fact  necessary  in order to make the  statement  made in light of the
circumstances  under  which  such  statements  were  made or will be  made,  not
misleading.


                                    ARTICLE 7
                                     NOTICES

     7.1 Notices.  All notices given in connection herewith shall be in writing,
and all such notices and deliveries to be made pursuant hereto shall be given or
made in person, by certified or registered mail, by reputable overnight courier,
or by facsimile  acknowledged upon receipt. Such notices and deliveries shall be
deemed to have been duly given and received when actually


<PAGE>


delivered in person or sent by facsimile  (during normal business hours), on the
next business day following the date they are sent by courier, or three business
days after  registered or certified  mailing when  deposited in a receptacle for
United States or Canadian mail, postage prepaid, and addressed as follows:

                  (a)      If to PDUS:

                           Placer Dome U.S. Inc.
                           240 South Rock Boulevard
                           Suite 117
                           Reno, Nevada 89502
                           Facsimile No.: (702) 856-7509
                           Attention:  Land and Legal Department

                           with a copy to:

                           Placer Dome U.S. Inc.
                           Suite 600-1055 Dunsmuir Street
                           Vancouver, British Columbia, Canada
                           V7X 1L3
                           Attention:  Secretary and General Counsel

                  (b)      If to Silverado:

                           Silverado Gold Mines Inc.
                           505-1111 W. Georgia Street
                           Vancouver, British Columbia
                           CANADA V6E 4M3
                           Facsimile No.: (604) 682-3519
                           Attention:  Chairman

                           with a copy to:

                           Davis & Company
                           2800-Park Place
                           666 Burrard Street
                           Vancouver, British Columbia
                           CANADA V6C 2Z7
                           Facsimile No.: (604) 605-3539
                           Attention:  Robert B.D. Swift


<PAGE>


                                    ARTICLE 8
                                 INDEMNIFICATION

     8.1 By SGM Ltd.  and  Silverado.  SGM Ltd. and  Silverado  agree to defend,
indemnify and hold harmless PDUS, its successors, affiliates, assigns, officers,
directors and  employees  from and against any and all claims,  actions,  suits,
losses,  liabilities,  damages,  assessments,  judgments,  costs  and  expenses,
including  reasonable  attorneys'  fees,  arising  out of or  related to (i) any
breach by SGM Ltd. or Silverado of any representation,  covenant or warranty set
forth  herein,  (ii) any  activities  conducted by Silverado on or in connection
with  the  Property  prior  to the  date  of  execution  of the  Mining  Venture
Agreement,  or (iii) any  activities  conducted by  Silverado on any  properties
adjacent to the Property;  provided,  however, that Silverado's  indemnification
obligation  as to  activities  conducted on adjacent  properties as set forth in
subsection  (iii) above shall  terminate to the extent such adjacent  properties
are located within the Silverado  Adjacent  Properties and are purchased by PDUS
pursuant to Section 11.2.

     8.2 By PDUS. PDUS agrees to defend,  indemnify and hold harmless Silverado,
its successors,  affiliates, assigns, officers, directors and employees from and
against  any and all  claims,  actions,  suits,  losses,  liabilities,  damages,
assessments,  judgments,  costs and expenses,  including  reasonable  attorneys'
fees, arising out of or related to (i) any breach by PDUS of any representation,
covenant or warranty set forth herein, or (ii) any activities  conducted by PDUS
on or in connection with the Property prior to the Effective Date and during the
Evaluation Period.

     8.3 Notification.  Any Party who has a claim giving rise to indemnification
liability pursuant to this Agreement (an "Indemnified Party") which results from
a claim by a third  Party  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 a 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.


<PAGE>


                                    ARTICLE 9
                              TERM AND TERMINATION

     9.1 Term and  Termination.  This Agreement will remain in effect during the
Evaluation Period, after which it will terminate  automatically,  whether or not
the  Parties  enter  into the  Mining  Venture  Agreement,  unless  it is sooner
terminated pursuant to the provisions of this Article 9.

     9.2 Termination by PDUS. PDUS shall have the right to terminate,  surrender
and relinquish this Agreement at any time during the Evaluation Period by giving
written notice to Silverado of such election.  Any  termination by PDUS pursuant
to this Section 9.2 will be effective  when such notice is effective as provided
in Section  7.1 above.  Upon  termination  of this  Agreement  pursuant  to this
Section 9.2, PDUS shall have no further  liability or  obligations  hereunder or
with respect to the Property,  except with respect to the  obligations set forth
in Sections  2.3(c),  2.6(a),  4.2,  4.8, 8.2, 9.4, 9.5 and 9.6, and in addition
PDUS  shall  leave the  Property  in at least four  years  good  standing  as to
recorded  assessment  work,  and SGM Ltd.  and  Silverado  shall have no further
liability or obligations  hereunder,  except with respect to the obligations set
forth in Sections 4.5 and 8.1.

