<PAGE>






                                 ROYAL OAK MINES INC.



-------------------------------------------------------------------------------


                         SENIOR SECURED DEBENTURE - SERIES A


-------------------------------------------------------------------------------


                                    JUNE 22, 1998









                           File #9801032.TRI - SENR15B.DEB

                                       LWS:wpc

                                  GOODMAN AND CARR
                                     Suite 2300
                                200 King Street West
                                  Toronto, Ontario
                                       M5H 3W5


<PAGE>


                                  TABLE OF CONTENTS
<TABLE>
<CAPTION>

ARTICLE NO.                          DESCRIPTION                                             PAGE NO.
<S>         <C>                                                                              <C>
1 - INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
    1.1     Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
    1.2     Use of Singular and Plural . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
    1.3     Interpretation Not Affected by Headings, etc.. . . . . . . . . . . . . . . . . . . .   1
    1.4     Monetary References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1
    1.5     Day Not a Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
    1.6     Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
    1.7     References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
    1.8     Debenture to Govern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
    1.9     Generally Accepted Accounting Principles . . . . . . . . . . . . . . . . . . . . . .   2
    1.10    Computation of Time Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
    1.11    Debentures in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

2 - PRINCIPAL AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
    2.1     Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4
    2.2     Payment of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
    2.3     Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5
    2.4     Optional Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6

3 - SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
    3.1     Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   6
    3.2     No Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
    3.3     Further Assurances - Security. . . . . . . . . . . . . . . . . . . . . . . . . . . .   8

4 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9
    4.1     Representations and Warranties by the Corporation. . . . . . . . . . . . . . . . . .   9
    4.2     Survival of Representations and Warranties by the Corporation. . . . . . . . . . . .  20

5 - COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
    5.1     Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
    5.2     Holder's Right to Decline to Receive Information . . . . . . . . . . . . . . . . . .  27
    5.3     Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

6 - DEFAULT AND ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
    6.1     Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
    6.2     Acceleration on Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
    6.3     Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36
    6.4     Debenture Not Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37

7 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
    7.1     Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
    7.2     Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
    7.3     Exchange of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
    7.4     Reliance and Non-Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
    7.5     Amendment, Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
    7.6     No Set-Off by the Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
    7.7     Employment of Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39
    7.8     Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
    7.9     Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
    7.10    Payment of Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
    7.11    Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  41
    7.12    Payment Agreements for Debenture . . . . . . . . . . . . . . . . . . . . . . . . . .  41
    7.13    Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  42

</TABLE>



<PAGE>

                             ROYAL OAK MINES INC.

                   (Amalgamated under the laws of Ontario)

                     SENIOR SECURED DEBENTURE - SERIES A

       Royal Oak Mines Inc. (the "Corporation") for value received hereby
acknowledges itself indebted and promises to pay to or to the order of the
Holder on the Final Maturity Date, each as defined herein, or such dates as all
or any part of the principal amount hereof may become due in accordance with the
provisions hereof, the principal sum of EIGHTY-FIVE MILLION UNITED STATES
DOLLARS (U.S. $85,000,000) (or such parts thereof as may become due), on
presentation and surrender of this Debenture (in the case of payment of all of
the principal amount hereof) to the Corporation at its registered office or at
such place as the Corporation may direct, and to pay interest on the principal
amount of this Debenture outstanding from time to time at the rates and times
and in the amounts set forth herein. 


ARTICLE 1 - INTERPRETATION

1.1    DEFINITIONS

       In this Debenture, unless otherwise defined in this Debenture, the 
terms set out in SCHEDULE A shall have the meanings ascribed to them in that 
schedule.

1.2    USE OF SINGULAR AND PLURAL

       Words importing the singular include the plural and vice versa and 
words importing gender include all genders.

1.3    INTERPRETATION NOT AFFECTED BY HEADINGS, ETC.

       The division of this Debenture into Articles, Sections, subsections 
and paragraphs and the insertion of headings are for convenience of reference 
only and shall not affect the construction or interpretation of this 
Debenture.

1.4    MONETARY REFERENCES

       Any reference in this Debenture to "Canadian dollars" or "Can. $" or 
similar terms shall be deemed to be a reference to lawful money of Canada and 
any reference in this Debenture to "United States of America dollars", 
"United States dollars" or "U.S. $" or similar terms shall be deemed to be a 
reference to lawful money of the United States of America.  If no such 
references are made with respect to any particular sum or obligation, the sum 
or obligation in question shall be deemed to refer to lawful money of Canada.

<PAGE>

1.5    DAY NOT A BUSINESS DAY

       In the event that any day on or before which any action is required to 
be taken hereunder is not a Business Day, then such action shall be required 
to be taken on or before the requisite time on the first Business Day 
thereafter. 

1.6    INVALIDITY OF PROVISIONS

       Each of the provisions contained in this Debenture is distinct and 
severable and a declaration of invalidity, illegality or unenforceability of 
any such provision or part thereof by a court of competent jurisdiction shall 
not affect the validity or enforceability of any other provisions hereof or 
thereof. Without limiting the generality of the foregoing, if any amounts on 
account of interest or fees or otherwise payable by the Corporation to the 
Holder hereunder exceed the maximum amount recoverable under Applicable Law, 
the amounts so payable hereunder shall be reduced to the maximum amount 
recoverable under Applicable Law. 

1.7    REFERENCES

       Except as otherwise specifically provided, reference in this Debenture 
to any contract, agreement or any other instrument shall be deemed to include 
references to the same as varied, amended, supplemented or replaced from time 
to time and reference in this Debenture to any enactment, including without 
limitation any statute, law, by-law, regulation, ordinance or order, shall be 
deemed to include references to such enactment as re-enacted, amended or 
extended from time to time.

1.8    DEBENTURE TO GOVERN

       If there is any inconsistency between the terms of this Debenture and 
the terms of any Security Document, the provisions hereof shall prevail to 
the extent of the inconsistency, but the foregoing shall not apply to limit 
or restrict in any way the rights and remedies of the Holder under the terms 
of the Security Documents after the Liens thereby constituted shall have 
become enforceable. 

                                       2
<PAGE>

1.9    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

       Unless otherwise specifically provided herein, all accounting terms 
shall be applied and construed in accordance with Canadian generally accepted 
accounting principles consistently applied.  For the purpose of determining 
compliance with the financial covenants set forth in Section 5.1(t), all 
computations shall be calculated on a consolidated basis, where applicable, 
and shall be adjusted to eliminate the effect of any discretionary change by 
the Corporation in the application of generally accepted accounting 
principles since the date of its most recent audited consolidated financial 
statements prior to the date hereof.

1.10   COMPUTATION OF TIME PERIODS

       In this Debenture, in the computation of periods of time from a 
specified date to a later specified date, unless otherwise expressly stated, 
the word "from" means "from and including", and the words "to" and "until" 
each mean "to but excluding".

1.11   DEBENTURES IN SERIES

       The Series A Senior Secured Debentures of the Corporation (the "Series 
A Debentures") may be issued to one or more holders.  The aggregate principal 
amount of Series A Debentures which shall be issued shall be U.S. 
$85,000,000. The Corporation shall also issue Series B Senior Secured 
Debentures of the Corporation (the "Series B Debentures"), the aggregate 
principal amount of which shall be U.S. $35,000,000.

       This Debenture and all other Series A Debentures now or hereafter 
issued shall be rateably secured by a Lien on the property, assets and 
undertaking of the Corporation and shall rank pari passu inter se for payment 
(whether such payment is a payment, repayment and/or prepayment and whether 
same is voluntary or mandatory) of principal and/or interest hereunder and 
all such payments shall be made pro rata to each holder of Series A 
Debentures in accordance with the principal amount outstanding under the 
debenture held by such holder at the time of such payment.

       For as long as a Default or an Event of Default has occurred and is 
continuing, all amounts realized pursuant to the enforcement or the exercise 
of collection or other remedial action pursuant to or with respect to the 
Security for the Series A Debenture or the Security (as defined in the Series 
B Debenture) for the Series B Debenture shall be applied first to pay in full 
any and all amounts outstanding pursuant to the Series A Debenture, and shall 
not be applied to pay any or all amounts outstanding pursuant to the Series B 
Debenture unless and until all amounts outstanding pursuant to the 

                                       3
<PAGE>

Series A Debenture have been paid in full.

       At all times prior to the occurrence of a Default or an Event of 
Default, and at all times after a Default or an Event of Default which has 
occurred has been cured, provided that no other Default or Event of Default 
has occurred which is continuing, all amounts realized pursuant to the 
enforcement or the exercise of collection or other remedial action pursuant 
to or with respect to the Security for the Series A Debenture or the Security 
(as defined in the Series B Debenture) for the Series B Debenture shall be 
applied pro rata in accordance with the relative amounts outstanding under 
the Series A Debenture and the Series B Debenture at the time of such payment.

       The Holder, by its acceptance of this Debenture, agrees to be bound by 
the provisions contained herein.

1.12   REPAYMENT AMOUNT

       For the purposes of (i) the repayment and prepayment of the principal 
amounts outstanding hereunder, (ii) the payment of interest thereon and (iii) 
the payment of fees contemplated in Sections 2.3 and 2.4 hereof, the amount 
outstanding hereunder at any time shall be the aggregate of the Initial 
Purchase Price paid by the Holder, the Additional Purchase Price paid by the 
Holder if any, any and all compounded interest at such time, and such other 
fees, expenses and other amounts as may be payable by the Corporation to the 
Holder pursuant to the Documents at such time.

1.13   USE OF PROCEEDS

       The Corporation hereby covenants, agrees, represents and warrants with 
and to the  Holder that the Corporation will use the proceeds from the 
issuance and sale of Debentures:

       (a)     to repay all amounts outstanding under the Senior Secured 
       Debenture Facility (as defined in the Purchase Agreement);

       (b)     to repay those Kemess South Mine accounts payable of the 
       Corporation listed in SCHEDULE G; 

       (c)     to fund capital and non-capital expenses of the Corporation in 
       connection with the construction, development and operation of the 
       Kemess South Mine.

       In addition to the foregoing, and until the occurrence of a Default or 
Event of Default hereunder:

                                       4
<PAGE>

       (d)     the Corporation may use such proceeds for general corporate 
       purposes in an amount not to exceed the aggregate of U.S. $20,000,000; 
       and

       (e)     to the extent that the amounts referred to in Section 1.13(d) 
       hereof are insufficient to satisfy the general corporate purposes of 
       the Corporation, and provided the Proceeds Conditions have then been 
       and remain satisfied, the Corporation may then use such proceeds for 
       general corporate purposes.

ARTICLE 2 - PRINCIPAL AND INTEREST

2.1    INTEREST

       Interest shall accrue from the date hereof, before and after the 
occurrence of an Event of Default, demand, maturity or judgment, on the 
outstanding principal amount of this Debenture, and on all overdue costs, 
expenses and interest payable hereunder, at the Interest Rate and shall be 
calculated and compounded monthly on the first day of each calendar month, 
and shall be payable on the first day of the calendar month occurring after 
the earlier of (i) July 31, 1998, and (ii) the Kemess Mine Production Date, 
and thereafter shall be calculated and compounded monthly and payable monthly 
in arrears on the first calendar day of each month in each year (each an 
"Interest Payment Date") and on the Maturity Date.  Notwithstanding the 
foregoing sentence, any accrued or accruing interest hereunder shall become 
and shall be immediately due and payable in full in the event that the 
principal amount outstanding hereunder has become due and payable.

2.2    PAYMENT OF INTEREST

       Except as otherwise provided for herein, as interest on this Debenture 
becomes due (except interest payable on the Maturity Date, which shall be 
paid upon presentation and surrender of this Debenture for payment), the 
Corporation shall pay to the Holder the interest due and payable on each 
Interest Payment Date, without deduction or set-off, by wire transfer of 
immediately available funds to such account and address of the Holder as may 
be provided by the Holder from time to time. 

2.3    REPAYMENT

(a)    Subject to the terms and conditions of this Debenture including the 
provisions of Section 6.2 hereof, the principal amount of this Debenture and 
all accrued interest thereon and any other amounts payable hereunder in 
connection with this Debenture shall be repaid in full on the date that is 
two years from the date hereof (the "Final Maturity Date").

                                       5
<PAGE>

(b)    In addition to any other amounts payable by the Corporation hereunder, 
the Corporation shall pay:

       (i)     on February 15, 1999, a non-refundable fee equal to 2% of the 
               amount by which the aggregate amount then outstanding under 
               the Debentures (including principal and accrued interest and 
               unpaid fees and expenses) exceeds U.S. $80,000,000; and

       (ii)    On October 15, 1999, a non-refundable fee equal to 2% of the 
               amount by which the aggregate principal amount then 
               outstanding under the Debentures (including principal and 
               accrued interest and unpaid fees and expenses) exceeds U.S. 
               $50,000,000.

Such fees shall be payable to the holders of the Debentures pro rata and pari 
passu, in accordance with the provisions of Section 1.11.

2.4    OPTIONAL PREPAYMENT

       Subject to the terms and conditions of this Debenture and provided no 
Default or Event of Default has occurred hereunder, under any other Series A 
Debentures or under any of the Series B Debentures, the Corporation shall 
have the privilege of prepaying from time to time, on any Business Day, all 
or any part of the principal amount of this Debenture on payment to the 
Holder of the Prepayment Amount provided that:

       (a)     any such prepayment shall only be made on at least five 
       Business Days' notice to the Holder, which notice, once given, shall 
       be irrevocable and binding upon the Corporation;

       (b)     any such prepayment shall be in an amount of at least U.S. 
       $5,000,000;

       (c)     any such prepayment shall be accompanied by payment of all 
       interest, fees and other amounts accrued in respect of the principal 
       amount being so prepaid to the date of prepayments as well as all 
       other amounts due and payable under this Debenture on the date of 
       prepayment;

       (d)     each such prepayment shall be in accordance with Section 1.11; 
       and 

       (e)     no such prepayment will be permitted at any time that the 
       Permitted Encumbrances set out in Part I of SCHEDULE C1 exceeds 
       Can.$10,000,000.

                                       6
<PAGE>


2.5    SUBORDINATED NOTE TRUST INDENTURE

       The Corporation hereby designates the Debt payable hereunder by the 
Corporation to the Holder as "Designated Senior Indebtedness" pursuant to and 
in accordance with the Subordinated Note Trust Indenture.


ARTICLE 3 - SECURITY

3.1    SECURITY

       (a)     As security for the due and punctual payment of all of its 
       obligations to the Holder under or in respect of this Debenture and 
       the other Documents, the Corporation shall execute and deliver to the 
       Holder, contemporaneous with the delivery of this Debenture to the 
       Holder, valid and enforceable Liens against all present and 
       after-acquired property, undertaking and assets of the Corporation 
       except the Excluded Assets, all in form and substance satisfactory to 
       the Holder and its Counsel, including without limitation the following:

               (i)    a security debenture by the Corporation creating a 
               fixed and floating Lien on all of the Corporation's present 
               and after-acquired property and assets including, without 
               limitation, fixed and specific Liens on all property and 
               assets comprising the Kemess Mine;

               (ii)   a general security agreement by the Corporation 
               creating a Lien on all of the Corporation's present and 
               after-acquired property and assets;

               (iii)  a limited guarantee by APM of the obligations of the 
               Corporation to the Holder;

               (iv)   a general security agreement by APM creating a Lien on 
               all of APM's present and after-acquired property and assets;

               (v)    assignments of the Corporation's interests in all 
               material mining claims, concessions and leases in any way 
               relating to the Kemess Mine;

               (vi)   an assignment by the Corporation of its rights and 
               interest in the Kemess South Resources Limited Partnership;

               (vii)  if and to the extent required by the Holder, an 
               assignment (and, where required, consents to such assignment) 
               by the Corporation of its

                                       7
<PAGE>

               rights and interest in the Kemess Mine Construction Contracts;

               (viii) an assignment (and, where required, consent to such 
               assignment) by the Corporation of its rights and interest in 
               such of the Material Contracts as the Holder may designate;

               (ix)   pledges of all of the shares in the capital of APM held 
               by the Corporation; 

               (x)    a deed of moveable hypothec for use in the province of 
               Quebec; and

               (xi)   such other agreements and documents as may, in the sole 
               discretion of the Holder, be necessary or desirable to grant 
               to the Holder valid and enforceable Liens on all of the 
               property, undertaking and assets of the Corporation other than 
               the Excluded Assets. 

