-- Converted by SEC Publisher 4.1.0.0, created by BCL Technologies Inc., for SEC Filing







	
Exhibit 4.2







SHARE EXCHANGE AGREEMENT


THIS SHARE EXCHANGE AGREEMENT is made as of the 22nd day of June, 2005 and is


	 	
AMONG







COMPANIA MINERA PITALLA, S.A. DE C.V., a Mexican corporation 


	 	
AND







	 	
MARK S. ISAACS AND MEL HERDRICK







(each, a Member, and where indicated a “Principal,” and together the “Principals”)


	 	
AND







	 	
EL DRAGON MINERALS, LLC 

A Nevada limited liability company

(“El Dragon”) 







	 	
AND







	 	
PEDIMENT EXPLORATION LTD.,

a British Columbia corporation 

(“Pediment”) 







	 	
BACKGROUND






	
A.      		
El Dragon is the beneficial owner of 599 of the 600 issued and outstanding shares of Compania Minera Pitalla, S.A. de C.V., a Mexican corporation (“Pitalla”);	
	 
	
B.      		
Pediment (or Skinny Technologies Inc. as it was then known) entered into a letter of intent dated July 29, 2004 in order for Pediment to acquire El Dragon’s interest in Pitalla in exchange for 5.4 million shares for a
deemed value of $CAD 405,000 based on the trading value of the shares of Skinny Technologies on the date the Letter of Intent was signed;	
	 
	
C.      		
Pediment is a public company whose shares trade on the NEX Board of the TSX Venture Exchange;	
	 
	
D.      		
El Dragon wishes to sell to Pediment and Pediment wishes to purchase from El Dragon all of the issued and outstanding shares of Pitalla beneficially owned by El Dragon on the terms and conditions set forth in this
Agreement.	
	 



P:\Clients\1-Sedar\Pediment\RTO-mex\Share Exchange Agreement - FINAL clean.doc









	
2







	
TERMS OF AGREEMENT







IN CONSIDERATION of the mutual agreements herein contained and of other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), the parties agree with one another as
follows:

	
1.      		
Definitions and Interpretation	
	 
	
1.1.      		
Definitions. Whenever used in this Agreement, the following words and terms will have the respective meanings ascribed to them below:	
	 
	 	
1.1.1.      		
“Acquired Shares” has the meaning given in Section 2.1;	
	 
	 	
1.1.2.      		
“Acquisition Shares” means an aggregate 5,400,000 Pediment Shares, subject to adjustment as provided in Section 8;	
	 
	 	
1.1.3.      		
“Additional Shares” has the meaning given in Section 2.2, subject to adjustment as provided in Section 8;	
	 
	 	
1.1.4.      		
“Agreement” means this Share Exchange Agreement and all instruments supplemental to or in amendment or confirmation of this Share Exchange Agreement, and all references to this Agreement will include the
agreements executed at or prior to the Closing in substantially the form of the attached Schedules;	
	 
	 	
1.1.5.      		
“Assets” means the property and assets of Pitalla or Pediment, as the case may be, as a going concern of every kind and description, wheresoever situated;	
	 
	 	
1.1.6.      		
“Business” means in the case of Pitalla, mineral acquisition and exploration and in the case of Pediment, a holding corporation;	
	 
	 	
1.1.7.      		
“Business Day” means any day, other than a Saturday, Sunday or any other day on which the principal chartered banks located in the City of Vancouver are not open for business during normal banking
hours;	
	 
	 	
1.1.8.      		
“Closing” means the completion of the purchase and sale of the Acquired Shares pursuant to this Agreement;	
	 
	 	
1.1.9.      		
“Closing Date” means the 5th Business Day following the receipt of final approval of the transactions contemplated by this Agreement
from the Exchange, provided that such date is on or before August 31, 2005;	
	 
	 	
1.1.10.      		
“Closing Date Financial Statements” means the unaudited financial statements of Pediment for the period from its last completed financial year to March 31, 2005, prepared in accordance with GAAP, together with
notes on those statements;	
	 
	 	
1.1.11.      		
“Closing Time” means 10:00 a.m. (Vancouver time) on the Closing Date or such other time on such date as the parties may agree as the time at which the Closing will take place;	
	 










	
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1.1.12.      		
“Encumbrance” means any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, interference, option, right of first refusal, pre-emptive right, community property
interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on
the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset);	
	 
	
1.1.13.      		
“Escrow Agreement” means such escrow agreement as may be required by the Exchange in connection with the transactions contemplated by this Agreement;	
	 
	
1.1.14.      		
“Exchange” means the TSX Venture Exchange;	
	 
	
1.1.15.      		
“GAAP” means generally accepted accounting principles approved from time to time by, as the case may be, the Canadian Institute of Chartered Accountants, Mexican Institute of Public Accountants, or any successor
institute, applied on a consistent basis;	
	 
	
1.1.16.      		
“Governmental Authority” means any federal, provincial, state, municipal, county or regional government or governmental authority, domestic or foreign and includes any department, commission, board, administrative
agency or regulatory body thereof;	
	 
	
1.1.17.      		
“Material Contracts” means (i) every agreement, contract or obligation requiring payment by or to Pitalla or Pediment, as the case may be, of an amount in any one year in the aggregate of more than $25,000;
(ii) every agreement or contract which has, or might have, any material direct or indirect effect (by license, assignment or otherwise) on the Assets or Business of Pitalla or Pediment, as the case may be (including all of the agreements pursuant to
which Pitalla has an interest in the Properties); and (iii) every agreement or contract with or with respect to any directors, officers, shareholders, consultants or employees of Pitalla or Pediment, as the case may be (including, without limitation
collective bargaining agreements and pension and benefit plans);	
	 
	
1.1.18.      		
“Person” includes an individual, corporation, partnership, joint venture, trust, unincorporated organization, the Crown or any agency or instrumentality thereof or any other juridical entity;	
	 
	
1.1.19.      		
“Pediment Financial Statements” means the unaudited financial statements of Pediment for the period ended March 31, 2005, copies of which are attached as Schedule C;	
	 
	
1.1.20.      		
“Pediment Liabilities” means all debts, liabilities (whether assumed, absolute or contingent or whether liquidated or unliquidated) and obligations of Pediment as at the Closing Date;	
	 
	
1.1.21.      		
“Pediment Shares” means the common shares in the capital of Pediment as they are presently constituted;	
	 










	
4






	
1.1.22.      		
“Pitalla Financial Statements” means Audited financial statements for the years ending Deceomber 31, 2003 and 2004, copies of which are attached as part of Schedule B;	
	 
	
1.1.23.      		
“Properties” means the various mining properties, concessions and prospects held by Pitalla in Mexico, all as more specifically described in Schedule H;	
	 
	
1.1.24.      		
“Subsidiary” means, with respect to a specified body corporate, any body corporate of which more than 50% of the outstanding shares ordinarily entitled to elect a majority of the board of directors thereof
(whether or not shares of any other class or classes will or might be entitled to vote upon the happening of any event or contingency) are at the time owned directly or indirectly by such specified body corporate and will include any body corporate,
partnership, joint venture or other entity over which it exercises direction or control;	
	 
	
1.1.25.      		
“Taxes” means all levies and assessments imposed by any Governmental Authority, including but not limited to all income, sales, use, ad valorem, value added, franchise, withholding, payroll, employment, excise or
property taxes, together with any applicable interest or penalty.	
	 


	
1.2.      		
Gender and Number. In this Agreement, words importing the singular include the plural and vice versa and words importing gender include all genders.	
	 
	
1.3.      		
Article and Section Headings. Article and Section headings contained in this Agreement are included solely for convenience, are not intended to be full or accurate descriptions of the
content of any Article or Section and will not be considered to be part of this Agreement.	
	 
	
1.4.      		
Schedules. The following Schedules are an integral part of this Agreement:	
	 
	 	
Schedule A – List of Shareholders and Number of Pitalla Shares beneficially owned Schedule B – Pitalla Financial Statements Schedule C – Pediment Financial Statements Schedule D – Acquired Shares,
Acquisition Shares and the Additional Shares Schedule E – Pitalla Material Contracts Schedule F – Pediment Material Contracts Schedule G – Permitted Encumbrances Schedule H – Properties of Pitalla Schedule I – Options and
Warrants outstanding in Pediment Schedule J – Name and Address of Shareholders Resident in the United States Schedule K – Payments required to maintain Properties in Good Standing Schedule L – Option Payments required to be made on
San Martin and San Martin Extension Properties.	
	 
	
1.5.      		
Accounting Terms. Unless otherwise indicated, all accounting terms not otherwise defined have the meanings assigned to them, and all calculations are to be made and all financial data
to be submitted are to be prepared, in accordance with GAAP.	
	 
	
1.6.      		
Arm’s Length. For purposes of this Agreement, Persons are not dealing “at arm’s length” with one another if they would not be considered to be dealing at
arm’s length with one another for purposes of the Income Tax Act (Canada), as amended.	
	 










	
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1.7.      		
Statutory Instruments. Unless otherwise specifically provided in this Agreement, any reference in this Agreement to any law, by-law, rule, regulation, order, act or statute of any
government, Governmental Authority or other regulatory body will be construed as a reference to those as amended or re-enacted from time to time or as a reference to any successor thereof.	
	 
	
2.      		
Share Exchange	
	 
	
2.1.      		
Acquired Shares. Upon and subject to the terms of this Agreement, El Dragon agrees to transfer to Pediment, and Pediment agrees to acquire from El Dragon all of the issued and
outstanding shares of Pitalla (the “Acquired Shares”), free and clear of all Encumbrances, in exchange for the Acquisition Shares.	
	 
