EX 10.3


    EXHIBIT
      10.3

     

    PROPERTY
      PURCHASE AGREEMENT

     

     

    THIS
      AGREEMENT (this “Agreement”) is made as of the 1st
      day of
      August, 2006,

     

    BETWEEN:

     

    ANGLO
      GOLD MINING INC.
      ,
      a Nevada
      Corporation

     

    (hereinafter
      referred to as the “Vendor”)

     

    OF
      THE
      FIRST PART,

     

    AND:

     

    SILVER
      RESERVE CORP.,
      a
      company incorporated under the laws of the State of Delaware 

     

    (hereinafter
      referred to as the “Purchaser”)

     

    OF
      THE
      SECOND PART.

     

    RECITALS

     

    WHEREAS
      the Vendor is the recorded and beneficial owner of a 100% interest in certain
      mineral claims situated in the State of Nevada (more particularly described
      in
      Schedule "A" hereto and collectively hereinafter referred to as the “Property”);

     

    WHEREAS
      the Vendor has agreed to sell to the Purchaser all of its right, title and
      interest in and to the Property, subject to the Net Profits Royalties as set
      out
      herein.

     

    NOW
      THEREFORE, in consideration of the mutual covenants and agreements herein
      contained and subject to the terms and conditions hereafter set out, the parties
      hereto agree as follows:

     

    1.  PURCHASE
      AND SALE

     

    1.01  The
      Vendor hereby sells and transfers to the Purchaser, and the Purchaser hereby
      buys and accepts from the Vendor, all of the Vendor’s right, title and interest
      in and to the Property (subject to the Net Smelter Royalties described below)
      in
      consideration of the sum of 1,850,000 common shares in the capital of the
      Purchaser (the “Shares”),
      to be
      paid and delivered to the Vendor on closing.

      
        
           

        

        
           

          
            

          

        

        
           

        

      



    2.  ROYALTIES

     

    2.01 The
      Property is subject to 2% Net Smelter Royalties (“NSR”) as described in Schedule
“B”. 

     

    3.    CLOSING
      DATE

     

    3.01  In
      this
      agreement, “Closing
      Date”
      means
      August 31, 2006, or such other date as may be agreed to by the parties
      hereto.

     

    4.  TRANSFER
      OF TITLE

     

    4.01  On
      the
      Closing Date, the Vendor shall deliver to the Purchaser recordable Bills of
      Sale
      or other applicable conveyancing documentation sufficient to affect the transfer
      of a 100% interest in and to the Property to the Purchaser. Vendor agrees to
      execute such further documentation as may be necessary or desirable to evidence
      such transfer of title and/or to record such transfer in appropriate registries,
      at the request of Purchaser.

     

    5.  RIGHT
      OF ENTRY

     

    5.01  The
      Purchaser, its servants, agents and workmen and any persons duly authorized
      by
      the Purchaser following execution of this Agreement, shall have the exclusive
      right to enter upon and take possession of and prospect, explore and develop
      the
      Property in such manner as the Purchaser in its sole discretion may deem
      advisable. 

     

    6.  REPRESENTATIONS
      AND WARRANTIES OF THE VENDOR

     

    
      	6.01	
              The
                Vendor hereby represents and warrants to the Purchaser
                that:

            


    

     

    
      	 	
              (a)

            	
              it
                is a company in good standing under the laws of the State of Nevada
                and
                has the power and authority to enter into this
                Agreement;

            


    

     

    
      	 	
              (b)

            	
              immediately
                prior to the closing of this Agreement it is the recorded and beneficial
                owner of a 100% interest in and to the Property and except as set
                out in
                Article 2 and Schedule B hereto the Property is not subject to any
                liens
                or encumbrances of any kind
                whatsoever;

            


    

     

    
      	 	
              (c)

            	
              the
                mineral claims comprising the Property have been validly located
                and are
                now duly recorded and in good standing substantially in accordance
                with
                the laws in effect in the jurisdiction in which they are
                situated;

            


    

     

    
      	 	
              (d)