       Notwithstanding anything to the contrary contained in the foregoing 
       but subject always to the provisions of Section 5.1(v), the 
       Corporation shall not be obligated to register the Security against 
       any real property or mineral claims comprising:  (i) the Pamour Mine, 
       the Nighthawk Lake Mine and the mines generally known as Giant, Hope 
       Brook and Colomac; and (ii) the Corporation's currently existing 
       exploration properties not in any way relating to the Kemess Mine.

       (b)     Contemporaneous with the delivery of the Security Documents 
       contemplated by Section 3.1(a), the Corporation shall deliver to the 
       Holder legal opinions in form and content, and from legal counsel, 
       satisfactory to the Holder regarding the validity, enforceability and 
       priority of all Liens created by such Security Documents and regarding 
       such other matters as the Holder may require to evidence compliance 
       with the terms of this Debenture and the other Documents.

       (c)     The Corporation shall ensure that all of the Security 
       Documents are executed and delivered in accordance with this Article 3 
       and the Liens created thereby are perfected in all jurisdictions and 
       at all times reasonably required by the Holder. 

                                       8
<PAGE>

3.2    NO MERGER

       The Security Documents shall not merge in any other security.  No 
judgment obtained by the Holder shall in any way affect any of the provisions 
of this Debenture or any of the Security Documents.  For greater certainty, 
no judgment obtained by the Holder shall in any way affect the obligation of 
the Corporation to pay principal, fees and interest at the rates, times and 
in the manner provided in this Debenture.

3.3    FURTHER ASSURANCES - SECURITY

       From time to time following the Closing Date, the Corporation shall at 
the expense of the Corporation take such action (including, without 
limitation, the provision of information and access to property) and execute 
and deliver to the Holder such agreements, conveyances, deeds and other 
documents and instruments as the Holder shall reasonably request in 
furtherance of granting to the Holder valid and enforceable first priority 
Liens on all of the Corporation's present and after acquired property, 
undertaking and assets other than the Excluded Assets, and the Corporation 
shall at the expense of the Corporation register, file or record the same (or 
a notice or financing statement in respect thereof) in all offices where such 
registration, filing or recording is, in the opinion of the Holder, necessary 
or advisable to constitute, perfect and maintain such Liens in all 
jurisdictions reasonably required by the Holder, subject only to Permitted 
Encumbrances, provided that (subject always to the provisions of Section 
5.1(v)) the Corporation shall not be obligated to register the Security 
against any real property or mineral claims comprising:  (i) the Pamour Mine, 
the Nighthawk Lake Mine and the mines generally known as Giant, Hope Brook 
and Colomac; and (ii) the Corporation's currently existing exploration 
properties not in any way relating to the Kemess Mine.  The Corporation shall 
deliver opinions of its Counsel in respect of such matters, in each case 
within a reasonable time after the request therefor by the Holder, and in 
each case in form and substance reasonably satisfactory to the Holder.


ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

4.1    REPRESENTATIONS AND WARRANTIES BY THE CORPORATION

       The Corporation hereby represents and warrants to the Holder and so 
long as this Debenture remains in effect shall be deemed to continuously 
represent and warrant as follows and acknowledges that the Holder is relying 
on such representations and warranties in connection with its purchase of the 
Debenture:

       (a)     INCORPORATION AND STATUS OF THE CORPORATION.  The Corporation 
       is the 

                                       9
<PAGE>

       successor corporation resulting from the amalgamation on December 29, 
       1997 of the former Royal Oak Mines Inc. and Kemess Mines Inc., is duly 
       amalgamated and organized under the laws of its jurisdiction of 
       incorporation, is in good standing in each jurisdiction where, by 
       reason of its business or assets, it is required to be qualified or 
       licensed and has, subject to the Materiality Threshold, all powers, 
       licenses, franchises and permits required to own its assets and carry 
       on its business as the same is presently carried on.

       (b)     POWER AND CAPACITY.  The Corporation has the corporate power 
       to enter into each of this Debenture and the other Documents and to do 
       all acts and things as are required or contemplated hereunder or 
       thereunder to be done, observed and performed by it.

       (c)     DUE AUTHORIZATION, NO CONTRAVENTION.  The entering into and 
       the performance by the Corporation of this Debenture, the other 
       Documents and the transactions contemplated herein and therein (i) 
       have been duly authorized by all necessary corporate action on the 
       part of the Corporation and (ii) do not and will not contravene, 
       violate, breach or result in any default under the articles, by-laws, 
       constating documents or other organizational documents of the 
       Corporation, or any agreement to which the Corporation is a party or, 
       subject to the Materiality Threshold, any term or provision of any 
       regulatory license or permit or any order of any court, governmental 
       authority or regulatory body or any law or regulation of any 
       jurisdiction in which the Corporation carries on its business.

       (d)     BINDING AGREEMENT.  This Debenture and the other Documents 
       have been duly executed and delivered by the Corporation and 
       constitute legal, valid and binding obligations enforceable against 
       the Corporation in accordance with their terms, subject only to the 
       availability of equitable remedies and the effect of bankruptcy, 
       insolvency and similar laws affecting the rights of creditors 
       generally.

       (e)     NO PROCEEDINGS.  As of the date of execution of this 
       Debenture, except as is disclosed in SCHEDULE H and subject to the 
       Materiality Threshold there is no material litigation, arbitration or 
       administrative proceedings, actions, suits or investigations 
       outstanding, pending or, to the Knowledge of the Corporation, 
       threatened against the Corporation or any of its properties.  None of 
       the transactions contemplated hereby or by the other Documents have 
       been enjoined by any Governmental Body and no suit or other proceeding 
       challenging the transactions contemplated hereby or by the other 
       Documents has been instituted or, to the Knowledge of the Corporation, 
       threatened, and no investigative demand on the Corporation or any 
       Subsidiary related to such transactions has been made by any 
       Governmental Body and no Governmental 

                                       10
<PAGE>

       Body or Person has, to the Knowledge of the Corporation, threatened to 
       take any such action.

       (f)     COMPLIANCE WITH APPLICABLE DOCUMENTS AND LAWS.  The 
       Corporation is not in violation of, or in default under (and there 
       does not exist any event or condition which, after notice or lapse of 
       time or both, would constitute such a default under), any term of its 
       articles, by-laws, constating documents or other organizational 
       documents, or, subject to the Materiality Threshold and other than 
       amounts owed to the holders of the Existing Encumbrances, under any 
       term of any agreement, instrument, judgment, decree, order, statute, 
       injunction, governmental regulation, rule or ordinance (including, 
       without limitation, those relating to zoning, city planning or similar 
       matters) applicable to the Corporation, or to which the Corporation is 
       bound or which may otherwise be applicable to any property of the 
       Corporation other than as is disclosed in item 11 of SCHEDULE H.

       (g)     NO CONSENTS REQUIRED.  Except as may be expressly set out in 
       SCHEDULE J hereto (the "Consents"), there are no consents, permits, 
       approvals, confirmations and acknowledgements required in order for 
       the Corporation to carry out the transactions contemplated hereby and 
       by the Documents, provided that the granting of fixed and specific 
       Liens or assignments which the Holder may request following the date 
       hereof pursuant to its right to do so hereunder or under the Documents 
       may require consents or approval of other Persons so as not to 
       constitute events of default under any agreements with such Persons.

       (h)     SHARES.  SCHEDULE E sets out the name and jurisdiction of 
       incorporation, continuance or amalgamation of the Corporation and each 
       Subsidiary, and SCHEDULE K accurately describes the respective 
       authorized and issued share capital as of the date hereof of the 
       Corporation and each Material Subsidiary.  Other than as disclosed in 
       Section 4.1(i) hereof, there are no shareholders' agreements, pooling 
       agreements, voting trusts or other similar agreements with respect to 
       the ownership or voting of any of the shares of the Corporation or of 
       Material Subsidiaries or pursuant to which any person may have any 
       right or claim in connection with any existing or past equity interest 
       in the Corporation or such Material Subsidiaries.

       (i)     NO OBLIGATION TO ISSUE SHARES.  Except for (i) agreements, 
       options, warrants, rights and conversion or other rights granted to 
       current or former directors and employees of the Corporation in 
       respect of which no more than 10 million common shares of the 
       Corporation may be acquired, (ii) agreements to issue to the 
       Corporation shares of APM (which shares when issued will be subject to 
       the Security and all share certificates in respect thereof will, at 
       the 

                                       11
<PAGE>

       request of the Holder, be delivered to the Holder), (iii) special 
       warrants and common shares which may be issued by the Corporation to 
       its creditors, in lieu of partial payment to such creditors, and to 
       other Persons, and (iv) 10,000,000 common shares being issued to the 
       consenting holders of the Subordinated Notes, there are no agreements, 
       options, warrants, rights of conversion or other rights pursuant to 
       which the Corporation or any of the Subsidiaries is or may become 
       obligated to issue any shares or any securities convertible into, or 
       exchangeable for, shares.

       (j)     FINANCIAL STATEMENTS.  The Audited Financial Statements and 
       the Interim Financial Statements have been prepared in accordance with 
       generally accepted accounting principles consistently applied (subject 
       to usual year-end adjustments in the case of the Interim Financial 
       Statements) and fairly present the financial position of the 
       Corporation and the Subsidiaries and the results of their operations 
       at the times and for the periods indicated.  The Corporation and each 
       of the Subsidiaries has no outstanding liabilities, contingent or 
       otherwise, other than those disclosed in the Audited Financial 
       Statements and the Interim Financial Statements and other than trade 
       or business obligations subsequently incurred in the ordinary course 
       of business, which such trade and business obligations are currently 
       in good standing in accordance with their respective terms, other than 
       as set forth in SCHEDULE L. 

       (k)     PERMITS, COMPLIANCE WITH LAWS.  This section 4.1(k) shall be 
       subject to the Materiality Threshold.  The Corporation has all 
       licences, permits, approvals and franchises that it requires, or is 
       required to have, to own its properties and assets and to carry on its 
       business as presently conducted including, without limitation, in 
       respect of the construction and development of the Kemess South Mine.  
       All such licences, permits, approvals and franchises are in good 
       standing and, except as is disclosed in item 11 of SCHEDULE H, no 
       actions, proceedings, investigations or other steps of any kind are in 
       process, pending, to the Knowledge of the Corporation threatened, or 
       reasonably foreseeable which might result in any such licence, permit, 
       approval or franchise being terminated, revoked, withdrawn, suspended 
       or otherwise made unavailable to the Corporation for any period of 
       time.  The Corporation has applications pending for all additional 
       licences, permits, approvals and franchises necessary or desirable for 
       the commencement of mining operations at the Kemess Mine in the manner 
       and to the full extent contemplated in plans and projections disclosed 
       to the Holder (a list of which additional licenses are attached here 
       as SCHEDULE M) and has no reason to believe that any or all such 
       additional licences, permits, approvals and franchises will not be 
       granted to prevent, impair or interfere with the Kemess Mine 
       Production Date occurring on or before December 31, 1998.  Except as 
       is disclosed in item 11 of SCHEDULE H, the Corporation is conducting 
       its business in compliance with all applicable 

                                       12
<PAGE>

       laws, regulations, by-laws and ordinances of each jurisdiction in 
       which its business is carried on, including without limitation all 
       laws, regulations, by-laws and ordinances relating to mining 
       concessions.

       (l)     NO RESTRICTIONS.  Except as may be provided for in agreements 
       between the Province of British Columbia and the Corporation 
       respecting economic assistance, copies of which have been provided to 
       the Holder, the Corporation is not a party to or bound by any 
       agreement which would restrict or limit its right to carry on any 
       business or activity or to solicit business from any Person or in any 
       geographical area or otherwise to conduct the business of the 
       Corporation.  The Corporation is not subject to any legislation or any 
       judgment, order or requirement of any court or governmental authority 
       which is not of general application to persons carrying on a business 
       similar to the business of the Corporation.

       (m)     LIMITATION ON PAYMENT RESTRICTIONS.  Except for restrictions 
       contained herein and in the Subordinated Note Trust Indenture and 
       restrictions in favour of the holders of the Permitted Hedging 
       Indebtedness to the extent such restrictions herein and in the 
       Subordinated Note Trust Indenture have been agreed to and adopted by 
       the Corporation and such holders, neither the Corporation nor any 
       Subsidiary is subject to any consensual restriction on its ability (a) 
       to pay dividends or make any other distributions on its equity 
       securities to, or pay any indebtedness owing to, or repurchase or 
       redeem any equity securities from, the holders of such equity 
       securities, the Corporation or any other Subsidiary, (b) to make any 
       loans or advances to the Corporation or any other Subsidiary, or (c) 
       to transfer any of its property or assets to the Corporation or any 
       other Subsidiary.

       (n)     NO MATERIAL ADVERSE CHANGES, DAMAGE OR ACCIDENTS.  Since June 
       1, 1998, the Corporation has operated its business diligently and only 
       in the ordinary course of business and except for the defaults set out 
       in SCHEDULE I (the "Disclosed Defaults"), (which Disclosed Defaults 
       have been remedied), and except for the Corporation committing events 
       of default pursuant to the Subordinated Note Trust Indenture (which 
       have since been cured), there has not been any material adverse change 
       in the condition (financial or otherwise), assets, liabilities, 
       affairs, business or operations of the Corporation, any substantial 
       loss of or damage to the assets of the Corporation, or any accident 
       (subject to the Materiality Threshold) relating to the mines, 
       properties or mining operations of the Corporation in which any 
       employee of the Corporation was injured.  For greater certainty, since 
       June 1, 1998 the Corporation has not:

               (i)    incurred any liabilities other than in the ordinary 
               course of business consistent with past practice;

                                       13
<PAGE>

               (ii)   sold, encumbered, assigned or transferred any assets or
               properties of the Corporation, other than for fair market value,
               to purchasers at arms length to the Corporation and in the
               ordinary course of business consistent with past practice;

               (iii)  created, incurred, assumed or guaranteed any obligations,
               liabilities or indebtedness except in the ordinary course of
               business consistent with past practice or subjected any of its 
               assets to any Lien except for Existing Encumbrances;

               (iv)   changed or amended its governing documents in any
               respect;

               (v)    declared, set aside, paid or made any distributions in
               cash or property on its equity securities including its common
               shares;

               (vi)   directly or indirectly redeemed, purchased or otherwise
               acquired any of its equity securities;

               (vii)  other than the resignations of John May, Matthew
               Gaasenbeek, Michael Lalonde, Nancy Deshaw and Scott Lampe,
               suffered any resignation or termination of employment of any key
               officers or directors or become aware of any impending
               resignation or termination of employment of any such key officers
               or directors;

               (viii) except in the ordinary course of its business, or as
               disclosed in writing to the Holder prior to the date hereof,
               materially increased the compensation payable or to become
               payable to any of its officers or directors or materially
               increased any bonus, insurance, pension or other employee benefit
               plan, payment or arrangement made for or with any such officers
               or directors;

               (ix)   materially changed its accounting methods, principles or
               practices; or

               (x)    entered into any agreement or commitment to do any of the
               things described in this section.

       (o)     NO WORK ORDERS.  Except as is disclosed in item 11 of SCHEDULE H
       and subject to the Materiality Threshold, no work orders, directions or
       notices have been issued pursuant to any applicable law relating to the
       business of the Corporation or any part of the Mortgaged Property or
       relating to or pursuant to any environmental matters affecting the 
       foregoing and the Corporation has not

                                       14
<PAGE>

       received any notification from any Governmental Body that any work, 
       repairs, construction or capital expenditures are required to be made 
       in respect of the Mortgaged Property or any part thereof as a 
       condition of continued compliance with any applicable law or any 
       Material Authorizations issued thereunder.

       (p)     NO DEFAULT.  Subject to the Materiality Threshold, the 
       Corporation is not in default or breach under any material commitment 
       or obligation under the terms and conditions relating to any Material 
       Authorizations and there exists no state of facts which, after notice 
       or the passage of time or both, would constitute such a default or 
       breach and there are no proceedings in progress, pending or, to the 
       Knowledge of the Corporation, threatened which may result in the 
       revocation, cancellation, suspension, non-grant or any adverse 
       modification of any Material Authorization except as is disclosed in 
       item 11 of SCHEDULE H. The Corporation has obtained all Material 
       Authorizations necessary or desirable to carry on all activities 
       currently and previously carried on at the Kemess Mine.