	
2.2.      		
Acquisition Shares. The purchase price for the Acquired Shares will be paid by the issuance to those members of El Dragon listed in Schedule D hereto (the “Members”) of the
fully paid and non-assessable Acquisition Shares . Consistent with approval of such distribution by the Manager of El Dragon, the Acquisition Shares will be issued to and allocated among the Members as set forth in Schedule D.	
	 
	 	
In addition, at such time as the following conditions are met, Pediment shall issue a further 2,500,000 of its common shares (the “Additional Shares”) (as such shares are presently constituted):	
	 
	 	
i)      		
an aggregate of at least 1,000,000 ounces of gold or gold equivalent “mineral resource”, is determined to be situated on any three or fewer of the Current Properties or on properties acquired by Pitalla or
Pediment that have an outer boundary that lies within three kilometres of any of the Current Properties, based on an independent report prepared in accordance with Policy 43-101 of the British Columbia Securities Commission; and	
	 
	 	
ii)      		
at least 500,000 ounces of such mineral resource is so determined to be situated on one of the Properties;	
	 
	 	
provided, however, that if the conditions set forth in Section 2.2 are not met by December 31, 2011, none of the Additional Shares shall be issued.	
	 
	 	
For purposes of determining gold equivalent mineral resources, silver will be converted to gold equivalent at the ratio of 75 ounces of silver to one ounce of gold, and copper will be converted to gold equivalent at the
ratio of 340 pounds of copper to one ounce of gold. Other valuable metals shall be converted at US dollar equivalents to gold prevailing at the time of a resource being established and supported by an independent report in accordance with Policy
43-101.	
	 
	 	
The Additional Shares will also be issued to and allocated among the Members as set forth in Schedule D.	
	 
	
2.3.      		
Resale of Acquisition Shares. El Dragon acknowledges and agrees that the Acquisition Shares will be subject to the required statutory hold periods, which, in the case of British
Columbia, will be a minimum four month period and will be accordingly stamped with a legend thereon indicating the hold period applicable in the Province of British Columbia.	
	 
	 	
In addition, if any of the Members that are receiving the Acquisition Shares are resident	
	 










	
6







in the United States or are considered to be U.S. Persons, the following additional legend or such other ledgend that Pediment may deem appropriate  will be included in the certificate representing the Acquisition Shares:



NOTICE:  RESTRICTION ON TRANSFER TO UNITED STATES RESIDENTS AND OTHER MATTERS 


THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED OR DISPOSED OF WITHIN THE UNITED STATES UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES, OR (B) THIS CORPORATION RECEIVED FROM THE SELLER’S LEGAL COUNSEL AN OPINION, IN FORM AND SUBSTANCE SATISFACTORY TO THIS CORPORATION (WHICH APPROVAL WILL NOT BE UNREASONABLY WITHHELD), STATING THAT SUCH TRANSACTION IS EXEMPT FROM
SUCH REGISTRATION, OR (C) THIS CORPORATION OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION. 


El Dragon hereby consents to the notation of “STOP TRANSFER” restrictions in Pediment’s stock transfer books relative to its holdings,
and to assist in the enforcement of the covenants and limitations set forth herein. 

	
2.4.      		
Deposit of Principal’s Acquisition Shares in Escrow. The Principals acknowledge and agree that the Acquisition Shares issuable to the Principals pursuant to Schedule D may be
required to be placed in escrow and be subject to a “Tier 2 Value Security Escrow Agreement” pursuant to the Exchange’s policies.	
	 
	
2.5.      		
[intentionally ommitted]	
	 
	
2.6.      		
Tax Election. It is intended that the transfer of the Acquired Shares will be on a tax- deferred basis to the Members for the purposes of the Income Tax Act (Canada) and applicable provincial income tax statutes. In order to give effect to this intention, El Dragon and Pediment will elect in prescribed form and manner to have the
provisions of subsection 85(1) of the Income Tax Act (Canada), and similar provisions of all corresponding provincial legislation, apply to the transfer of the Acquired Shares
and will deliver such elections to the Canada Customs and Revenue Agency and each applicable provincial taxation authority within the time prescribed in accordance with the Income Tax Act (Canada) and all corresponding provincial legislation. The elected amounts for purposes of each such election will be determined by the Members in a manner consistent with the above-mentioned intention.	
	 










	
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3.      		
Representations, Warranties and Covenants	
	 
	
3.1.      		
Representations and Warranties of Pitalla and the Principals. Pitalla and the Principals hereby jointly and severally represent, warrant and covenant to Pediment as follows, and
acknowledge that Pediment is relying on these representations, warranties and covenants in entering into this Agreement and in completing the transactions contemplated hereby:	
	 
	 	
3.1.1.      		
Organization and Good Standing – Pitalla is duly incorporated or organized and validly existing in good standing under the laws of Mexico.	
	 
	 	
3.1.2.      		
Bankruptcy – No bankruptcy, insolvency or receivership proceedings have been instituted or are pending against Pitalla, and Pitalla is able to satisfy its liabilities as they become due.	
	 
	 	
3.1.3.      		
Capacity to Carry on Business – Pitalla has all necessary corporate power, authority and capacity to own the Assets used in its Business and to carry on its Business as presently owned and carried on by it, and Pitalla
is duly licensed, registered and qualified as a corporation to do business and is in good standing in each jurisdiction in which the nature of its Business makes such qualification necessary.	
	 
	 	
3.1.4.      		
Due Authorization – Pitalla has all necessary power, authority and capacity to enter into this Agreement and to perform its obligations under this Agreement.	
	 
	 	 	
The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Pitalla.	
	 
	 	
3.1.5.      		
Authorized and Issued Capital – The authorized capital of Pitalla consists of 10,000 shares of which 600 shares have been validly issued and are outstanding as fully paid and non-assessable.	
	 
	 	
3.1.6.      		
No Options – No options, warrants or other rights for the purchase, subscription or issuance of shares or other securities of Pitalla or securities convertible into or exchangeable for securities of Pitalla have been
authorized or agreed to be issued or are outstanding. There are no restrictions on the transfer of the Acquired Shares except those set out in the Articles of Pitalla and pursuant to applicable securities laws. No person has any agreement, right or
option to require Pitalla to purchase, redeem or otherwise acquire any of the issued and outstanding shares of its capital.	
	 
	 	
3.1.7.      		
Absence of Conflicting Agreements – The execution and delivery of this Agreement and the performance by El Dragon and the Principals of their respective obligations hereunder do not and will not:	
	 
	 	 	
a.      		
to the best of the Principals’ knowledge, result in the violation of any applicable laws;	
	 
	 	 	
b.      		
result in or constitute a breach of any term or provision of, or constitute a default under, any constating documents of Pitalla or any agreement to which Pitalla is a party or its Assets are bound; or	
	 










	
8






	
c.      		
constitute an event which would permit any party to any agreement with Pitalla to terminate such agreement or to accelerate the maturity of any indebtedness or other obligation of Pitalla.	
	 


	
3.1.8.      		
Consents – There are no consents, authorizations, licenses, agreements, permits, approvals or orders of any Person or Governmental Authority required to permit El Dragon to complete the transactions contemplated by
this Agreement, except for the approval of this Agreement and the transaction contemplated thereby by a majority of the percentage interests of the members of El Dragon.	
	 
	
3.1.9.      		
Rights and Privileges – There are no rights, privileges or advantages presently enjoyed by Pitalla which might be lost as a result of the consummation of the transactions contemplated under this Agreement.	
	 
	
3.1.10.      		
Enforceability of Obligations – This Agreement constitutes a valid and binding obligation of El Dragon and the Principals, enforceable against each of them in accordance with its terms, provided that enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws generally affecting enforceability of creditors’ rights and that equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought.	
	 
	
3.1.11.      		
Books and Records – The books and records of Pitalla are fully and accurately maintained and their respective books of account provide for all excise, sales, business and property taxes and other rates, charges,
assessments, levies, duties, taxes, contributions, fees, licenses and other governmental charges of whatsoever kind and nature that have become due and payable or, to the extent such amount is material, that may become due and payable before the
Closing Time. The minute books of Pitalla are complete and accurate and reflect all material actions taken and resolutions passed by the directors and shareholders, as the case may be, of Pitalla since the date of incorporation or
organization.	
	 
	
3.1.12.      		
Financial Statements – The Pitalla Financial Statements are true and correct in every material respect and present fairly the assets, liabilities and financial position of Pitalla as at December 31, 2004 and the
results of its operations to that date, in accordance with GAAP applied on a basis consistent with that of previous periods.	
	 
	
3.1.13.      		
No Other Liabilities – There are no liabilities, contingent or otherwise, of Pitalla which are not disclosed or reflected in the Pitalla Financial Statements except those incurred in the ordinary course of business,
which liabilities do not exceed $25,000, and Pitalla has not guaranteed, or agreed to guarantee, any debt, liability or other obligation of any Person. There are no liabilities of any Person capable of creating an Encumbrance on any of
Pitalla’s Assets.	
	 
	
3.1.14.      		
Non-Arms Length Obligations – Pitalla is not indebted to El Dragon or any affiliate, director, officer or employee of Pitalla except as shown on the Pitalla Financial Statements and none of El Dragon or any affiliate,
officer, director or employee of Pitalla is now indebted or under obligation to Pitalla on any account.	
	 