     9.3 Termination by Silverado In the event of a material  default  hereunder
on the part of PDUS,  Silverado shall give to PDUS written notice specifying the
particular  default or defaults  asserted,  and, in the case of a default  other
than with respect to the payment of money, PDUS shall have thirty days after the
receipt of said notice (or in the event PDUS  disputes  the  existence of such a
material  default,  thirty  days  after  the  entry  by  a  court  of  competent
jurisdiction  of a judgment  finding such a default) within which either to cure
such  specified  defaults,  or to  undertake  to cure the  same  and  diligently
thereafter  promptly to cure the same. In the event of such a cure by PDUS, this
Agreement  shall  continue  in full force and  effect as though no  default  had
occurred.  In the event such  curative  action is not so  completed  or diligent
efforts to cure such defaults are not undertaken  within the  applicable  30-day
period and thereafter  diligently pursued to completion,  Silverado may elect to
terminate  this  Agreement  by notice to PDUS as provided in Section 7.1. In the
case of a default by PDUS relating to the payment of any funds to Silverado, SGM
Ltd.,  or any third party as required  hereunder,  PDUS shall have ten  business
days after receipt of notice of such default to rectify the same,  failing which
Silverado  may elect to terminate  this  Agreement by written  notice to PDUS as
provided in Section 7.1. Upon  termination  of this  Agreement  pursuant to this
Section 9.2, PDUS shall have no further  liability or  obligations  hereunder or
with respect to the Property,  except with respect to the  obligations set forth
in Sections  2.3(c),  2.6(a),  4.2,  4.8,  8.2,  9.4,  9.5 and 9.6, SGM Ltd. and
Silverado shall have no further liability or obligations hereunder,  except with
respect to the obligations set forth in Sections 4.5 and 8.1.

     9.4 Return of Data. As soon as  practicable  upon the  termination  of this
Agreement,  if the Parties have not entered into the Mining  Venture  Agreement,
PDUS  shall   return  to   Silverado   copies  of  all   title,   environmental,
metallurgical, geological, geophysical, milling and other data furnished to PDUS
by Silverado At such time, PDUS shall make available to Silverado for


<PAGE>


examination and copying all survey maps,  drill hole logs,  sample locations and
assays  developed by PDUS with  respect to the Property  during the term of this
Agreement and not  previously  made available to Silverado;  provided,  however,
that PDUS shall have no obligation to make any interpretive data developed by it
or on its behalf available to Silverado PDUS makes no representation or warranty
as to the accuracy,  reliability or  completeness of any such  information  made
available to Silverado,  and  Silverado  and SGM Ltd.  shall rely on the same at
their sole risk.  Silverado and SGM Ltd. shall  indemnify and hold PDUS harmless
from and against any and all costs, liabilities,  expenses (including reasonable
attorneys'  fees),  claims  or  damages  PDUS may  incur as a result of any such
reliance by Silverado, SGM Ltd. or any third party.

     9.5 Release.  Upon  termination of this Agreement,  if the Parties have not
entered into the Mining Venture Agreement,  PDUS will, at the written request of
Silverado,  provide  Silverado  with  a  written  release,  in the  nature  of a
quitclaim deed or similar  document in recordable  form, of its rights hereunder
with respect to the Property.

     9.6 Surrender of Possession and Removal of Equipment.  Upon  termination of
this  Agreement,  if the  Parties  have  not  entered  into the  Mining  Venture
Agreement,  PDUS shall  surrender  possession  of the  Property,  subject to the
condition  that PDUS shall  have the right at any time  within one year (or such
longer  period as PDUS can  demonstrate  is  reasonably  necessary)  after  such
surrender  or  termination  of  this  Agreement  to  complete  any   reclamation
obligations  required  of PDUS  pursuant  to  Section  4.8 and remove all of its
tools, equipment, machinery, supplies, fixtures, buildings, structures and other
property  erected or placed on such  property by PDUS,  excepting  only  timber,
chutes and ladders in place for  underground  support  and entry.  Title to such
property  not  removed  within the time  period set forth  above  shall,  at the
election of Silverado, pass to Silverado.  Alternatively, at the end of the time
period set forth above, Silverado may remove any such property from the Property
and dispose of the same in a commercially  reasonable manner, all at the expense
of PDUS