       (q)     NON-ARM'S LENGTH TRANSACTIONS.  Except as is described in
       employment agreements and correspondence delivered to the Holder prior
       to the date hereof, the Corporation is not a party to any contract,
       commitment or transaction (including by way of loan) with any officer,
       director or shareholder of the Corporation, any of the Subsidiaries, or
       any of their respective affiliates or associates, other than as
       disclosed in the Audited Financial Statements and the Interim Financial
       Statements and other than employment contracts in the ordinary course of
       business.

       (r)     TAX MATTERS.

               (i)    The Corporation has prepared and filed on a timely basis
               with all appropriate Governmental Bodies all returns with respect
               to Taxes and other documents that it is required to file in
               respect of any Taxes for all fiscal periods ending on or prior to
               the date hereof and all such returns or other documents are
               correct and complete in all material respects;

               (ii)   The Corporation has paid in full all Taxes due on or
               before the date hereof and, in the case of Taxes accruing on or
               before the date hereof that are not due on or before the date
               hereof, the Corporation will have made adequate provision in its
               books and records and financial statements for such payment; and
               the Corporation does not have any liability for Taxes other than
               those provided for in the Audited Financial Statements and the
               Interim Financial Statements and those arising subsequently in
               the ordinary course of the operation of its business;

                                       15
<PAGE>

               (iii)  The Corporation has withheld from each payment made to
               any of its present or former employees, officers, directors and
               to all persons who are non-residents of the applicable
               jurisdictions all amounts required pursuant to Applicable Law to
               be withheld or remitted and will continue to do so until the
               Maturity Date and furthermore has remitted such amounts within
               the applicable periods to the appropriate Governmental Body; the
               Corporation has remitted all Canada Pension Plan contributions,
               unemployment insurance premiums, employer health taxes and other
               Taxes payable by it in respect of its employees and has or will
               have remitted such amounts to the appropriate Governmental Body
               within the time required under the applicable legislation; and
               the Corporation has charged, collected and remitted on a timely
               basis all Taxes as required under applicable legislation on any
               sale, supply, or delivery whatsoever, made by the Corporation;

               (iv)   Except for a disputed assessment of fuel taxes payable by
               the Corporation to the government of Canada in the approximate
               amount of Can. $100,000, there are no reassessments of the
               Corporation with respect to Taxes that have been issued and are
               outstanding; no Governmental Body has challenged, disputed or
               questioned the Corporation in respect of Taxes or in respect of
               any returns, filings or other reports filed under any statute
               providing for Taxes; the Corporation has not received any
               indication from any Governmental Body that an assessment or a
               reassessment in respect of the Corporation is proposed; and the
               Corporation has not executed or filed any agreement extending the
               period for assessment, reassessment or collection of any Taxes.

       (s)     NO ENCUMBRANCES.  The Corporation owns and has good and
       marketable title, free and clear of all Liens except Existing
       Encumbrances, to all assets used in connection with its business
       including, without limitation, all assets reflected on the balance sheet
       included in the Audited Financial Statements and the Interim Financial
       Statements or acquired by it after the date of such balance sheet except
       for changes in such assets in the ordinary course of business subsequent
       to that date.  All material operating facilities, equipment and other
       material items of tangible property and assets owned by the Corporation
       are in good operating condition and repair, subject to normal wear and
       maintenance and having regard to their respective ages, are usable in
       the regular and ordinary course of business and conform to all
       Applicable Laws relating to their construction, use and operation,
       except where such failure, individually or in the aggregate, would not
       have a material adverse effect on the Corporation.  The Corporation's
       quarterly report on Form 10-Q for the

                                       16
<PAGE>

       fiscal quarter ended March 31, 1998 filed with the United States 
       Securities And Exchange Commission pursuant to the Securities 
       Exchange Act of 1934, as amended, contains a complete and accurate 
       description of all material property and assets owned by the 
       Corporation.  SCHEDULE N contains a complete and accurate description
       of all material property and assets owned by the Corporation
       relating to the Kemess Mine.  Subject to the Materiality Threshold, all
       equipment or other tangible assets or property situated on the premises
       of the Corporation, or necessary to the operation of the business of the
       Corporation, which is leased under a capital lease or under a material
       operating lease is listed in SCHEDULE O.  Subject to the Materiality
       Threshold, the Corporation is in compliance with all terms of agreements
       and arrangements governing the leased items listed in SCHEDULE O.

       (t)     MATERIAL INDEBTEDNESS.  SCHEDULE P contains a list of all
       material indebtedness of the Corporation in excess of Can. $1,000,000
       and the identity of the Persons to whom it is owed.  The accounts
       payable of the Corporation listed in SCHEDULE G relate only to the
       construction, development and operation of the Kemess South Mine.

       (u)     SECURITY DOCUMENTS.  The Security Documents and the other
       Documents create a valid and enforceable security interest and Lien upon
       the Mortgaged Property securing the payment and satisfaction of all
       obligations of the Corporation and APM to the Holder.  Such security
       interests are perfected security interests subject to no prior Liens or
       Liens ranking senior in priority to the Liens in favour of the Holder,
       except for such Liens (i) granted pursuant to the Royalty Debenture, and
       (ii) relating to or securing Debt of the Corporation not in excess of
       Can. $15,000,000 as may be held by holders of Existing Encumbrances set
       out in Part I of SCHEDULE C1.

       (v)     EMPLOYMENT MATTERS.  Except as is disclosed in SCHEDULE Q, the
       Corporation is not a party to or is not bound by any:

               (i)    written contract or commitment for the employment of any
               employee or officer providing for an annual salary (including
               benefits) of in excess of Can. $200,000 or a payment on
               termination of in excess of six months salary and benefits;

               (ii)   oral contract or commitment for the employment of any
               employee or officer, except for contracts of indefinite hire
               terminable by the Corporation without cause on reasonable notice;

               (iii)  in the case of the Kemess Mine only, contract with or
               commitment to any trade union, council of trade unions, employee

                                       17
<PAGE>

               bargaining agent or affiliated bargaining agent (collectively
               called "labour representatives") and the Corporation has not
               conducted negotiations with respect to any such future contracts
               or commitments; no labour representatives hold bargaining rights
               with respect to any employees of the Corporation relating to the
               Kemess Mine; no labour representatives have applied to have the
               Corporation declared a related employer pursuant to the
               applicable labour legislation; and, to the Knowledge of the
               Corporation, there are no current or threatened attempts to
               organize or establish any trade union or employee association
               with respect to the Kemess Mine project provided, however, that
               the Corporation anticipates that steps may be taken by its
               employees to unionize and negotiate collective bargaining
               agreements for the Kemess Mine at some time in the future; or

               (iv)   except as is disclosed in financial information made
               available to the Holder prior to the date hereof and subject to
               the Materiality Threshold, bonus, pension, multi-employer, profit
               sharing, deferred compensation, retirement, disability, health
               insurance or similar benefit plan, with respect to any of its
               employees or others (including without limitation any agreements
               in respect of employee share ownership plans), other than Canada
               Pension Plan, the Ontario Health Insurance Plan and other similar
               health plans established and administered by any other
               governmental authority or workers' compensation insurance
               provided pursuant to statute.

       Subject to the Materiality Threshold, there is no work stoppage or other
       concerted action, grievance or dispute existing or, to the Knowledge of
       the Corporation, threatened against the Corporation, and there is no
       material complaint, grievance, claim, work order or investigation that
       has been filed, made, commenced or, to the Knowledge of the Corporation,
       threatened against the Corporation pursuant to any human rights,
       occupational health and safety, workers compensation, employment
       standards or pay equity legislation or any similar legislation of any
       jurisdiction in which the Corporation carries on its business.

       (w)     INTELLECTUAL PROPERTY.  The Corporation owns and has good and
       marketable title, free and clear of all Liens except Existing
       Encumbrances, to the Intellectual Property.  The conduct of the business
       of, and the use of the Intellectual Property by the Corporation does not
       infringe, and the Corporation has not received any notice, complaint,
       threat or claim alleging infringement of, any patent, trade mark, trade
       name, copyright, industrial design, trade secret or other propriety
       right of any other Person.  To the Knowledge of the Corporation, the
       Intellectual Property which is not owned by the Corporation is

                                       18
<PAGE>

       being used with the consent of, and in accordance with the consent or 
       licence from, the rightful owner thereof.  The Corporation has taken all
       necessary steps to establish, preserve and protect its rights in the
       Intellectual Property which is material to the Corporation.

       (x)     MATERIAL CONTRACTS.  SCHEDULE R contains a list of all agreements
       of the Corporation which are material to the Kemess Mine and which have
       not been fully performed by the parties thereto, including, without
       limitation, agreements which relate to construction underway or proposed
       at the Kemess Mine and including, without limitation, royalty, refining
       and shipping agreements (the "Material Contracts").  SCHEDULE Z contains
       a list of all material agreements of the Corporation relating to the
       construction or development of the Kemess Mine or relating to the supply
       of equipment to the Kemess Mine, which agreements have been performed by
       the parties thereto but the warranty periods in respect of which have
       not yet expired (the "Kemess Mine Construction Contracts").  Subject to
       the Materiality Threshold, and other than amounts owed to holders of the
       Existing Encumbrances, each of the Material Contracts and the Kemess
       Mine Construction Contracts is in full force and effect without
       amendment, and there has been no default under any of them, or under any
       other material commitment or obligation, by the Corporation or, to the
       Knowledge of the Corporation, any other party, nor has any event
       occurred that, with the giving of notice, lapse of time or any other
       condition subsequent, would constitute a default or would otherwise
       allow the termination of any Material Contract or Kemess Mine
       Construction Contract.

       (y)     MINING CONCESSIONS.  SCHEDULES B-1 AND B-2 contain a complete and
       accurate list of all material mining claims, concessions and leases in
       which the Corporation has an interest relating in any way to the Kemess
       Mine, including, without limitation, all mining claims, concessions and
       leases in respect of which the Corporation has any obligation to
       contribute funds or make payments, other than fees or taxes payable in
       the ordinary course under the regulations governing such claims,
       concessions or leases.  The Corporation is the absolute beneficial owner
       of, and has good and marketable title to, such mining claims,
       concessions and leases in accordance with governing laws and
       regulations, free of all Liens except for such rights as may be held by
       Kemess South Resources Limited Partnership as disclosed in item (a) of
       Part II of SCHEDULE C1 to this Debenture and by the holders of the
       Existing Encumbrances.

       (z)     PRICING, HEDGING PROTECTION.  Subject to the Materiality
       Threshold, SCHEDULE S contains a complete and accurate list and
       description of all hedging or related arrangements to which the
       Corporation is a party or by which it is bound including, without
       limitation, forward sale contracts, options, interest

                                       19
<PAGE>

       rate swap agreements, currency swap agreements, derivative agreements and
       similar arrangements.  None of the hedging or related arrangements 
       entered into by the Corporation provides for the granting of (i) any Lien
       against the property, assets and undertaking of the Corporation other 
       than the Permitted Encumbrances described in Section (b) of the 
       definition thereof, or (ii) production advances or any other disposition 
       of any property, assets or undertaking of the Corporation in 
       consideration for advance or accelerated payment or other manner of 
       prepayment or payment not contemporaneous with delivery other than for
       the sales of up to U.S. $10,000,000 of copper concentrate pursuant to 
       the Glencore Agreement.

       (aa)    ENVIRONMENTAL MATTERS.  Except as is disclosed in item 11 of
       SCHEDULE H regarding the sediment concerns at the Kemess South Mine and
       subject to the Materiality Threshold, the Corporation is not in
       violation of any applicable federal, provincial, state, municipal or
       local laws, regulations, orders, governmental decrees or ordinances with
       respect to environmental, health or safety matters (collectively,
       "Environmental Laws") and no actions, proceedings, investigations or
       other steps of any kind are in process, pending, to its Knowledge
       threatened, or reasonably foreseeable with respect to any such existing
       or past violation or alleged violation or other liability whatsoever on
       the part of the Corporation under Environmental Laws.  For greater
       certainty, subject to the same qualifications and without limiting the
       generality of the foregoing:

               (i)    the Corporation has carried on its business and at all
               times has received, handled, used, stored, treated, shipped and
               disposed at all times of all contaminants in compliance with all
               Environmental Laws;

               (ii)   there have been no releases, deposits or discharges, in
               violation of Environmental Laws, of any hazardous or toxic
               substances, materials, pollutants, contaminants or wastes into
               the earth, air or into any river, stream, lake or other body of
               water or into any municipal or other sewer or drain water
               systems;

               (iii)  no orders, directions or notices have been issued
               pursuant to any Environmental Laws relating to the business or
               assets of the Corporation; and

               (iv)   the Corporation has not failed to report to the proper
               Governmental Body the occurrence of any event which is required
               to be so reported by any Environmental Laws.

       (bb)    PLACES OF BUSINESS.  The registered office of the Corporation is
       situated

                                       20
<PAGE>

       at BCE Place, P.O. Box 747, Suite 2500, 181 Bay Street,
       Toronto, Ontario, Canada M5J 2T7, and the chief executive office of the
       Corporation is situated at 5501 Lakeview Drive, Kirkland, Washington,
       U.S.A. 98033.

       (cc)    ALL MATERIAL INFORMATION SUPPLIED.  The Corporation has provided
       to the Holder all material information relating to the financial
       condition, business and prospects of the Corporation and all information
       provided to the Holder is true, accurate and complete in all material
       respects and omits no material fact necessary to make such information
       not misleading provided, however, that the Corporation is not
       representing and warranting that the financial and operating projections
       made by it will accurately correspond to actual future results
       notwithstanding that they are based on the best information currently
       available to the Corporation.  For greater certainty, all documents
       provided to the Holder in the course of investigating, negotiating and
       preparing the Documents and the property, assets and affairs of the
       Corporation are complete and, subject to the proviso in the immediately
       preceding sentence, accurate in every respect and copies of all such
       documents provided to the Holder conform in every respect to the
       originals thereof.

       (dd)    DEBENTURE COVENANTS.  No event or circumstance has occurred or
       exists which is inconsistent with the covenants and agreements of the
       Corporation set out in this Debenture or which would, immediately or
       with the passage of time or giving of notice or taking of any other
       prerequisite step, constitute a Default or Event of Default hereunder.

       (ee)    SUBORDINATED NOTES.  The Corporation is, and will after giving
       effect to the transactions contemplated by this Debenture and the other
       Documents be, in compliance with all terms and conditions and agreements
       applicable to the Subordinated Notes.  The indebtedness under the
       Debenture will fully constitute "Permitted Indebtedness" and the
       Security will in every respect constitute "Permitted Liens" under the
       Subordinated Note Trust Indenture.  The indebtedness under the
       Debentures and the amounts if any from time to time outstanding on
       account of the Royalty Agreement constitute "Senior Indebtedness" under
       the Subordinated Note Indenture.  The indebtedness under the Debentures
       constitute "Designated Senior Indebtedness" under the Subordinated Note
       Indenture.  The indebtedness of any Subsidiary under or on account of
       the Debentures constitute "Guarantor Senior Indebtedness" under the
       Subordinated Note Indenture.  The Lender is entitled to the benefit of
       and can rely on the provisions of the Subordinated Note Indenture
       relating to "Senior Indebtedness", "Designated Senior Indebtedness" and
       "Guarantor Senior Indebtedness" and the holder of the royalty pursuant
       to the Royalty Agreement is entitled to the benefit of and can rely on
       the provisions of the Subordinated Note Indenture relating to "Senior
       Indebtedness" to the extent of

                                       21
<PAGE>

       the amounts if any from time to time outstanding on account of the 
       Royalty Agreement.  Each of the Lenders and the holder of the royalty 
       pursuant to the Royalty Agreement, to the extent of the amounts if any 
       from time to time outstanding on account of the Royalty Agreement, can 
       enforce such provisions as are applicable to it directly against the 
       Corporation and any other Subsidiary.  The Corporation has delivered 
       to the Holder complete and accurate copies of all agreements and 
       documents relating to the Subordinated Notes including, without 
       limitation, the Subordinated Note Trust Indenture. The Subordinated 
       Notes are, in accordance with their terms, fully subordinated and 
       postponed to the obligations of the Corpoation to the Holder under the 
       Documents, which obligations constitute "Senior Indebtedness" under 
       the Subordinated Note Trust Indenture.