	
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3.1.15.      		
Absence of Changes – Since December 31, 2004, Pitalla’s Business has been carried on in the normal course and:	
	 
	 	
a.      		
no dividend or other distribution on any shares in the capital of Pitalla has been made, declared or authorized and Pitalla has neither purchased nor redeemed nor agreed to purchase or redeem any of the shares in its
capital;	
	 
	 	
b.      		
no payment of any kind has been made or authorized to or on behalf of El Dragon or to or on behalf of officers, directors or shareholders of Pitalla; and Pitalla has not paid or agreed to pay any compensation, pension,
bonus, share of profits or other benefit to, or for the benefit of, any employee, director or officer of Pitalla except in the ordinary course of business and has not increased or agreed to increase the compensation of any director, officer or
management employee except in the ordinary course of business;	
	 
	 	
c.      		
there has not been any material adverse change in the financial position or condition of Pitalla or any damage, loss or other material adverse change in circumstances affecting Pitalla’s Business or Assets or its right
or capacity to carry on business;	
	 
	 	
d.      		
Pitalla has not transferred, assigned, sold or otherwise disposed of any of its assets except in the ordinary course of business and has not mortgaged, pledged, subjected to lien, granted a security interest in or otherwise
encumbered any of its Assets;	
	 
	 	
e.      		
Pitalla has not discharged or satisfied any Encumbrance or paid any obligation or liability (fixed or contingent) other than liabilities included in the Financial Statements and liabilities incurred since December 31, 2004
in the ordinary course of business;	
	 
	 	
f.      		
Pitalla has not suffered an extraordinary loss, or waived any rights of material value, or entered into any material commitment or transaction not in the ordinary course of business; and	
	 
	 	
g.      		
Pitalla has not incurred or assumed any obligation or liability (fixed or contingent), except secured and unsecured current obligations and liabilities incurred in the ordinary course of business.	
	 
	
3.1.16.      		
Subsidiaries – Pitalla does not have any Subsidiaries.	
	 
	
3.1.17.      		
Material Contracts – Except as listed in Schedule E, Pitalla is not a party to or bound by any Material Contract or commitment whether oral or written. All Material Contracts of Pitalla can be fulfilled and performed
in all material respects by Pitalla in the normal course of business dealings and all such Material Contracts are in good standing and no event of default has occurred, except in the case of certain option payments required to be made on the San
Martin Properties as disclosed on Exhibit L, and is continuing and no event has occurred which, with the giving of notice, the passing of time or both, would constitute an event of default under any Material Contract.	
	 










	
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3.1.18.      		
Employees – Subject to applicable statutory rights, Pitalla is not party to any written contracts of employment with any of its employees or any oral contracts of employment which are not terminable on the giving of
reasonable notice and/or severance pay in accordance with applicable law and no inducements to accept employment with Pitalla were offered to any such employees which have the effect of increasing the period of notice of termination to which any
such employee is entitled. Pitalla has deducted and remitted to the relevant governmental authority or entity all income taxes, unemployment insurance contributions, Mexican Pension Plan contributions, provincial employer health tax remittances and
any taxes or deductions or other amounts which it is required by statute or contract to collect and remit to any governmental authority or other entities entitled to receive payment of such deduction. Pitalla has paid to the date of this Agreement
all amounts payable on account of salary, bonus payments and commission to or on behalf of any and all of its current and former employees.	
	 
	 	
All levies under the Workers’ Compensation legislation of any jurisdiction where Pitalla carries on its Business have been paid by Pitalla.	
	 
	
3.1.19.      		
Compliance with Applicable Laws – To the best knowledge of the Principals, Pitalla has conducted and is conducting its Business in compliance in all material respects with all applicable laws, rules and regulations in
each jurisdiction in which its Business is carried on. Pitalla has not received any notices to the effect that its Business or Assets are not in full compliance with all of the requirements of applicable federal, provincial or local environmental,
health and safety statutes and regulations.	
	 
	
3.1.20.      		
Litigation (Pitalla) – There is no suit, action, litigation, arbitration proceeding or governmental proceeding, including appeals and applications for review, in progress, and to the best knowledge of the Principals,
pending or threatened against or relating to Pitalla. There is not presently outstanding against Pitalla any judgement, decree, injunction, rule or order of any court, Governmental Authority, commission, agency, instrumentality or
arbitrator.	
	 
	
3.1.21.      		
Litigation (Shares) – There is no suit, action, litigation, arbitration proceeding or governmental proceeding, including appeals and applications for review, in progress, pending or, to the best knowledge of the
Principals, threatened against Pitalla or El Dragon relating to the Acquired Shares.	
	 
	
3.1.22.      		
Tax Matters – As of the date of this Agreement, Pitalla has duly and timely filed all tax returns and reports required by law to have been filed by it (except for such tax returns and reports with respect to which the
failure to timely file would not have a materially adverse effect on Pitalla), has duly and correctly reported all income and other amounts required to be reported and has paid all Taxes to the extent that such Taxes have been assessed by the
relevant taxation authority.	
	 
	 	
Pitalla has duly and timely paid all instalments of Taxes required to be paid by it and has made full provision on its books for all Taxes that are not yet due, that will become due and which relate to periods ending
immediately prior to the date of this Agreement. There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the best of the knowledge of the Principals, threatened against Pitalla in respect of any Taxes and there
are no matters under discussion with any taxation or other Government Authority relating to any such matters. Pitalla has made all elections required to be made under the Income Tax	
	 










	
11







Act of Mexico or equivalent statute in connection with any distributions by Pitalla and all such elections were true and correct. Pitalla has not before the date of this Agreement:


	
a.      		
acquired any asset from a Person with whom it was not dealing at arm’s length; or	
	 
	
b.      		
disposed of anything to a Person with whom it was not dealing at arm’s length for proceeds less than the fair market value.	
	 


	
3.1.23.      		
Title to Properties – Pitalla has good and marketable title to all its Assets, and to the Properties, real and personal, including without limitation those reflected in the Pitalla Financial Statements or acquired
since the date of such statements (except as otherwise permitted in this Agreement or as since transferred, sold or otherwise disposed of in the ordinary course of business), free and clear of all Encumbrances. All registrations with respect to
Pitalla’s Properties have been made and kept renewed and are in full force and effect and none of Pitalla’s Properties are under option to Pitalla. In addition, there are no contractual payments required to be made to any vendor or
optionor of the Properties. Pitalla has all requisite permits to commence exploration and mining activities on the Properties.	
	 
	
3.1.24.      		
Condition of Assets – All material tangible Assets of Pitalla used in or in connection with the Business are in good condition, repair and, where applicable, working order, having regard to the use and age
thereof.	
	 
	
3.1.25.      		
Disclosure - None of the foregoing representations, warranties and statements of fact contains any untrue statement of material fact or omits to state any material fact necessary to make any such representation, warranty or
statement not misleading to a prospective purchaser of Purchased Shares seeking full information concerning the matters which are the subject of such representations, warranties and statements.	
	 
	
3.1.26.      		
Schedule K sets out the annual payments required to be made by Pitalla to all governmental authorities and other third parties to maintain the Properties in good standing.	
	 
	
3.1.27.      		
Schedule L sets out the payments that Pitalla is required to make on the San Martin and San Martin Extension Properties. The parties hereto acknowledge that the agreement referred to on Schedule L as the “San Martin
Agreement” is currently in default and that Pediment may choose to either remedy the default or cancel the San Martin Agreement prior to Closing.	
	 
	
3.1.28.      		
The Texson concessions comprising the Property have been transferred by Martha Carranza to Pitalla.	
	 


	
3.2.      		
Representations, Warranties and Covenants of El Dragon. El Dragon, as to itself and with respect to the shares of Pitalla owned by it, hereby severally represents, warrants and
covenants to Pediment as follows and acknowledges that Pediment is relying on the representations, warranties and covenants in entering into this Agreement and in completing the transactions contemplated under this Agreement:	
	 










	
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3.2.1.      		
El Dragon is the beneficial owner of the Acquired Shares and is the registered owner of the Acquired Shares outlined in Schedule A hereto, with good and marketable title thereto, free and clear of all encumbrances, and
without limiting the generality of the foregoing, none of the Acquired Shares are, or will be, subject to any voting trust, shareholder agreement or voting agreement. Upon completion of the transaction contemplated by this Agreement, all of the
Acquired Shares owned by El Dragon will be owned by Pediment as the registered and beneficial owner of record, with good and marketable title thereto;	
	 
	
3.2.2.      		
This Agreement has been duly executed and delivered by El Dragon and constitutes a valid and binding agreement of El Dragon, enforceable against El Dragon in accordance with its terms, subject to (a) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws of general application affecting the rights and remedies of creditors and (b) general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or
at law);	
	 
	
3.2.3.      		
El Dragon has full power and capacity to enter into this Agreement on the terms and conditions herein set forth and to transfer the legal and beneficial title and ownership of the Acquired Shares owned by El Dragon to
Pediment;	
	 
	
3.2.4.      		
The Acquired Shares owned by El Dragon are validly issued and outstanding as fully paid and non-assessable and are now, and upon release to Pediment will be free and clear of all liens, charges, options, encumbrances,
restrictions, equities and claims of every kind created by El Dragon;	
	 
	
3.2.5.      		
El Dragon acknowledges and agrees to be bound by the requirements and provisions contained in Sections 2.3 herein, to the extent applicable to it.	
	 


	
3.3.      		
Representations, Warranties and Covenants of Pediment. Pediment hereby represents, warrants and covenants to Pitalla and El Dragon as follows and acknowledges that Pitalla and El
Dragon are relying on these representations, warranties and covenants in entering into this Agreement and in completing the transactions contemplated under this Agreement:	
	 
	 	
3.3.1.      		
Organization and Good Standing – Pediment is duly incorporated or organized and validly existing in good standing under the laws of the Province of British Columbia.	
	 
	 	
3.3.2.      		
Bankruptcy – No bankruptcy, insolvency or receivership proceedings have been instituted or are pending against Pediment, and Pediment is able to satisfy its liabilities as they become due.	
	 
	 	
3.3.3.      		
Capacity to Carry on Business – Pediment is duly licensed, registered and qualified as a corporation to do business and is in good standing in each jurisdiction in which the nature of its Business makes such
qualification necessary.	
	 
	 	
3.3.4.      		
Due Authorization – Pediment has all necessary power, authority and capacity to enter into this Agreement and to perform its obligations under this Agreement.	
	 
