DRILLING RIG SALE AND PURCHASE AGREEMENT


                               BETWEEN:

                          TD INTERNATIONAL SA
                                ("TDI")

                        MASON OIL COMPANY, INC.
                               (`Mason")

                      HEMLEY EXPLORATION PTY LTD
                     (ACN 073 039 059) ("Hemley")

                          DESCO INCORPORATED
                               ("DESCO")

                                  AND

                        DAVID A MUNNS ("Munns")


<PAGE>


THIS AGREEMENT is made the _________ day of _________, 1998.
BETWEEN:

TD INTERNATIONAL SA a company registered in Panama,  with its principal place of
business at 32 Tuas Avenue 4, Singapore 639381 ("TDI")

MASON OIL COMPANY,  INC. a Utah corporation with its principal place of business
at PO Box 1566 Sarasota, Florida ("Mason" and sometimes collectively with Hemley
"the Sellers") HEMLEY EXPLORATION PTY LTD (ACN 073 039 059) a company registered
in Australia and a wholly owned  subsidiary of Mason with its principal place of
business  at Suite  3, CCH  House,  174  Greenhill  Road,  Parkside  5063  South
Australia  ("Hemley") DESCO  INCORPORATED a Philippines  corporation  having its
registered  office at KM, 21 Villonco Road,  West Service Road,  Muninlupa City,
Philippines  ("DESCO") AND DAVID A MUNNS C/- 32 Tuas Avenue 4, Singapore  639381
("Munns")

RECITALS

A.    Pursuant  to a Rig  Sale,  Purchase  and  Utilisation  Agreement  dated 13
      November  1997,  between the Sellers and TDI ("the  Purchase  Agreement"),
      Hemley owns an  undivided  50%  interest in and to a Franks  Cabor  1000hp
      drilling rig and all equipment associated therewith as described in Part 1
      of Exhibit A to the Purchase Agreement ("the Rig").

B.   Pursuant  to  the  operation  of  a  drilling  agreement  between  Monument
     Resources  (Overseas)  Limited having its registered office at Cedar house,
     41 Cedar House,Hamilton HM 12 Bermuda "(Monument") and DESCO ("the Monument
     Drilling  Agreement"),  DESCO and in respect of the  drilling  of a well in
     Laos within licence known as BLOCK MROL/SDC,  DESCO has acquired a rig camp
     and the camp's  inventory  ("the  Camp") as described in Schedule VI to the
     Monument Drilling Agreement.

C.   Pursuant to a Master  Drilling  Contract  between  TDI and Hemley  dated 22
     April  1998,  ("the TDI  Drilling  Contract"),  TDI has agreed to drill and
     complete one exploration  well on Exploration  Permit 18 in the Northern of
     Australia  ("EP 18") as described in the Drilling Order attached to the TDI
     Drilling Contract, using the Rig.

D.   Munns is a shareholder and director of TDI and DESCO.

E.   Hemley  wishes to sell and TDI has agreed to buy,  Hemley's  50%  undivided
     interest in the Rig,  subject to the terms and  conditions  set out in this
     Agreement.


<PAGE>



NOW, THEREFORE the parties hereto agree as follows:

1.   Purchase and Sale

     Subject to the terms and conditions of this Agreement, effective  as of the
     Closing  Date,  Hemley  sells to TDI and TDI  buys  from  Hemley,  Hemley's
     undivided 50% interest in the Rig, free from any  encumbrance,  security or
     third party interest.

2.   Purchase Price

     In consideration for the purchase of Hemley's interest in the Rig as
     referred to in clause 1 TDI will:

     2.1  pay to Hemley  (or its  nominee)  by bank  cheque  or wire  transfer,
          immediately available funds of US$300,000 payable as follows:

          2.1.1     US$50,000 on the Closing Date; and
          2.1.2     US$50,000 for each of the next remaining 5 quarters payable
                    by 1 January 1999, 30 March 1999, 30 June 1999,
                    30 September 1999, and 1 January 2000, respectively.

     2.2  transfer to such agent as  nominated  by Mason,  all shares of Mason's
          common stock held by TDI,  being  806,667  shares in such common stock
          ("the Shares")  together with all options in Mason's common stock held
          by TDI being  options to  purchase  an  additional  500,000  shares in
          common stock of Mason; and

          DESCO will on the Completion Date:-

     2.3  TRANSFER TO HEMLEY FREE FROM ANY ENCUMBRANCE,  SECURITY OR THIRD PARTY
          INTEREST,  ALL ITS RIGHT, TITLE AND INTEREST IN THE CAMP, THE VALUE OF
          WHICH FOR THE PURPOSES OF THIS AGREEMENT IS AGREED TO BE US$121,626.00

3.   Interest

     3.1  TDI shall pay interest on the unpaid balance of the purchase price and
          on overdue monies to Hemley

     3.2  Interest shall be paid by TDI in  arrears:

          3.2.1     at  the  time  that  installments  of  the  balance  of the
                    purchase  price  are paid to Hemley  until the  installment
                    becomes  due  and  owing; and
          3.2.2     upon demand on overdue  monies.


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     3.3  The interest rate:

          3.3.1     on the unpaid balance of the purchase price until it becomes
                    due and owing will be the higher rate but if:

                    3.3.1.1   an  interest payment calculated  at the lower rate
                              is  receive  by  Hemley  on or before the relevant
                              interest payment date; and

                    3.3.1.2   on that interest payment date there is no unwaived
                              and  continuing  event  of  default,   Mason shall
                              accept  that  payment  for  the period to which it
                              relates instead of an interest payment  calculated
                              at the higher rate; and

          3.3.2     on overdue monies will be the higher rate.

     3.1  For the purposes of this  clause:

          3.4.1     "Higher  rate" means 10% per annum;
          3.4.2     "Lower rate" means 8% per  annum;  3.4.3  "Interest  payment
                    date"  means the date that the  installments  referred to in
                    clause 2.1 are due and payable.

4.   Time and Place of Closing

     Closing is to occur within 7 days of the execution of this Agreement by the
     parties,  at such  place or in such  manner as the  parties  may agree (the
     "Closing Date").

5.   Obligations  of  TDI/DESCO at Closing

     5.1  At the  Closing:-

          5.1.1     TDI must  deliver to Hemley all  certificates  held by it in
                    respect  of  the  Shares  together  with such  duly executed
                    transfer  forms or other  documents in respect of the Shares
                    as  Hemley  or  Mason  may so request;
          5.1.2     TDI must pay to Hemley  (or its nominee)  the  amount of  US
                    $100,000 in the manner as set out in clause 2.1;
          5.1.3     DESCO shall  deliver to Hemley a Bill of Sale in the form of
                    Annexure "A"  hereto, duly  executed by DESCO and such other
                    certificates  of  title  and  other  instruments as shall be
                    necessary  to  vest right, title and interest in the Camp to
                    Hemley.

6.   Re-Location of Camp

     TDI and/or DESCO within sixty (60) days after  execution of this  Agreement
     shall move the Camp at its cost to the port of Laem  Chabang,  Thailand and
     Hemley will take possession of the Camp at that point.  Notwithstanding the
     handover  at the Closing to Hemley of a Bill of Sale in respect of the Camp
     all risk in relation to the Camp shall remain with TDI and DESCO,  prior to
     handover of possession to Hemley in Thailand.

<PAGE>


7.   TDI Drilling Contract

     7.1  Mason  and  Hemley  acknowledge  that  TDI has  requested  that TDI be
          released of its obligations under the TDI Drilling Contract to drill a
          well on EP18 in  accordance  with the  terms  and  conditions  of that
          Contract  and  TDI   acknowledges   that  Hemley  has  given   certain
          undertakings  to  Mataranka  Oil  N.L.  and  the  Northern   Territory
          Department of Mines & Energy to drill a well on EP18 utilizing the Rig
          pursuant to the TDI Drilling Contract.