       (ff)    SUBSIDIARIES OF THE CORPORATION.  SCHEDULE E contains a list of
       all of the Subsidiaries of the Corporation, including the jurisdiction
       of incorporation, continuance and amalgamation for each such Subsidiary.

       (gg)    PROVINCIAL ECONOMIC ASSISTANCE.  The Province of British Columbia
       has unconditionally and irrevocably advanced to the Corporation
       approximately Can. $154,000,000 of the previously committed economic
       assistance, compensation and investment.  All such economic assistance,
       compensation and investment is completely and accurately described in
       SCHEDULE T and the Holder has been provided with true, complete and
       accurate copies of all agreements and other documents relating thereto. 
       Except for annual payments of Can. $1,000,000 for each of the 12
       successive years commencing in 1999, both as identified in SCHEDULE T,
       there are no further outstanding commitments of economic assistance,
       compensation or investment which remain to be completed and there are no
       commitments, agreements or arrangements with any Governmental Body which
       would be breached or otherwise adversely impacted by the transactions
       contemplated by the Documents or which could in any way preclude,
       hinder, prejudice or delay the exercise of the Holder's rights and
       remedies hereunder and thereunder.

       (hh)    WINDY CRAGGY PROPERTY.  The inability of the Corporation to incur
       expenditures on and maintain in good standing the Windy Craggy Property
       will not result in: (i) any diminution in the amounts of payments from
       the government of British Columbia pursuant to the agreement of June 27,
       1997; (ii) revocation of any permits issued by the government of British
       Columbia in connection with the Kemess Mine; or (iii) any material
       adverse effect on the ability of the Corporation to conduct mining
       operations at, and to maintain good title to, the Kemess Mine; and the
       Windy Craggy Property does not include or in any way comprise the
       property and assets comprising the Kemess Mine.

                                       22
<PAGE>

       (ii)    BANKS.  SCHEDULE T1 lists particulars, including bank, branch
       address, account type and account number, of each bank account
       maintained by the Corporation and by each of the Subsidiaries.

4.2    SURVIVAL OF REPRESENTATIONS AND WARRANTIES BY THE CORPORATION

       The representations and warranties made by the Corporation pursuant to
Section 4.1 hereof will survive the closing of the issuance of this Debenture
and the other transactions provided for herein and, notwithstanding such closing
or any investigation made by or on behalf of the Holder or any other person or
any knowledge of the Holder or any other person, shall continue in full force
and effect for the benefit of the Holder.


ARTICLE 5 - COVENANTS

5.1    AFFIRMATIVE COVENANTS

       So long as the Debenture or any obligation of the Corporation to the
Holder under the Debenture or any other Document remains outstanding, the
Corporation covenants and agrees with the Holder that:

       (a)     PUNCTUAL PAYMENT AND PERFORMANCE OF DEBENTURE.  The Corporation
       shall pay or cause to be paid all amounts payable to the Holder
       hereunder and under the other Documents on the dates and in the manner
       specified therein and the Corporation shall perform and carry out all of
       the acts or things to be done by the Corporation as provided in the
       Debenture and the other Documents;

       (b)     CONDUCT OF BUSINESS.  The Corporation shall do or cause to be
       done all things necessary to maintain its corporate existence in its
       present jurisdiction of incorporation and to maintain its corporate
       power and capacity to own its properties and assets;

       (c)     PRESERVATION OF MATERIAL AUTHORIZATIONS.  The Corporation and
       each Material Subsidiary shall preserve and maintain all Material
       Authorizations including, without limitation, all licenses, permits,
       approvals and franchises necessary or desirable to carry on mining
       operations at the Kemess Mine in the manner and to the full extent
       contemplated in plans and projections disclosed to the Holder.

       (d)     PRESERVATION OF MINING CLAIMS, CONCESSIONS AND LEASES.  The
       Corporation shall preserve and maintain:  (i) all mining claims subject
       to the 
                                       23
<PAGE>

       Materiality Threshold, and all concessions and leases necessary
       or desirable to carry on mining operations at the Kemess Mine in the
       manner and to the full extent contemplated in plans and projections
       disclosed to the Holder, and (ii) subject to the Materiality Threshold,
       all other material mining claims, concessions and leases.

       (e)     COMPLIANCE WITH APPLICABLE LAW AND CONTRACTS.  The Corporation
       and each Material Subsidiary shall comply with:  (i) the requirements of
       all Applicable Laws; (ii) all obligations which, if contravened, could
       give rise to a Lien (other than Permitted Encumbrances) over any of its
       property; and (iii) all insurance policies and all contracts to which
       the Corporation or such Material Subsidiary is a party or by which it or
       its properties are bound, non-compliance with which would, singly or in
       the aggregate, have a material adverse effect upon the business,
       property or financial condition of the Corporation or such Material
       Subsidiary or upon its ability to perform its obligations under this
       Debenture or any of the other Documents;

       (f)     INSURANCE.  The Corporation and each Material Subsidiary shall:

               (i)    keep its properties and assets insured with reputable
               insurers, in amounts not less than the replacement cost thereof
               and against such losses as are insured against by comparable
               corporations engaged in comparable businesses or which the Holder
               may reasonably require including without limitation, if requested
               by the Holder acting reasonably, sudden and accidental pollution
               liability insurance;

               (ii)   maintain public liability insurance in such amounts and
               against such risks as is normally carried by comparable
               corporations engaged in comparable businesses or which the Holder
               may reasonably require;

               (iii)  provide the Holder with certificates for all insurance
               policies; and 

               (iv)   provide that any loss under all such insurance policies
               (other than policies in respect of third party liability and
               business interruption insurance) in excess of Can. $500,000 shall
               be payable to the Holder subject only to any prior rights which
               may be specifically held in such proceeds by the holders of
               Permitted Encumbrances, provided that if a Default or Event of
               Default has not occurred, the Corporation or such Material
               Subsidiary shall, provided prior notice thereof shall have been
               given to the Holder, be entitled to receive such loss payment
               directly if the entire amount thereof is:   

                      (A)     used to repair or replace the lost or damaged
                      property in 


                                       24
<PAGE>

                      question if the lost or damaged property relates to the 
                      Kemess Mine; or

                      (B)     if the lost or damaged property does not in any
                      way relate to the Kemess Mine either (x) used to repair
                      or replace the lost or damaged property in question or
                      (y) after applying such loss payment or a portion thereof
                      to the reasonable costs of any required remediation of
                      the lost or damaged property, used and distributed as the
                      proceeds of a "Sale" pursuant to and in accordance with
                      Section 5.3(e) hereof;

       (g)     ACCOUNTING METHODS AND FINANCIAL RECORDS.  The Corporation shall,
       and shall cause each of its Subsidiaries to, maintain a system of
       accounting which is established and administered in accordance with
       generally accepted accounting principles and keep adequate records and
       books of account in which accurate and complete entries shall be made in
       accordance with such accounting principles reflecting all transactions
       required to be reflected by such accounting principles; 

       (h)     MAINTENANCE OF MORTGAGED PROPERTY.  The Corporation shall
       maintain the Mortgaged Property comprising the Kemess Mine and all other
       Mortgaged Property used by the Corporation or a Material Subsidiary from
       time to time in good repair, working order and condition (reasonable
       wear and tear excepted) and from time to time make or cause to be made
       all necessary and appropriate repairs, renewals, replacements, additions
       and improvements thereto;

       (i)     PAYMENT OF TAXES AND CLAIMS.  The Corporation and each Material
       Subsidiary shall:

               (i)    pay and discharge all lawful claims for labour, material
               and supplies;

               (ii)   pay and discharge all Taxes payable by it; 

               (iii)  withhold and collect all Taxes required to be withheld
               and collected by it and remit such Taxes to the appropriate
               Government Body at the time and in the manner required; and 

               (iv)   pay and discharge all obligations incidental to any trust
               imposed upon it by statute which, if unpaid, might become a Lien
               upon any of the Mortgaged Property; 

       (j)     INSPECTIONS.  The Corporation and each Material Subsidiary shall
       permit 
                                       25
<PAGE>

       the Holder and its authorized employees, representatives and
       agents to:  (i) visit and inspect its properties during normal business
       hours, (ii) inspect and make extracts from and copies of its books and
       records, and (iii) discuss with its senior management its businesses,
       property, financial condition and prospects, all on a reasonable basis
       and frequency;

       (k)     NOTICE OF LITIGATION AND OTHER MATTERS.  The Corporation shall,
       as soon as practicable after it shall become aware of the same, give
       notice to the Holder of the following events:

               (i)    the commencement or threat of a material nature of any
               action, proceeding, arbitration or investigation against or in
               any other way relating adversely to the Corporation or the
               Subsidiaries or any of their respective properties, assets or
               businesses which, if adversely determined, would singly or when
               aggregated with all other such actions, proceedings, arbitrations
               and investigations have a material adverse effect on the
               business, property or financial condition of the Corporation or
               on the ability of the Corporation to perform its obligations
               under this Debenture or any of the other Documents; 

               (ii)   any amendment of its articles, by-laws or other
               organizational documents; 

               (iii)  any actual or threatened revocation, termination,
               modification, amendment, substitution, issuance or other material
               event relating to Material Authorizations or to mining claims,
               concessions or leases respecting the Kemess Mine and, following
               any such event, the Corporation shall at the request of the
               Holder use its best efforts to obtain from the appropriate
               Governmental Body or other Persons such consents, approvals,
               acknowledgements or other documents as the Holder may consider
               necessary, acting reasonably, to ensure that the Holder has valid
               and enforceable first priority Liens on all such Material
               Authorizations, mining claims, concessions or leases and may
               avail itself of the rights and privileges of the Corporation
               thereunder and assign such rights and privileges should the
               Holder enforce its rights and remedies in respect of the Security
               and the other Documents;

               (iv)   any development which has had or will have a material
               adverse effect upon its business, property or financial condition
               or its ability to perform its obligations under this Debenture or
               any of the other Documents or which should reasonably be expected
               to be of material interest to the Holder, other than any changes
               in the market prices of gold or copper or changes in the Can. 
               $/U.S.$ currency exchange rate;

                                       26

<PAGE>

               (v)    any development which would lead the Corporation to
               reasonably believe that the Kemess Mine Production Date will not
               be on or before December 31, 1998;

               (vi)   any Default or Event of Default; and

               (vii)  any default or event of default, or the occurrence or
               non-occurrence of any event which constitutes, or which with the
               passage of time or giving of notice or both would constitute, a
               material default under any other agreement to which the
               Corporation or any Subsidiary is a party or by which they or any
               of their properties may be bound which has a material adverse
               effect on the business, property or financial condition of the
               Corporation or its ability to perform its obligations under this
               Debenture or any other Document; 

       giving in each case the details thereof and specifying the action
       proposed to be taken with respect thereto.

       (l)     QUARTERLY CASHFLOW STATEMENTS.  On or prior to the date hereof
       and on the 25th day following the end of each calendar quarter
       thereafter the Corporation shall deliver to the Holder in form and
       substance acceptable to the Holder a cashflow statement on a line item
       basis for the ensuing twelve (12) month period, all in such detail as
       the Holder may reasonably require.

       (m)     MONTHLY FINANCIAL STATEMENTS.  The Corporation shall, as soon as
       practicable and in any event within 25 days after the end of each month,
       deliver to the Holder the monthly unaudited consolidated financial
       statements of the Corporation for the previous monthly period including
       in each case a balance sheet, statement of profit and loss and a
       statement of changes in financial position, together with comparative
       figures for the corresponding month in the previous Financial Year;

       (n)     INTERIM FINANCIAL STATEMENTS.  The Corporation shall, as soon as
       practicable and in any event within 60 days after the end of each of the
       first three Financial Quarters of each Financial Year, deliver to the
       Holder the interim unaudited consolidated financial statements of the
       Corporation and, at the request of the Holder, interim unaudited
       unconsolidated financial statements of the Corporation and of the
       Subsidiaries, including in each case a balance sheet, statement of
       profit and loss and a statement of changes in financial position,
       together with comparative figures for the corresponding period in the
       previous Financial Year;


                                       27
<PAGE>


       (o)     ANNUAL FINANCIAL STATEMENTS.  The Corporation shall, as soon as
       practicable and in any event within 120 days after the end of each
       Financial Year, deliver to the Holder the annual audited consolidated
       financial statements of the Corporation and, at the request of the
       Holder, annual unaudited unconsolidated financial statements of the
       Corporation and of each Subsidiary including in each case a balance
       sheet, statement of profit and loss, a statement of changes in financial
       position and a statement of retained earnings, together with comparative
       figures for the previous Financial Year;

       (p)     OFFICER'S CERTIFICATE.  The Corporation shall deliver to the
       Holder, together with the financial statements referred to in Sections
       5.1(l), (n) and (o), an officers' certificate certifying (i) that such
       financial statements were prepared in accordance with generally accepted
       accounting principles (subject to normal year-end adjustments in the
       case of interim unaudited financial statements) and fairly present the
       financial condition of the Corporation and the other Subsidiaries and
       the financial information presented therein for the period and as at the
       date thereof, (ii) that no Default or Event of Default has occurred
       hereunder or, if any Default or Event of Default has occurred,
       specifying the relevant particulars and the period of existence thereof
       and the action taken or proposed to be taken by the Corporation with
       respect thereto, and (iii) demonstrating in reasonable detail compliance
       (or, as the case may be, non-compliance) with the covenants contained in
       Section 5.1(t);

       (q)     PUBLIC AND OTHER INFORMATION.  The Corporation shall from time to
       time deliver to the Holder copies of all reports, financial statements,
       information or proxy circulars and other information or notices sent by
       the Corporation (i) to its shareholders at the same time as the
       Corporation sends such material to its shareholders, and (ii) pursuant
       to the Subordinated Note Trust Indenture at the same time as Corporation
       sends such material to the recipient thereof, and (iii) the Corporation
       shall deliver to the Holder copies of all press releases, material
       change reports and similar disclosures filed by the Corporation with any
       securities regulatory authority or stock exchange, provided that, if any
       such reports or disclosures under this paragraph (iii) are filed on a
       confidential basis, then the Corporation shall not be required to
       deliver the same to the Holder until such time as they are no longer
       filed on a confidential basis;

       (r)     CHANGE OF CONTROL.  The Corporation shall immediately notify the
       Holder in the event of a Change of Control of the Corporation;

       (s)     OTHER INFORMATION.  The Corporation shall furnish to the Holder,
       as soon as practicable following a request therefor from the Holder,
       such other information as the Holder may reasonably request from time to
       time;


                                       28
<PAGE>


       (t)     FINANCIAL COVENANTS.  The Corporation shall ensure that:

               (i)    EBITDA shall not be less than:

                      (A)     for the Financial Quarter ending March 31, 1999,
                      Can. $9,000,000;

                      (B)     for the two Financial Quarters ending June 30,
                      1999, Can. $18,000,000;

                      (C)     for the three Financial Quarters ending September
                      30, 1999, Can. $27,000,000; and 

               (ii)   following September 30, 1999, Can. $36,000,000 as at the
               end of each Financial Quarter and calculated in each case for the
               preceding 12 months;

       (u)     KEMESS MINE PRODUCTION DATE.  The Corporation shall keep the
       Holder informed as to the progress of the construction, development and
       operation of the Kemess South Mine and when the Kemess Mine Production
       Date has occurred and shall deliver to the Holder a certificate
       (together with reasonable backup) of a senior officer to that effect; 

       (v)     PAMOUR MINE AND NIGHTHAWK LAKE MINE.  The Corporation shall, and
       shall cause each Subsidiary, as required to, forthwith following a
       request therefor from the Holder and at the expense of the Corporation
       deliver to the Holder valid and enforceable first priority Liens against
       the Pamour Mine and the Nighthawk Lake Mine all in form and substance
       satisfactory to the Holder and its Counsel together with legal opinions
       in form and content, and from legal counsel, satisfactory to the Holder
       regarding the validity, enforceability and priority of such Liens and
       regarding such other matters as the Holder may require to evidence
       compliance with the terms of this Debenture; provided that the Holder
       may only request such Liens at a time that the aggregate amount then
       outstanding under the Debentures (including principal and accrued
       interest and unpaid fees and expenses) exceeds U.S.$60,000,000; and

       (w)     PROPOSED LEASEBACK ASSETS.   The Corporation will pay or cause to
       be paid all amounts payable to Trilon Bancorp Inc. pursuant to an
       equipment lease dated April 6, 1998 between the Corporation and Trilon
       Bancorp Inc. (Lease Number L-RY001) on the dates and in the manner
       specified therein and the Corporation will comply with, perform and
       carry out all of its obligations provided under such equipment lease.