	 	 	
The execution and delivery of this Agreement and the consummation of the	
	 










13


transactions contemplated hereby have been duly authorized by all necessary action on the part of Pediment. 

	
3.3.5.      		
Authorized and Issued Capital – The authorized capital of Pediment consists of 100,000,000 common shares of which 4,385,244 have been validly issued and are outstanding as fully paid and non-assessable.	
	 
	
3.3.6.      		
No Options – No options, warrants or other rights for the purchase, subscription or issuance of shares or other securities of Pediment or securities convertible into or exchangeable for securities of Pediment have been
authorized or agreed to be issued or are outstanding except as set out in Schedule I. There are no restrictions on the transfer of the Pediment shares except those pursuant to applicable securities laws. No person has any agreement, right or option
to require Pediment to purchase, redeem or otherwise acquire any of the issued and outstanding shares of its capital.	
	 
	
3.3.7.      		
Compliance with Securities Laws – Pediment is in compliance with its timely disclosure obligations under applicable securities laws, including stock exchange regulations, and no order ceasing or suspending trading in
securities of Pediment or prohibiting the transactions contemplated hereby has been issued and no proceedings for such purpose are ongoing or pending, or to the best knowledge of Pediment, threatened.	
	 
	
3.3.8.      		
The Acquisition Shares – On Closing, the Acquisition Shares:	
	 
	 	
a.      		
will be issued to the Members as fully paid and non-assessable shares of Pediment;	
	 
	 	
b.      		
will be duly registered in the name of each of the Members in the books and registers of Pediment; and	
	 
	 	
c.      		
will be duly listed and posted for trading on the Exchange, subject only to any Escrow Agreement and any statutory holding period.	
	 
	
3.3.9.      		
Absence of Conflicting Agreements – The execution and delivery of this Agreement and the performance by Pediment its obligations hereunder do not and will not:	
	 
	 	
a.      		
result in the violation of any applicable laws;	
	 
	 	
b.      		
result in or constitute a breach of any term or provision of, or constitute a default under, any constating documents of Pediment or any agreement to which Pediment is a party or its Assets are bound;	
	 
	 	
c.      		
constitute an event which would permit any party to any agreement with Pediment to terminate such agreement or to accelerate the maturity of any indebtedness or other obligation of Pediment; or	
	 
	 	
d.      		
result in or creatre any lien, charge, encumbrance, restriction or claim of any kind on or against the Acquisition Shares.	
	 










	
14






	
3.3.10.      		
Consents – There are no consents, authorizations, licenses, agreements, permits, approvals or orders of any Person or Governmental Authority required to permit Pediment to complete the transactions contemplated by this
Agreement other than the approvals of the Exchange.	
	 
	
3.3.11.      		
Rights and Privileges – There are no rights, privileges or advantages presently enjoyed by Pediment which might be lost as a result of the consummation of the transactions contemplated under this Agreement.	
	 
	
3.3.12.      		
Enforceability of Obligations – This Agreement constitutes a valid and binding obligation of Pediment enforceable against Pediment in accordance with its terms, provided that enforcement may be limited by bankruptcy,
insolvency, liquidation, reorganization, reconstruction and other similar laws generally affecting enforceability of creditors’ rights and that equitable remedies such as specific performance and injunction are in the discretion of the court
from which they are sought.	
	 
	
3.3.13.      		
Books and Records – The books and records of Pediment are fully and accurately maintained and its books of account provide for all excise, sales, business and property taxes and other rates, charges, assessments,
levies, duties, taxes, contributions, fees, licenses and other governmental charges of whatsoever kind and nature that have become due and payable or, to the extent such amount is material, that may become due and payable before the Closing Time.
The minute books of Pediment are complete and accurate and reflect all material actions taken and resolutions passed by the directors and shareholders, as the case may be, of Pediment since the date of incorporation or organization.	
	 
	
3.3.14.      		
Financial Statements – The Pediment Financial Statements are true and correct in every material respect and present fairly the assets, liabilities and financial position of Pediment as at March 31, 2005 and the results
of its operations to that date, in accordance with GAAP applied on a basis consistent with that of previous periods.	
	 
	
3.3.15.      		
No Other Liabilities – There are no liabilities, contingent or otherwise, of Pediment which are not disclosed or reflected in the Pediment Financial Statements except those incurred in the ordinary course of business
and Pediment has not guaranteed, or agreed to guarantee, any debt, liability or other obligation of any Person. There are no liabilities of any Person capable of creating an Encumbrance on any of Pediment’s Assets.	
	 
	
3.3.16.      		
Absence of Changes – Since March 31, 2005, Pediment’s Business has been carried on in the normal course and:	
	 



no dividend or other distribution on any shares in the capital of Pediment has been made, declared or authorized and Pediment has neither purchased nor redeemed nor agreed to purchase or redeem any of the 

	
a.      		
shares in its capital;	
	 
	
b.      		
no payment of any kind has been made or authorized to or on behalf of officers, directors or shareholders of Pediment; and Pediment has not	
	 










	
15







paid or agreed to pay any compensation, pension, bonus, share of profits or other benefit to, or for the benefit of, any employee, director or officer of Pediment except in the ordinary course of business and has not
increased or agreed to increase the compensation of any director, officer or management employee; 

	
c.      		
there has not been any material adverse change in the financial position or condition of Pediment or any damage, loss or other material adverse change in circumstances affecting Pediment’s Assets or its right or
capacity to carry on business;	
	 
	
d.      		
Pediment has not transferred, assigned, sold or otherwise disposed of any of its Assets except in the ordinary course of business and has not mortgaged, pledged, subjected to lien, granted a security interest in or
otherwise encumbered any of its Assets;	
	 
	
e.      		
Pediment has not discharged or satisfied any Encumbrance or paid any obligation or liability (fixed or contingent) other than liabilities included in the Pediment Financial Statements and liabilities incurred since
September 30, 2004 in the ordinary course of business;	
	 
	
f.      		
Pediment has not suffered an extraordinary loss, or waived any rights of material value, or entered into any material commitment or transaction not in the ordinary course of business; and	
	 
	
g.      		
Pediment has not incurred or assumed any obligation or liability (fixed or contingent), except secured and unsecured current obligations and liabilities incurred in the ordinary course of business.	
	 


	
3.3.17.      		
Subsidiaries – Pediment does not have any Subsidiaries except for Pediment Exploration Mexico S de R.L. a Mexican Corporation and wholly-owned subsidiary of
Pediment (“Pediment Mexico”).	
	 
	
3.3.18.      		
Material Contracts – Except as listed in Schedule E, Pediment is not a party to or bound by any Material Contract or commitment whether oral or written. All Material Contracts of Pediment can be fulfilled and performed
in all material respects by Pediment in the normal course of business dealings and all such Material Contracts are in good standing and no event of default has occurred and is continuing and no event has occurred which, with the giving of notice,
the passing of time or both, would constitute an event of default under any Material Contract.	
	 
	
3.3.19.      		
Compliance with Applicable Laws –Pediment has conducted its business in compliance in all material respects with all applicable laws, rules and regulations in each jurisdiction in which its business was carried on and
Pediment is not in breach of any such rules or regulations.	
	 
	
3.3.20.      		
Litigation (Pediment) – There is no suit, action, litigation, arbitration proceeding or governmental proceeding, including appeals and applications for review, in progress, pending or threatened against or relating to
Pediment. There is not presently outstanding against Pediment any judgement, decree, injunction, rule or	
	 










16


order of any court, Governmental Authority, commission, agency, instrumentality or arbitrator. Pediment has not received any notices to the effect that its former business or Assets are not in full compliance with all of
the requirements of applicable federal, provincial or local environmental, health and safety statutes and regulations. 

	
3.3.21.      		
Tax Matters – As of the date of this Agreement, Pediment has duly and timely filed all tax returns and reports required by law to have been filed by it (except for such tax returns and reports with respect to which the
failure to timely file would not have a materially adverse effect), has duly and correctly reported all income and other amounts required to be reported and has paid all Taxes to the extent that such Taxes have been assessed by the relevant taxation
authority.	
	 
	 	
Pediment has duly and timely paid all instalments of Taxes required to be paid by it and has made full provision on its books for all Taxes that are not yet due, that will become due and which relate to periods ending
immediately prior to the date of this Agreement. There are no actions, suits, proceedings, investigations, audits or claims now pending or, to the best of the knowledge of Pediment, threatened against Pediment in respect of any Taxes and there are
no matters under discussion with any taxation or other Government Authority relating to any such matters. Pediment has made all elections required to be made under the Income Tax Act (Canada) in connection with any distributions by Pediment and all such elections were true and correct. Pediment has not before the date of this Agreement:	
	 
	 	
a.      		
acquired any asset from a Person with whom it was not dealing at arm’s length; or	
	 
	 	
b.      		
disposed of anything to a Person with whom it was not dealing at arm’s length for proceeds less than the fair market value.	
	 
	
3.3.22.      		
Disclosure Documents – The forms, reports, news releases, financial statements, annual information forms and other documents filed by Pediment on SEDAR	
	 
	 	
(System for Electronic Document Analysis and Retrieval), taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading.	
	 


	
3.4.      		
Survival. All representations, warranties, covenants and agreements contained in this Agreement on the part of each of the parties will survive the Closing as follows:	
	 
	 	
3.4.1.      		
the representations, warranties, covenants and agreements relating to tax matters will survive until the expiry of 90 days after the relevant authorities are no longer entitled to assess liability for tax against Pitalla or
Pediment, as the case may be;	
	 
	 	
3.4.2.      		
the other representations and warranties contained in this Agreement will survive for two years following Closing;	
	 



after which period, if no claim has, prior to the expiry of such period, been specifically made in writing under this Agreement against a party with respect to any incorrectness in or breach of any representation or
warranty made herein by such party, such party will have no further liability under this Agreement with respect to such representation or warranty provided that if the matter









	
17







involves intentional misrepresentation or fraud there is no time limit and a claim may be brought at any time. 