            	
              the
                entering into this Agreement does not conflict with any applicable
                law nor
                does it conflict with, or result in a breach of or accelerate the
                performance required by, any contract or other commitment to which
                it is a
                party or by which it is bound;

            


    

     

    
      	 	
              (e)

            	
              it
                has the exclusive right to enter into this Agreement and all necessary
                authority to assign to the Purchaser all of its right, title and
                interest
                in and to the Property in accordance with the terms and conditions
                of this
                Agreement;

            



      
        
           

        

        
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              (f)

            	
              to
                the best of its knowledge, other than the Net Smelter Royalties provided
                for Article 2 and in Schedule “B” hereto, the Property is free and clear
                of all liens and encumbrances and all claims are in good standing
                with
                assessment work filed for, not less than one year following
                closing;

            


    

     

    
      	 	
              (g)

            	
              there
                are no outstanding or, to the best of the Vendor’s information, knowledge
                and belief, proposed, threatened or contemplated actions or suits
                which,
                if successful, would or could affect the market value or ownership
                of the
                Property or any portion thereof;

            


    

     

    
      	 	
              (h)

            	
              conditions
                on and relating to the Property are in compliance with all applicable
                laws, regulations and orders relating to environmental matters, including,
                but not limited to, waste disposal and storage and Vendor is not
                aware of
                any conditions with respect to the Property that could give rise
                to
                environmental claims that would impair the Purchaser’s development of the
                Property;

            


    

     

    
      	 	
              (i)

            	
              there
                are no reclamation liabilities to be carried out in the future,
                outstanding work orders or actions required to be taken relating
                to the
                condition of the Property, or any operations that have been carried
                out
                thereon; and

            


    

     

    
      	 	
              (j)

            	
              on
                the Closing Date the Vendor will deliver to the Purchaser copies
                of all
                reports, maps and other documents and or materials relating to the
                Property in the Vendor’s
                possession.

            


    

     

    
      	 	
              (k)

            	
              the
                Vendor has been informed as to, and is familiar with, the business
                activities of the Purchaser and its affiliates, and has had an opportunity
                and proceeded, or waived the opportunity, to (i) review the books
                and
                records of the Purchaser and its affiliates and to ask questions
                of, and
                receive answers from, appropriate representatives of the Purchaser
                and its
                affiliates concerning the Purchaser and its affiliates and the terms
                and
                conditions of this Agreement, and (ii) obtain and review all additional
                information relating to the history and proposed business plan of
                the
                Purchaser and its affiliates that it deems
                necessary.

            


    

     

    
      	 	
              (l)

            	
              the
                Vendor fully understands that the Shares have not been registered
                under
                the Securities Act in reliance upon exemptions therefrom, and,
                accordingly, to the extent that it is not supplied with the information
                which would have been contained in a registration statement filed
                under
                the Securities Act, it must rely on its own access to such
                information.

            


    

     

    
      	 	
              (m)

            	
              the
                Vendor has had an opportunity to obtain and has obtained a general
                and
                complete understanding satisfactory to it of the Purchaser, its affiliates
                and their services, potential assets, finances, and manner of doing
                business sufficient to permit it to evaluate (i) the Purchaser and
                its
                prospects and (ii) the risks and merits of accepting the Shares on
                payment
                for the Property.

            


    

     

    
      	 	
              (n)

            	
              the
                Vendor (i) recognizes that accepting the Shares involves risk, (ii)
                has
                carefully considered whether accepting he Shares is appropriate,
                and
                (iii)

            



      
        
           

        

        
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    has
      obtained such individual financial, tax and legal advice as it deems necessary
      or appropriate to fully understand the risks involved and to evaluate accepting
      the Shares.

     

    
      	 	
              (o)

            	
              the
                Vendor recognizes that it must bear the economic risk involved in
                accepting the Shares for an indefinite period of time because, among
                other
                reasons, the Shares have not been registered under the Securities
                Act and
                therefore cannot be sold, pledged, assigned or otherwise disposed
                of
                unless (i) they are subsequently registered under the Securities
                Act or
                (ii) an exemption from such registration is available and an opinion
                of
                counsel acceptable to the Purchaser that the transfer is not in violation
                of any federal securities act or state securities law is provided
                to the
                Purchaser.