     7.2  Subject to clause 7.3,  Mason and Hemley  hereby  release TDI from any
          and all of its  obligations  under the TDI Drilling  Contract and from
          the date of execution  hereof by the parties hereto,  the TDI Drilling
          Contract shall be deemed to have been terminated.

8.   Security and Warranty

     8.1  To  ensure  the  fulfillment  by  TDI of its  obligations  under  this
          Agreement,  TDI undertakes to execute in favor of Hemley a charge over
          the Rig in the form set out in Annexure "B".

     8.2  TDI and Munns jointly and severally warrant that as at the date hereof
          and as at the Closing Date,  TDI does and TDI will own its interest in
          the Rig unencumbered and free from any prior mortgage, charge or other
          security  interest so that the charge shall be a first ranking  charge
          securing the  indebtedness  and  performance of TDI under the terms of
          this Agreement.

9.   Undertaking by David A. Munns

     Munnshereby  guarantees  the  performance  by each of TDI and  DESCO of its
     obligations  under  this   Agreementincluding   without   limitation,   the
     performance of obligations arising under clause 7.3 above.

10.  Applicable Law

     This  Agreement  shall be governed by and construed in accordance  with the
     laws of South Australia.

11.  Notices

     All notices or other communications required or which may be give hereunder
     shall be addressed to the party concerned at the relevant  address give for
     the party in this Agreement.


<PAGE>



12.  Entire Agreement

     This  instrument  contains  the entire  Agreement  between  the parties and
     supersedes all other prior negotiations, undertakings, notes, memoranda and
     agreements, whether written or oral, concerning the subject matter hereof.



<PAGE>


IN WITNESS  WHEREOF,  of the parties hereto have duly executed this Agreement by
their  authorized  representatives,  respectively,  as of the day and year first
above written.


TD INTERNATIONAL SA                 HEMLEY EXPLORATION PTY LTD

By: /s/ D.A. Munns                  By: /s/ J.L. Naylor

Name: D.A. Munns                    Name:  J.L. Naylor

Title: Director                     Title:  Managing Director

Date: 23/10/98                      Date: 10 October 1998

DESCO INCORPORATED                  MASON OIL COMPANY, INC.

By:  /s/ D.A. Munns                 By: /s/ J. L. Naylor

Name: D.A. Munns                    Name: J.L. Naylor

Title:  Director                    Title:  Managing Director

Date: 23/10/98 Date:                14 October 1998

DAVID A MUNNS

/s/ D.A. Munns

Date:  23/10/98


<PAGE>


                              ANNEXURE A

                         Form of Bill of Sale

                             BILL OF SALE

THIS BILL OF SALE made as of the __________  day of ___________  1998 is between
DESCO INCORPORATED a Philippines corporation having its registered office at KM,
21 Villanco Road, West Service Road, Muninlupa City,  Philippines ("Seller") and
HEMLEY  EXPLORATION  PTY LTD an Australian  Company with offices at Suite 3, BCH
House, 174 Greenhill Road, Parkside 5063, South Australia ("Buyer").


FOR GOOD AND  VALUABLE  CONSIDERATION,  the  receipt  and  adequacy of which are
hereby acknowledged, Seller does hereby, bargain, sell, assign, transfer and set
over unto Buyer the Seller's  right,  title and interest in the rig camp and the
camp's inventory as described in Schedule VI to the drilling  agreement  between
the Seller and Monument Resources  (Overseas) Limited and utilized by the Seller
in relation to the  drilling  of a well in Laos  within  license  known as BLOCK
MROL/SDC ("the Camp").

TO HAVE AND TO HOLD the same unto Buyer,  its  successors  and assigns  forever.
Seller warrants title to the Camp and further warrants that the Camp is free and
clear of liens, charges,  mortgages,  interest,  rights, claims and encumbrances
and Seller  agrees to defend Buyer and its  successors  and assigns  against all
persons or entities claiming or to claim any interest in the Camp.

Seller also assigns and transfers unto Buyer the Seller's  rights and privileges
and with respect to any and all  warranties  relating to the Camp, to the extent
the same are assignable and transferable.

This  Bill of Sale is made and  given  pursuant  to the  Agreement  by and Among
Seller, TD International  SA, Buyer,  Mason Oil Company and David A. Munns dated
of  23  October   1998  and  the  terms  and   conditions   thereof,   including
representations  and warranties with respect to the Camp are incorporated herein
by this reference.

IN WITNESS WHEREOF Seller and Buyer have executed this Bill of Sale effective as
of 23 October 1998.

SELLER:                        BUYER:

DESCO INCORPORATED             HEMLEY EXPLORATION PTY LTD

By:/s/ D.A. Munns              By: /s/ J.L. Naylor
Name: David A. Munns           Name: J.L. Naylor
Title: Director                Title: Managing Director



<PAGE>



ANNEXURE B

                           Form of Mortgage


<PAGE>


                             ANNEXURE "B"


THIS DEED OF CHARGE is made on ________________ 1998
BY
TD  INTERNATIONAL  S.A. a company  registered in Panama with offices in
Singapore ("Mortgagor")
IN FAVOR OF:
HEMLEY  EXPLORATION PTY LTD (ACN 073 039 059) a company  registered in Australia
being a wholly owned subsidiary of Mason Oil Company,  a U.S. company registered
in the State of Utah, USA ("Creditor").

OPERATIVE PART

1.    INTERPRETATION

     1.1  Definitions

          In this document,  unless the context otherwise  requires:
          "Attorney" means any attorney appointed under Clause 14 and any person
          who  derives  a  right  by  delegation  directly or indirectly from an
          attorney.  "Authorized representative" means in relation to any party:

          (a)  if that party is a  corporation,  a director or secretary of that
               party'
          (b)  that  party's  lawyer;  and
          (c)  a  person  appointed  by  that  party  to  act  as  an authorized
               representative  for  the  purpose  of  this  document  and  whose
               appointment is notified in writing by the  appointor to the other
               party;

          "Bankruptcy" means:

          (a)  in   relation   to   any   corporation   the  appointment  of  an
               administrator, provisional liquidator or liquidator in respect of
               it because it is or may be  insolvent;  and
          (b)  in relation  to an  individual, that person becoming an insolvent
               under administration as defined in  Section 9 of the  Corporation
               Law of Australia or any similar  or equivalent legislation in any
               relevant jurisdiction.

           "Business  day"  means  a  day  which  is not a Saturday, Sunday or a
            public or bank  holiday  in  Australia;

           "Credit support" means:

           (a) any guarantee by which any person guarantees the  payment  of the
               secured money;
           (b) any security which secures:
    
               (i)  payment of the secured  money;  or
               (ii) the  payment  of  moneys  or  damages  owing  (actually  or
                    contingently) from time to time by any guarantor in relation
                    to a guarantee of the payment of the secured money.


<PAGE>


           "Credit support provider" means a person:

          (a)  who has given a credit support; or

          (b)  who holds any property  which is subject to a security which is a
               credit support.

           "Default Notice" means a notice under Clause 7(2).

           "Encumbrance" in relation to any property means:

          (a)  any  interest  in or right over the  property;  and 

          (b)  anything which prevents, restricts or delays;

               (i)  the exercise of any right over the property;

               (ii) the use of the property; or

               (iii)the  registration  of any  interest  in or dealing  with the
                    property

          "Event of default" means any event described in Clause 6.