	
3.5.      		
Investigation. No investigation by or on behalf of Pediment into the Business, operations prospects, Assets, or condition (financial or otherwise) of Pitalla will diminish in any way
the affect of any representations or warranties made by Pitalla and El Dragon in this Agreement or will relieve Pitalla and El Dragon of any of their respective obligations under this Agreement. No investigation by or on behalf of Pitalla and El
Dragon into the affairs, Assets, or condition (financial or otherwise) of Pediment will diminish in any way the effect of any representations or warranties made by Pediment in this Agreement or will relieve Pediment of any of its obligations under
this Agreement.	
	 
	
4.      		
Covenants	
	 
	
4.1.      		
Covenants of Pitalla, El Dragon and the Principals. El Dragon and the Principals jointly and severally covenant and agree as follows:	
	 
	 	
4.1.1.      		
both before and after the Closing Date, cause Pitalla to use its reasonable best efforts to assist Pediment to obtain from all appropriate federal, provincial, state, municipal and other Governmental Authorities or
administrative bodies and all other persons all such approvals and consents in form and terms satisfactory to counsel for Pediment as are necessary or required in order to permit the transfer and assignment of all of the right, title and interest of
El Dragon in and to the Acquired Shares to Pediment and the issuance of the Acquisition Shares to the Members;	
	 
	 	
4.1.2.      		
at any time up to the Closing Date, cause Pitalla to permit Pediment, and its auditors, solicitors and other authorized persons, to make such investigation of Pitalla’s Assets and of Pitalla’s financial and legal
condition as Pediment deems necessary or advisable to familiarize itself with such assets and other matters and to have full access to Pitalla’s Business premises and to
all records, documents and other information related to Pitalla’s Business and Pitalla, including all working papers (internal and external) and details of accounts and inventories prepared, obtained or used in connection with the preparation
of the Pitalla Financial Statements;	
	 
	 	
4.1.3.      		
from the date of this Agreement to the Closing Date, the Principals will cause Pitalla to:	
	 
	 	 	
a.      		
carry on its Business in the ordinary course, in a prudent, businesslike and efficient manner and substantially in accordance with the procedures and practices in effect on the date of this Agreement;	
	 
	 	 	
b.      		
use its reasonable best efforts to preserve and maintain the goodwill of Pitalla’s Business; and	
	 
	 	 	
c.      		
do all necessary repairs and maintenance to Pitalla’s Assets and take reasonable care to protect and safeguard those Assets;	
	 










	
18






	
4.1.4.      		
from the date of this Agreement to the Closing Date, the Principals will not permit Pitalla, without the prior consent in writing of Pediment, not to be unreasonably withheld, to:	
	 
	 	
a.      		
purchase or sell, consume or otherwise dispose of any of Pitalla’s Assets and Properties except in the ordinary course of business;	
	 
	 	
b.      		
enter into any contract or assume or incur any liability except in the ordinary course of business and which is not material;	
	 
	 	
c.      		
settle any account receivable of a material nature at less than face value net of the reserve for that account;	
	 
	 	
d.      		
waive or surrender any material right;	
	 
	 	
e.      		
discharge, satisfy or pay any mortgage, pledge, deed of trust, lien, claim, encumbrance, charge, obligation or liability except in the ordinary course of business;	
	 
	 	
f.      		
issue any securities, including but not limited to options, warrants or rights to acquire or convert or exchange into shares of Pitalla; or	
	 
	 	
g.      		
make any capital or exploration expenditure or commitment for any capital expenditure or exploration expenditure on the Properties.	
	 
	
4.1.5      		
Pitalla and the Principals will use their reasonable best efforts to cause Mr. Alberto Navarro Mayer to enter into an agreement with Pediment pursuant to which Mr. Navarro’s current equity interest in Pitalla will be
held in trust by Mr.	
	 
	 	
Navarro for the benefit of Pediment (the “Mayer Trust Agreement”)_.	
	 
	
4.1.6      		
El Dragon will use its reasonable best efforts to obtain the approval of this Agreement and the transactions contemplated thereby by a majority of the percentage interests of the members of El Dragon.	
	 


	
4.2.      		
Covenants of Pediment. Pediment covenants and agrees as follows:	
	 
	 	
4.2.1.      		
both before and after the Closing Date, Pediment will use its reasonable best efforts to obtain from all appropriate federal, provincial, state, municipal and other Governmental Authorities or administrative bodies and all
other persons all such approvals and consents in form and terms satisfactory to counsel for Pitalla and El Dragon as are necessary or required in order to permit the sale, transfer and assignment of all of the right, title and interest of El Dragon
in and to the Acquired Shares to Pediment and the issuance of the Acquisition Shares to the Members;	
	 
	 	
4.2.2.      		
at any time up to the Closing Date, Pediment will permit Pitalla and El Dragon, and their auditors, solicitors and other authorized persons, to make such investigation of Pediment’s Assets and of Pediment’s
financial and legal condition as the Principals deem necessary or advisable to familiarize themselves with such assets and other matters and to have full access to Pediment’s premises and to all records, documents and other information related
to Pediment,	
	 










	
19







including all working papers (internal and external) and details of accounts and inventories prepared, obtained or used in connection with the preparation of the Pediment Financial Statements; 

	
4.2.3.      		
from the date of this Agreement to the Closing Date Pediment will not without the prior consent in writing of Pitalla, such consent not to be unreasonably withheld:	
	 
	 	
a.      		
purchase or sell, consume or otherwise dispose of any of Pediment’s Assets except in the ordinary course of business;	
	 
	 	
b.      		
enter into any contract or assume or incur any liability except in the ordinary course of business and which is not material;	
	 
	 	
c.      		
settle any account receivable of a material nature at less than face value net of the reserve for that account;	
	 
	 	
d.      		
waive or surrender any material right;	
	 
	 	
e.      		
discharge, satisfy or pay any mortgage, pledge, deed of trust, lien, claim, encumbrance, charge, obligation or liability except in the ordinary course of business; or	
	 
	 	
f.      		
make any capital expenditure or commitment for any capital expenditure.	
	 
	
4.2.4.      		
if required by the Exchange, it will immediately after the execution of this Agreement call and convene a meeting of its shareholders in accordance with its constating documents and applicable securities and corporate law
in order to obtain the requisite shareholder approval and it will solicit proxies to be voted at	
	 
	 	
a      		
shareholders meeting in favour of the transaction contemplated by this	
	 
	 	
Agreement;	
	 
	
4.2.5.      		
if required by the Exchange to call a shareholders’ meeting to obtain shareholder approval, it will prepare (in consultation with Pitalla and the Principals), file and distribute to its shareholders in a timely and
expeditious manner, an information circular and any amendments or supplements to the information circular, all as required by applicable law and the Rules of the Exchange, and in all the jurisdictions where the same is required, complying in all
material respects with all applicable legal requirements and such information circular will include a recommendation from the board of directors of Pediment that the shareholders vote in favour of the transactions contemplated by this
Agreement;	
	 
	
4.2.6.      		
it will notify Pitalla and El Dragon of any material adverse change (actual, anticipated, contemplated or to the knowledge of Pediment, threatened, financial or otherwise) in its Assets, financial condition or prospects and
of any material governmental or third party complaints, investigations or hearings; and	
	 
	
4.2.7.      		
it will use its reasonable best efforts to obtain the approval of the Exchange and will prepare and file, in consultation with Pitalla and El Dragon, all documents and forms requested by the Exchange in connection with such
approval.	
	 










	
20






	
4.3.      		
Covenants of Pitalla, El Dragon and the Principals and Pediment. Each of El Dragon, the Principals and Pediment covenants and agrees to take all such actions as are within his, her or its power to control, and to use his, her or its reasonable best efforts to cause other actions to be taken which are
not within his, her or its power to control, so as to ensure compliance with, and satisfaction of, any conditions set forth in Section 4 whether for his, her or its benefit or for the benefit of another party to this Agreement.	
	 
	
5.      		
Conditions Precedent	
	 
	
5.1.      		
Conditions Precedent for the Benefit of Pediment. The obligation of Pediment to complete the transactions contemplated by this Agreement are subject to the satisfaction of, or
compliance with, at or before the Closing Time, each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit of Pediment and may be waived by it in whole or in part):	
	 
	 	
5.1.1.      		
Truth of Representations and Warranties – Except as otherwise required by this Section 5, the representations and warranties of Pitalla, El Dragon and the Principals contained in this Agreement will be true and correct
on and as of the Closing Date as though made at and as of the Closing Date.	
	 
	 	
5.1.2.      		
Covenants and Agreements – Each of Pitalla, El Dragon and the Principals will have complied with all covenants and agreements in this Agreement agreed to be performed or caused to be performed by him, her or it on or
before the Closing Date.	
	 
	 	
5.1.3.      		
Loss of Assets – No material loss or destruction of or damage to any of Pitalla’s Assets will have occurred between the date of this Agreement and the Time of Closing.	
	 
	 	
5.1.4.      		
No Actions or Proceedings – No action or proceeding against Pitalla or any of El Dragon will be pending or threatened by any Person to enjoin or prohibit:	
	 
	 	 	
a.      		
the transactions contemplated by this Agreement; or	
	 
	 	 	
b.      		
the right of Pitalla to conduct its operations and carry on its Business in the ordinary course as they have been conducted and carried on in the past.	
	 
	 	
5.1.5.      		
Agreement Consents – All consents or approvals from or notifications to any lessor or other third person required under the terms of any of the agreements to which Pitalla is a party to the completion of the
transactions contemplated by this Agreement, will have been obtained or given on or before the Closing Time;	
	 
	 	
5.1.6.      		
Texson Concessions – The Texson concessions comprising the Property have been transferred by Martha Carranza to Pitalla.	
	 