            


    

     

    
      	 	
              (p)

            	
              the
                Vendor recognizes that there is no current market for the Shares;
                that
                there can be no assurances that such a market will exist any time
                in the
                future and accordingly it may not be able to sell or dispose of any
                of the
                Shares even if it had held them for a number of years; that its right
                to
                transfer the Shares will be restricted by federal and state securities
                laws and a legend to this effect will be placed on the certificates
                representing the Shares and that such laws impose strict limitations
                upon
                such transfer; and the Purchaser is under no obligation in connection
                with
                the subsequent transfer thereof by it or to aid it in obtaining an
                exemption from such registration.

            


    

     

    
      	 	
              (q)

            	
              the
                Vendor acknowledges that the Share certificate representing the purchase
                price shall be legended with a legend substantially in the following
                form:

            


    

     

    THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES LAWS. THESE
      SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
      ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITY UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, AND QUALIFICATION UNDER ANY APPLICABLE
      STATE
      SECURITIES LAWS OR (B) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
      COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
      SECURITIES LAWS. ANY PURPORTED TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
      REPRESENTED BY THIS CERTIFICATE IN ANY MANNER WHICH IS IN VIOLATION OF THE
      FOREGOING LIMITATIONS IS INVALID AND THE COMPANY WILL NOT TRANSFER SUCH
      INVALIDLY TRANSFERRED SECURITY ON THE BOOKS OF THE COMPANY.

     

    
      	 	
              (r)

            	
              The
                Vendor acknowledges and agrees that the Purchaser is undertaking
                to
                register the Shares and upon registration, the Shares will be subject
                to a
                private restriction wherein only 20% of the Shares may be sold after
                one
                year has expired from the date of issue and the remaining 80% may
                be
                sold

            


    

     

    
      
         

      

      
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    after
      two
      years have expired from the date of issue and the Purchaser shall be entitled
      to
      legend the share certificate to this effect.

     

    6.02  The
      representations and warranties hereinbefore set out are conditions upon which
      the Purchaser has relied in entering into this Agreement and shall survive
      the
      Closing Date by a period of 24 months, except that the representation and
      warranty of Vendor pursuant to Sections 6.01 (b), (c), (d), (e) and (f) shall
      survive indefinitely. The Vendor hereby indemnifies and saves the Purchaser
      harmless from all loss, damage, costs, actions and suits arising out of or
      in
      connection with any breach of any representation or warranty made by it and
      contained in this Agreement.

     

    6.03  The
      Purchaser accepts, as of the date of this Agreement, responsibility for all
      ongoing cost of the maintenance of the Property and without limitation shall
      include the sustaining fees due August 31, 2006.

     

    7.  REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

    7.01  The
      Purchaser represents and warrants to the Vendor that:

     

    
      	 	
              (a)

            	
              it
                has full corporate power and authority to enter into this Agreement
                and
                the entering into of this Agreement does not conflict with any applicable
                laws or with its charter documents nor does it conflict with, or
                result in
                a breach of, or accelerate the performance required by any contract
                or
                other commitment to which it is party or by which it is
                bound;

            


    

     

    
      	 	
              (b)

            	
              the
                shares to be delivered to the Vendor upon the Closing Date will be
                duly
                and validly authorized and issued and
                non-assessable;

            


    

     

    
      	 	
              (c)

            	
              the
                shares delivered to the Vendor on Closing will be incorporated for
                registration in SB2 registration statement, to be filed by the Purchaser
                under the Securities Act of 1933 as
                amended.

            


    

     

    7.02 The
      representations and warranties hereinbefore set out are conditions upon which
      the Vendor has relied on entering into this Agreement and shall survive the
      Closing Date. The Purchaser hereby indemnifies and saves the Vendor harmless
      from all loss, damage, costs, actions and suits arising out of or in connection
      with any breach of any representation or warranty made by it and contained
      in
      this Agreement.