          "Financial  indebtedness"  of  a  person  means  any  indebtedness  or
          liability (actual or contingent) relating to any guarantee given by it
          or relating to any financial  accommodation  granted to it, including,
          without  limitation,  any  indebtedness  or liability  for payments in
          respect of:

          (a)  moneys borrowed or raised by that person;

          (b)  the sale or  negotiation  of any bill of exchange  or  promissory
               note;

          (c)  any finance  lease or hire  purchase  agreement  under which that
               person is the lessee;

          (d)  the deferred  purchase  price of any  property or services  other
               than  indebtedness  for  the  purchase  price  of  trading  stock
               incurred by that person in the  ordinary  course of its  ordinary
               trading business;

          (e)  any redeemable preference share issued by that person.

          "Government body" means

          (a)  any  person,  agency  or other  thing  exercising  an  executive,
               legislative,  judicial  or  other  governmental  function  of any
               country or political sub-division of any country;

          (b)  any public authority constituted by or under a law of any country
               or political sub-division of any country; and

          (c)  any person deriving a right by delegation  directly or indirectly
               from any other government body.

          "Material adverse effect" means a material adverse effect upon either:

          (a)  the ability of the  mortgagor  to perform its  obligations  under
               this document; or

          (b)  the  effectiveness,  priority  or  enforceability  of this or any
               other  credit  support.  "Parts"  means  any  parts,  appliances,
               instruments,  accessories,  furnishing  and  other  equipment  or
               components  including  motors and engines  which are from time to
               time part of or used on the Rig.


<PAGE>


          "Potential event of default" means anything which the giving of notice
          lapse of time or determination of materiality will constitute an event
          of default.

          "Receiver"  means a receiver or receiver and manager  appointed  under
          this  document  and any  person  who  derives  a right  by  delegation
          directly or indirectly from any receiver.

          "Remedy  proceeds" means money received from the exercise of any right
          against the secured property.

          "Representative" of a person means an officer, employee, contractor or
          agent of that person.

          "Rig  Agreements"  means  relating  to  the  acquisition,   servicing,
          maintenance  or repair of the secured  property and includes,  without
          limitation,  any warranty,  condition or other  obligations  as to the
          condition,  quality or fitness for any purpose of the rig or the spare
          parts.

          "Rig" means Franks Cabot  1000hp  drilling rig (Serial No.  31449) and
          all equipment associated with it.

          "Secured Money" means all money and damages which now or in the future
          are owed (actually or  contingently)  by the mortgagor to the creditor
          for any reason and,  without  limitation,  includes  money and damages
          payable:

          (a)  by the  mortgagor  alone or jointly or  severally  with any other
               person;

          (b)  if there is more than one mortgagor, by all or any of them;

          (c)  by the mortgagor in its own right or in any capacity;

          (d)  to the creditor in its own right or in any capacity;

          (e)  to the creditor  pursuant to any  assignment by any person to the
               creditor of a debt payable by the mortgagor or other transaction,
               including,   without   limitation,   any   assignment   or  other
               transaction   to  which  the   mortgagor   is  not  a  party  and
               irrespective   of  whether   before  that   assignment  or  other
               transaction the payment of those monies was secured or unsecured,
               interest  was payable by the  mortgagor on that debt or any other
               thing; 

          (f)  by the mortgagor as liquidated or  unliquidated  damages cause or
               contributed  to by any breach by the mortgagor or any  obligation
               owed by the mortgagor to the creditor,  any tort by the mortgagor
               or any other act or omission of the creditor; and

          (g)  by the mortgagor under this document.

          "Secured Property" means:

          (a)  the rig;

          (b)  the spare parts;

          (c)  the technical records; and
               
          (d)  the   mortgagor's   rights  under  the  rig  agreements  and  the
               mortgagor's copy or counterpart of the rig agreements.

          "Security"  means any  instrument  or  transaction  which  reserves or
          creates a security interest or under which a person agrees to create a
          security interest.


<PAGE>


          "Security  Interest" means an interest in or right over property which
          secures  the  payment of a debt or other  monetary  obligation  or the
          performance of any other obligation.

          "Spare  Parts"  means  any spare  engine,  motor,  parts,  appliances,
          instruments,   accessories,   furnishings   and  other   equipment  or
          components  which  are from  time to time  kept by the  mortgagor  for
          possible use on the rig.

          "Taxes"  means taxes,  rates,  levies,  imposts and duties (other than
          those on the net overall  income of the  creditor)  and any  interest,
          penalties, fines and expenses relating to any of them.

          "Technical  Records" means in relation to the rig, all technical data,
          manuals,  logs,  warranties of manufacturers  and suppliers of the rig
          and all service contracts relating to the rig and all Rig agreements.

1.2  General In this  document,  unless the context  otherwise  requires: 

     (a)  a reference to any legislation or legislative  provision  includes any
          statutory  modification or re-enactment  of, or legislative  provision
          substituted  for, and any  statutory  instrument  issued  under,  that
          legislation or legislative provision;

     (b)  a word  denoting the singular  number  includes the plural  number and
          vice versa;

     (c)  a word denoting an individual or person includes a corporation,  firm,
          authority, government body and vice versa;

     (d)  a word denoting a gender includes all genders;

     (e)  a reference to a clause of this document;

     (f)  a reference  to any  agreement  or document  is to that  agreement  or
          document (and,  where  applicable,  any of its  provisions) as varied,
          novated, supplemented or replaced from time to time; and

     (g)  a  reference   to  any  party   includes   that   party's   executors,
          administrators, substitutes, successors and permitted assigns.

1.3  Headings and Parts of Speech In this document:

     (a)  headings  are for  convenience  of  reference  only and do not  affect
          interpretation; and

     (b)  where an expression is defined,  another part of speech or grammatical
          form of that expression has a corresponding meaning.


<PAGE>



2.    SECURITY AND RELEASE

2.1  Security

     The  mortgagor  charges the secured  property to the creditor to secure the
     payment of the secured money.

2.2  Release

     The creditor  shall at the request of the  mortgagor  discharge  any charge
     created by this document if the  mortgagor's  obligation to pay the secured
     money is satisfied  and in the  creditor's  opinion no payment  towards the
     satisfaction  of the  mortgagor's  obligation to pay the unsecured money is
     likely to be void or voidable under law relating to bankruptcy.

2.3  Consideration - Continuing Security

     2.3.1The   mortgagor   has  entered   into  this   document   for  valuable
          consideration  from the creditor and receipt of the  consideration  is
          acknowledged.

     2.3.2This  document is a  continuing  security for the whole of the secured
          money.

3.   PAYMENT AND INTEREST

     3.1  Place manner and time of payment

           The mortgagor, subject to Clause 7.2, shall pay the secured moneys to
           the  creditor in  accordance  with any  agreement  which  obliges the
           mortgagor  to pay them and in the  absence  of  agreement:  

          3.1.1upon  demand at the time and place and in the  manner  reasonably
               required by the creditor, and

          3.1.2in  immediately  available  funds and  without  set-off,  counter
               claims,  conditions,  or, unless  required by law,  deductions or
               withholdings.

     3.2  Interest

           3.2.1The  mortgagor  shall pay  interest  on that part of the secured
                money which is from time to time owing by the  mortgagor  to the
                creditor.


<PAGE>


           3.2.2

               (a)Interest  shall  be  paid in  accordance  with  any  agreement
                    requiring interest to be paid on the secured money.

               (b)Inthe absence of any agreement,  the applicable  interest rate
                    will be that  determined  from time to time by the creditor,
                    interest  will  accrue  from  day to day,  interest  will be
                    computed  from and  including  the day when the moneys  upon
                    which  interest is payable  become  owing to the creditor by
                    the  mortgagor  until but  excluding  the day of  payment of
                    those moneys and interest  will be  calculated on the actual
                    number of days elapsed on the basis of a 365 day year.

          3.2.3The  creditor  may  capitalize  any  part of any  interest  which
               becomes  due and owing on demand at the times  determined  by the
               creditor  and, if no  determination  is made,  on the last day of
               each month and interest shall be payable in accordance  with this
               document upon capitalized interest.