	 	
5.1.7.      		
Regulatory Consents – All consents, approvals, orders and authorizations of or from Governmental Authorities or the Exchange required in connect with the completion of the transactions contemplated by this Agreement
will have been obtained on or before the Closing Time.	
	 










	
21






	
5.1.8.      		
Escrow Agreement – The parties to the Escrow Agreement, other than Pediment, will have executed the Escrow Agreements and each of the Principals will have deposited with the escrow agent, those of his, her or its
Acquisition Shares to be deposited under the Escrow Agreement.	
	 
	
5.1.9.      		
Mayer Trust Agreement – Alberto Navarro Mayer shall have executed the Mayer Trust Agreement in a form acceptable to Pediment.	
	 
	
5.1.10.      		
Closing Documents – Each of El Dragon and the Principals will have tendered the documents to be delivered by him, her or it at Closing in accordance with this Agreement.	
	 


	
5.2.      		
Non-satisfaction of Conditions. If any of the conditions set forth in Section 5.1 are not fulfilled or waived to the reasonable satisfaction of Pediment, Pediment may, acting
reasonably, terminate this Agreement by notice in writing to Pitalla and El Dragon. In such event, Pediment will be released from all obligations under this Agreement and El Dragon and the Principals will also be so released unless they were
reasonably capable of causing such condition or conditions to be fulfilled or they have breached any of their representations, warranties, covenants or agreements in this Agreement.	
	 
	
5.3.      		
Conditions Precedent for the Benefit of El Dragon. The obligations of El Dragon to complete the transactions contemplated by this Agreement are subject to the satisfaction of, or
compliance with, at or before the Closing Time, each of the following conditions precedent (each of which is hereby acknowledged to be inserted for the exclusive benefit El Dragon and may be waived byit in whole or in part):	
	 
	 	
5.3.1.      		
Truth of Representations and Warranties – The representations and warranties of Pediment contained in this Agreement will be true and correct on and as of the Closing Date as though made at and as of the Closing
Date.	
	 
	 	
5.3.2.      		
Covenants and Agreements – Pediment will have complied with all covenants in agreements in this Agreement agreed to be performed or caused to be performed by it on or before the Closing Date.	
	 
	 	
5.3.3.      		
Loss of Assets – No material loss or destruction of or damage to any of Pediment’s Assets will have occurred between the date of this Agreement and the Time of Closing.	
	 
	 	
5.3.4.      		
No Actions or Proceedings – No action or proceeding against Pediment will be pending or threatened by any Person to enjoin or prohibit:	
	 
	 	 	
a.      		
the transactions contemplated by this Agreement; or	
	 
	 	 	
b.      		
the right of Pediment to conduct its operations in the ordinary course as they have been conducted and carried on in the past.	
	 
	 	
5.3.5.      		
Agreement Consents – All consents or approvals from or notifications to any lessor or other third person required under the terms of any of the agreements to which Pediment is a party to the completion of the
transactions contemplated by this Agreement, will have been obtained or given on or before the Closing Time;	
	 










	
22






	
5.3.6.      		
Regulatory Consents – All consents, approvals, orders and authorizations of or from Governmental Authorities and the Exchange required in connection with the completion of the transactions contemplated by this
Agreement will have been obtained on or before the Closing Time.	
	 
	
5.3.7.      		
Member Consents – the approval of this Agreement and the transactions contemplated thereby by a majority of the percentage interests of the Members will have been obtained on or before the closing;	
	 
	
5.3.8.      		
Pediment Liabilities – Pediment will have provided El Dragon with evidence satisfactory to them acting reasonably that there are no material Pediment Liabilities other than in the normal course of business and
liabilities resulting from the legal, accounting and regulatory fees with respect to the transactions contemplated herein.	
	 
	
5.3.9.      		
The Acquisition Shares – The Acquisition Shares will, in the case of the Principals only, be allotted and issued subject only to any Escrow Agreement required by the Exchange.	
	 
	
5.3.10.      		
Closing Documents – Pediment will have tendered the documents to be delivered by it at Closing in accordance with this Agreement.	
	 


	
5.4.      		
Non-satisfaction of Conditions. If any of the conditions set forth in Section 5.3 are not fulfilled or waived to the reasonable satisfaction of El Dragon, El Dragon may, acting
reasonably, terminate this Agreement by notice in writing to Pediment. In such event, Pitalla, El Dragon and the Principals will be released from all obligations under this Agreement and Pediment will also be so released unless it was reasonably
capable of causing such condition or conditions to be fulfilled or it has breached any of its representations, warranties, covenants or agreements in this Agreement.	
	 
	
5.5.      		
Waiver. Each of the parties on his, her or its behalf, may waive any condition for his, her or its benefit in this Agreement, in whole or in part, without prejudice to any right of
rescission or any other right in the event of the non-fulfilment of any other condition or conditions. A waiver will only be binding if it is in writing.	
	 
	
6.      		
Closing	
	 
	
6.1.      		
Location. The Closing will take place at the Time of Closing at the offices of Vector Corporate Finance Lawyers, 1040- 999 West Hastings Street, Vancouver, B.C., V6C 2W2	
	 
	
6.2.      		
El Dragon’s Closing Documents. At the Closing, El Dragon and Pitalla will tender to Pediment:	
	 
	 	
6.2.1.      		
certified copies of the resolutions of the directors of Pitalla, in form and substance satisfactory to Pediment, acting reasonably, authorizing the execution and delivery of this Agreement and the transactions contemplated
by this Agreement;	
	 
	 	
6.2.2.      		
certified copies of the resolutions of El Dragon, in form and substance satisfactory to Pediment, acting reasonably, authorizing the execution and delivery of this Agreement and the transactions contemplated by this
Agreement.	
	 










	
23






	
6.2.3.      		
a share certificate for the Acquired Shares duly endorsed for transfer to Pediment;	
	 
	
6.2.4.      		
share certificates for the Acquired Shares in the name of Pediment;	
	 
	
6.2.5.      		
from Pitalla and El Dragon and the Principals a certificate certifying the truth and correctness of his or its representations and warranties and covenants provided in this Agreement as though made at and as of the Closing
Date, the performance of all of his or its covenants and agreements contained in this Agreement on or before the Closing Date and that there has been no material damage to or adverse change in the condition of Pitalla’s Assets or
Business;	
	 
	
6.2.6.      		
appointment of representative(s) of Pediment as majority directors and officers of Pitalla;	
	 
	
6.2.7.      		
the opinion dated the Closing Date, of counsel for Pitalla, in form and substance satisfactory to Pediment, acting reasonably, confirming the corporate existence, authority, capacity and power of Pitalla, the authorized and
issued share capital of Pitalla and such other matters which Pediment acting reasonably may specify; in giving such opinion, counsel for Pitalla may rely on certificates of senior offices of Pitalla as to factual matters;	
	 
	
6.2.8.      		
copies of such other documentation or other evidence it may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement and the taking of all corporate proceedings in
connection with those transactions in accordance with this Agreement, in form and substance satisfactory to Pediment and its counsel, acting reasonably; and	
	 
	
6.2.9.      		
the corporate records and books of account of Pitalla including minute books, share registers and annual reports, and the corporate seal of Pitalla.	
	 


	
6.3.      		
Pediment’s Closing Documents. At the Closing, Pediment will tender to El Dragon:	
	 
	 	
6.3.1.      		
certified copies of the resolutions of the directors of Pediment, in form and substance satisfactory to Pediment, acting reasonably, authorizing the execution and delivery of this Agreement, the transactions contemplated by
this Agreement and the issuance of the Acquisition Shares to the Members;	
	 
	 	
6.3.2.      		
share certificates for the Acquisition Shares in the name of each respective Member;	
	 
	 	
6.3.3.      		
a certificate certifying the truth and correctness of its representations and warranties provided in this Agreement as though made at and as of the Closing Date, the performance of all of its covenants and agreements
contained in this Agreement on or before the Closing Date and the obligation to issue the Additional Shares pursuant to this Agreement and that there has been no material damage to or adverse change in the condition of Pediment’s Assets;
and	
	 
	 	
6.3.4.      		
copies of such other documentation or other evidence El Dragon may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement and the taking of all corporate proceedings in
connection with	
	 










24


those transactions in accordance with this Agreement, in form and substance satisfactory to El Dragon and its counsel, acting reasonably. 

	
7.      		
Intentionally Ommitted	
	 
	
8.      		
Capital Reorganization	
	 
	
8.1.      		
Recapitalizations. If at any time (i) with respect to the Acquisition Shares, after the execution hereof and prior to the Closing Date, and/or (ii) with respect to the Additional
Shares, prior to the date they are actually issued, there shall be a recapitalization of the capital stock, the number of Acquisition Shares and Additional Shares, as applicable, shall be proportionately adjusted so that the holders thereof shall
thereafter be entitled to receive the number of shares of stock or other securities or property of Pediment to which	
	 
	 	
a      		
holder of the number of Acquisition Shares and/or Additional Shares would have been	
	 
	 	
entitled on such recapitalization.	
	 
	
8.2.      		
Reorganizations, Mergers or Consolidations. If at any time (i) with respect to the Acquisition Shares, after the execution hereof and prior to the Closing Date, and/or (ii) with
respect to the Additional Shares, prior to the date they are actually issued, there is a capital reorganization of Pediment or the merger or consolidation of Pediment with or into another corporation or another entity, as a part of such capital
reorganization, provision shall be made so that the holders of the Acquisition Shares and Additional Shares, as applicable, shall thereafter be entitled to receive the number of shares of stock or other securities or property of Pediment to which a
holder of Acquisition Shares and Additional Shares, as applicable, would have been entitled on such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 8 with respect to the rights of the holders of Acquisition Shares and Additional Shares, as applicable, after the capital reorganization to the end that the provisions of this
Section 8 shall be applicable after that event and be as nearly equivalent as practicable.	
	 