     

    8.  INDEPENDENT
      ACTIVITIES

     

    8.01  No
      joint
      venture is created by this Agreement. Except as expressly provided herein,
      each
      party shall have the free and unrestricted right to independently engage in
      and
      receive the full benefit of any and all business endeavours of any sort
      whatsoever, whether or not competitive with the endeavours contemplated herein
      without consulting the other or inviting or allowing the other to participate
      therein. No party shall be under any fiduciary or other duty to the other which
      will prevent it from engaging in or enjoying the benefits of competing
      endeavours within the general scope of the endeavours contemplated herein.
      The
      legal doctrines of "corporate opportunity" sometimes applied to persons engaged
      in a joint venture or having fiduciary status shall not apply in the case of
      any
      party. In particular, without limiting the foregoing, no party shall have an
      obligation to any other party as to:

      
        
           

        

        
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            	(a)	
              any
                opportunity to acquire, explore and develop any mining property,
                interest
                or right presently owned by it or offered to it outside of the Property
                at
                any time; and

            


    

     

    
      	 	
              (b)

            	
              the
                erection of any mining plant, mill, smelter or refinery, whether
                or not
                such mining plant, mill, smelter or refinery treats ores or concentrates
                from the Property.

            


    

     

    9.  CONFIDENTIALITY
      OF INFORMATION

     

    9.01  The
      parties hereto shall, subject to the exceptions set out hereinafter, treat
      all
      data, reports, records and other information relating to this agreement and
      the
      Property as confidential. While this Agreement is in effect, no party hereto
      shall, without the express written consent of the other, disclose to any third
      party any information concerning the results of the operations hereunder nor
      issue any press releases concerning this Agreement or its exploration operations
      except where such disclosure is mandatory under the law or is deemed necessary
      by the disclosing party's counsel for the satisfaction by the disclosing party
      of its obligations under applicable securities law, and the disclosing party
      has, prior to the public disclosure, given the non-disclosing parties a draft
      copy of the disclosure.

     

    10.  ARBITRATION

     

    10.01  Any
      controversy between the parties hereto involving any claim arising out of or
      relating to this Agreement, will be submitted to and be settled by final and
      binding arbitration in Las Vegas, Nevada, in accordance with the then current
      Commercial Arbitration Rules of the American Arbitration Association (the
“AAA”), and judgment upon the award rendered by the arbitrators may be entered
      in any court having jurisdiction thereof. Such arbitration shall be conducted
      by
      three (3) arbitrators chosen by the Vendor and the Purchaser, or failing such
      agreement, an arbitrator experienced in the sale of similar mineral assets
      appointed by the AAA. There shall be limited discovery prior to the arbitration
      hearing as follows: (a) exchange of witness lists and copies of documentary
      evidence and documents relating to or arising out of the issues to be
      arbitrated, (b) depositions of all party witnesses, and (c) such other
      depositions as may be allowed by the arbitrators upon a showing of good cause.
      Depositions shall be conducted in accordance with the Nevada Code of Civil
      Procedure, the arbitrator(s) shall be required to provide in writing to the
      parties the basis for the award or order of such arbitrator(s), and a court
      reporter shall record all hearings, with such record constituting the official
      transcript of such proceedings.

     

    11.  NOTICES

     

    11.01  Any
      notice, election, consent or other writing required or permitted to be given
      hereunder shall be deemed to be sufficiently given if delivered or if mailed
      by
      registered air mail or by fax, addressed as follows:

     

     

    In
      the
      case of the Vendor:

     

    Anglo
      Gold Mining Inc.

    3702
      S.
      Virginia, Ste G-12-405

    Reno,
      Nevada

    89502-6097

    
      
         

      

      
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    In
      the
      case of the Purchaser:

     

    Silver
      Reserve Corp.

    1226
      White Oaks Blvd., Suite 10A

    Oakville,
      Ontario L6H 2B9

    Fax
      #905-845-6415

    Attention:
      Stafford Kelley

     

    and
      any
      such notice given as aforesaid shall be deemed to have been given to the parties
      hereto if delivered, when delivered, or if mailed, on the tenth business day
      following the date of mailing, or, if faxed, on the next succeeding day
      following the faxing thereof PROVIDED HOWEVER that during the period of any
      postal interruption in either the country of mailing or the country of delivery,
      any notice given hereunder by mail shall be deemed to have been given only
      as of
      the date of actual delivery of the same. Any party may from time to time by
      notice in writing change its address for the purpose of this
      paragraph.