          3.2.4If the  liability  of the  mortgagor  to pay to the  creditor any
               moneys  payable under this document  becomes  merged in any deed,
               judgement,  order or other thing the mortgagor shall pay interest
               on the amount owing from time to time under that deed,  judgment,
               order or other thing in accordance with this document.

     3.3  Currency of Payment

          3.3.1The  mortgagor  shall pay the  secured  money in the  currency in
               which  it is  payable  under  any  agreement  which  obliges  the
               mortgagor  to  pay it and in  the  absence  of  agreement  in the
               currency reasonably required by the creditor.

          3.3.2If the  creditor  accepts  a payment  under  this  document  in a
               currency other than that required by Clause

          3.3.1that  payment  will not  satisfy  the  amount  due  except to the
               extent  that the  creditor  could in the  ordinary  course of its
               business buy with the payment  received the required  currency at
               the time of or within a reasonable  time after the payment  after
               the deduction of all costs relating to the purchase.

     3.4  Appropriation

          The creditor may, subject to any express provision in this document to
          the contrary,  appropriate any payment towards the satisfaction of any
          moneys due by the  mortgagor  in relation to this  document in any way
          that  the  creditor   requires  and   notwithstanding   any  purported
          appropriation by the mortgagor.



<PAGE>


     3.5  Payments in Gross

          The creditor in applying towards satisfaction of the secured money any
          money received by it shall credit the mortgagor only with that part of
          those moneys which is actually received by the creditor in immediately
          available funds.

4.    REPRESENTATIONS AND WARRANTIES

     4.1  List

          The mortgagor represents and warrants that:

          4.1.1if  the  mortgagor  purports  to be a  corporation,  it  is  duly
               incorporated in accordance with the laws of Panama validly exists
               under  those laws and has the  capacity  to sue or be sued in its
               own name and to own its property;

          4.1.2

               (a)this document is  enforceable  by the  creditor in  accordance
                    with its terms and is not void or voidable;

               (b)any security  interest which this document  purports to create
                    is validly created and has the priority which ft purports to
                    have under this document or any priority  agreement  between
                    the mortgagor and the creditor;

          4.1.3each authorization from a government body necessary to enable:

               (a)  the  mortgagor  to  perform  its   obligations   under  this
                    document; and

               (b)  the creditor to exercise its rights under this document, has
                    been obtained.

          4.1.4the  unconditional  execution and delivery of and  performance by
               the  mortgagor of its  obligations  under this  document does not
               contravene:

               (a)  a law or directive from a government body;

               (b)  if  the  mortgagor  is a  corporation,  the  memorandum  and
                    articles of association or other constitutional documents of
                    the mortgagor;

               (c)  an  agreement  or  instrument  to which the  mortgagor  is a
                    party; or

               (d)  an obligation of the mortgagor to any other person.

          4.1.5all information  given to and each statement made to the creditor
               relating to this document by or at the direction of the mortgagor
               is correct, complete and not misleading.


<PAGE>


          4.1.6except as notified to the  creditor in writing  prior to the date
               of this document:

               (a)  no litigation,  arbitration or administrative  proceeding is
                    now current,  pending or, to the knowledge of the mortgagor,
                    threatened which has or is likely to have a material adverse
                    effect;

               (b)  there are no  encumbrances  over the secured  property other
                    than permitted encumbrances;

               (c)  there is no  restriction  on or proposal  by any  government
                    body or any other  person to restrict the use of the secured
                    property or to resume the secured property,  which has or is
                    likely to have a material adverse effect.

          4.1.7no unremedied or unwaived event of default has occurred;

          4.1.8each Rig agreement is  enforceable  by the creditor in accordance
               with its terms and is not void or voidable;

          4.1.9each authorization from a government body necessary to enable:

               (a)  the  mortgagor  unconditionally  to execute  and deliver and
                    perform its obligations under this document and carry on its
                    principal business or activity; or

                    (b)  the   creditor  to  exercise   its  rights  under  this
                         document, has been obtained.

          4.1.10 all  information  given  to  and  each  statement  made  to the
               creditor by or at the  direction of the  mortgagor in relation to
               this document is correct, complete and not misleading.

     4.2  General

          4.2.1The   interpretation   of   any   statement   contained   in  any
               representation  or warranty  shall not be restricted by reference
               to or inference from any other  statement  contained in any other
               representation or warranty.

          4.2.2The  mortgagor  acknowledges  that the  creditor has entered into
               this   document  in  reliance   upon  the   representations   and
               warranties.

          4.2.3Each  representation  and warranty  will survive the execution of
               this document and be deemed to be repeated with  reference to the
               facts and  circumstances  then  existing  whenever any  financial
               accommodation secured by this document is granted by the creditor
               or any property becomes subject to any security  interest created
               by this document.

5.   GENERAL UNDERTAKINGS

     5.1  Prohibited dealings with variation of other secured indebtedness

          5.1.1The mortgagor shall not cause or permit any person to acquire any
               interest in the secured property except permitted encumbrances.


<PAGE>


          5.1.2The  mortgagor  shall not incur any debt or  monetary  obligation
               (actual or contingent) to a holder, other than the creditor, of a
               security  interest over the secured property the payment of which
               is   secured  by  that   security   interest   except   financial
               indebtedness  incurred as a consequence  of that holder  granting
               financial  accommodation  to  the  mortgagor  or a  person  whose
               obligations  are  guaranteed  by the  mortgagor to that holder in
               accordance  with  an  agreement  existing  at the  date  of  this
               document:

               (i)  which  has  been  fully  disclosed  to and  approved  by the
                    creditor; and

               (ii) under  which the  holder  is, at the date of this  document,
                    actually  or  contingently  obliged to grant that  financial
                    accommodation.

          5.1.3The mortgagor,  subject to Clause 5.1.2 shall not cause or permit
               any person to acquire any interest in the secured property.

     5.2  Title Documents

          5.2.1

               (i)  The  mortgagor  shall upon the execution of this document by
                    the mortgagor  deposit with the creditor the title documents
                    relating to the secured property;

               (ii) The  creditor may have  possession  and control of the title
                    documents  unfit the  creditor  is obliged  to  release  the
                    secured property from the security  interest created by this
                    document.

               (iii)The  rights of the  creditor  under  this  Clause  5.2.1 are
                    subject to the rights of the holder of any other encumbrance
                    over the secured property which ranks in priority before any
                    security   interest   created  by  this   document  to  have
                    possession of the title documents.

          5.2.2The mortgagor  may from time to time and at  reasonable  times at
               its request  and at its own cost and on payment of the  creditors
               costs and  expenses  relating to the  exercise of the  mortgagoes
               right,  inspect and make copies or abstracts of or extracts from,
               the title  documents or other  documents  relating to the secured
               property in the possession or under the control of the creditor.

          5.3  Material   adverse  effect  The  mortgagor  shall  use  its  best
               endeavors to delay and prevent any  occurrence in relation to the
               secured  property  which  has or is  likely  to  have a  material
               adverse effect.


<PAGE>


          5.4  Mortgagor's other obligations

               The mortgagor  shall duly perform its  obligations in relation to
               the secured property,  including,  without limitation,  under any
               encumbrance over the secured  property,  under any law applicable
               to the secured  property and under any lawful  direction from any
               government body.

          5.5  Creditor's right to entry and assistance

               5.5.1The creditor and its  nominees  may at any  reasonable  time
                    enter  on  any  property  owned,  used  or  occupied  by the
                    creditor for any purpose related to this document.

               5.5.2The mortgagor shall provide the creditor with all reasonable
                    assistance and facilities to enable the creditor to exercise
                    its rights under this document.

