STOCK OPTION
AGREEMENT

     

    LI3
ENERGY, INC.

     

     

    THIS
AGREEMENT is entered into as of the ____ day of _______, 2009 (the “Date of
Grant”)

     

    BETWEEN:

     

    Li3 Energy, Inc., a company
incorporated pursuant to the laws of the State of Nevada (the
“Company”)

     

    AND:

     

     (the
“Optionee”)

     

     

    WHEREAS:

     

    A.         The
Board of Directors of the Company (the “Board”) has approved and adopted the
2009 Equity Incentive Plan (the “Plan”), pursuant to which the Board is
authorized to grant to employees and other selected persons stock options to
purchase common shares of the Company (the “Common Stock”);

     

    B.          The
Plan provides for the granting of stock options that either (i) are intended to
qualify as “Incentive Stock Options” within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”), or (ii) do not qualify
under Section 422 of the Code (“Non-Qualified Stock Options”); and

     

    C.         
  The Board has authorized the grant to Optionee of options to
purchase a total of ___________ shares of Common
Stock (the “Options”), which Options are intended to be (select
one):

     

    [   ]           Incentive
Stock Options;

    [   ]           Non
Qualified Stock Options

     

    NOW
THEREFORE, the Company agrees to offer to the Optionee the option to purchase,
upon the terms and conditions set forth herein and in the Plan, _________________ shares of
Common Stock.  Capitalized terms not otherwise defined herein shall
have the meanings ascribed thereto in the Plan.

     

    1.           Exercise
Price.  The exercise price of the options shall be US$______
per share.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.           Limitation on the Number of
Shares.  If the Options granted hereby are Incentive Stock
Options, the number of shares which may be acquired upon exercise thereof is
subject to the limitations set forth in Section 6(a)(i) of the
Plan.

     

    3.           Vesting
Schedule.  The Options shall vest in accordance with Exhibit
A.

     

    4.           Options not
Transferable.  The Options may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or, in the
case of a Non-Qualified Stock Option, pursuant to a qualified domestic relations
order, and shall not be subject to execution, attachment or similar process;
provided, however, that
if the Options represent a Non-Qualified Stock Option, such Option is
transferable without payment of consideration to immediate family members of the
Optionee or to trusts or partnerships established exclusively for the benefit of
the Optionee and Optionee’s immediate family members.  Upon any
attempt to transfer, pledge, hypothecate or otherwise dispose of any Option or
of any right or privilege conferred by the Plan contrary to the provisions
thereof, or upon the sale, levy or attachment or similar process upon the rights
and privileges conferred by the Plan, such Option shall thereupon terminate and
become null and void.

     

    5.           Investment
Intent.  By accepting the Options, the Optionee represents and
agrees that none of the shares of Common Stock purchased upon exercise of the
Options will be distributed in violation of applicable federal and state laws
and regulations.  In addition, the Company may require, as a condition
of exercising the Options, that the Optionee execute an undertaking, in such a
form as the Company shall reasonably specify, that the Stock is being purchased
only for investment and without any then-present intention to sell or distribute
such shares.

     

    6.           Termination of Employment
and Options.  Vested Options shall terminate, to the extent not
previously exercised, upon the occurrence of the first of the following
events:

     

    
      	
               
      

            	
              (a)

            	
              Expiration.  Ten
      (10) years from the Date of Grant.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Termination for
      Cause.  The date of the first discovery by the Company of
      any reason for the termination of an Optionee’s employment or contractual
      relationship with the Company or any related company for cause (as
      determined in the sole discretion of the Plan Administrator), and, if an
      Optionee’s employment is suspended pending any investigation by the
      Company as to whether the Optionee’s employment should be terminated for
      cause, the Optionee’s rights under this Agreement and the Plan shall
      likewise be suspended during the period of any such
      investigation.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Termination Due to
      Death or Disability.  The expiration of one (1) year from
      the date of the death of the Optionee or cessation of an Optionee’s
      employment or contractual relationship by reason of Disability (as defined
      in Section 2(o) of the Plan).  If an Optionee’s employment or
      contractual relationship is terminated by death, any Option held by the
      Optionee shall be exercisable only by the person or persons to whom such
      Optionee’s rights under such Option shall pass by the Optionee’s will or
      by the laws of descent and
distribution.

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

     

    
      	
               
      

            	
              (d)

            	
              Termination for Any
      Other Reason.  The expiration of three (3) months from
      the date of an Optionee’s termination of employment or contractual
      relationship with the Company or any affiliated company or subsidiary of
      the Company for any reason whatsoever other than termination of service
      for cause, death or Disability (as defined in Section 2(o) of the
      Plan).