     

    12.  GENERAL
      TERMS AND CONDITIONS

     

    12.01  The
      parties hereto hereby covenant and agree that they will execute such further
      agreements, conveyances and assurances as may be requisite, or which counsel
      for
      the parties may deem necessary to effectually carry out the intent of this
      Agreement.

     

    12.02  This
      Agreement shall represent the entire understanding between the parties with
      respect to the Property. No representa-tions or inducements have been made
      save
      as herein set forth. No changes, alterations, or modifications of this Agreement
      shall be binding upon either party until and unless an amendment to this
      Agreement or a memorandum in writing to such effect shall have been signed
      by
      all parties hereto.

     

    12.03  The
      titles to the articles to this Agreement shall not be deemed to form part of
      this Agreement but shall be regarded as having been used for convenience of
      reference only.

     

    12.04  The
      schedules to this Agreement shall be construed with and as an integral part
      of
      this Agreement to the same extent as if they were set forth verbatim
      herein.

     

    12.05  This
      Agreement shall be governed by and interpreted in accordance with the laws
      in
      effect in the State of Delaware.

     

    12.06  This
      Agreement shall enure to the benefit of and be binding upon the parties hereto
      and their respective successors and assigns.

     

    12.07 This
      Agreement may be executed in multiple counterparts, each of which shall be
      deemed an original, and all of which together shall constitute one and the
      same
      instrument. Execution and delivery of this Agreement by exchange of facsimile
      copies bearing facsimile

      
        
           

        

        
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    signature
      of a party shall constitute a valid and binding execution and delivery of this
      Agreement by such party. Such facsimile copies shall constitute enforceable
      original documents.

     

    12.08  Time
      shall be of the essence of this agreement.

     

     

    IN
      WITNESS WHEREOF this Agreement has been executed by the parties hereto as of
      the
      day and year first above written.

     

     

    ANGLO
      MINING CORP.

     

     

    By: 
      s/
      George Orr

      
        

      

    

    Its: President

     

     

    SILVER
      RESERVE CORP.

     

     

    By: 
      s/
      Todd Montgomery

      
        

      

    

    Its: President

    
      
         

      

      
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    SCHEDULE
      "A"

     

    TO
      THAT
      CERTAIN AGREEMENT MADE AS OF THE 1ST
      DAY OF
      AUGUST, 2006 BETWEEN ANGLO GOLD MINING INC., OF THE FIRST PART AND SILVER
      RESERVE CORP., OF THE SECOND PART

    
      
        

      

    

     

    THE
      “PROPERTY”

     

     

    PANSY
      LEE GROUP

     

    
      	
              NAME

            	
              NMC
                No.

            	
              LOCATION
                DATE

            
	
              PANSY
                LEE No.1

            	
              879333

            	
              —

            
	
              PANSY
                LEE No.3

            	
              879334

            	
              —

            
	
              PANSY
                LEE No.5

            	
              879335

            	
              —

            
	
              PANSY
                LEE 2

            	
              859406

            	
              Dec.
                20/03

            
	
              PANSY
                LEE 4

            	
              859407

            	
              Dec.
                20/03

            
	
              PANSY
                LEE 6

            	
              859408

            	
              Dec.
                20/03

            
	
              PANSY
                LEE 7-30 

               

              30
                Claims

            	
              859409-432

            	
              Dec.
                20/03

            


    

     

    
      
         

      

      
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    SCHEDULE
      “B”

     

    Attached
      to and forming part of the Agreement dated the 1st of August, 2006, between
      Anglo Gold Mining Inc. and Silver Reserve Corp.