                                       29
<PAGE>


       (x)     PERMITTED PAYMENTS SECURITY.   The Corporation will provide 10
       days prior written notice to the Holder of any proposed Permitted
       Payments together with detailed particulars of the Permitted Payments. 
       The Corporation will provide or cause to be provided to the Holder prior
       to or contemporaneous with the making of any such Permitted Payments:

               (i)    a guarantee from each Subsidiary receiving such Permitted
               Payments pursuant to which the Subsidiary guarantees to the
               Holder all of the obligations of the Corporation to the Holder;

               (ii)   such agreements, conveyances, deeds and other documents
               and instruments as the Holder shall reasonably request in
               furtherance of granting to the Holder valid and enforceable first
               priority Liens on all of the present and after acquired property,
               undertaking and assets of each Subsidiary receiving such
               Permitted Payments and the Corporation shall at the expense of
               the Corporation register, file or record the same (or a notice or
               financing statement in respect thereof) in all offices where such
               registration, filing or recording is, in the opinion of the
               Holder, necessary or advisable to constitute, perfect and
               maintain such Liens in all jurisdictions reasonably required by
               the Holder, subject only to Permitted Encumbrances, provided that
               (subject always to the provisions of Section 5.1(v)) the
               Corporation shall not be obligated to register the Security
               against any real property or mineral claims comprising the Pamour
               Mine, the Nighthawk Lake Mine and the mines generally known as
               Giant, Hope Brook and Colomac, and the Corporation's currently
               existing exploration properties not in any way relating to the
               Kemess Mine; and 

               (iii)  legal opinions in form and content, and from legal
               counsel, satisfactory to the Holder regarding the validity,
               enforceability and priority of all Liens created by such Security
               Documents and regarding such other matters as the Holder may
               require to evidence compliance with the terms of this Debenture
               and the other Documents.


5.2    HOLDER'S RIGHT TO DECLINE TO RECEIVE INFORMATION

       Notwithstanding the obligations of the Corporation to provide the
notices, documents and information referred to in Sections 5.1(k), (l), (m),
(n), (o), (p) and (u), the Holder shall be entitled to decline to receive any or
all such notices, documents and information by giving written notice thereof to
the Corporation.  In the event the Holder gives any such notice to the
Corporation, the Corporation shall withhold the


                                       30
<PAGE>


notices, documents and information expressly stated in the written notice of 
the Holder for such periods of time and on such terms as the Holder may 
direct.  The Holder may at any time supplement, revoke or otherwise change 
its directions to the Corporation under this Section 5.2 by further written 
notice to the Corporation. Nothing in this Section 5.2 or in any written 
notice given by the Holder hereunder in any way reduces or otherwise affects 
the obligation of the Corporation to provide to the Holder the information 
referred to in Sections 5.1(q) and (r).

5.3    NEGATIVE COVENANTS

       So long as this Debenture or any obligations of the Corporation under
this Debenture or any other Document remain outstanding, the Corporation
covenants and agrees that without the prior written consent of the Holder
neither the Corporation nor any Material Subsidiary shall:

       (a)     ENCUMBER PROPERTY.  Create, grant, assume or suffer to exist any
       Lien upon any of its properties or assets other than Permitted
       Encumbrances;

       (b)     LOANS AND INVESTMENTS.  Except for (i) loans by the Corporation
       and APM to existing employees not at any time exceeding in the aggregate
       U.S. $2,250,000 and loans by the Corporation and APM to new employees
       employed after the date hereof not at any time exceeding in the
       aggregate U.S. $750,000, (ii) APM Transactions, (iii) payments of up to
       Can. $1,500,000 in the aggregate made by the Corporation to purchase
       shares in the capital of Asia Minerals Corp. and of Highwood Resources
       Ltd., and (iv) Permitted Payments, make any loans to, or acquire or
       invest in any securities issued by, any Person other than currently
       existing loans by the Corporation to any Subsidiaries of which notice in
       writing has been provided to the Holder;

       (c)     NON-ARM'S LENGTH TRANSACTIONS.  Except for (i) loans by the
       Corporation and APM to existing employees not at any time exceeding in
       the aggregate U.S. $2,250,000 and loans by the Corporation and APM to
       new employees employed after the date hereof not at any time exceeding
       in the aggregate U.S. $750,000, (ii) APM Transactions, (iii) the
       acquisition by the Corporation of the Mikwam Property from Highwood
       Resources Ltd. on the terms disclosed to the Holder in writing prior to
       the date hereof, (iv) the sale by the Corporation of the Copperstone
       Property to a purchaser not dealing at arm's length to the Corporation,
       and (v) Permitted Payments, repay any indebtedness or liabilities owed
       to, transfer assets to, purchase assets from, lease property to or from,
       pay any monies to, guarantee Debt of, provide other financial assistance
       to, or otherwise enter into any transaction or agreement to do any of
       the foregoing (other than as may be expressly contemplated by the
       Documents) with or in respect of any Affiliate (or any corporation
       which, after the transaction in


                                       31
<PAGE>


       question becomes effective, would become an Affiliate) or with any
       officer, director, employee, shareholder or other related Person of the
       Corporation or any Subsidiary, provided that if the Corporation has not
       committed an Event of Default, the Corporation may pay ordinary course
       compensation to officers, directors and employees consistent with past
       practice and additional ordinary course compensation under the
       Corporation's head office employee plans, in an aggregate amount not
       exceeding U.S.$5,000,000 in any Financial Year.

       (d)     RESTRICTED DISTRIBUTIONS.  Except for APM Transactions and
       Permitted Payments, declare, pay or make any dividend or other
       distribution on any shares in its capital or purchase, redeem, retire,
       cancel or acquire (i) any shares in the capital of the Corporation or
       any Subsidiary (except shares acquired upon the conversion thereof into
       other shares in its capital), (ii) any option, warrant or other right to
       acquire shares in the capital of the Corporation or any Subsidiary, or
       (iii) any debt or equity security of the Corporation or any Subsidiary,
       provided that the Corporation shall be entitled to declare and pay stock
       dividends and to wind-up Witteck Development Inc. and transfer to the
       Corporation all the property and assets of Witteck Development Inc.;

       (e)     DISPOSITION OF ASSETS.  Except for Permitted Payments, sell,
       lease, consign or otherwise dispose of or agree to sell, lease, consign
       or otherwise dispose of, any assets or property.  Notwithstanding the
       foregoing so long as no Default or Event of Default has occurred or
       would occur as a result of any such sale, lease, consignment or other
       disposition (collectively a "Sale"):

               (i)    at any time prior to the Kemess Mine Production Date,
               assets of the Corporation, other than assets which comprise or
               are in any way material to the Kemess Mine, may be sold by the
               Corporation for proceeds equal to their fair market value to
               purchasers dealing at arm's length with the Corporation provided
               that:

                      (a)     if the proceeds from all such Sales in the
                              aggregate are equal to or less than Can.
                              $15,000,000, such proceeds shall be used solely
                              for prepayments of principal hereunder in
                              accordance with the provisions of Section 2.4
                              hereof, regular debt service payments pursuant to
                              the Subordinated Notes, payment of capital and
                              non-capital expenses of the Corporation in
                              connection with the construction, development and
                              operation of Kemess Mine and/or general corporate
                              purposes; and

                      (b)     if the proceeds from all such Sales in the
                              aggregate exceed Can. $15,000,000, such excess
                              proceeds shall be used


                                       32
<PAGE>


                              solely for prepayments of principal hereunder in
                              accordance with the provisions of Section 2.4
                              hereof and/or for payment of capital and
                              non-capital expenses of the Corporation in
                              connection with the construction, development and
                              operation of the Kemess Mine;

               (ii)   at any time following the Kemess Mine Production Date,
               provided that EBITDA of the Corporation for the consecutive three
               (3) calendar month period immediately prior to the date of such
               Sale is Can. $9,000,000 or more, assets of the Corporation, other
               than assets which comprise or are in any way material to the
               Kemess Mine, may be sold by the Corporation at fair market value
               to purchasers dealing at arm's length to the Corporation and the
               proceeds of such Sales may be used for general corporate purposes
               of the Corporation; and

               (iii)  at any time, assets of the Corporation which comprise or
               were in any way material to the Kemess Mine but which fall below
               the Materiality Threshold as a result of them being or becoming
               obsolete or redundant, provided that if saleable they are sold or
               disposed of by the Corporation for proceeds equal to their fair
               market value to purchasers at arm's length with the Corporation
               and the proceeds of such Sale are used in connection with the
               construction, development and operation of the Kemess Mine.

       In addition to the foregoing, and notwithstanding the Security, the
       Corporation may without the consent of the Holder at any time prior to
       the occurrence of a Default or Event of Default sell:

               (iv)   the Proposed Leaseback Assets for cash consideration as
               part of an operating leaseback agreement or as part of an
               agreement comprising an Eligible Capital Lease Obligation and
               Purchase Money Security Interest;

               (v)     the Corporation's interest in the Copperstone Property
               to a purchaser not dealing at arm's length to the Corporation for
               consideration of shares in or a royalty interest from the
               purchaser thereof; and

               (vi)   the Corporation's interest in the Mikwam Property to a
               purchaser not dealing at arm's length to the Corporation for
               consideration of shares in or a royalty interest from the
               purchaser thereof;


                                       33
<PAGE>


provided, in such cases, that the transaction is with an arm's length Person (or
to a non-arm's length Person but on arm's-length terms in the case of a Sale of
the Copperstone Property and the Mikwam Property) and on reasonable commercial
terms and that the proceeds of disposition become immediately subject to the
Liens in favour of the Holder created pursuant to the Security Documents. In the
event of any disposition or sale referred to in the immediately preceding
sentence, the Holder will deliver such acknowledgements and discharges of the
Security as the Corporation may reasonably request for the purpose of giving
effect to such sale rights on the part of the Corporation.  

       (f)     DEBT.  Create, incur, assume or suffer to exist, contingently or
       otherwise, Debt other than Permitted Debt.

       (g)     REPAYMENT OF DEBT.  Pay any principal, interest, fees or any
       other amounts in respect of Debt other than Permitted Payments and other
       than, if no Default or Event of Default has occurred:

               (i)    payments of interest on the Subordinated Notes ordinarily
               due and payable in accordance with the terms and conditions
               contained in the Subordinated Note Trust Indenture; and

               (ii)   other amounts ordinarily due and payable in respect of
               Permitted Debt provided that such payments shall not be
               inconsistent with the terms and conditions of applicable
               documents provided to the Holder prior to the date hereof.

       (h)     GUARANTEES.  Other than as may constitute Permitted Debt,
       guarantee, give financial assistance to or render itself liable in any
       manner whatsoever, directly or indirectly, conditionally or otherwise
       for any Debt or obligation whatsoever of a third party.

       (i)     AMALGAMATIONS, ETC.  Enter into any transaction (including by way
       of reorganization, consolidation, amalgamation, merger, reconstruction,
       liquidation, transfer, sale, lease or otherwise) whereby all or any
       material portion or significant operating division of the undertaking,
       property and assets of the Corporation or a Material Subsidiary would
       become the property of any other Person or, in the case of any such
       amalgamation, of the continuing corporation resulting therefrom without
       the Holder's prior written consent, provided that the Holder will
       provide its consent if the Holder, acting reasonably, determines that
       such transaction will not impair or prejudice the ability of the
       Corporation or the Material Subsidiaries to pay the indebtedness owing
       hereunder, to perform its covenants hereunder or impair or prejudice the
       Holder's Security.


                                       34
<PAGE>

       (j)     CHANGE IN BUSINESS.  (i) Enter into any contract, agreement or
       commitment out of the ordinary course of its business or (ii) acquire or
       establish any business unrelated to the current business of the
       Corporation or (iii) make any material change in, or terminate or
       suspend (other than in the ordinary course of its operations) any
       material part of, the construction, development and operation of the
       Kemess South Mine.

       (k)     PRICING, HEDGING PROTECTION.  Enter into any hedging or related
       arrangements (including, without limitation, forward sale contracts,
       options, currency swap agreements, interest swap agreements, and similar
       arrangements) which provide for (i) the granting of any Lien against the
       property, assets and undertaking of the Corporation or a Material
       Subsidiary other than Permitted Encumbrances or (ii) production advances
       or any other disposition of any property, assets or undertaking of the
       Corporation or a Material Subsidiary in consideration for advance or
       accelerated payment or other manner of prepayment or payment not
       contemporaneous with delivery, other than the sales by the Corporation
       of not more than U.S. $10,000,000 of copper concentrate pursuant to the
       Glencore Agreement.

       (l)     ENVIRONMENTAL MATTERS

               (i)    The Corporation shall maintain, and shall cause each of
               the Subsidiaries to maintain, a system to assure and monitor
               continued compliance with all Applicable Laws relating to the
               environment, which system shall include periodic reviews of such
               compliance.

               (ii)   Subject to the Materiality Threshold, if the Corporation
               or any Subsidiary (a) receives written notice that any violation
               of any Applicable Law relating to the environment may have been
               committed or is about to be committed by it, (b) receives written
               notice that any administrative or judicial complaint or order has
               been filed or is about to be filed against it alleging violations
               of any Applicable Law relating to the environment or requiring it
               to take any action in connection with the release of Hazardous
               Substances into the environment, or (c) receives any written
               notice from a Governmental Body or other Person alleging that it
               may be liable or responsible for costs associated with a response
               to or clean-up of a release of a Hazardous Substance into the
               environment or any damages caused thereby, the Corporation or
               Subsidiary, as the case may be, shall provide the Holder with a
               copy of such notice within ten days of receipt thereof. Subject
               to the Materiality Threshold, the Corporation or Subsidiary, as
               the case may be, shall also provide to the Holder, as soon as
               practicable after it becomes available, 


                                       35
<PAGE>


               a copy of any environmental site assessment or audit 
               report required to be submitted to any Governmental Body.

               (iii)  The Corporation shall indemnify the Holder and its
               officers, directors, employees, agents and shareholders, and
               shall hold each of them harmless, from and against any and all
               losses, liabilities, damages, costs, expenses and claims
               (including legal fees on a solicitor and his own client basis)
               suffered or incurred by such party in respect of (a) any
               violation by the Corporation or any Subsidiary of Applicable Law
               related to the environment including the assertion of any Lien
               thereunder, (b) the presence of any Hazardous Substance affecting
               the Mortgaged Property or any adjacent real estate, or (c) the
               release of any Hazardous Substance by the Corporation or any
               Subsidiary into the environment, provided that the foregoing
               indemnity shall not apply in connection with any negligence,
               willful misconduct or violation of any Applicable Law relating to
               the environment affecting the Mortgaged Property by the Holder or
               its agents after taking possession of the Mortgaged Property. The
               Corporation's obligations and indemnification under this section
               shall survive the satisfaction and release of the Security
               Documents and the repayment of this Debenture. The Holder shall
               hold the benefit of this indemnity in trust for those indemnified
               parties who are not parties to this Debenture.

       (m)     CAPITAL EXPENDITURES.   Make or permit any of its Subsidiaries,
       on a consolidated basis, to make any Capital Expenditures in any
       Financial Year in excess of Can. $12,000,000 if such Capital
       Expenditures do not directly relate to the construction, development or
       operation of the Kemess South Mine.