     5.6  Information The mortgagor shall give to the creditor:

          5.6.1full  particulars  of any event of default or potential  event of
               default immediately after its occurrence;

          5.6.2upon receipt of a copy of any notice or order  received  from any
               government  body or any other person  relating to any proposal in
               relation to the secured property which if implemented may have or
               be likely to have a material adverse effect;

          5.6.3as soon as it is commenced or to the  knowledge of the  mortgagor
               is threatened, full particulars of any litigation, arbitration or
               administrative  proceeding  which  affects the  mortgagor  or the
               secured property and which may have a material adverse effect.

     5.7  Further assurances

          The mortgagor shall promptly execute any document and do anything else
          that the creditor from time to time reasonably requires for further or
          more perfectly:

          5.7.1establishing  the  priority of this  document  and  stamping  and
               registering it in any jurisdiction that the creditor demands;

          5.7.2giving to the creditor the rights that this document  purports to
               give or which are contemplated by it;

          5.7.3charging the secured property to the creditor.

     5.8  Preservation and Enforcement Default

          5.8.1The mortgagor  shall take any action a prudent  person would take
               to preserve and enforce the mortgaged rights.

          5.8.2The mortgagor shall not cause or permit an event of default to
                occur.


<PAGE>



     5.9. Legislation compliance The mortgagor shall:

          5.9.1

               (i)  cause  the Rig at all  times to remain  duly  registered  or
                    licensed  if  required   under  any   relevant   legislation
                    applicable to the Rig either in the name of the mortgagor or
                    any other person who has, with the approval of the creditor,
                    possession  or control of the Rig  pursuant to a contract of
                    hire or charter  and upon demand  deliver to the  creditor a
                    copy of any certificate of registration or licence;

               (ii) notify any relevant government body of the security interest
                    created by this document;

          5.9.2maintain and keep current any certificates and licences  required
               for the use and operation of the Rig;

          5.9.3 not maintain, use or operate the Rig in violation of:

               (i)  any law of any government body which has  jurisdiction  over
                    the Rig;

               (ii) any  certificate,  licence or  registration  relating to the
                    Rig;  and  without  limitation,  comply  with  all  relevant
                    provisions of applicable legislation; and

          5.9.4

               (i)  maintain all logs and other records which a prudent owner of
                    the Rig and spare parts would maintain,  including,  without
                    limitation,  those  required by relevant  legislation  to be
                    maintained;

               (ii) promptly   comply  with  any  direction  from  any  relevant
                    government body relating to the Rig;

               (iii)immediately  notify the  creditor  of any  failure to comply
                    with any direction from any relevant  government body or any
                    obligations   imposed  upon  the  mortgagor  under  relevant
                    legislation.

     5.10 Rig Maintenance

          The mortgagor shall:

          5.10.1 maintain the Rig and spare parts in good  operating  condition,
               ordinary  wear  and  tear  excepted,   and  without   limitation,
               maintain,   service,   repair,  overhaul  and  test  the  Rig  in
               accordance with any direction or recommendation from any relevant
               authority or the Rig's manufacturer;

          5.10.2 not make any  equipment  changes  which may  reduce  the value,
               utility or condition of the Rig;

          5.10.3 give by the creditor at 6 monthly  intervals and otherwise when
               required by the creditor a maintenance and servicing schedule for
               the Rig and upon demand duly completed certificates acceptable to
               the  creditor  evidencing   completion  of  the  maintenance  and
               servicing contemplated by the schedules; and


<PAGE>


          5.10.4 not  do  anything  which  will  prejudice  any  rights  of  the
               mortgagor or the creditor against any manufacturer or supplier or
               any person who carries out work on the Rig.

     5.11 Location, Use and Possession The mortgagor shall:

          5.11.1 not  cause or  permit  the Rig to be  operated  or the  secured
               property to be located:

               (i)  outside Laos or Thailand, or

               (ii) in any area excluded  from coverage by any insurance  except
                    in  the  case  of a  requisition  by or  for  an  Australian
                    government body, where the mortgagor obtains an indemnity in
                    lieu of the insurance from that  Australian  government body
                    against  the  risks  and  for  the  amounts  covered  by the
                    insurance;

          5.11.2 not register the  ownership of the secured  property  under the
               laws of any country except Panama, Australia or Singapore;

          5.11.3 not use the Rig or spare parts for any  purpose  other than the
               conduct of its business of the drilling of oil and gas wells;

          5.11.4 give to the creditor upon demand full particulars of the actual
               and anticipated whereabouts of the secured property;

          5.11.5 not  permit  any  person to have  possession  or control of the
               secured property except as contemplated by this document.

     5.12 Inspection and copies

          5.12.1 The creditor or its  representatives may at any reasonable time
               upon reasonable notice being given,  inspect the secured property
               and carry out any tests of it.

          5.12.2 The mortgagor  shall upon demand provide to the creditor copies
               of any technical records or Rig agreements.

     5.13 Replacement  Parts The mortgagor shall promptly replace all parts that
          are  lost,  stolen,  destroyed,  confiscated  or  unfit  for use  with
          replacements which are:

          5.13.1 owned by the mortgagor free of encumbrances  (except  permitted
               encumbrances);

          5.13.2 in good  condition  and fit for the  purpose  of the parts they
               replace; and

          5.13.3 of a value not less than those of the parts they replace.


<PAGE>



     5.14 Alteration  The mortgagor may make any  alteration to the Rig which is
          necessary:

          5.14.1 to comply with the requirements of any relevant government body
               without  limitation,  to  maintain  any  certificate,  license or
               registration applicable to the Rig;

          5.14.2 for the proper and efficient use of the Rig by the mortgagor in
               the ordinary course of its business if the alteration:

               (i)  does not  lessen  the value of the Rig or fitness fo the Rig
                    for the  purpose  for  which  it was  designed,  immediately
                    before the alteration was carried out;

               (ii) meets any requirements of any relevant government body, and

               (iii)does not prejudice the creditors security.

6.   DEFAULT

     Each of the  following  is an event of  default  (whether  or not  cause by
     anything outside the control of the mortgagor);

     (a)  The mortgagor  does not pay the secured money in accordance  with this
          document or perform its obligations under Clause 5.1.

     (b)  The mortgagor does not perform one of its other obligations under this
          document and if that default is capable of rectification:

          (i)  it is not rectified  within 10 business days (or any other longer
               period agreed by the creditor) of its occurrence; and

          (ii) the  mortgagor  does not during that period take all action which
               in the  creditor's  opinion is  necessary or desirable to quickly
               remedy that default.

     (c)  A  representation,  warranty or statement made or deemed to be made by
          the mortgagor in this document is untrue or misleading in any material
          respect.

     (d)  This  document is void,  voidable or  otherwise  unenforceable  by the
          creditor or is claimed to be so by the mortgagor.

     (e)  A security  interest which this document  purports to create ceases to
          have the  priority  which it purports  to have under this  document or
          under any  agreement  between the mortgagor and the creditor or ceases
          to  secure  the  payment  of  the  moneys  or the  performance  of the
          obligations which it purports to secure,  otherwise than by any act of
          the creditor;

     (f)  A distress,  attachment or execution is levied or becomes  enforceable
          against  any  property  of  the  mortgagor  for  an  amount  exceeding
          $5,000.00 or its equivalent;

     (g)  An authorization from a government body necessary to enable:

          (i)  the mortgagor to perform its obligations under this document; or

          (ii) the  creditor  to exercise  its rights  under this  document;  is
               withdrawn or terminates.


<PAGE>



     (h)  An event or series  of  events,  whether  related  or not,  including,
          without  limitation,  any material  adverse  change in the property or
          financial  condition of the  mortgagor,  occurs which has or is in the
          creditor's opinion likely to have a material adverse effect.