     

    Whereas
      based on an agreement dated June 15, 2003 between the Vendor and William M.
      Clem
      and Delores K. Clem, 171 Olympic Drive, Mountain Home, Arkansas 72653, the
      Vendor agreed to the payment of a 2% NSR on the Pansey Lee claims, No. 1 through
      No. 8, based on the following formula:

     

    Net
      Smelter Returns Royalty

     

    1.1    Net
      Smelter Returns shall be the Gross Revenue received by the Purchaser, less
      Permissible Deductions, calculated on a calendar quarterly basis with the
      following meanings in effect:

     

    (a)    “Gross
      Revenue” means the aggregate of the following amounts received in each quarterly
      period following the commencement of commercial production:

     

    
      	 	
              (i)

            	
              the
                revenue received by the Purchaser from arm’s length purchasers of all
                mineral products produced from the Property (the
                “Products”);

            


    

     

    
      	 	
              (ii)

            	
              the
                air market value of all Products sold by the Purchaser in such period
                to
                persons not dealing at arm’s length with the Purchaser;
                and

            


    

     

    
      	 	
              (iii)

            	
              the
                Purchaser’s share of the proceeds of insurance on
                Products.

            


    

     

    (b)    “Permissible
      Deductions” means the aggregate of the following charges (to the extent that
      they are not deducted by any purchaser in computing payment) that are paid
      by
      the Purchaser in each quarterly period:

     

    
      	 	
              (i)

            	
              sales
                charges levied by any sales agent on the sale of
                Products;

            


    

     

    
      
         

      

      
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              (ii)

            	
              transportation
                costs for Products from the property to the place of beneficiation,
                processing or treatment and thence to the place of delivery of Products
                to
                a purchaser thereof, including shipping, freight, handling and forwarding
                expenses;

            


    

     

    
      	 	
              (iii)

            	
              all
                costs, expenses and charges of any nature whatsoever which are either
                paid
                or incurred by the Purchaser in connection with the refinement of
                beneficiation of Products after leaving the property, including all
                weighing, sampling, essaying and representation costs, metal losses,
                any
                of umpire charges, and any penalties charged by the processor, refinery
                or
                smelter; and

            


    

     

    
      	 	
              (iv)

            	
              all
                insurance costs on Products and any government royalties, production
                taxes, severance taxes and sales and other taxes levied on Products
                on or
                the production or value thereof (other than any Federal, Provincial,
                State, municipal or similar taxes levied on the income or profit
                of the
                Purchaser), provided that where a cost or expense otherwise constituting
                a
                Permissible Deduction is incurred by the Purchaser in a transaction
                with a
                party with whom it is not dealing at arm’s length, such cost or expense
                may be deducted but only as to the leaser of the actual cost incurred
                by
                the Purchaser or the fair market value thereof, calculated at the
                time of
                such transaction and under all the circumstances
                thereof.

            


    

     

    1.2    The
      payment on account of the Royalty for each calendar quarter will be calculated
      and paid within sixty (60) days after the end of each calendar quarter. Smelter
      settlement sheets, if any, and a statement setting forth calculations in
      sufficient detail to show the payment’s derivation (the “Statement”) must be
      submitted with the payment.

     

    1.3    In
      the
      event that final amounts required for the calculation of the payment on account
      of the Royalty are not available within the period referred to in Section 1.2
      of
      this Agreement, then provisional amounts will be estimated and such payment
      will
      be paid on the basis of this provisional calculation. Positive or negative
      adjustments will be made to the payment on account of the Royalty for the
      succeeding quarter.

     

    1.4    All
      payments on account of the Royalty will be considered final and in full
      satisfaction of all obligations of the Purchaser or with respect thereto, unless
      the Vendors deliver to the Purchaser a written notice (the “Objection Notice”)
      describing and setting forth a specific objection to the calculation thereof
      within sixty (60) days after receipt by the Vendors of the Statement. If the
      Vendors object to a particular Statement as herein provided, the Vendors will,
      for a period of sixty (60) days after the Purchaser’s receipt of such Objection
      Notice, have the right, upon reasonable notice and at reasonable times, to
      have
      the Purchaser’s accounts and records relating to the calculation of the payment
      in question audited by the auditors of the Purchaser. If such audit determines
      that there has been a deficiency or an excess in the payment made to the
      Vendors, such deficiency or excess will be resolved by adjusting the next
      quarterly payment due hereunder. The Vendors will pay all the costs and expenses
      of such audit unless a deficiency of five (5%) percent or more, of the amount
      due is determined to exist. All books and records used and kept by the Purchaser
      to calculate the Royalty due hereunder will be kept in accordance with Canadian
      generally accepted accounting principles. Failure on the part of the Vendors
      to
      make claim against the Purchaser for adjustment in such sixty (60) day period
      by
      delivery of an Objection Notice will conclusively establish the correctness
      and
      sufficiency of the Statement and payment on account of the Royalty for such
      quarter.