            


    

     

    Each
unvested Option granted pursuant hereto shall terminate immediately upon
termination of the Optionee’s employment or contractual relationship with the
Company for any reason whatsoever, including Disability, unless otherwise
provided by the Administrator.

     

    7.           Stock. In the case of
any stock split, stock dividend or like change in the nature of shares of Stock
covered by this Agreement, the number of shares and exercise price shall be
proportionately adjusted as set forth in Section 14 of the Plan.

     

    8.           Exercise of
Option.  Options shall be exercisable, in full or in part, at
any time after vesting, until termination; provided, however, that any
Optionee who is subject to the reporting and liability provisions of Section 16
of the Securities Exchange
Act of 1934 with respect to the Common Stock shall be precluded from
selling or transferring any Common Stock or other security underlying an Option
during the six (6) months immediately following the grant of that
Option.  If less than all of the shares included in the vested portion
of any Option are purchased, the remainder may be purchased at any subsequent
time prior to the expiration of the Option term.  No portion of any
Option for less than fifty (50) shares (as adjusted pursuant to Section 14 of
the Plan) may be exercised; provided, that if the vested portion of any Option
is less than fifty (50) shares, it may be exercised with respect to all shares
for which it is vested.  Only whole shares may be issued pursuant to
an Option, and to the extent that an Option covers less than one (1) share, it
is unexercisable.

     

    Each
exercise of the Option shall be by means of delivery of a notice of election to
exercise (which may be in the form attached hereto as Exhibit B) to the
President of the Company at its principal executive office, specifying the
number of shares of Common Stock to be purchased and accompanied by payment in
cash by certified check or cashier’s check in the amount of the full exercise
price for the Common Stock to be purchased.  In addition to payment in
cash by certified check or cashier’s check, an Optionee or transferee of an
Option may pay for all or any portion of the aggregate exercise price by
complying with one or more of the following alternatives:

     

    
      	
               
      

            	
              (a)

            	
              by
      delivering to the Company shares of Common Stock previously held by such
      person, duly endorsed for transfer to the Company, or by the Company
      withholding shares of Common Stock otherwise deliverable pursuant to
      exercise of the Option, which shares of Common Stock received or withheld
      shall have a fair market value at the date of exercise (as determined by
      the Plan Administrator) equal to the aggregate purchase price to be paid
      by the Optionee upon such exercise;
or

            


    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (b)

            	
              by
      complying with any other payment mechanism approved by the Plan
      Administrator at the time of
exercise.

            


    

     

    It is a
condition precedent to the issuance of shares of Common Stock that the Optionee
execute and/or deliver to the Company all documents and withholding taxes
required in accordance with Section 15 of the Plan.

     

    9.           Holding period for Incentive
Stock Options.  In order to obtain the tax treatment provided
for Incentive Stock Options by Section 422 of the Code, the shares of Common
Stock received upon exercising any Incentive Stock Options received pursuant to
this Agreement must be sold, if at all, after a date which is later of two (2)
years from the date of this agreement is entered into or one (1) year from the
date upon which the Options are exercised.  The Optionee agrees to
report sales of shares prior to the above determined date to the Company within
one (1) business day after such sale is concluded.  The Optionee also
agrees to pay to the Company, within five (5) business days after such sale is
concluded, the amount necessary for the Company to satisfy its withholding
requirement required by the Code in the manner specified in Section 15 of the
Plan.  Nothing in this Section 9 is intended as a representation that
Common Stock may be sold without registration under state and federal securities
laws or an exemption therefrom or that such registration or exemption will be
available at any specified time.

     

    10.         Resale restrictions may
apply.  Any resale of the shares of Common Stock received upon
exercising any Options will be subject to resale restrictions contained in the
securities legislation applicable to the Optionee.  The Optionee
acknowledges and agrees that the Optionee is solely responsible (and the Company
is not in any way responsible) for compliance with applicable resale
restrictions.

     

    11.         Subject to 2009 Equity
Incentive Plan.  The terms of the Options are subject to the
provisions of the Plan, as the same may from time to time be amended, and any
inconsistencies between this Agreement and the Plan, as the same may be from
time to time amended, shall be governed by the provisions of the Plan, a copy of
which has been delivered to the Optionee, and which is available for inspection
at the principal offices of the Company.