       (n)     BANKING.  Open or operate or permit any of its Subsidiaries to
       open or operate a bank account anywhere other than in the provinces of
       Ontario, British Columbia or Quebec and other than as set out in
       SCHEDULE T1.

       (o)     GRANT OR AMEND SECURITY.  Grant or permit any of its Subsidiaries
       to grant any Liens to any of the holders of Permitted Encumbrances set
       out in Section (b) or Section (l) of the definition thereof other than
       in such form and on such property, assets or undertaking of the
       Corporation or such Subsidiary that has been previously provided to the
       Holder hereunder, or amend or permit any of its Subsidiaries to amend
       any of the agreements, instruments or documents which provide Liens to
       any of the holders of Permitted Encumbrances set out in Section (b) or
       Section (l) of the definition thereof and which have been granted on or
       prior to the date hereof.

       (p)     AMEND SUBORDINATED NOTE TRUST INDENTURE.  Amend the Subordinated
       

                                       36
<PAGE>


       Note Trust Indenture.

       (q)     BANK WORKING CAPITAL FACILITY.  Amend the Bank Working Capital
       Facility or increase the principal amount that may from time to time be
       outstanding under the Bank Working Capital Facility to an amount in
       excess of Can. $1,900,000.



ARTICLE 6 - DEFAULT AND ACCELERATION

6.1    EVENTS OF DEFAULT

       The occurrence of any of the following events shall constitute an Event
of Default:

       (a)     if the Corporation defaults in payment of (i) all or any part of
       the principal of this Debenture when due, or (ii) all or any part of the
       fees provided for in Section 2.3 hereof when due; or

       (b)     if the Corporation defaults in payment of any interest or any
       other amount due hereunder; or

       (c)     if the Corporation defaults in observing or performing any other
       covenant or condition of this Debenture, the Purchase Agreement, the
       Security Documents, any other Debentures, or any other Document on its
       part to be observed or performed, and, if the default in question is one
       which is reasonably capable of being cured or remedied, such default
       continues for a period of 20 days after notice has been given to the
       Corporation by the Holder specifying such default and requiring the
       Corporation to rectify the same or cause to be rectified the same; or

       (d)     if any representation and warranty made by the Corporation in any
       Document is found to be false or incorrect in any material respect; or

       (e)     if an order is made or an effective resolution is passed for the
       winding-up or liquidation of the Corporation, or in the event of any
       other dissolution of the Corporation by operation of law; or

       (f)     if the Corporation defaults after the expiry of any applicable
       cure period thereunder in any way in the performance of any obligations
       to any holders of (i) Subordinated Notes or (ii) any of the Permitted
       Encumbrances referred to in clause (b) of the definition of Permitted
       Encumbrances; or if any such holder


                                       37
<PAGE>


       asserts any claim or takes any proceeding against the Corporation and 
       such claim or proceeding is not being contested in good faith by all 
       appropriate actions or, if proceedings are commenced against the 
       Corporation, the rights of such holders are at any time unstayed or 
       undismissed; or

       (g)     if the Corporation shall generally not pay its debts as such
       debts become due, or shall admit its inability to pay its debts
       generally as they become due or otherwise acknowledge its insolvency, or
       shall make a general assignment for the benefit of creditors; or any
       proceeding shall be instituted by the Corporation seeking to adjudicate
       it a bankrupt or insolvent, or seeking liquidation, winding-up,
       reorganization, arrangement, adjustment, protection, relief or
       composition of it or its debts, or a proposal is made by the Corporation
       under any Applicable Law relating to bankruptcy, insolvency or
       reorganization or relief of debtors, or seeking the entry of an order
       for the appointment of a receiver, trustee, custodian or other similar
       official for it or for any substantial part of its property, including
       without limitation any such proceeding under the Companies' Creditors
       Arrangement Act (Canada); or the Corporation shall take any action to
       consider, approve or authorize any of the actions set forth above; or

       (h)     if any proceeding shall be instituted against the Corporation
       seeking to adjudicate it a bankrupt or insolvent, or seeking
       liquidation, winding-up, reorganization, arrangement, adjustment,
       protection, relief or composition of it or its Debts, or a proposal is
       made against the Corporation under any Applicable Law relating to
       bankruptcy, insolvency or reorganization or relief of debtors, or
       seeking the entry of an order for the appointment of a receiver,
       trustee, custodian or other similar official for it or for any
       substantial part of its property, including without limitation any such
       proceeding under the COMPANIES' CREDITORS ARRANGEMENT ACT (Canada), and
       such proceeding is at any time not being contested in good faith by all
       appropriate proceedings or, if so contested, remains outstanding,
       undismissed and unstayed, more than 30 days from the institution of such
       proceeding; or

       (i)     if any execution, distress or other enforcement process, whether
       by court order or otherwise, involving indebtedness of the Corporation
       individually or in the aggregate in excess of Can. $2,000,000 becomes
       enforceable against any property of the Corporation and if such
       execution, distress or other enforcement process shall have been
       commenced by a creditor before obtaining judgment, such execution,
       distress or other enforcement process shall not have been stayed or
       vacated within 3 Business Days from the commencement thereof, or if any
       judgment or order for the payment of money in excess of Can. $2,000,000
       shall be rendered against the Corporation and either (i) enforcement
       proceedings shall have been commenced by any creditor upon such judgment
       or order or (ii) there shall be any period during which a stay of
       enforcement of 


                                       38

<PAGE>
       such judgment or order, by reason of a pending appeal or otherwise, 
       shall not be in effect;

       (j)     if any event or proceeding is taken with respect to any part of
       the Mortgaged Property in any jurisdiction outside Canada which has an
       effect equivalent or similar to any of the events described in sections
       6.1(e), 6.1(g) or 6.1(h); or

       (k)     if the Corporation fails to make to any Person when due any
       payment (whether at scheduled maturity or by required prepayment,
       acceleration, demand or otherwise, but excluding trade payables incurred
       in the ordinary course of business which are not overdue by 90 days or
       more or are being contested in good faith by all appropriate proceedings
       promptly instituted and diligently conducted by the Corporation) in
       respect of indebtedness which exceeds individually Can. $3,000,000 or in
       the aggregate Can. $7,000,000; or any other event shall occur or
       condition shall exist specified in any agreement or instrument relating
       to any such indebtedness or liability of the Corporation if the effect
       of such event or condition is to accelerate, or to permit the
       acceleration of the maturity of such indebtedness or liability of the
       Corporation; or any such indebtedness or liability of the Corporation
       which is outstanding shall be declared to be due and payable prior to
       the stated maturity thereof and in each such case such failure or event
       is not remedied within 20 days of such failure or event; or

       (l)     If the Corporation allows, permits, consents to or becomes
       subject to a Change of Control of the Corporation without the prior
       written consent of the Holder, provided that it shall not be an Event of
       Default hereunder and the Holder will consent to a Change of Control of
       the Corporation if prior to such Change of Control of the Corporation
       the Holder, acting reasonably, determines that such Change of Control of
       the Corporation (i) will not impair or prejudice the ability of the
       Corporation to pay any indebtedness owing hereunder or to perform its
       covenants hereunder, and (ii) will not impair or prejudice the Holder's
       Security; or

       (m)     if the Kemess Mine Production Date is not on or before December
       31, 1998; or

       (n)     if any Material Subsidiary commits an event of default (after any
       applicable cure period) in any agreement with or obligation owing to the
       Holder including pursuant to any of the Documents; or

       (o)     If the Corporation commits a default under or is in breach of the
       equipment lease dated April 6, 1998 between the Corporation and Trilon
       Bancorp Inc. (Lease Number L-RY001).

6.2    ACCELERATION ON DEFAULT

                                       39
<PAGE>


       Upon the occurrence of an Event of Default, the Holder may, in its
discretion:

               (a)    declare the principal amount of this Debenture then
               outstanding, all accrued and unpaid interest hereunder and any
               other moneys payable hereunder to be immediately due and payable
               by the Corporation to the Holder; and

               (b)    realize upon all or any part of the Security constituted
               by the Security Documents; and

               (c)    take such actions and commence such proceedings as may be
               contemplated by the Documents or permitted at law or in equity
               (whether or not provided for herein or in the Security Documents
               or other Documents) at such times and in such manner as the
               Holder in its sole discretion may consider expedient;

all without, except as may be required by Applicable Law, any additional notice,
presentment, demand, protest, notice of protest, dishonour or any other action.

6.3    REMEDIES CUMULATIVE

       No remedy conferred upon or reserved to the Holder herein or in the
Security Documents or any other Document is intended to be exclusive of any
other remedy, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing by
law or by statute.

6.4    DEBENTURE NOT REQUIRED

       All rights of action under the Security Documents or hereunder may be
enforced by the Holder without the possession of this Debenture or the
production thereof on the trial or other proceedings relating thereto.

                                       40
<PAGE>

ARTICLE 7 -  MISCELLANEOUS

7.1    NOTICE

       Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by delivery as hereafter provided. Any such notice
or other communication, if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the Business Day
following the sending, or, if delivered by hand, shall be deemed to have been
received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at such address
having apparent authority to accept deliveries on behalf of the addressee.
Notice of change of address shall also be governed by this section.  Notices and
other communications shall be addressed as follows:


       (a)     if to the Corporation:        Royal Oak Mines Inc.
                                             c/o Arctic Precious Minerals, Inc.,
                                             d.b.a Royal Oak Mines (U.S.A.) Inc.
                                             5501 Lakeview Drive
                                             Kirkland, Washington
                                             U.S.A. 98033

                                             Attention:  President
                                             Facsimile Number:  (425) 822-3349

               with a copy to:               Lang Michener
                                             BCE Place, Box 747
                                             2500 - 181 Bay Street
                                             Toronto, Ontario
                                             M5J 2T7
                                             Attention:  William Sheridan and
                                             David Thring
                                             Facsimile No.:  (416) 365-1719

                                       41
<PAGE>

       (b)     if to the Holder:             Northgate Exploration Limited
                                             1 First Canadian Place
                                             Suite 2630, P.O. Box 143
                                             Toronto, Ontario
                                             M5X 1C7

                                             Attention: Terry Lyons
                                             Facsimile Number: (416) 363-2856

               with a copy to:               Goodman and Carr
                                             Suite 2300
                                             200 King Street West
                                             Toronto, Ontario
                                             M5H 3W5

                                             Attention:     Jeffrey Blidner and
                                                            Lorne Segal
                                             Facsimile No.: (416) 595-0567

                                       42
<PAGE>

7.2    ASSIGNMENT

       The Corporation may not assign this Debenture. This Debenture and the
Holder's rights hereunder may be assigned at any time by the Holder in whole or
in part (including, without limitation, by the grant or conveyance of
participations in its interests hereunder), together with, at its discretion,
its corresponding rights in any or all of the Security Documents and other
Documents. Upon an assignment pursuant to this section, the Corporation shall,
at the request of the assignee, issue a replacement Debenture registered in the
name of the assignee (and, in the case of a partial assignment, shall also issue
a replacement Debenture to the Holder in respect of the principal balance held
by it), upon surrender and cancellation of the existing Debenture, and shall
also, at the Holder's request, execute and deliver new Security Documents and
other Documents to and in favour of the assignee. The Corporation shall also,
and shall cause the Subsidiaries to, execute and deliver such other agreements,
documents and instruments as the Holder or the assignee may request in
connection with such assignment. The Holder may provide to any proposed assignee
or participant such information concerning the financial position and the
operations of the Corporation and its Subsidiaries as, in the opinion of the
Holder, may be relevant or useful in connection with this Debenture or any other
Document or any portion thereof proposed to be acquired by such assignee or
participant. Notwithstanding anything else in this Section 7.2, if no Default or
Event of Default has occurred the Holder shall not be entitled to assign this
Debenture to any corporation whose principal business is the exploration for or
mining of precious or base metals (other than to such Persons in which the
Holder or their respective Associates and Affiliates has a direct or indirect
interest, which Persons may be an assignee of this Debenture or the Documents). 
Following a Default or an Event of Default, there shall be no restrictions on
the Holder's ability to assign tis Debenture or any of the Documents.

7.3    EXCHANGE OF INFORMATION

       The Holder may provide to any proposed assignee or participant such
information concerning the financial position and the operations of the
Corporation and its Subsidiaries as, in the opinion of the Holder, may be
relevant or useful in connection with this Debenture or any other Document or
any portion thereof proposed to be acquired by such assignee or participant.

                                       43
<PAGE>

7.4    RELIANCE AND NON-MERGER

       All covenants, agreements, representations and warranties of the
Corporation made herein or in any other Document or in any certificate or other
document signed by any of its directors or officers and delivered by or on
behalf of either of them pursuant hereto or thereto are material, shall be
deemed to have been relied upon by the Holder notwithstanding any investigation
heretofore or hereafter made by the Holder or the Holder's Counsel or any
employee or other representative of the Holder and shall survive the execution
and delivery of this Debenture and the other Documents until the Corporation
shall have satisfied and performed all of its obligations hereunder and
thereunder.  Nothing contained in this Debenture shall operate to subordinate
the Security provided in favour of the Holder to or in favour of any Permitted
Encumbrance or other Liens, or to postpone any of the obligations owing by the
Corporation to the Holder to any of the obligations, indebtedness or liabilities
owed by the Corporation to the holders of the Permitted Encumbrances or other
Liens.

7.5    AMENDMENT, WAIVER

       No amendment or waiver of this Debenture shall be binding unless
executed in writing by the Corporation if it is to be bound thereby, or by the
Holder if the Holder is to be bound thereby (any such amendment or waiver to be
contemporaneously made in respect of the Debenture).  No waiver of any provision
of this Debenture will constitute a waiver of any other provision nor will any
waiver of any provision of this Debenture constitute a continuing waiver unless
otherwise expressly provided.

7.6    NO SET-OFF BY THE CORPORATION

       The amounts payable by the Corporation under this Debenture or any other
Document shall not be subject to any deduction, withholding, set-off or
counterclaim by the Corporation for any reason whatsoever.

7.7    EMPLOYMENT OF EXPERTS

       The Holder may, at any time and from time to time, when a Default or
Event of Default has occurred and is continuing, retain and employ legal
counsel, independent accountants, consultants and other experts in order to
perform or assist it in the performance of its rights and powers under this
Debenture or the other Documents, and the Corporation shall pay to the Holder on
demand all proper and reasonable compensation paid or payable to such counsel,
accountant, consultant or other expert retained or employed pursuant to this
provision.

                                       44
<PAGE>

7.8    FURTHER ASSURANCES

       Whether before or after the happening of a Default or Event of Default,
the Corporation shall at its own expense do, make, execute or deliver, or cause
to be done, made, executed or delivered by its Subsidiaries or other Persons,
all such further acts, documents and things in connection with this Debenture
and the other Documents as the Holder may reasonably require from time to time
for the purpose of giving effect to the Documents including, without limitation,
for the purpose of facilitating the enforcement of the Security, all immediately
upon the request of the Holder.

7.9    GOVERNING LAW

       This Debenture shall be governed by and construed in accordance with the
laws of the Province of Ontario and the federal laws of Canada applicable
therein.  The Corporation submits to the jurisdiction of the courts of Ontario
to determine all issues whether at law or in equity arising from this Debenture.

7.10   PAYMENT OF COSTS AND EXPENSES

       The Corporation shall pay to the Holder on demand all reasonable costs
and expenses of the Holder, its agents, officers and employees, and any receiver
or receiver-manager appointed by the Holder or by a court, in connection with
this Debenture, the Security Documents and the other Documents including,
without limitation:

       (a)     the preparation, execution, filing and registration of the
       Debenture, the Security Documents, and the other Documents (including,
       without limitation, any Security Documents and other Documents to be
       delivered following the date hereof pursuant to Article 3 hereof) and
       any actual or proposed amendment or modification hereof or thereof or
       any waiver hereunder or thereunder and all instruments supplemental or
       ancillary thereto;

       (b)     obtaining advice as to the Holder's rights and responsibilities
       under this Debenture, the Security Documents and the other Documents at
       any time after an Event of Default; and

       (c)     the defence, establishment, protection or enforcement of any of
       the rights or remedies of the Holder under this Debenture, any of the
       Security Documents or any other Documents including, without limitation,
       all costs and expenses of establishing the validity and enforceability
       of, or of collection of amounts owing under, this Debenture, any of the
       Security Documents or any other Documents or of any enforcement of the
       Security,

                                       45
<PAGE>

and all of the fees, expenses and disbursements of any advisors to the Holder
including, Counsel to the Holder on a solicitor and his own client basis,
incurred in connection therewith, and including all sales or value-added taxes
payable by the Holder (whether refundable or not) on all such costs and
expenses. 