	
8.3.      		
No Impairment. Pediment will not, by amendment of its charter documents, or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by Pediment, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 8 and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the holders of the Acquisition Shares and Additional Shares, as applicable, against such
impairment..	
	 
	
9.      		
Notices	
	 
	
9.1.      		
Delivery of Notice. Any notice, direction or other instrument required or permitted to be given by any party under this Agreement will be in writing and will be sufficiently given if
delivered personally or by courier, or transmitted by telecopier during the transmission of which no indication of failure of receipt is communicated to the sender:	
	 
	 	
9.1.1. in the case of El Dragon and the Principals:	
	 
	 	 	
c/o Mark S. Isaacs	
	 
	 	 	
601 Telegraph Canyon Road, Suite 340	
	 










	
25







	 	
Chula Vista, California 91910 



Fax Number: (413) 832-3176 

Email: Silverzinc@cox.net 



with a copy to : 

Scott Alderton 

Stubbs Alderton & Markiles, LLP 

Encino, California 91436 

Fax Number: (818) 444-4520 

Email: salderton@.biztechlawcom







	 	
9.1.2. in the case of Pediment: 

c/o 800 – 850 West Hastings 

Vancouver, British Columbia 

V6C 1E1 



Fax Number: (604) 685-9700







	 	
with a copy to: 

Vector Corporate Finance Lawyers







	 	
1040- 999 West Hastings Street

Vancouver, B.C. 

V6C 2W2 







Fax 604 683-1102 


Att: Stewart L. Lockwood slockwood@vectorlaw.com

	
9.2.      		
Receipt of Notice. Any such notice, direction or other instrument, if delivered personally, will be deemed to have been given and received on the date on which it was received at such
address and, if faxed, will be deemed to have been given and received on the date of transmission in accordance with this Section.	
	 
	
10.      		
Termination	
	 
	
10.1.      		
Grounds for Termination. This Agreement supersedes and replaces the Letter of Intent dated July 29, 2004 and may be terminated at any time:	
	 
	 	
10.1.1.      		
by the mutual agreement of parties to this Agreement;	
	 
	 	
10.1.2.      		
by Pitalla if it is not in material breach of its obligations under this Agreement, and if:	
	 
	 	 	
a.      		
there has been a breach by Pediment of any of its representations and warranties hereunder such that Subsection 5.3.1 will not be satisfied; or	
	 
	 	 	
b.      		
there has been a breach on the part of Pediment of any of its covenants or agreements contained in this Agreement such that Subsection 5.3.2 will not be satisfied;	
	 










	
26






	
c.      		
there are charges to this Agreement to satisy regulatory requirements that Pediment may be subject to that Pitalla deems materially alter the economic terms of this Agreement to its detriment;	
	 
	
d.      		
if Pediment has not completed a financing of at least $1,000,000 to close concurrently with this agreement or in any case in an anount that stasfies the “Concurrent Financing” requirement for Value Escrow as
set out in section 4.3 of the TSX Venture Exchange Policy 5.4	
	 



and in any case such breach has not been cured within ten days after written notice, specifying such breach, to Pediment. 

	
10.1.3.      		
by Pediment if it is not in material breach of its obligations under this Agreement, and if:	
	 
	 	
a.      		
there has been a breach by El Dragon of any of its representations and warranties hereunder such that Subsection 5.1.1 will not be satisfied; or	
	 
	 	
b.      		
the regulatory consents referred to Section 5.3.6 have not been obtained; or	
	 
	 	
c.      		
there has been a breach on the part of El Dragon or Pitalla of any of their respective covenants or agreements contained in this Agreement such that Subsection 5.1.2 will not be satisfied;	
	 
	 	
and, in each case such breach or consent has not been cured or obtained within ten days after written notice, specifying such breach, to El Dragon and Pitalla;	
	 
	
10.1.4.      		
by any party if the Closing Date is not on or before August 31, 2005.	
	 


	
10.2.      		
Effect of Termination. If this Agreement if terminated as provided in Section 10.1, it will, except as provided herein, forthwith become void and none of the parties or their
respective officers, directors, employees, agents, or shareholders will have any liability or obligation with respect to the terminated provisions of the Agreement.	
	 
	
10.3.      		
Option. If this Agreement is terminated as provided in Section 10.1, Pitalla shall have the exclusive option, for 180 days from the later of the date of termination or the date notice
of such termination is given pursuant to Section 9.1, to purchase all of the issued and outstanding capital stock of Pediment Mexico, a wholly-owned subsidiary of Pediment, for an amount
equal to the total amount invested in Pediment Mexico by Pediment through the date such option is execrised, on terms to be determined in good faith by the parties.	
	 
	
11.      		
General Provisions	
	 
	
11.1.      		
Entire Agreement. This Agreement, including all the Schedules hereto, together with the agreements and other documents to be delivered pursuant hereto, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or
other agreements	
	 










	
27







among the parties in connection with the subject matter hereof except as specifically set forth herein and therein. 

	
11.2.      		
Costs and Expenses. Each of the parties will be responsible for the costs incurred by him, her or it in connection with the transactions contemplated by this Agreement.	
	 
	
11.3.      		
Public Announcements. No party will, without the prior consent of the others, make any disclosure regarding the existence, purpose, scope, content, terms or conditions of this
Agreement or other agreements relating to this Agreement except in order to comply with a legal obligation, the requirements of a competent government or statutory agency or the requirements of the Exchange; provided that, where practicable, a copy
of any proposed announcement or statement will be furnished to the other parties in advance of the proposed date of publication. Nothing herein will prevent disclosure of the terms of this Agreement to a corporate party’s directors, officers,
employees or agents or its financial, legal, accounting or other advisors.	
	 
	
11.4.      		
Waiver. The failure of a party in any one or more instances to insist upon strict performance of any of the terms of this Agreement or to exercise any right or privilege arising under
it will not preclude it from requiring by reasonable notice that any other party duly perform its obligations or preclude it from exercising such a right or privilege under reasonable circumstances, nor will waiver in any one instance of a breach be
construed as an amendment of this Agreement or waiver of any later breach.	
	 
	
11.5.      		
Assignment. None of the parties will assign, transfer, charge or otherwise encumber the benefit (or any part thereof) or the burden (or any part thereof) of this Agreement without the
prior written consent of the other parties, such consent not to be unreasonably withheld.	
	 
	
11.6.      		
Further Assurances. Each of the parties hereto will from time to time at the request of any of the other parties hereto and without further consideration, execute and deliver all such
other additional assignments, transfers, instruments, notices, releases and other documents and will do all such other acts and things as may be necessary or desirable to assure more fully the consummation of the transactions contemplated
hereby.	
	 
	
11.7.      		
Time. Time will be of the essence of this Agreement.	
	 
	
11.8.      		
Amendment. This Agreement may be amended or varied only by agreement in writing signed by each of the parties. Unless the context otherwise so requires, a reference to this Agreement
includes a reference to this Agreement as amended or varied from time to time.	
	 
	
11.9.      		
Several not Joint; Limitation on Liability. EACH AND EVERY COVENANT, REPRESENTATION OR WARRANTY OF THE SHAREHOLDERS CONTAINED	
	 
	 	
HEREIN ARE SEVERAL AND NOT JOINT. IN ADDITION, UNDER NO CIRCUMSTANCES SHALL ANY SHAREHOLDER BE LIABLE TO PEDIMENT HEREUNDER FOR ANY AMOUNT IN EXCESS OF THE PROCEEDS RECEIVED BY SUCH SHAREHOLDER FORM THE SALE OF THE
ACQUISITION SHARES AND ADDITIONAL SHARES RECEIVED BY SUCH SHAREHOLDER HEREUNDER, NET OF ANY RESULTING TAX LIABILITY THEREFORE.	
	 










	
28






	
11.10.      		
Severability. If any provision of this Agreement is determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability will attach only to such
provision or part thereof and the remaining part of such provision and all other provisions hereof will continue in full force and effect.	
	 
	
11.11.      		
Governing Law. This Agreement will be governed by and interpreted in accordance with the laws from time to time in force in British Columbia and each of the parties hereby attorns to
the non-exclusive jurisdiction of the courts of British Columbia.	
	 
	
11.12.      		
Benefit of Agreement. This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.	
	 
	
11.13.      		
Counterparts. This Agreement may be executed in as many counterparts as are necessary. It will be binding on each party when each party hereto has signed and delivered one such
counterpart. Delivery may be made by facsimile transmission. When a counterpart of this Agreement has been executed by each party, all counterparts together will constitute one agreement.	
	 



THE PARTIES, intending to be contractually bound, have executed this Agreement as of the date and year first above written. 



















	
SCHEDULE A







List of Shareholders, Addresses and Number of Pitalla Shares Beneficially Owned

	
El Dragon Minerals ,LLC 
		
 		
599 Shares 
	
	
C/O Woodburn & Wedge 
		
 		
 
	
	
6100 Neil Rd., Suite 500 
		
 		
 
	
	
Reno, Nevada 85911 
		
 		
 
	
	
 
	
	
Alberto Navarro Mayer* 
		
 		
1 share* 
	
	
Rincon de la Herradura No 15A 
		
 		
 
	
	
Col Villa Satillite 
		
 		
 
	
	
Hemosillo, Sonora State 
		
 		
 
	
	
Mexico 
		
 		
 
	




*Mr. Mayer’s share is held in trust for the benefit of El Dragon Minerals. The trust agreement will be altered so that the share is held in trust for the benefit of Pediment Exploration Ltd upon execution and
Exchange approval of this agreement.