     

    12.         Professional
Advice.  The acceptance of the Options and the sale of Common
Stock issued pursuant to the exercise of Options may have consequences under
federal and state tax and securities laws which may vary depending upon the
individual circumstances of the Optionee.  Accordingly, the Optionee
acknowledges that he or she has been advised to consult his or her personal
legal and tax advisor in connection with this Agreement and his or her dealings
with respect to Options.  Without limiting other matters to be
considered with the assistance of the Optionee’s professional advisors, the
Optionee should consider: (a) whether upon the exercise of Options, the Optionee
will file an election with the Internal Revenue Service pursuant to Section
83(b) of the Code and the implications of alternative minimum tax pursuant to
the Code; (b) the merits and risks of an investment in the underlying shares of
Common Stock; and (c) any resale restrictions that might apply under applicable
securities laws.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    13.         No Employment
Relationship.  Whether or not any Options are to be granted
under this Plan shall be exclusively within the discretion of the Plan
Administrator, and nothing contained in this Plan shall be construed as giving
any person any right to participate under this Plan.  The grant of an
Option shall in no way constitute any form of agreement or understanding binding
on the Company or any Related Company, express or implied, that the Company or
any Related Company will employ or contract with an Optionee, for any length of
time, nor shall it interfere in any way with the Company’s or, where applicable,
a Related Company’s right to terminate Optionee’s employment at any time, which
right is hereby reserved.

     

    14.         Entire
Agreement.  This Agreement is the only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan supersede all prior and contemporaneous oral and written statements and
representations and contain the entire agreement between the parties with
respect to the Options.

     

    15.         Notices.  Any
notice required or permitted to be made or given hereunder shall be mailed or
delivered personally to the addresses set forth below, or as changed from time
to time by written notice to the other:

     

    The
Company:

    
      	
                                                   Av.
      Pardo y Aliaga 609 Off. 802

            
	
                                                   San
      Isidro, Lima 27, Peru

            


    

                                         Attention:   Luis
F. Saenz

    


    


     

    The
Optionee:

     

    


     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    Li3
Energy, Inc.

    
 

    
      	
              Per:

            	
               

            	 
	 
      	
              Luis
      F. Saenz, Chief Executive Officer

            	 


    

     

    


     

    


     

    


     

     

    


    
      	 
         	 
	
              [Name
      of Optionee]

            	 


    

     

    


     

    


    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    EXHIBIT
A

    


     

    TERMS OF THE
OPTION

     

    


    
      	
              Name
      of the Optionee:

            	 
      
	 	 
	
              Date
      of Grant:

            	
              _______
      ___, 20__

            
	 	 
	
              Designation:

            	
              [Qualified]
      [Non-Qualified] Stock Options

            
	 	 
	
              1.

            	
              Number
      of Options granted:

            	
                          stock
      options

            
	 	 	 
	
              2.

            	
              Purchase
      Price:

            	
              $_____
      per share

            
	 	 	 
	
              3.

            	
              Vesting
      Dates:

            	
              _______
      shares on _______ __, 20__

               

              _______
      shares on _______ __, 20__

               

              _______
      shares on _______ __, 20__

            
	 	 	 
	
              4.

            	
              Expiration
      Date:

            	
              _______
      ___ , 20__

            


    

     

     

     

    
 

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    EXHIBIT
B

     

    To:

     

    
      	      
              Li3
      Energy, Inc.

            
	
              Av.
      Pardo y Aliaga 609 Off. 802

            
	
              San
      Isidro, Lima 27, Peru

            


    

     

    


     

    


     

    Notice of Election to
Exercise

     

    This
Notice of Election to Exercise shall constitute proper notice pursuant to
Section 5.1(h) of Li3 Energy, Inc.’s (the “Company”) 2009 Equity Incentive Plan
(the “Plan”) and Section 8 of that certain Stock Option Agreement (the
“Agreement”) dated as of the _____ day of _______ ____, 20__, between the
Company and the undersigned.

     

    The
undersigned hereby elects to exercise Optionee’s option to purchase _______
shares of the common stock of the Company at a price of US$_____ per share, for
aggregate consideration of US$______, on the terms and conditions set forth in
the Agreement and the Plan.  Such aggregate consideration, in the form
specified in Section 8 of the Agreement, accompanies this notice.

     

    The
Optionee hereby directs the Company to issue, register and deliver the
certificates representing the shares as follows:

     

    
      	
              Registration
      Information:

            	 
      	
              Delivery
      Instructions:

            
	 
      	 
      	 
      
	
              Name
      to appear on certificates

            	 
      	
              Name

            
	 
      	 
      	 
      
	
              Address

            	 
      	
              Address

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              Telephone
      Number

            


    

     

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    DATED at
____________________________________, the _______ day of
________________________, 20___.

     

    
 

    
      	 	 
	 
      	
              (Name of Optionee – Please type or
      print)

            
	 	 
	 	 
	 
      	 
      
	 
      	
              (Signature and, if applicable,
      Office)

            
	 	 
	 	 
	 
      	 
      
	 
      	
              (Address of Optionee)

            
	 	 
	 	 
	 
      	 
      
	 
      	
              (City, State, and Zip Code of
      Optionee)

            


    

     

    


     

    


     

    


    
      
         

      

      
        9