     (i)  Any person  who holds a security  over the  secured  property  becomes
          entitled to exercise a right under that security to recover any moneys
          the payment of which is secured by that  security or enforce any other
          obligation the performance of which is secured by it;

     (j)  A default by the  mortgagor  or any event occurs which is or is deemed
          to be or is defined as a default by the mortgagor;

     (k)  

          (i)  the bankruptcy of the mortgagor;

          (ii) the mortgagor  enters into an arrangement or compromise  with, or
               assignment for the benefit,  of all or any class of its creditors
               or members or a moratorium involving any of them;

          (iii)the  mortgagor  being or  staffing  that it is  unable to pay its
               debts when they fall due;

          (iv) the  appointment of a receiver or receiver and manager in respect
               of the mortgagor or any of its property;

          (v)  an  application  being made (which is not  dismissed or withdrawn
               within 10 business days) for an order, a resolution  being passed
               or proposed,  a meeting being  convened or any other action being
               taken to cause anything described above;

     (l)  

          (i)  financial indebtedness of the mortgagor in excess of $5,000.00 or
               its equivalent becomes due and owing or capable of being declared
               due and  owing  before  its  stated  maturity  other  than by the
               exercise  of an option  of the  mortgagor  to pay it  before  its
               maturity;

          (ii) an obligation by any person to the mortgagor to provide financial
               accommodation or to acquire or underwrite financial  indebtedness
               ceases before its stated  maturity  other than by the exercise of
               an option of the mortgagor to cancel that transaction;

          (iii)the  mortgagor  fails  to pay when due and  owing  any  financial
               indebtedness in excess of $5,000.00 or its equivalent; or

     (m)  if the mortgagor is a corporation:

          (i)  the appointment of an official manager, provisional liquidator or
               liquidator in respect of the mortgagor or the  dissolution of the
               mortgagor;

               (a)  reduces or attempts to reduce its capital  other than by the
                    redemption of preference shares;

               (b)  passes or attempts to pass a resolution under Section 188(2)
                    or Section 205(10) of the Corporations Law or any similar or
                    equivalent statutory provision in any other jurisdiction; or


<PAGE>


               (c)  takes any  action to buy  shares in  itself,  other than the
                    insertion in its articles of  association  of a provision to
                    the effect that the  Mortgagor  may buy  ordinary  shares in
                    itself;

          (ii) an event described in Section 461 of the  Corporations Law or any
               similar  or   equivalent   statutory   provision   in  any  other
               jurisdiction occurs in respect of the mortgagor;

          (iii)a share  issued by the  mortgagor  is  required to be redeemed or
               repurchased before its stated maturity other than by the exercise
               of an option of the issuer to redeem or repurchase;

     (n)  the mortgagor ceases or threatens to cease to carry on its business or
          a substantial part of its business;

     (o)  a material part of the mortgaged  goods are lost,  stolen,  damaged or
          destroyed.

7.   DEFAULT POWERS

     7.1  General

          (a)  The creditor may, subject to the operation of any applicable law,
               at any time after an event of default has occurred,  exercise any
               or all of the rights  set out in this  Clause 7 in any manner and
               at any time, notwithstanding that a receiver has been appointed.

          (b)  The  interpretation  of any right set out in this  Clause 7 shall
               not be  restricted  by reference  to or inference  from any other
               right.

     7.2  Acceleration

          If an event of default  occurs the  creditor may at any time by notice
          to the mortgagor make:

          (a)  the secured money which is owing; and

          (b)  an  amount  equal  to that  part of the  secured  money  which is
               contingently owing by the mortgagor to the creditor,  immediately
               due and owing.

     7.3  Statutory  and implied  Powers The  creditor  may  exercise all rights
          capable  of being  conferred  by the  statutes  and other  laws of any
          relevant Jurisdiction upon mortgagees.

     7.4  Dealings The creditor may:

          (a)  take possession or control of and get in the secured property;

          (b)  manage,  quietly  enjoy  and  otherwise  deal  with  the  secured
               property;

          (c)  

               (i)  exercise  the  rights  of  the  mortgagor  and  perform  its
                    obligations in respect of the secured property and cause and
                    permit any other  person to  perform  their  obligations  in
                    respect of the secured property;


<PAGE>


               (ii) vary,  replace  or  release  any  right or  interest  of the
                    mortgagor or any other person;

          (d)  exchange any part of the secured  property for any other property
               and,  if there is a  difference  in value  between  the  property
               exchanged,  give or  receive,  as the case may be,  any moneys or
               other  consideration equal to the difference in value in order to
               give or receive equal value for the exchange;

          (e)  vary, replace, rescind or terminate any agreement relating to the
               secured property to which it or the mortgagor is a party;

          (f)  the  creditor may in the exercise of its rights under this Clause
               7.4:

               (i)  break  open  any  doors,  windows,  gates,  fences  or other
                    obstructions and otherwise  employ  reasonable force against
                    any property of any person; and

               (ii) enter  upon,  occupy and use any  property of or occupied by
                    the mortgagor  upon which the  mortgaged  goods are situated
                    and go to and from that property over other property.

     7.5  Investment of Moneys Any moneys received by the creditor which are not
          required  to be  immediately  applied in the  exercise of any right or
          pursuant  to Clause 10 may be invested  in any way  authorized  by the
          laws of any relevant  jurisdiction  for the investment of trust moneys
          and the creditor may vary or otherwise deal with the investment.

     7.6  Ancillary Powers The creditor may:

          (a)  employ or engage any person for the purpose of exercising  any of
               the creditor's rights under this Clause 7;

          (b)  commence,  defend, prosecute,  settle, discontinue and compromise
               litigation,  administrative or arbitral  proceedings  relating to
               the secured property;

          (c)  give receipts for and satisfy, release, or compromise any debt or
               other  obligation  owed to or by the mortgagor in relation to the
               secured property;

          (d)  enter into and  execute  and  deriver  documents  and  agreements
               relating to the exercise of its rights under this Clause 7;

          (e)  delegate  to any  person  any  right  (including  this  right  of
               delegaton)  under this  Clause 7; and do anything  incidental  or
               conducive  to the exercise of any of its rights under this Clause
               7.


<PAGE>



     7.7  Receivers The creditor may:

          (a)  either  before or after it has taken  possession  of the  secured
               property appoint in writing:

               (i)  any one or more  persons to be a receiver and manager of the
                    secured property or a part of it; or

               (ii) different  receivers or receivers and managers for different
                    parts of the secured property;

     (b)  if more than one person is appointed as receiver of any property,  the
          creditor may appoint them jointly or jointly and severally;

     (c)  remove the  receiver  and appoint  another if the receiver is removed,
          retires or dies and,  in the case of removal or  retirement  reappoint
          that receiver; and

     (d)  fix the remuneration of the receiver.

8.   RECEIVERS

     8.1  Agent The  creditor  may  appoint a receiver  who will be the agent of
          either:

          (a)  the mortgagor,  who alone shall be responsible for the receiver's
               acts and omissions and remuneration; or

           (b)  the creditor.

      8.2  Powers

           (a)  A receiver  shall have the right in relation to any  property of
                which  the  receiver  is  appointed  to do  everything  that the
                mortgagor may lawfully authorize an agent to do on behalf of the
                mortgagor in relation to that property and, without  limitation,
                a receiver may in relation to that  property  exercise;  

               (i)  the rights  capable of being  conferred  upon  receivers and
                    receivers  and  managers  by  the  Corporations  Law  or any
                    similar  or  equivalent  statutory  provision  in any  other
                    Jurisdiction   and   statutes   and  laws  of  any  relevant
                    Jurisdiction;

               (ii) the rights of the creditor  under this  document  except the
                    right to  accelerate  payment of the  secured  money and the
                    right to appoint a receiver;

               (iii)the  rights of the  mortgagor  and,  if the  mortgagor  is a
                    corporation, the directors of the mortgagor; and

               (iv) any other  rights the  creditor  may by written  notice to a
                    receiver give to a receiver.