                                   ARTICLE 10
                             AMENDMENT OR RELOCATION

     10.1 Amendment and Relocation of Unpatented Claims.  Subject to Silverado's
prior written  approval (which shall not be unreasonably  withheld),  PDUS shall
have the full,  exclusive right, but not the obligation,  to relocate (including
the right to  relocate  Claims  as  unpatented  mill  sites) or amend any of the
Claims,  and to defend  contests  or adverse  actions or suits and to  negotiate
settlement  thereof  with  respect to any and all of the Claims,  and  Silverado
shall  cooperate with PDUS and shall execute any and all documents  necessary or
desirable  in the  opinion  of PDUS to  further  such  amendments,  relocations,
contests,  adverse  actions or suits,  or settlement of such contests or adverse
actions or suits. PDUS shall not be liable to Silverado or SGM Ltd. for the loss
of any of the Claims as a result of such  amendments,  relocations,  contests or
adverse actions or suits, so long as the same are undertaken in good faith.

<PAGE>


                                   ARTICLE 11
                        TITLE TO AFTER-ACQUIRED INTERESTS
                   AND RIGHTS TO ACQUIRE ADDITIONAL INTERESTS

     11.1  After-Acquired  Property and Area of Mutual Interest.  This Agreement
applies and  extends to any  further or  additional  right,  title,  interest or
estate  heretofore  or hereafter  acquired by Silverado in or to the Property or
any part  thereof;  and this  Agreement  will apply and extend to any further or
additional right, title, interest or estate acquired by either Silverado or PDUS
within the Area of Mutual Interest.  In the event Silverado acquires such right,
title, interest or estate, Silverado will formally submit the same to PDUS in an
appropriate writing to the effect that the terms and conditions provided in this
Agreement shall apply to and govern such interest.

     11.2 Preemptive Right. If Silverado intends to sell, lease, grant,  assign,
encumber,  pledge or otherwise commit or dispose of ("Transfer") all or any part
of its interest in any real property within the Silverado  Adjacent  Properties,
it shall  promptly  notify PDUS of its  intentions.  The notice  shall state the
price and all other  pertinent  terms and  conditions by which  Silverado  would
agree to consummate the intended Transfer,  and if such intended Transfer is the
result of an offer from a third  party,  shall be  accompanied  by a copy of the
offer or contract for sale. If the intended Transfer is based upon a third-party
offer and if the  consideration  for the Transfer is, in whole or in part, other
than  monetary,  the notice shall describe such  consideration  and its monetary
equivalent  (based upon the fair market value of the  nonmonetary  consideration
and stated in terms of cash or currency).  PDUS shall have 30 days from the date
such notice is  delivered to notify  Silverado  whether it elects to acquire the
offered  interest at the same price and on the same terms and  conditions as set
forth in the notice.  If PDUS does so elect,  the Transfer  shall be consummated
promptly after notice of such election is delivered to Silverado.  If PDUS fails
to so elect within the thirty-day  period  provided for above,  Silverado  shall
have 90 days  following the expiration of such period to consummate the Transfer
to a third party at a price and on terms no less favorable than those offered by
Silverado to PDUS in the required  notice.  If Silverado fails to consummate the
Transfer to a third party  within the  ninety-day  period set forth  above,  the
preemptive right of PDUS in such offered interest shall be deemed to be revived.
Any  subsequent  proposal  to  Transfer  such  interest  shall be  conducted  in
accordance with all of the procedures set forth in this Section 11.2.

     11.3  Exceptions to Preemptive  Right.  Section 11.2 shall not apply to any
Transfer by Silverado of all or any part of any interest in real property within
the Silverado Adjacent  Properties to any Affiliate,  except that this exception
will no longer apply and the preemptive  right set forth in Section 11.2 will be
triggered in the event that the party to whom Silverado  transfers such interest
ceases being an Affiliate of Silverado.

     11.4  Acquisitions  by PDUS Within the Silverado  Adjacent  Properties.  If
during the Evaluation  Period PDUS acquires any interest in real property within
the Silverado Adjacent Properties,  such interest shall be deemed to be acquired
on behalf of Silverado at no cost to


<PAGE>


Silverado, and upon any such acquisition, PDUS shall immediately convey any such
interest to Silverado by appropriate  documentation in the nature of a quitclaim
deed.


                                   ARTICLE 12
                           ENTIRE AGREEMENT/AMENDMENT

     12.1 Entire  Agreement.  This  Agreement is the complete  expression of all
agreements,  contracts,  covenants,  and promises  between the Parties,  and all
negotiations,  understandings,  and agreements between the Parties are set forth
in this Agreement,  which solely and completely  expresses their  understanding,
and  shall  be   construed   without   reference   to  any  such   negotiations,
understandings and agreements.

