Silver Dragon Resources Inc. - Exhibit 10.2 - Prepared By TNT Filings
Inc.



 



English version for informative purposes

ASSETS BAILMENT AGREEMENT (The "Agreement")
ENTERED INTO BY AND BETWEEN MR. JAIME MUGUIRO PEÑA, BY HIS OWN RIGHT HEREINAFTER
REFERRED TO AS THE "BAILOR" AND THE MINING COMPANY SILVER DRAGON MINING DE
MEXICO, S.A. DE C.V. REPRESENTED BY MR. JUAN CARLOS GALVAN PASTORIZA HEREINAFTER
REFERRED TO AS THE "BAILEE" PURSUANT TO THE FOLLOWING RECITALS AND CLAUSES:

RECITALS


  I. BAILOR declares:

  a) That he is and
  individual of Mexican Nationality, married, and registered before the Federal
  Taxpayers Registry under number MUPJ 341006 001.

  b)
  That he is the only legal owner of the assets described in Exhibit I of this
  agreement (hereinafter the "Assets") which are located in Guadalupe Victoria,
  Durango, State of Durango.

  c) That he whishes
  to grant in bailment to BAILEE the ASSETS with a Purchase Option under the
  terms of this Agreement.

  II. BAILEE through its legal representative declares that:

  a)
  Is a Mexican Mining Company formed and existing under the Mexican Federal Laws
  and registered at the Public Registry of Commerce of the City of Durango,
  Durango under the commercial file No. 250, dated January 19th, 2006
  and since it was recently incorporated its still in the process of being
  registered before the Public Registry of Mining.

  b)
  That Mr. Juan Carlos Alberto Galvan Pastoriza is the legal representative of
  the BAILEE having sufficient authorities to represent it and oblige it under
  the terms and conditions of this Agreement, which have not been modified nor
  limited in anyway whatsoever.

  c) That it wishes
  to receive from BAILOR the ASSETS in bailment and exercise the Purchase Option
  the ASSETS under the terms of this Agreement.

  d) That it has
  reviewed the characteristics and condition of the ASSETS, and confirmed that
  they are in good physical status and in good condition of use.

  III. Both parties declare that:

  a)
  As of March 1st, 2006, they entered into an Assignment Agreement
  over several Mining Concessions (the "Assignment Agreement") regarding the
  Concessions (as defined in the Assignment Agreement) where the ASSETS are
  located, whereby the BAILEE (as Assignee) committed to make several







  installments payments in favor of
  BAILOR (as Assignor) due to the assignment of the Concessions.

  Pursuant to the above Recitals, the parties agree to enter
  into this Agreement subject to the following:



CLAUSES


  1.
  Bailment with Purchase Option:

  
  1.1 The BAILOR whereby grants and delivers to BAILEE the free and exclusive
  use of the ASSETS, and the BAILEE receives them to its entire satisfaction,
  serving this Agreement as the broadest receipt applicable according to law.

  
  1.2 BAILOR will maintain at all times title over the ASSETS, and therefore
  BAILEE will not be able to impose any liens over the ASSETS nor in any way
  restrict or vary their status.

  
  1.3 BAILOR agrees to grant to BAILEE a PURCHASE OPTION over the ASSETS which
  can be exercised by BAILEE by means of a written notice within the following
  30 days as of the date BAILEE pays to BAILOR the total price set forth in the
  Assignment Agreement, in which case, both parties must execute the
  corresponding Assets Purchase Agreement over the ASSETS under the purchase
  price of USD$1,000.00 plus the applicable value added tax (15%) corresponding
  to the amount of US$150.00. Such Assets Purchase Agreement must be executed by
  the parties within the following 15 days as of the date BAILEE notifies BAILOR
  its intention to exercise its PURCHASE OPTION right. The parties agreed that
  the price set forth for the purchase of the ASSETS is fair and therefore it
  does not represent any illegal enrichment, fraud, lesion or other defects that
  could invalid or nullify the Agreement.