7.11   JUDGMENT CURRENCY

       If for the purpose of obtaining judgment in any court, it is necessary
to convert an amount due under this Debenture or any other of the Documents or
under any instrument delivered thereunder from a currency in which it is due
(the "Original Currency") into another currency (the "Second Currency") the
parties hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which, in accordance with normal banking
procedures, the Holder could purchase the Original Currency with the Second
Currency on the date two Business Days preceding that on which judgment is
given.  The obligation of the Corporation in respect of any Original Currency
due from it to the Holder under this Debenture or any other Documents or under
any instrument delivered thereunder shall, notwithstanding any judgment in the
Second Currency, be discharged by a payment made to the Holder entitled thereto
on account thereof in the Second Currency only to the extent that, on the
Business Day following receipt of such payment in the Second Currency, the
Holder may, in accordance with normal banking procedures, purchase the amount
due in the Original Currency with the amount of the Second Currency so paid; and
if the amount of the Original Currency which may be so purchased is less than
the amount originally due in the Original Currency, the Corporation agrees as a
separate and independent obligation and notwithstanding any such payment or
judgment to indemnify the Holder against such deficiency.  

7.12   PAYMENT AGREEMENTS FOR DEBENTURE

       Notwithstanding anything contained herein, the Corporation may enter
into an agreement with the Holder, in the absolute discretion of the Holder,
providing for the payment to such Holder of the principal of and interest on
this Debenture at a place and in a manner other than the place and manner
specified herein as the place and manner for such payment.  Any payment of the
principal of and interest on this Debenture at such other place and in such
other manner pursuant to such agreement shall, notwithstanding any other
provision of this Debenture, be valid and binding on the Corporation and the
Holder. 

                                       46
<PAGE>

7.13   ENTIRE AGREEMENT

       The Documents constitute the entire agreement between the parties hereto
pertaining to the matters therein set forth and supersede and replace any prior
understandings or arrangements pertaining to such matters.  There are no
warranties, representations or agreements between the parties in connection with
such matters except as specifically set forth or referred to in the Documents. 

       IN WITNESS WHEREOF the Corporation has executed this Debenture on the
date first above written. 

                                   ROYAL OAK MINES INC.

                                   By: /s/ James H. Wood
                                      --------------------------------------
                                   Name:  James H. Wood
                                   Title:  Chief Financial Officer

       Dated as of June 22, 1998

                                       47
<PAGE>
                                     SCHEDULE "A"

                                     DEFINITIONS

"ADDITIONAL PURCHASE PRICE" has the same meaning given to such term in the
Purchase Agreement;

"AFFILIATE" has the meaning ascribed thereto in the BUSINESS CORPORATIONS ACT
(Ontario) and includes, for greater certainty, all Subsidiaries;

"APM" means Arctic Precious Metals, Inc., a company incorporated under the laws
of Nevada;

"APM TRANSACTIONS" means ordinary course transactions between the Corporation
and APM in accordance with past practice and generally as described in SCHEDULE
B hereto provided, however that such transactions shall not in any one Financial
Year involve transactions of the kind referred to in sections 5.3(b)(i),(ii) and
(iii), 5.3(c) and 5.3(d) hereof aggregating more than Can. $13,500,000 and
provided further that such transactions shall be permitted only prior to an
Event of Default;

"APPLICABLE LAW" means, in respect of any Person, property, transaction or
event, all applicable laws, statutes, rules, by-laws and regulations, and all
applicable official written directives, orders, judgments and decrees of
Governmental Bodies;

"ASSOCIATE" has the meaning ascribed thereto in the BUSINESS CORPORATIONS ACT
(Ontario) and shall include any entity which is an Associate of an Associate,
and so on;

"AUDITED FINANCIAL STATEMENTS" means the audited consolidated financial
statements of the Corporation as at and for the 12 month fiscal period ended
December 31, 1997, consisting of a balance sheet, an income statement and a
statement of changes in financial position, together with the notes thereto,
copies of which have been provided to the Holder;

"BANK WORKING CAPITAL FACILITY" means a working capital facility provided to the
Corporation by the Bank of Nova Scotia pursuant to a credit agreement dated
February 15, 1996 as amended by agreements dated August 5, 1996 and May 30, 1997
in a maximum principal amount not to exceed Can. $1,900,000 pursuant to which
the Bank of Nova Scotia has outstanding letters of credit on behalf of the
Corporation and in respect of which the Corporation has provided to the Bank of
Nova Scotia cash collateral as security therefor in the approximate amount of
Can. $2,012,126 as at May 19, 1998 plus interest thereon.

"BUSINESS DAY" means any day, other than Saturday, Sunday or any statutory
holiday in Toronto, Canada;

"CAPITAL EXPENDITURES" means, for any period, those expenditures of the
Corporation (on a consolidated basis) which would, in accordance with generally
accepted accounting principles, be considered expenditures for capital assets of
the Corporation (on a consolidated basis) for such period;

<PAGE>

"CAPITAL LEASE OBLIGATIONS" of the Corporation means the obligations of the
Corporation to pay rent or other amounts under a lease (or other agreement
conveying the right to use) of real or personal property, which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet under generally accepted accounting principles and, for purposes of this
Debenture, the amount of such obligations shall in each case be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles;

"CHANGE OF CONTROL OF THE CORPORATION" means if any Person acquires or becomes
the beneficial owner of, or a combination of Persons acting jointly acquire or
become the beneficial owners of, directly or indirectly more than 35% of the
common shares of the Corporation or any shares of the Corporation which in the
aggregate represent 35% of the voting shares of the Corporation, whether through
the acquisition of previously issued and outstanding shares, or of shares that
have not been previously issued, or any combination thereof, or any other
transaction having a similar effect;

"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement dated February
19, 1998 between the Corporation and BC Pacific Capital Corporation;

"CONSENT" has the meaning attributed to such term in Section 4.1(g);

"COPPERSTONE PROPERTY" has the meaning ascribed thereto in SCHEDULE U;

"COUNSEL" means a barrister or solicitor or firm of barristers and solicitors
retained by the Holder or retained by the Corporation and acceptable to the
Holder acting reasonably;

"DEBENTURE" means this Senior Secured Debenture - Series B of the Corporation as
it may be amended, modified, restated or replaced from time to time;

"DEBENTURES" means all Senior Secured Debentures of the Corporation (whether
Series A or Series B) sold pursuant to the Purchase Agreement as same may be
amended, modified, restated or replaced from time to time.

"DEBT" of any Person means all indebtedness including, without limitation (i)
all indebtedness of such Person for and in respect of borrowed money, including
obligations with respect to bankers' acceptances, letters of credit and letters
of guarantee or indemnity; (ii) all indebtedness of such Person for the deferred
purchase price of property or services represented by a note or other evidence
of indebtedness or other security; (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to the
possession or sale of such property); (iv) all obligations under leases which,
in accordance with generally accepted accounting principles (or accounting
principles generally accepted in the jurisdiction of incorporation or
organization of such Person), are recorded as capital leases, in respect of
which such Person is liable as lessee; (v) all

                                       2
<PAGE>

indebtedness or obligations of such Person pursuant to any interest rate 
swaps, currency swaps, commodity agreements and similar hedging agreements; 
and (vi) all Debt Guaranteed by such Person;

"DEBT GUARANTEED" by any Person means Debt of the kinds referred to in (i)
through (v) of the definition of Debt which is directly or indirectly guaranteed
by such Person or which such Person has agreed (contingently or otherwise) with
the creditor to purchase or otherwise acquire or assume, or in respect of which
such Person has otherwise assured a credit against loss by means of an
indemnity, security or bond;

"DEFAULT" means any event which, but for the lapse of time, giving of notice or
both, would constitute an Event of Default;

"DISCLOSED DEFAULTS" has the meaning given to such term in Section 4.1(n)
hereof;

"DOCUMENTS" means, collectively, the Debenture, the Security Documents and any
other document now or hereafter delivered to the Holder by the Corporation or
any Subsidiary pursuant to or in connection therewith including any document,
agreement or guarantee delivered to the Holder pursuant to or in connection with
the Reorganization Undertaking (as defined in the Purchase Agreement);

"EBITDA" means, for any period, Net Income for such period, plus (i)
consolidated interest expense of the Corporation and its Subsidiaries for such
period, plus (ii) provision for income taxes of the Corporation and its
Subsidiaries for such period, plus (iii) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
charges (excluding any such non-cash charge to the extent that it represents an
accrual of or reserve for cash charges in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of the Corporation and its
Subsidiaries to the extent that such depreciation, amortization and other
non-cash charges were deducted in computing Net Income for such period, minus
(iv) non-cash items increasing consolidated revenues of the Corporation and its
Subsidiaries in determining Net Income for such period, in each case on a
consolidated basis and determined in accordance with generally accepted
accounting principles; provided that the following shall not be included in the
calculation of EBITDA as either a charge or revenue: (a) non-cash changes in the
carrying value of the Subordinated Notes and other Debt which is not denominated
in Canadian dollars and is translated to Canadian dollars at the balance sheet
date; and (b) non-cash changes resulting from the marking to market of foreign
currency and commodity contracts; and provided further that premiums paid or
received on options, warrants or similar instruments shall be recognized, for
the purposes of EBITDA, as expenses or revenue, as the case may be, only on the
date on which the option, warrant or other instrument in question expires,
matures, is exercised or otherwise terminates;

"ELIGIBLE CAPITAL LEASE OBLIGATIONS AND PURCHASE MONEY SECURITY INTERESTS" means
(a) Capital Lease Obligations and Purchase Money Security Interests existing as
at the date hereof

                                       3
<PAGE>

or any renewals or replacements thereof on materially the same terms and in 
amounts not materially exceeding those existing as at the date hereof; and 
(b) Capital Lease Obligations and Purchase Money Security Interests incurred 
following the date hereof if the claims of the lessor or creditor thereunder 
are limited to recovery or repossession of the leased or financed property in 
question and if such leased or financed property is newly acquired by the 
Corporation;

"EVENT OF DEFAULT" has the meaning attributed to such term in section 6.1;

"EXCLUDED ASSETS" means the Windy Craggy Property;

"EXISTING ENCUMBRANCES" means the Liens specifically described in SCHEDULE C1;

"FINAL MATURITY DATE" has the meaning given to such term in Section 2.3(a)
hereof;

"FINANCIAL QUARTER" means, in relation to the Corporation or any Subsidiary, the
four periods each consisting of three months in each Financial Year of the
Corporation or such Subsidiary ending on the last day of each of the third,
sixth, ninth and twelfth months in such Financial Year;

"FINANCIAL YEAR" means, in relation to the Corporation or any Subsidiary, the
period beginning on January l and ending on December 31 of each calendar year;

"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means the accounting principles so
described and promulgated by the Canadian Institute of Chartered Accountants
from time to time;

"GLENCORE AGREEMENT" means the letter agreement dated November 5, 1997 between
the Corporation and Glencore Ltd. relating to the sale by the Corporation of
copper concentrate;

"GOVERNMENTAL BODY" means any government, parliament, legislature, or any
regulatory, authority, agency, commission or board of any government, parliament
or legislature, or any court or (without limitation to the foregoing) any other
law, regulation or rule-making entity (including, without limitation, any
central bank, fiscal or monetary authority or authority regulating banks),
having jurisdiction in the relevant circumstances, or any Person acting under
the authority of any of the foregoing (including, without limitation, any
arbitrator);

"HAZARDOUS SUBSTANCE" includes but is not limited to any contaminants,
pollutants, dangerous substances, liquid wastes, industrial wastes, toxic
substances, hazardous wastes, hazardous materials of whatsoever nature or kind
or any other hazardous substance within the meaning of any Applicable Law
including without limitation the HAZARDOUS PRODUCTS ACT (Canada), the CANADIAN
ENVIRONMENTAL PROTECTION ACT (Canada), the ENVIRONMENTAL PROTECTION ACT
(Ontario) and the WASTE MANAGEMENT ACT (B.C.);

"HOLDER" means Trilon Financial Corporation and its successors and permitted
assigns;

                                       4
<PAGE>

"INITIAL PURCHASE PRICE" has the same meaning given to such term in the Purchase
Agreement; 

"INTELLECTUAL PROPERTY" means all trade marks, trade names, patents, patent
applications, copyrights, trade secrets, logos, processes, computer systems and
application software which are owned or used by, or which relate to the business
of, the Corporation or the Subsidiaries;

"INTEREST PAYMENT DATE" means each day on which interest is payable hereunder
pursuant to section 2.1;

"INTEREST RATE" means the LIBOR Rate plus 6.0% per annum;

"INTERIM FINANCIAL STATEMENTS" means the unaudited consolidated financial
statements of the Corporation as at and for the 4 month period ended April 30,
1998 consisting of a balance sheet, an income statement and a statement of
changes in financial position, a copy of which has been provided to the Holder;

"KEMESS MINE" means the Kemess North Property and the Kemess South Mine;

"KEMESS NORTH PROPERTY" means all present and future property and assets
comprising or relating to what is generally referred to as the Kemess North
Property in British Columbia, Canada including, without limitation, all mineral
claims and leases referred to in SCHEDULE B-1 hereto, all buildings, equipment,
fixtures and other property and assets owned or leased by the Corporation (or in
which the Corporation otherwise has an interest) situated or used at the Kemess
North Property site all operations, exploration and other activities carried on
at such site and all permits, authorizations, licenses and similar approvals
relating thereto;

"KEMESS SOUTH MINE" means all present and future property and assets comprising
or relating to what is generally referred to as the Kemess South Mine property
in British Columbia, Canada including, without limitation, all mineral claims
and leases referred to in SCHEDULE B-2 hereto, all buildings, equipment,
fixtures and other property and assets owned or leased by the Corporation (or in
which the Corporation otherwise has an interest) situated or used at the Kemess
South Mine site, all operations, exploration and other activities carried on at
such site and all permits, authorizations, licenses and similar approvals
relating thereto;

"KEMESS MINE PRODUCTION DATE" means the date that the Kemess South Mine has
produced concentrate over the immediately preceding 30 day period, and is able
to sustain and maintain such production thereafter, of not less than 8500 short
tons of concentrate yielding mineral content that is acceptable to Glencore Ltd.
pursuant to the Glencore Agreement (without giving effect to any amendments
thereof);

"KEMESS MINE CONSTRUCTION CONTRACTS" has the meaning given to such term in
Section 4.1(x);

                                       5
<PAGE>

"KNOWLEDGE" means the best knowledge of the senior management of that party
(which in the case of the Corporation specifically includes but is not limited
to the Kemess Mine Project Manager, the Kemess Mine Project Director and the
Kemess Mine Manager of Project Accounting, after having made all reasonable
inquiries;

"LIBOR RATE" means the rate of interest per annum, calculated on the basis of a
year of 360 days, determined by the Holder for a 30 day period to be (i) the
rate per annum, calculated on the basis of a year of 360 days, which appears on
the Reuters Telerate Page 3750 as of 11:00 a.m. (London time) on the second
Business Day prior to the commencement of such 30 day period in an amount of
U.S. dollars equal to the principal amount then outstanding under the Debenture
and for a 30 day deposit period, or (ii) if such rate does not appear on the
Reuters Telerate Page 3750 as and when contemplated herein, the arithmetic
average (rounded upwards to the nearest 1/16th of 1%) of the rates of interest
per annum, calculated on the basis of a year of 360 days, at which any three
prime banks in the London inter-bank market are offering deposits at
approximately 11:00 a.m. (London time) on the second Business Day prior to the
commencement of such 30 day period in an amount of U.S. dollars equal to the
principal amount then outstanding under this Debenture and for a 30 day deposit
period;

"LIEN" means any mortgage, lien, pledge, assignment, charge, security interest,
lease intended as security, title retention agreement, rights reserved in any
Governmental Body, registered lease of real property, hypothec, levy, execution,
seizure, attachment, garnishment or other similar encumbrance and includes any
contractual restriction which, if contravened, may give rise to an encumbrance;