     12.2  No  Implied  Covenants.  No  implied  term,  covenant,  condition  or
provision of any kind  whatsoever  shall  affect any of the Parties'  respective
rights and obligations  hereunder,  including,  without  limitation,  rights and
obligations  with respect to exploration,  development,  mining,  processing and
marketing of minerals, and the only terms,  covenants,  conditions or provisions
which  shall in any way affect any of their  respective  rights and  obligations
shall be those expressly set forth in this Agreement.

     12.3 Amendments. This Agreement may not be amended or modified, nor may any
obligation hereunder be waived, except by writing duly executed on behalf of all
Parties,  and  unless  otherwise  specifically  provided  in such  writing,  any
amendment,  modification,  or waiver  shall be  effective  only in the  specific
instance and for the purpose it is given.


                                   ARTICLE 13
                                  FORCE MAJEURE

     13.1 Effect of Occurrence.  In the event PDUS is rendered unable, wholly or
in part,  by fore  majeure  applying to it, to timely  achieve the Minimum  Work
Requirement  during any Annual  Period,  or to carry out any of its  obligations
under this  Agreement  (other than the purchase of required  amounts of Stock or
the  fulfillment of required  obligations  under the Leases),  it is agreed that
such  obligations  of PDUS,  so far as they are affected by such force  majeure,
shall be suspended during the continuance of any inability so caused, but for no
longer period;  that the various  periods and terms provided for herein shall be
extended for a period equivalent to such period of force majeure;  and that such
cause shall, so far as possible, be remedied with all reasonable dispatch.  PDUS
will promptly notify  Silverado of the commencement and termination of any event
of force majeure.

     13.2 Definition.  The term "force majeure," as employed herein,  shall mean
acts of God,  strikes,  lockouts or other industrial  disturbances,  unavoidable
accidents,   uncontrollable  delays  in  transportation,   inability  to  obtain
necessary  materials in the open market, any state or federal laws,  regulations
or requirements (expressly including inability to obtain necessary


<PAGE>


governmental  approvals,  licenses and permits on terms reasonably acceptable to
PDUS), or other matters beyond the reasonable  control of PDUS,  whether similar
to matters  herein  specifically  enumerated  or not;  provided,  however,  that
performance shall be resumed within a reasonable period of time after such cause
has been removed;  and provided  further that PDUS shall not be required against
its will to adjust  any labor  dispute  or to  question  the  validity  of or to
refrain  from  judicially  testing the  validity of any state or federal  order,
regulation or law.


                                   ARTICLE 14
                               GENERAL PROVISIONS

     14.1 Governing Law. This  Agreement,  and the rights and liabilities of the
Parties  hereunder,  shall be governed by and construed in  accordance  with the
laws of the State of Alaska, other than its rules as to conflicts of law.

     14.2 Parties in Interest;  Assignment.  All of the terms and  provisions of
this  Agreement  shall be  binding  upon  and  inure  to the  benefit  of and be
enforceable by the respective  Parties hereto and their successors and permitted
assigns,   whether  hereinabove  so  expressed  or  not.  The  rights,   powers,
privileges,  and  interests  hereunder  shall not be assignable by either Party,
except to affiliates or subsidiaries,  or as otherwise specifically provided for
herein,  without the prior written  consent of the  non-assigning  Party,  which
consent  shall not be  unreasonably  withheld;  provided  that any  affiliate or
subsidiary  or third party to whom any rights,  powers,  privileges or interests
hereunder  are assigned  shall agree in writing to be bound by all the terms and
conditions of this Agreement.

     14.3 Other  Business  Opportunities.  This Agreement is, and the rights and
obligations  of the  Parties  are,  strictly  limited to the  matters  set forth
herein.  Subject to the  provisions  of Article 11  relating  to  after-acquired
title, the Parties shall have the free and  unrestricted  right to independently
engage in and receive the full benefits of any and all business  ventures of any
sort whatever,  whether or not competitive with the matters  contemplated hereby
without  consulting  the other or inviting or allowing the other to  participate
therein.

     14.4  Confidentiality.  Except as set forth in Section  14.6,  the  Parties
hereto agree to treat all data, reports, records and other information developed
under this Agreement and applicable to the property as confidential,  and unless
any Party is required by any law, rule, regulation, or order, to disclose any of
such  information,  information  shall not be disclosed to any person other than
consultants,  contractors,  or potential  investors or assignees,  without prior
written agreement of both Parties, which will not be unreasonably withheld.