          (b)  The creditor may by written notice to a receiver at the time of a
               receivers  appointment or any subsequent times give any rights to
               or limit any rights of a receiver.


<PAGE>



9.   EXERCISE OF DEFAULT RIGHTS

     9.1  No Hindrance The mortgagor  shall not cause or permit the creditor,  a
          receiver or an attorney to be  prevented or hindered  from  exercising
          its rights under this document.


     9.2  Mortgagee in possession

          (a)  If the creditor,  a receiver or an attorney  exercises its rights
               under this document or takes possession of the secured  property,
               it will not be liable to  account  as  mortgagee  or  chargee  in
               possession.

          (b)  If the creditor has taken  possession of the secured  property it
               may give up possession of the secured property at any time.

          (c)  The obligations of the mortgagor under this document  relating to
               the secured  property shall not be affected by the creditor,  any
               receiver  or  any  attorney  taking  possession  of  the  secured
               property.

      9.3  Exclusion of Legislation

           (a)  The provisions implied in securities by any statute will for the
                purposes of this  document be negatived or varied only so far as
                they are  inconsistent  with the provisions of this document and
                are  otherwise  varied  so as to  become  consistent  with  this
                document.

           (b)  Any statutory  restrictions (other than mandatory  restrictions)
                upon any right of the  creditor,  receiver  or  attorney to deal
                with the secured  property will not apply to the rights of those
                persons under this document.

     9.4  Default Notice

          (a)  The mortgagor and the creditor, to the extent that any applicable
               law permits, dispense with:

               (i)  any notice to the mortgagor (including,  without limitation,
                    any notice identifying a default by the mortgagor,  giving a
                    period to rectify it and staffing that the power to sell the
                    secured property, appoint a receiver to the secured property
                    or take possession of the secured  property can be exercised
                    if the default is not rectified); or

               (ii) any lapse of time (including,  without limitation,  a period
                    to rectify a default),  prescribed by any statute or rule of
                    law or equity and which  would  otherwise  be required to be
                    given or allowed  before the creditor  exercises  its rights
                    relating to an event of default.

          (b)  If an  applicable  law requires  notice to be given or a lapse of
               time  before any right can be  exercised,  then if no  particular
               period  of  notice or lapse of time is  required,  the  period of
               notice or lapse shall be one day.


<PAGE>



10.   APPLICATION OF MONEY

      10.1 Method
           The  remedy  proceeds  shall,  subject  to  any  mandatory  statutory
           requirements, be applied or paid by the creditor, any receiver or any
           attorney as follows: 

          (a)  first, towards any moneys owing (actually or contingently) by the
               mortgagor  to any person who is, in the  creditors  opinion,  the
               holder of any security  interest  ranking in priority  before any
               security  interested  created by this document to the extent that
               their  security  interest  secures the payment of those moneys in
               priority before the secured money;

          (b)  secondly:

               (i)  towards the  secured  money which is then due and owing and,
                    if any secured money is contingently  owing or owing but not
                    due, in accordance  with Clause 10.5 and the remedy proceeds
                    shall be appropriated  between,  those categories of secured
                    money as the creditor requires; and

               (ii) to any person who is in the creditors  opinion the holder of
                    any security  interest in the secured  property  which ranks
                    equally with any security  interest created by this document
                    to the  extent  that their  security  interest  secures  the
                    payment of those moneys equally with the secured money;

          (c)  thirdly,  towards any moneys owing (actually or  contingently) by
               the mortgagor to any person who in the  creditors  opinion is the
               holder of any  security  interest in the secured  property  which
               ranks in priority  after any  security  interest  created by this
               document to the extent that their security  interest  secures the
               payment of those moneys in priority after the secured money; and

          (d)  fourthly,  to any person  entitled  to the  secured  property  or
               authorized to give receipts for those moneys.

     10.2 Creditor's certificate and disputes

          (a)  The creditor may rely upon a certificate issued by any person who
               claims to be entitled  to receive  any of the remedy  proceeds to
               the effect that moneys are owing  (actually or  contingently)  by
               the  mortgagor  to it and stating the amount  owing  (actually or
               contingently) without being obliged to make any further inquiry.

          (b)  If there is any  dispute  between  any  persons  (other  than the
               creditor)  as to who is entitled to receive the remedy  proceeds,
               the  creditor may pay those moneys into court and if that is done
               the  creditor  will have no further  obligations  in  relation to
               those moneys.

     10.3 No  interest  or remedy  proceeds  The  creditor is not obliged to pay
          interest to any person upon the remedy proceeds.

<PAGE>

     10.4 Payment into bank account If the creditor  pays any moneys into a bank
          account in the name of any person to whom the  creditor  is obliged to
          pay  moneys  under  Clause  10.1  and  notifies  that  person  of  the
          particulars   of  the  account  the  creditor  will  have  no  further
          obligations- in relation to those moneys;

     10.5 Contingent Debts If part of the secured money is in the opinion of the
          creditor  contingently  owing  or owing  but not due and the  creditor
          receives any moneys pursuant to this document the creditor may:

          (a)  pay those moneys into a suspense  account and hold them to secure
               the payment of the secured money; and

          (b)  at any  time  appropriate  any  moneys  in the  suspense  account
               towards the  satisfaction  of any moneys due by the  mortgagor to
               the creditor in any way that the creditor requires,  and when the
               secured  money is  satisfied  in full or the  creditor  no longer
               holds that  opinion,  the  creditor  shall pay the balance to any
               person  entitled to the secured  property or  authorized  to give
               receipts for those moneys.

11.  THIRD PARTY DEALINGS

     11.1 Creditor's  receipts  and  discharges  The  creditor  may  give  valid
          discharges  and receipts for any moneys  payable by any third party in
          respect of any  exercise of a right by the  creditor,  any receiver or
          any attorney.

     11.2 No duty to inquire

          (a)  Any  person  dealing  with  the  creditor,  any  receiver  or any
               attorney in  relation  to the  exercise by any of them of a right
               under this document shall not be concerned to inquire whether:

               (i)  any event of default has occurred;

               (ii) the receiver or attorney is properly appointed;

               (iii)the right is  otherwise  properly  exercised by that person;
                    and

               (iv) any money's paid by it to the creditor, receiver or attorney
                    are  properly  applied,  and the title of that person to any
                    property  acquired  by it from  the  creditor,  receiver  or
                    attorney,  shall not be  adversely  affected by any improper
                    exercise  of the  right  or  application  of  moneys  by the
                    creditor, any receiver or any attorney.

          (b)  The benefit of Clause

     11.2 

          (a)  is held on trust for the benefit of the  creditor and each person
               dealing with the creditor, any receiver or any attorney.


<PAGE>



12.  COSTS AND EXPENSES

     12.1 General The mortgagor shall pay and if paid by the creditor  reimburse
          to the creditor:

          (a)  the  creditor's  reasonable  costs and expenses  relating to this
               document,   including,   without  limitation,   those  which  the
               mortgagor is liable to pay under any  applicable law and those in
               relation to:

               (i)  the  negotiation,   preparation,   execution,  stamping  and
                    registration of this document;

               (ii) any consent, request for consent, communication,  the waiver
                    of any  right  or  the  variation  or  replacement  of  this
                    document;

               (iii)the exercise or attempted  exercise or the  preservation  of
                    any rights of the creditor under this document;

               (iv) any event or default or potential event of default; and

               (v)  the creation,  lodgment,  registration  or release of or any
                    dealing relating to any encumbrance,  including any security
                    interest   created  by  this  document,   over  the  secured
                    property; and

          (b)  any taxes and registration or other fees (and fines and penalties
               relating to the taxes and fees) which are payable or are assessed
               by a relevant  government  body to be payable in relation to this
               document,  any  document  contemplated  by it or any  transaction
               contemplated by it.