"MATERIAL AUTHORIZATION" means, with respect to the Corporation or any
Subsidiary, any approval, permit, licence or similar authorization from, and any
filing or registration with, any Governmental Body required by such Person to
own its property and assets or to carry on its business in each jurisdiction in
which it does so or is contemplated to do so, where the failure to have such
approval, permit, licence, authorization, filing or registration would have a
material adverse effect upon its business, financial condition or prospects;

"MATERIAL CONTRACTS" has the meaning given to such term in Section 4.1(x);

"MATERIAL SUBSIDIARIES" means APM and all Subsidiaries each of which has total
assets exceeding a fair market value of Can. $2,000,000;

"MATERIALITY THRESHOLD" means that the representation, warranty, covenant or
other obligation in question shall apply only to subject matter which
individually or in the aggregate is or should reasonably be expected as
determined by the Holder, acting reasonably, to be material to:

     (a)  the business, property or affairs of the Corporation taken as a
     whole;

     (b)  the construction, ownership or operation of the Kemess Mine or
     the requirement

                                       6
<PAGE>

     that the Kemess Mine Production Date occur on or before
     December 31, 1998; or

     (c)  the Holder, in its capacity as a secured creditor of the
     Corporation under the Documents;

"MIKWAM PROPERTY" has the meaning ascribed thereto in SCHEDULE V;

"MORTGAGED PROPERTY" means all of the property, assets and undertaking of the
Corporation and APM of every nature and kind, both present and future, real and
personal, tangible and intangible, other than Excluded Assets, including without
limitation all proceeds of disposition of any such property, assets and
undertaking;

"NET INCOME" means, for any period, the aggregate of the net income of the
Corporation and its Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles (for greater certainty,
after Taxes), but excluding therefrom (i) extraordinary items, (ii) any gains or
losses from the sale of any assets (other than inventory sold in the ordinary
course of business) of the Corporation or its Subsidiaries, (iii) the net income
of any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that net income is not permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its shareholders, or is not
permitted without prior governmental approval (that has not been obtained), and
(iv) the income or loss from any entity in which the Corporation's or its
Subsidiary's, as applicable, investment is classified pursuant to generally
accepted accounting principles as a minority interest;

"NIGHTHAWK LAKE MINE" has the meaning ascribed thereto in SCHEDULE W;

"PAMOUR MINE" has the meaning ascribed thereto in SCHEDULE X;

"PERMITTED DEBT" means, collectively, the indebtedness pursuant to the
Debentures and:

     (a)  indebtedness of the Corporation under the Subordinated Notes;

     (b)  indebtedness of the Corporation which, pursuant to agreements and
     confirmations delivered by the applicable creditor to and in favour of
     the Corporation and the Holder in form and content satisfactory to the
     Holder, is fully subordinated and postponed to the obligations of the
     Corporation to the Holder under the Debenture and the other Documents,
     provided that at the time any or all such indebtedness is incurred or
     reincurred no Default or Event of Default has occurred; 

     (c)  indebtedness of the Corporation to Persons under interest rate
     swaps, currency swaps, commodity agreements and similar hedging
     agreements (the "Permitted Hedging Indebtedness");

                                       7
<PAGE>

     (d)  Debt under or secured by Eligible Capital Lease Obligations and
     Purchase Money Security Interests, not at any time exceeding the
     aggregate of (A) Can. $30,000,000 plus (B) for so long as the Proposed
     Leaseback Assets are leased to the Corporation pursuant to the April 6,
     1998 lease between the Corporation and Trilon Bancorp Inc. (Lease Number
     L-RY001) and in the event of a sale and leaseback of the Proposed
     Leaseback Assets and solely for those purposes, the amount by which the
     Debt under or secured by an Eligible Capital Lease Obligation or
     Purchase Money Security Interest relating to the Proposed Leaseback
     Assets exceeds the difference between (1) Can. $30,000,000, and (2) the
     amount of Debt under all Eligible Capital Lease Obligations and Purchase
     Money Security Interests existing as at the date hereof;

     (e)  Debt by way of trade payables or the endorsement of negotiable
     instruments incurred or created in the ordinary course of business for
     the purpose of carrying on same.

"PERMITTED ENCUMBRANCES" means Liens granted to secure indebtedness under the
Debentures and other Documents, Liens granted to Trilon Financial Corporation to
secure obligations owing to it under a Royalty Agreement and a Royalty Debenture
each dated the date hereof; and: 

     (a)  the Existing Encumbrances set out in Parts I and II of SCHEDULE C1 
     hereto and extensions, renewals or refinancings thereof on materially the 
     same terms and in amounts not materially exceeding those existing at the 
     date hereof;

     (b)  Liens on the Mortgaged Property granted by the Corporation to
     holders of Permitted Hedging Indebtedness in an aggregate amount not at
     any time exceeding U.S. $50,000,000 to secure the Corporation's
     obligations in respect of Permitted Hedging Indebtedness in an aggregate
     amount not at any time exceeding U.S. $50,000,000, provided that each
     such holder delivers to and in favour of the Corporation and the Holder
     an inter-creditor agreement, in form and content satisfactory to the
     Holder, providing for, among other things, the subordination by such
     holders of Permitted Hedging Indebtedness Note of any Liens granted to
     them to and in favour of the Security until such time as all of the
     obligations of the Corporation to the Holder are satisfied in full;

     (c)  cash collateral accounts for the letters of credit specifically
     described in SCHEDULE Y and extensions, renewals or refinancings thereof
     on materially the same terms and in amounts not materially exceeding
     those existing at the date hereof;

                                       8
<PAGE>

     (d)  Liens for taxes, assessments or governmental charges incurred in
     the ordinary course of business that are not yet due and payable (taking
     into account any relevant grace periods), in respect of which the
     Corporation or a Subsidiary, as the case may be, has established on its
     books reserves to the extent required by generally accepted accounting
     principles considered by it and its auditors to be adequate therefor;

     (e)  rights reserved to or vested in any Governmental Body by the
     terms of any lease, licence, franchise, grant or permit, or by any
     statutory provision, to terminate the same, to take action which results
     in an expropriation, to designate a purchaser of any Mortgaged Property
     or to require annual or other payments as a condition to the continuance
     thereof;

     (f)  construction, contractors', mechanics', carriers',
     warehousemen's, suppliers' and materialmen's Liens and Liens in respect
     of vacation pay, workers' compensation, unemployment insurance or
     similar statutory obligations, provided the obligations secured by such
     Liens are not yet due and payable and, in the case of construction
     Liens, which have not yet been filed or for which the Corporation or a
     Subsidiary has not received written notice of a Lien, provided that in
     any case the Corporation may permit to exist construction Liens (in
     addition to those included in the definition of Existing Encumbrances
     and listed in Part I of SCHEDULE C1) which do not individually or in the
     aggregate relate to indebtedness exceeding Can. $10,000,000, which the
     Corporation is contesting in good faith by all appropriate proceedings
     promptly instituted and diligently conducted, and in respect of which,
     notice in writing has been given by the Corporation to the Holder, with
     full particulars thereof;

     (g)  zoning restrictions, easements, rights of way, leases or other
     similar encumbrances or privileges in respect of real property which in
     the aggregate do not materially impair the use of such property by the
     Corporation or a Subsidiary in the operation of its business;

     (h)  Liens in connection with any Eligible Capital Lease Obligations
     and Purchase Money Security Interests in respect of Debt not at any time
     exceeding in the aggregate of (A) Can. $30,000,000 plus (B) for so long
     as the Proposed Leaseback Assets are leased to the Corporation pursuant
     to the April 6, 1998 lease between the Corporation and Trilon Bancorp
     Inc. (Lease Number L-RY001) and in the event of a sale and leaseback of
     the Proposed Leaseback Assets and solely for those purposes, the amount
     by which the Debt under or secured by an Eligible Capital Lease
     Obligation or Purchase Money Security Interest relating to the Proposed
     Leaseback Assets exceeds the difference between (1) Can. $30,000,000 and
     (2) the amount of the Debt under all Eligible Capital lease Obligations
     and Purchase Money Security Interests existing as at the date hereof;

     (i)  security given by the Corporation or a Subsidiary to a public
     utility or any

                                       9
<PAGE>

     Governmental Body, when required by such utility or Governmental 
     Body in connection with the operations of the Corporation or
     Subsidiary in the ordinary course of its business, which singly or in
     the aggregate do not materially detract from the value of the asset
     concerned or materially impair its use in the operation  of the business
     of the Corporation or Subsidiary;

     (j)  the reservation in any original grants from the Crown of any land
     or interest therein and statutory exceptions to title;

     (k)  title defects or irregularities which are of a minor nature and
     which do not materially detract from the value of the assets of the
     Corporation or its Subsidiaries encumbered thereby;  

     (l)  Liens on the Mortgaged Property granted by the Corporation to or
     on behalf of holders of the Subordinated Notes in an aggregate principal
     amount not at any time exceeding U.S. $175,000,000 to secure the
     Corporation's obligations in respect of the Subordinated Note Trust
     Indenture in an aggregate principal amount not at any time exceeding
     U.S. $175,000,000, provided that Chase Manhattan Trust Company, National
     Association, as trustee thereunder and any other collateral agent
     appointed by it delivers to and in favour of the Corporation and the
     Holder an inter-creditor agreement, in form and content satisfactory to
     the Holder, providing for, among other things, the subordination by such
     holders of Subordinated Notes of any Liens granted to them to and in
     favour of the Security until such time as all of the obligations of the
     Corporation to the Holder are satisfied in full, and providing that
     notwithstanding the granting of such Liens the holders of the
     Subordinated Notes will take reasonable steps to ensure that they are
     placed in a separate class of creditors than the Holder in any
     insolvency proceedings relating to the Corporation and if
     notwithstanding the foregoing they are placed in the same class of
     creditors they will assign their votes to the Holder so as to permit the
     Holder to vote against and defeat any restructuring plan in such
     insolvency proceedings; and

     (m)  any other Lien which the Holder after the date hereof approves in
     writing as a Permitted Encumbrance;

provided that nothing herein shall constitute or be interpreted as a
postponement or subordination of the Security to any security granted by the
Corporation in connection with such Permitted Encumbrances.

"PERMITTED HEDGING INDEBTEDNESS" has the meaning given to it in paragraph (c) of
the definition of Permitted Debt;

"PERMITTED PAYMENTS" means any payment, distribution, loan, advance or 
transfer by a Restricted Subsidiary (as defined in the Subordinated Note 
Trust Indenture) to the Corporation or to another Restricted Subsidiary 
contemplated in paragraphs 4.13(a),(b) and (c) of the 

                                       10

<PAGE>

Subordinated Note Trust Indenture that, and only to the extent that, cannot 
be subject to a Payment Restriction pursuant to and as defined in Section 
4.13 of the Subordinated Note Trust Indenture;

"PERSON" means any individual, partnership, limited partnership, joint 
venture, syndicate. sole proprietorship, company or corporation with or 
without share capital, unincorporated association, trust, trustee, executor, 
administrator or other legal personal representative, government or 
governmental authority or entity, however designated or constituted;

"PREPAYMENT AMOUNT" means the principal amount of this Debenture which the
Corporation proposes to prepay under Section 2.4 plus a non-refundable fee of
one per cent (1%) of such principal amount being prepaid;

"PROCEEDS CONDITIONS" means the conditions precedent in favour of the Holder
that (i) the Kemess South Mine has produced concentrate over the immediately
preceding 30 day period, and is able to sustain and maintain such production
thereafter, of not less than 7500 short tons of concentrate yielding mineral
content that is acceptable to Glencore Ltd. pursuant to the Glencore Agreement
(without giving effect to any amendments thereof), (ii) at such time the Kemess
South Mine accounts payable of the Corporation do not exceed U.S.$15,000,000 and
(iii) at such time the Kemess South Mine accounts payable of the Corporation are
not overdue in accordance with their respective terms;

"PROPOSED LEASEBACK ASSETS" means one P & H model 2800XPB Electric Mining Shovel
(Serial No.28127) and one P & H model 100XP Rotary Blast Hole Drill (Serial
No.10036);

"PURCHASE AGREEMENT" means the Securities Purchase Agreement dated April 17,
1998 entered into by Trilon Financial Corporation and the Corporation in respect
of, inter alia, the purchase of the Debentures, as amended from time to time;

"PURCHASE MONEY SECURITY INTEREST" means any Lien given, assumed or arising by
operation of law, including capital leases, to provide or secure, or to provide
the obliger with funds to pay, the whole or any part of the consideration for
the acquisition of property where the principal amount of the obligation secured
by such Lien (i) is not in excess of the cost to the obliger of the property
encumbered thereby and (ii) is secured only by the property being acquired by
the obliger, and includes the renewal or refinancing of any such Lien upon the
same property provided that the indebtedness secured and the security therefor
are not increased thereby;

"ROYALTY AGREEMENT" has the same meaning given to such term in the Purchase
Agreement;

"ROYALTY DEBENTURE" has the same meaning given to such term in the Purchase
Agreement;

                                       11
<PAGE>

"SALE" has the meaning attributed to such term in section 5.3(e);

"SECURITY" means the Liens created by the Security Documents;

"SECURITY DOCUMENTS" means, collectively, the agreements, instruments and
documents delivered from time to time (both before and after the date of this
Debenture) to the Holder by the Corporation and APM and by any Subsidiary for
the purpose of creating, perfecting, preserving or protecting the security of
the Holder in respect of the Debenture and in respect of amounts outstanding
thereunder (including, without limitation, the documents referred to in Article
3, Section 5.1(v) and Section 5.1(x));

"SUBORDINATED NOTES" means the outstanding Secured 12.75% Senior Subordinated 
Notes due 2006 in the aggregate principal amount of U.S.$175,000,000;

"SUBORDINATED NOTE TRUST INDENTURE" means the Trust Indenture dated as of August
12, 1996 among the Corporation, Kemess Mines Inc. and Mellon Bank, F.S.B.
relating to the Subordinated Notes, as amended by (i) the First Supplemental
Indenture, dated and effective as of December 31, 1997, (ii) the Second
Supplemental Indenture dated and effective as of January 31, 1998, (iii) the
Third Supplemental Indenture dated and effective as of May 19, 1998, (iv) the
Fourth Supplemental Indenture dated and effective the date hereof, and (v) the
Fifth Supplemental Indenture dated and effective the date hereof, each by and
between the Corporation and Chase Manhattan Trust Company, National Association,
the successor to Mellon Bank, F.S.B. as Trustee;

"SUBSIDIARIES" means all of the corporations listed on SCHEDULE E and any other
corporation or limited liability company which is or hereafter becomes directly
or indirectly controlled by the Corporation, and for the purposes of this
definition, the Corporation shall be deemed to control a corporation if the
Corporation beneficially owns, directly or indirectly, shares to which are
attached more than 50% of the voting rights ordinarily exercisable at meetings
of shareholders of such corporation, and the Corporation shall be deemed to own
beneficially shares beneficially owned by a corporation controlled by it, and so
on indefinitely, and the Corporation shall be deemed to control a limited
liability company where it owns more than 50% of the equity interests in such
limited liability company;

"TAXES" means all taxes of any kind or nature whatsoever including, without
limitation, income taxes, sales or value-added taxes, levies, stamp taxes,
royalties, duties, and all fees, deductions, compulsory loans and withholdings
imposed, levied, collected, withheld or assessed as of the date hereof or at any
time in the future, by any Governmental Body of or within Canada or any other
jurisdiction whatsoever having power to tax, together with penalties, fines,
additions to tax and interest thereon;

"THIS DEBENTURE" and "THE DEBENTURE" refer to this Debenture and, unless 
otherwise expressly provided, not to any particular Article, section, 
subsection, paragraph, clause, subdivision or other portion hereof, and 
includes any and every instrument supplemental or ancillary hereto or in 
implementation hereof;

                                       12
<PAGE>

"WINDY CRAGGY PROPERTY" means the mineral claims in and around Windy Craggy
mountain in the Tatshenshini/Alsek region of northwestern British Columbia, more
particularly described in SCHEDULE F hereto.

                                       13