     14.5  Memorandum  for  Recording.  Simultaneous  with the execution of this
Agreement,  the Parties agree to execute for recording  purposes a written Short
Form of Exploration  and Development  Agreement,  in the form attached hereto as
Exhibit H, setting  forth the basic terms and  conditions  of this  Agreement as
necessitated by Alaska law.


<PAGE>


     14.6  Public  Announcements.  Disclosure  of  information  relating to this
Agreement or the Property  may be made by either  Party if such  information  is
required  to  be  disclosed  to  any  federal,  state  or  local  government  or
appropriate  agencies and departments thereof or if such information is required
by law, stock exchange rule or regulation to be publicly  announced.  Otherwise,
public  announcements  or  reports  by  Silverado  or SGM Ltd.,  of  information
relating to this  Agreement or the  Property  shall be made only on the basis of
agreed texts upon the prior written consent of PDUS,  which consent shall not be
unreasonably  withheld.  Each of Silverado and SGM Ltd., accordingly agrees that
it will,  not less  than  forty-eight  hours in  advance  of making  public  any
information  referred to in the preceding sentence,  give PDUS written notice of
the text of the proposed  report and provide PDUS with the opportunity to object
to the form and content  thereof before the same is issued.  The  non-disclosing
Party shall respond within  forty-eight  hours of receipt of such notice, or its
silence will constitute a waiver of objection to the terms of the proposed text.

     14.7 Waiver Amendment. Any of the terms or conditions of this Agreement may
be waived at any time by the Party which is entitled to the benefit thereof, but
no such waiver shall affect or impair the right of the waiving  Party to require
observance,  performance, or satisfaction of any other term or condition hereof.
Any of the terms of provisions  of this  Agreement may be amended or modified at
any time by agreement in writing.

     14.8  Severability.  In the  event  that any one or more of the  provisions
contained in this Agreement or in any other instrument or agreement contemplated
hereby shall, for any reason, be held to be invalid,  illegal,  or unenforceable
in any respect,  such  invalidity,  illegality,  or  unenforceability  shall not
affect any other  provision of this  Agreement or any such other  instrument  or
agreement.

     14.9 Time of the Essence. Time is of the essence of this Agreement.

     14.10 Attorneys'  Fees. In the event of any controversy,  claim, or dispute
between the Parties hereto,  arising out of or relating to this Agreement or the
breach  thereof,  the  prevailing  Party shall be  entitled to recover  from the
losing Party reasonable expenses, attorneys' fees, and costs.

     14.11 Further Documents.  At the request of either Party, the Parties shall
execute  and deliver any further  instruments,  agreements,  documents  or other
papers  reasonably  requested  by either  Party to effect the  purposes  of this
Agreement and the transactions contemplated hereby.

     14.12 Dispute Resolution. The Parties hereby agree that any dispute arising
under  this  Agreement  shall be  subject  to the  informal  dispute  resolution
procedure set forth in this Section 14.12.  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  business
days of receipt of such notice,  the  Land/Legal  Manager of PDUS and the CEO of
Silverado shall arrange for a personal or telephone conference in which they use
good faith

<PAGE>


efforts to resolve such dispute.  If those individuals are unable to resolve the
dispute,  they shall jointly prepare and, within seven business days after their
conference,  circulate to the Vice President of Exploration  and the Chairman of
Silverado a memorandum outlining in reasonable detail the nature of the dispute.
Within five 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  14.12  shall not be used in any legal  proceeding
against the Party that made such statement.

     14.13   Counterparts.   This   Agreement   may  be   executed  in  multiple
counterparts,  and all such  counterparts  taken  together  shall be  deemed  to
constitute one and the same document.

     IN WITNESS  WHEREOF,  the Parties hereto have caused this  Exploration  and
Development  Agreement to be duly  executed,  delivered,  and effective from the
date first above written.

                                   Placer Dome U.S. Inc.,
                                   a California corporation


                                   By
                                   ---------------------------------------------

                                   ---------------------------------------------
                                                                          (name)
                                   ---------------------------------------------
                                                                         (title)


                                   Silverado Gold Mines Inc.,
                                   an Alaska corporation


                                   By
                                   ---------------------------------------------

                                   ---------------------------------------------
                                                                          (name)
                                   ---------------------------------------------
                                                                         (title)


                                   Silverado Gold Mines Ltd., a company
                                   incorporated under the laws of the Province 
                                   of British Columbia, Canada


                                   By
                                   ---------------------------------------------

                                   ---------------------------------------------
                                                                          (name)
                                   ---------------------------------------------
                                                                         (title)