     12.2 Legal costs

          A REFERENCE TO COSTS AND EXPENSES IN THIS DOCUMENT  INCLUDES,  WITHOUT
          LIMITATION, LEGAL COSTS AND EXPENSES ON A FULL INDEMNITY BASIS.

     12.3 Acts at mortgagor's expense

          ANYTHING  WHICH  THIS  DOCUMENT  STATES  IS TO BE DONE BY  EITHER  THE
          CREDITOR OF THE MORTGAGOR IS TO BE DONE AT THE MORTGAGOR'S EXPENSE.

     12.4 Remuneration

          THE CREDITOR,  ANY RECEIVER AND ANY ATTORNEY  SHALL BE  REMUNERATED BY
          THE  MORTGAGOR  FOR ANY  SERVICES  RENDERED BY THEM IN RELATION TO THE
          EXERCISE  OF ANY  RIGHT  UNDER  THIS  DOCUMENT  AND  THE  RATE  OF THE
          REMUNERATION  AND THE MANNER OF PAYMENT WILL BE THAT DETERMINED BY THE
          CREDITOR.


<PAGE>



13.  INDEMNITIES

     13.1 General

          The mortgagor  indemnifies the creditor and each receiver and attorney
          and their respective  representatives  and the  representatives of the
          creditor  against  any  liability,  loss,  cost or  expense  caused or
          contributed  to by any event of default or the  exercise or  attempted
          exercise of any right by the  creditor,  any  receiver or any attorney
          under this document.

     13.2 Independence and survival

          Each indemnity in this document is a continuing  obligation,  separate
          and  independent  from the  other  obligations  of the  mortgagor  and
          survives the termination of this document.

     13.3 Currency deficiency

          If there is any deficiency between:

          (a)  an amount  payable by the mortgagor  under this document which is
               received by the  creditor in a currency  other than the  currency
               payable  under  this  document  because  of  a  judgment,  order,
               bankruptcy or otherwise; and

          (b)  the amount  produced by converting the payment  received from the
               currency  in which it was paid into the  currency in which it was
               agreed to be paid,  the  mortgagor  shall pay to the creditor the
               deficiency and any loss, cost or expense resulting from it.

14.  ATTORNEY

     14.1 Appointment and powers The mortgagor irrevocably appoints the creditor
          its attorney  with the right to do  everything  that the mortgagor may
          lawfully authorize an agent to do in respect of the secured property.

     14.2 General

          (a)  Any attorney may  exercise  its rights  notwithstanding  that the
               exercise of the right constitutes a conflict of interest or duty.

          (b)  The  mortgagor  shall  ratify  any  exercise  of a  right  by  an
               attorney.

          (c)  The power of  attorney  is  granted  for  valuable  consideration
               (receipt of which is acknowledged by the mortgagor) and to secure
               the  performance  of  the  obligations  of the  mortgagor  to the
               creditor under this document and any proprietary interests of the
               creditor under this document.

15.  MISCELLANEOUS

     15.1 Set-Off

          The creditor may:

          (a)  set-off  against the secured  money any debt due and owing by the
               creditor to the mortgagor,  including,  without  limitation,  any
               moneys in any  currency  held by the  creditor for the account of
               the mortgagor in any place; and


<PAGE>


          (b)  if the debt due and owing by the  creditor  to the  mortgagor  is
               payable in a  currency  other than that in which the debt due and
               owing by the  mortgagor to the  creditor is payable,  convert the
               creditors debt into the currency in which the mortgagor's debt is
               payable by applying an exchange rate determined by the creditor.

     15.2 Creditor's determination

          (a)  If any matter  related to this  document is to be resolved by the
               determination  or  opinion  of the  creditor  or an  attorney  or
               receiver-.

               (i)  the  determination  or opinion of the creditor,  attorney or
                    receiver  will  be  binding  upon  the  mortgagor  if  it is
                    reasonable;

               (ii) the  creditor,  attorney  or receiver is not obliged to give
                    the reasons for a determination or opinion; and

               (iii)the  mortgagor  will  have  the  -onus  of  proving  that  a
                    determination  or  opinion  of  the  creditor,  attorney  or
                    receiver is unreasonable.

          (b)  A determination or an opinion of an authorized  representative of
               the  creditor,  which  is  given to the  mortgagor  or  otherwise
               expressed or acted upon by the creditor as being a  determination
               or  an  opinion  of  the   creditor   will  be  deemed  to  be  a
               determination or opinion of the creditor.

     15.3 Rights  cumulative  The  rights of the  creditor  in  respect  of this
          document  are  cumulative  and in addition to any other  rights of the
          creditor.

     15.4 Variation No  variation or waiver of, or any consent to any  departure
          by a party from, a provision of this  document is effective  unless it
          is  confirmed  in  writing  signed  by  the  creditor  and  then  that
          variation,  waiver or consent is effective only in  circumstances  for
          which it may be made or given.

     15.5 Liability  of parties If any party to this  document  consists of more
          than  one  person  then the  liability  of those  persons  under  this
          document  is a joint  liability  of all those  persons  and a separate
          liability of each of them.

     15.6 Severance  If any  provision  of this  document  is  unenforceable  in
          accordance with its terms., other provisions which are self-sustaining
          and capable of separate  enforcement with regard to the  unenforceable
          provision,  are and continue to be,  enforceable  in  accordance  with
          their terms.

     15.7 Governing law and jurisdiction This document is governed by, and is to
          be construed in accordance with, the laws of Australia and the parties
          submit to the  non-exclusive  jurisdiction  of the courts of Australia
          and any court hearing appeals from those courts.


<PAGE>



16.  NOTICE

     16.1 General Any notice, demand, certification or other communication under
          this  document  shall be given in writing and in the English  language
          and may be given by an authorized representative of the sender.

     16.2 Method of giving notices A  communication  required or permitted to be
          given by any party to another  under this  document must be in writing
          and is treated as being duly given if it is:

          (a)  left at that party's address;

          (b)  sent by pre-paid mail to that party's address;

          (c)  transmitted by telex to that party's address; or
           
          (d)  transmitted by facsimile to that party's address.

     16.3 Time of receipt A  communication  given to a party in accordance  with
          this Clause 16 is treated as having been duly given and received:

          (a)  when  delivered  (in the  case of it being  left at that  party's
               address);

          (b)  on the third  business day after posting (in the case of it being
               sent by pre-paid mail;

          (c)  on the business day after  transmission  (in the case of it being
               given by facsimile and sent to the facsimile  receiver  number of
               that party and no intimation having been received that the notice
               had not been received,  whether that  intimation  comes from that
               party or from the operation of facsimile machinery or otherwise).

     16.4 Address of parties  For the  purposes  of Clause 16, the  address of a
          party is the address set out below or another address which that party
          may from time to time notify each other party:

The Mortgagor:          TD INTERNATIONAL SA
Address:                35  Gul  Crescent,   Singapore  629544
Facsimile:
Attention:              David Munns

The Creditor:           HEMLEY EXPLORATION PTY LTD
Address:                174 Greenhill  Road,  Parkside SA 5063
Facsimile:
Attention:              John Naylor



<PAGE>



IN WITNESS WHEREOF, the parties have duly executed this DEED by their authorized
representatives respectively, as of the day and year first written

TD INTERNATIONAL SA            HEMLEY EXPLORATION PTY LTD

By:/s/ D.A. Munns                   By:/s/ J.L. Naylor

Name: D.A. Munns                    Name: J.L. Naylor

Title: Director                     Title: Director

Date: 23/10/98                      Date: 14 October 1998