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SCHEDULE B 


Pitalla Financial Statements


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SCHEDULE C 


Pediment Financial Statements


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SCHEDULE D







EL Dragon Member Interests, Acquisition Shares and Additional Shares to be Issued

	
 
		
 		
 
		
 		
 
		
 		
Additional 
	
	
        Name of Member 
		
 		
EDM Membership Interest % 
		
 		
Acquisition Shares 
		
 		
Acquisition 
	
	
 
		
 		
 
		
 		
 
		
 		
Shares (if 
	
	
 
		
 		
 
		
 		
 
		
 		
Issued) 
	
	
 
	
	
Melvin A. Herdrick 
		
 		
28.2464% 
		
 		
1,525,305 
		
 		
706,159 
	
	
Mark S. Isaacs 
		
 		
18.9827% 
		
 		
1,025,065 
		
 		
474,567 
	
	
Charles H. Troe 
		
 		
9.8499% 
		
 		
531,895 
		
 		
246,247 
	
	
David Coffin 
		
 		
8.0476% 
		
 		
434,570 
		
 		
201,190 
	
	
Eric Coffin 
		
 		
8.0476% 
		
 		
434,570 
		
 		
201,190 
	
	
Matthew K. H. Hee 
		
 		
6.5144% 
		
 		
351,777 
		
 		
182,860 
	
	
Shirley Isaacs 
		
 		
1.4683% 
		
 		
79,290 
		
 		
36,708 
	
	
Jaime Fushille 
		
 		
1.3698% 
		
 		
73,970 
		
 		
34,245 
	
	
Holly Merrill 
		
 		
1.0488% 
		
 		
56,635 
		
 		
26,220 
	
	
Michael Fushille 
		
 		
0.6370% 
		
 		
34,398 
		
 		
15,925 
	
	
Robert McCord 
		
 		
0.3425% 
		
 		
18,495 
		
 		
8,562 
	
	
Kenneth Cates 
		
 		
0.3992% 
		
 		
21,556 
		
 		
9,980 
	
	
Daniel Howard 
		
 		
0.2014% 
		
 		
10,875 
		
 		
5,035 
	
	
Frank Fushille 
		
 		
0.1712% 
		
 		
9,245 
		
 		
4,280 
	
	
Kenney Earle 
		
 		
0.2568% 
		
 		
13,867 
		
 		
6,420 
	
	
Glenn Castillo 
		
 		
0.1712% 
		
 		
9,245 
		
 		
4,280 
	
	
 
	
	
Ernest Pernet 
		
 		
7.4074% 
		
 		
400,000 
		
 		
185,185 
	
	
Scott Hunter 
		
 		
1.8519% 
		
 		
100,000 
		
 		
46,296 
	
	
Robert Newton 
		
 		
1.0684% 
		
 		
57,693 
		
 		
26,710 
	
	
Nelson Martin 
		
 		
0.7123% 
		
 		
38,465 
		
 		
17,808 
	
	
Roldan Chavez 
		
 		
0.3561% 
		
 		
19,230 
		
 		
8,902 
	
	
Isabella Fuschille 
		
 		
1.3105% 
		
 		
70,767 
		
 		
32,720 
	
	
Dr. & Mrs. Fushille 
		
 		
1.5386% 
		
 		
83,085 
		
 		
38,465 
	




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SCHEDULE E 



Pitalla Material Contracts






	
1.      		
Contrato Preparatorio de Preomsa de Compra – Venta (Property Purchase	
	 
	 	
Agreement) by and between Marth Beatriz Encinas Ideco and Pitalla, dated July 13, 2004. IN DEFAULT	
	 
	
2.      		
Service Agreement by and between Servicios Jamm Integrales and Alberto Navarro Mayer, dated March 23, 2005._	
	 



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4







JAMM SERVICE AGREEMENT ( SPANISH)



































































































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SCHEDULE F


Pediment Material Contracts


INTENTIONALLY BLANK









SCHEDULE G 


Permitted Encumbrances 


[INTENTIONALLY BLANK]


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SCHEDULE H 



Properties of Pitalla







Pitalla’s  mineral property holdings consist of mineral concessions located in Sonora State and Baja California, Mexico. Descriptions of specific concession groups are as follows:


	
Caborca Project







The Caborca area project consists of three non-contiguous concessions, namely the Pitalla, Martha and Diana concessions, totalling 667 hectares. The concessions are located within 25 km of the town of Caborca in Sonora
State, Mexico, are held 100% by Pitalla and are in good standing. 


	
Las Colinas Project







Las Colinas consists of two concessions, Cirio and Emily, totalling 3,306 hectares. The project is located 40 kilometres SE of La Paz in the state of Baja California Sur, México. The concessions are held 100% by
Pitalla and are in good standing.


	
Texson Project







The Texson project consists of three concessions, namely Texson Fraction 1, 2 and 3. The concessions total 2,919 hectares and are located 150 kilometres northwest of Hermosillo in Sonora State, Mexico. The concessions
are held 100% by Pitalla and are in good standing. 


	
Daniel Project







The Daniel project consists of four concessions, Daniel 1, Daniel 2, Daniel 3, and Daniel 4 totalling 2,863 hectares. Daniel is located 40 kilometres northwest of Caborca in Sonora State, Mexico. The concessions are
100% owned by Pitalla and are in good standing.


	
Mel-Manuel Project







The Mel-Manuel project consists of two non-contiguous concessions, the Mel and Manuel, totalling 1,166 hectares.  The project is located 110 kilometres northwest of Caborca in Sonora State, Mexico.  The concessions are
held 100% by Pitalla and are in good standing.


	
Valenzuela Project







The Valenzuela project consists of three contiguous concessions, the El Valle, San Martin and San Martin Extension, totalling 400 hectares. The project is located 100 kilometres southeast of Cananea in Sonora State,
Mexico. The El Valle concession is 100% held by Pitalla while the San Martin concessions totalling 61 hectares and internal to the El Valle concession are optioned from a third party. The option requires a final payment of US$50,000 which is
currently in default. The company plans to finalize the acquisition of the San Martin concessions but there is no guarantee that they will be acquired. 


	
Cochis Project







The Cochis project consists of a single concession, the El Toro, totalling 250 hectares which was staked by the company in July 2004 and remains in good standing. The property is located 70 kilometres northeast of
Hermosillo in Sonora State, Mexico. 


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PITALLA CONCESSIONS AND PROPERTY TAXES PAID AT JANUARY 2005











	
SCHEDULE I
	
	
Options and Warrants Outstanding in Pediment
	
	
 
	
	
Stock Options Outstanding: 
		
 		
 
	
	
Number 
		
 		
                                                              Expiry Date 
		
 		
Exercise Price 
	
	
      26,600 
		
 		
                                                              September 13, 2006 
		
 		
$2.25 
	
	
Share Purchase Warrants: 
		
 		
 
	
	
Number 
		
 		
                                                              Expiry Date 
		
 		
Exercise Price 
	
	
  617,500 
		
 		
                                                              December 16, 2005 
		
 		
                    $0.35 
	
	
Convertible Debenture: 
		
 		
 
	
	
Principal Amount: 
		
 		
$409,500 
		
 		
 
	
	
Convertible until December 16, 2005 into: 
		
 		
 
	




1, 365,000 common shares and 682,500 warrants

	
Share Purchase Warrants on Debenture Conversion: 
		
 		
 
	
	
 
	
	
Number 
		
 		
Expiry Date 
		
 		
Exercise Price 
	
	
682,500 
		
 		
December 16, 2006 
		
 		
      $0.35 
	




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SCHEDULE J







Name and Address of Shareholders Resident in the United States


	
Melvin A. Herdrick 

P.O. Box 1631 

Nogales, Arizona 85628 



Mark S. Isaacs 

601 Telegraph Canyon Road #340

Chula Vista, California 91910 



Charles H. Troe 

2410 Westridge Road 

Los Angeles, California 90049 



Matthew Hee 

44-150 Nanamoana Street 

Kaneohe, Hawaii 96744 



Shirley M. Isaacs 

P. O. Box 10280 

Honolulu, Hawaii 96816 



Holly Merrill 

P. O. Box 1286 

Sun Valley, Idaho 83353 



Jaime Fushille 

412 Stonebluff Road 

El Paso, Texas 79912 



Michael Fushille 

804 Loring Street #1B 

San Diego, California 92109 



Robert C. McCord 

6220 Burton Street 

Romulus, Michigan 48174 



Ken Cates 

18262 Shore Drive 

Kemp, Texas 75143 



Daniel Howard 

4553 Avenida Privado 

Oceanside, California 92057 



Frank Fushille 

804 Loring Street #1B 

San Diego, California 92109 







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Kenney & Jenny Earle 


15190 Willow Road Lakeside, California 92040 


Glenn Castillo 


7641 Heatherly Lane San Diego, California 92130


Robert Newton 


19640 Biscayne Bay Drive Boca Raton, Florida 33498 


Nelson W. Martin 6117 Pinehurst Drive El Paso, Texas 79912 


Roldan Chavez 4925 Avila Lane El Paso, Texas 79922 


Dr. & Mrs. Michael Fushille


1009 Broadmoor El Paso, Texas 79912 









	
SCHEDULE K







Payments required to maintain Properties in Good Standing


Property Taxes:


 US$8000 each 6 months. The next property tax payment is due by July 31, 2005 


Annual Proof of Works Obligations:


Reports are required to prove that minimum exploration expenditures have been carried out on the properties. For calendar 2005 the total exploration expenditure required for Pitalla’s current properties is
approximately US$ 50,000.00. These reports must be filed by May 2006.


All payments required to maintain Properties in Good Standing are subject to change based on currency fluctuations. 


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SCHEDULE L







Option Payments required to be made on San Martin and San Martin Extension Properties 


A final payment of US $50,000 is due under the San Martin Agreement


This agreement is currently in default.


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