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    1.5    All
      profits and losses resulting from the Purchaser engaging in any commodity
      futures trading, option trading, metals trading, gold loans or any combination
      thereof, and any other hedging transactions with respect to a Product which
      is a
      precious metal (collectively “Hedging Transactions”) are specifically excluded
      from calculations of the payments on account of the Royalty pursuant to this
      Agreement (it being the intent of the parties that the Purchaser will have
      the
      unrestricted right to market and sell Product to third parties that the
      Purchaser will have the unrestricted right to market and sell Product to third
      parties in any manner as it chooses and that the Vendors will not have any
      right
      to participate in such marketing activities or to share in any profits or losses
      therefrom). All Hedging Transactions by the Purchaser and all profits or losses
      associated therewith, if any, will be solely for the Purchaser’s account. The
      amount of Net Smelter Revenue derived from all Product subject to Hedging
      Transactions by the Purchaser will be determined pursuant to the provisions
      of
      this Paragraph 1.5 and not Paragraph 1.1. As to precious metals subject to
      Hedging Transactions by the Purchaser, Net Smelter Revenue will be determined
      without reference to transactions and will be determined by using, for gold,
      the
      quarterly average price of gold, which will be calculated y dividing the sum
      of
      all London the Vendors Market Association P.M. Gold Fix prices reported for
      the
      calendar quarter in question by the number of days for which such prices were
      quoted, and for silver, the quarterly average price of silver, which will be
      calculated by dividing the sum of all New York Commodity Exchange (“COMEX”)
      prices for silver quoted by and at the closing of COMEX reported for the
      calendar quarter in question by the number of days for which such prices were
      quoted, less, in each case, an amount reasonably equivalent to the deductions
      permitted by Paragraph 1.1(b). Any Product subject to Hedging Transactions
      will
      be deemed to be sold, and revenues received therefrom, only on the date of
      final
      settlement of the amount of refined Product allocated to the account of the
      Purchaser b y a third party refinery in respect of such transactions.
      Furthermore, the Purchaser will have no obligation to fulfill any future
      contracts, forward sales, gold loans or other Hedging Transaction which the
      Purchaser or any of its Associated Companies may hold with Product.

     

    1.6    The
      Vendors may transfer all or any portion of its interest in the Royalty, but
      if
      the Royalty becomes payable to three or more parties, those parties will
      appoint, and will deliver to the Purchaser, a document executed by all those
      parties appointing, a single agent or trustee of all such parties to whom the
      Purchaser will make all payments on account of the Royalty. The Purchaser will
      have no responsibility as to the division of the Royalty payments among such
      parties, and if the Purchaser makes a payment or payments on account of the
      Royalty to such appointed trustee or agent in accordance with the provisions
      of
      this Paragraph 1.6, it will be conclusively deemed that such payment or payments
      have been received by the Vendors. All charges of the agent or trustee will
      be
      born solely by the parties receiving payments on account of the
      Royalty.

     

    Any
      decision to place the Pansey Lee Claims into production shall be at the sole
      discretion of the Purchaser and the Purchaser shall be under no obligation
      to
      place the said claims into production. The Purchaser shall have an unfettered
      right to suspend or curtail any such production operation as it in its sole
      discretion any determine. Advance Royalty payments, if any, paid to the Vendors
      pursuant to this Agreement shall be deducted form any Royalty payments that
      may
      accrue during the term of this Agreement.

    
      
         

      

        -12-