  
  1.4 Parties agree that until full payment of the price provided in the
  Assignment Agreement, this Bailment Agreement cannot be terminated by the
  BAILOR nor revoke the PURCHASE OPTION granted to the BAILEE. Therefore, while
  this Bailment Agreement is in force, BAILOR will not be allowed to sale,
  transfer or encumber in any way the ASSETS nor grant any rights over the
  ASSETS to any third parties, with the purposes of avoiding any restriction to
  the right of use of the ASSETS under this Agreement and the PURCHASE OPTION
  granted to BAILEE.

  1.5 BAILOR
  represents and warrants:

  a)
  That the execution and performance of this Agreement does not infringe any
  prior agreements with third parties and that it is not required for BAILOR to
  notify or obtain any type of authorization for the execution and performance
  of this Agreement.







  b)
  That he is the legal owner and has valid title over the ASSETS, and that they
  are free from any liens or encumbrances and updated on the payment of any kind
  of duties that may correspond.

  a) That he does
  not have any knowledge about any demand, claim or legal proceeding that could
  affect the ASSETS or the validity of this Agreement.

  b)
  That the ASSETS were used, possessed and operated by the BAILOR in accordance
  with applicable laws, rules and without infringing any third parties' rights.

  c)
  That the BAILOR is in compliance with his fiscal obligations and will be
  obliged to pay to the Tax Authorities the taxes that are generated due to the
  assignment and the eventual sale of the ASSETS, if applicable.

  2. VARIOUS

  
  2.1 This Agreement and its Exhibits are the total Agreement between the
  parties in connection with the ASSETS. Therefore both parties agree that this
  Agreement substitutes any other prior agreement or covenant in connection with
  the ASSETS.

  
  2.2 In the event that any condition or provision of this Agreement is
  considered as totally or partially illegal, void or contrary to any law or
  rule, such shall not be deemed as part of the Agreement, without affecting the
  remainder of the other conditions and provisions of this Agreement which shall
  remain in full force and effect.

  2.3 Any
  modification to this Agreement will not be valid unless by mutual written
  consent of the parties.

  
  2.4 The SELLER is obliged to release, indemnify and hold the BAILEE harmless
  from any penalties, claims, demands, notifications, or any other acts whether
  from Federal, Local or Municipal authorities or any other third party
  originated by any cause prior to the execution of this Agreement.

  3. Governing Law
  and Jurisdiction.

  
  3.1 For everything related to the interpretation and performance of this
  Agreement both parties agree to submit themselves to the applicable Laws of
  Mexico and the competent Courts of the City of Durango, waiving to any other
  forum that may correspond to them due to their present or future domiciles.

  4. Notifications

  4.1 Both parties
  designate the following addresses for the effects of this Agreement and all
  related notices:




THE BAILOR

Mr. Jaime Muguiro Peña




Circuito Primavera No. 283 

Fraccionamiento Providencia 

Durango, Durango.

México, C.P. 34178

THE BAILEE

Silver Dragon Mining de México, S.A. de C.V. 

Alonso de Pacheco No. 130, 

Fracc. Del Lago 

Durango, Durango 

México, C.P. 34080

Attention: Lic. JUAN CARLOS GALVAN PASTORIZA


  
  4.3 Notifications under this Agreement will be valid if sent in writing by
  registered mail, return receipt or personally delivered to the consignee. They
  will be effective as of the date received by the consignee.

  
  4.4 Any party can modify its address above, provided that the interested party
  delivers to the other party a writing notice with 15 days in advance to the
  effective date of such address change.

  5. HEADINGS

  5.1 The headings
  of this Agreement are for reference only and they shall not affect the meaning
  or interpretation of this Agreement's provisions.



IN WITNESS of the above, both parties execute this Agreement
as of March 2, 2006, in the City of Durango, State of Durango.

BAILOR

___________________ 

Mr. Jaime Muguiro Peña

BAILEE

______________________________________________ 

SILVER DRAGON MINING DE MÉXICO, S.A. DE C.V. 

By: Mr. JUAN CARLOS GALVAN PASTORIZA




Exhibit I 

ASSETS