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                                 ROYAL OAK MINES INC.



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                         SENIOR SECURED DEBENTURE - SERIES B


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                                    JUNE 22, 1998









                           File #9801032.TRI - SENR12B.DEB

                                       LWS:wpc

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






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                                            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 B

       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 THIRTY-FIVE MILLION UNITED STATES
DOLLARS (U.S. $35,000,000) (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
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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 B 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 B 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 (as defined in the Series A Debenture) for the Series A Debenture or 
the Security 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 this Series 
B Debenture unless and until all amounts outstanding pursuant 

                                       3
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to the 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 (as defined in the Series A Debenture) for the Series A
Debenture or the Security 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 B
Debentures or under any of the Series A 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 rights and interest in the Kemess Mine
               Construction Contracts;

                                       7
<PAGE>

               (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. 

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.

                                       8
<PAGE>

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 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.

                                       9
<PAGE>

       (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 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

                                       10
<PAGE>

       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 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.

                                       11
<PAGE>

       (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 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 

                                       12
<PAGE>

       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;

               (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 

                                       13
<PAGE>

               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 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 

                                       14
<PAGE>

       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,
       (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

                                       23
<PAGE>

       Corporation shall preserve and maintain:  (i) all mining claims 
       subject to the 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:

                                       24
<PAGE>

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

                                       25
<PAGE>

       (j)     INSPECTIONS.  The Corporation and each Material Subsidiary 
       shall permit 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 

                                       26
<PAGE>

               gold or copper or changes in the Can. $/U.S.$ currency 
               exchange rate;

               (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


                                       35
<PAGE>


               available, 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
       Note


                                       36
<PAGE>


       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 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


                                       37
<PAGE>


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

                                      38

<PAGE>


       (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).


                                     39

<PAGE>

6.2    ACCELERATION ON DEFAULT

       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

       (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

                                        41

<PAGE>

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

                                       6
<PAGE>

     (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

                                       10
<PAGE>

or to another Restricted Subsidiary contemplated in paragraphs 4.13(a),(b) 
and (c) of the 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

                                       12
<PAGE>

ancillary hereto or in implementation hereof;

"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