JOINT VENTURE AGREEMENT


 


1.
JOINT VENTURE. AMIKO KAY, S de RL  de CV, a company formed under the laws of Mexico (the "Company"),
and Miguel Angel Jaramillo Tapia (the “Seller”) hereby form a joint venture (the “Joint Venture”)
to process 1,200,000 tons of mine “tailings” and other silver and gold mining residue (the “Tailings”),
and, after processing, use, market and sell any minerals extracted from the Tailings. The Tailings are located in the city of
Hidalgo del Parral in the state of Chihuahua, Mexico (the “Property”). The Property is identified as San Antonio
del Potrero, Mineral de Jal (Residuo de Roca Mineral), which comprises approximately 75 hectares and is registered with the San
Antonio Ejido and the city of Hidalgo del Parral. The date of this Agreement is made on January 26, 2012.


 


2.SELLER
REPRESENTATIONS. The Seller represents and warrants to Company:


 


(i)That
the Seller is the rightful owner and is in legal possession of the Tailings, the Seller is current in the payment of all applicable
taxes, fees, duties and other assessments, the Seller owns the Tailings free and clear of any and all liens, claims, charges, options,
or any other limitation of ownership, and the Seller has the full power and authority to perform its obligations under this Agreement.


 


(ii)That
the Seller is a Mexican national, married, and does not require his wife’s consent in order to enter into this Agreement,
due to the fact that he is married under the separate asset regime (regimen de separación de bienes).


 


(iii)That
the Seller has not executed any agreement that creates, now or in the future, a lien or limitation of ownership of any kind on
the Tailings or that obligates the Seller to transfer the Tailings to third parties.


 


(iv)To
the best of Seller’s knowledge, that there are no actions, lawsuits, judicial procedures, claims, investigations, legal or
arbitration disputes pending before any Mexican authority, or any federal, state or municipal or any court or judicial authority,
any administrative or regulatory agency, commission, governmental agency, semi-governmental authority, decentralized agency, any
public official, or any division, or political subdivision, department or branch of any of the referred agencies (the “Governmental
Authorities”) in civil, fiscal, mercantile, labor and all other matters, complaints or accusations related to criminal
matters, against or affecting, now or in the future, the Tailings, the Property or the ability of the parties to perform this Agreement
and form the joint venture with the Company as herein contemplated.






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(v)That
the execution of this Agreement and the transactions contemplated hereunder, will not result in violation of any resolution, either
judicial or administrative, nor affect the rights of third parties, including without limitation, creditors, workers’ rights
and the rights of public agencies of the Federal Administration or Chihuahua’s government with respect to which the Seller
is a party or subject of obligation.


 


(vi)That
the Seller has complied and is in compliance with all the federal, state or municipal applicable laws and regulations, including,
without limitation, tax, labor, environmental and other legislation (hereinafter the “Applicable Laws”); the
Seller has paid all taxes and other contributions applicable or relating to the Tailings and the Property and there is no, and
the Seller has no knowledge of, any claim, or procedure, complaint or accusation for any violations and/or non- compliance with
any Applicable Laws and sanctions, either federal, state or municipal, imposed and/or
ordered by any Governmental Authority regarding the Tailings or the Property.


 


(vii)To
the best of the Seller’s knowledge, that there does not exist inside, on, under, or at any distance that can affect the Tailings,
any residues or dangerous material, toxic substances, or material of corrosive nature, reactive, explosive, toxic, inflammable
or biological infectious, in violation of any Applicable Law.


 


(viii)That
there are no (and there is no threat of) fines, investigation, sanctions, fees, penalties or amounts payable due to the non-compliance
of any Applicable Laws, that the Seller has not received any notice, visits, notifications or any other kind of communication issued
by any Governmental Authorities related to any violation or possible violation of the Applicable Laws.


 


(ix)That
the Seller is not aware of the existence of any complaint, claim, or accusation of any third party related to the Property, regarding
the land use or its possession.


 


(x)That
no statement, representation or warranty made by the Seller to the Company, in connection with the Tailings or the Property or
otherwise relating to this Agreement or any document or instrument related thereto is false, incorrect or incomplete in any material
respect.


 


3.PAYMENTS
BY COMPANY.In connection with this Agreement, and in consideration for Seller contributing the Tailings, and the rights
necessary to process the Tailings and sell any minerals extracted from the Tailings, to the Joint Venture, the Company will pay
the Seller the amount of $300,000 USD (Three Hundred Thousand Dollars of the United States of America) (“Purchase
Price”).


 


4.TERMS
OF PAYMENT. The Purchase Price will be paid as follows:


 


A.The
amount of $25,000 USD (Twenty Five Thousand Dollars of the United States of America) paid previously to the Seller prior
to this Agreement.


 


B.The
amount of $75,000 USD (Seventy Five Thousand Dollars of the United States of America) upon execution of this Agreement.


 


C.The
amount of $200,000 USD (Two Hundred Thousand Dollars of the United States of America) within 12 months of the signing of
this Agreement.


 



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In addition to the
above, Company will fund an amount up to $1,000,000 USD for the benefit of the Joint Venture, according to the work commitment
set forth below (the “Work Commitment”):


 


1.Heavy
equipment, processing and plant construction costs totaling a minimum of $1,000,000 USD (One Million Dollars of the United
States of America) over the first two years of the Joint Venture, as follows:


 


A.The
amount of $250,000 USD (Two Hundred Fifty Thousand Dollars of the United States of America) within the first year after
the signing of this Agreement for the purchase of used heavy equipment, including one front end loader, large bulldozer, 4x4 backhoe
and two nine/ten meter dump trucks, and miscellaneous equipment and materials for processing the Tailings pile, as well as taxes,
permits and general operating expenses associated with the processing of the Tailings.


 


B.The
amount of $750,000 USD (Seven Hundred Fifty Thousand Dollars of the United States of America) within the second year after
the signing of this Agreement for the construction of a heap leach system and floatation plant (the “Plant”)
on the Property. The Seller and the Company will mutually agree on plans to build the Plant, including a detailed budget, by the
end of the first year. If necessary, the Seller will grant the Joint Venture a ground lease of the Property on which the Plant
will be located, on terms and conditions reasonably acceptable to the Company.


 


C.An
additional $250,000 USD (Two Hundred Fifty Thousand Dollars of the United States of America) will be at the disposal of
the Joint Venture, if additional processing equipment is justified and required to maximize the liberation of precious metals in
the Tailings material.


 


The above amounts will be paid to third parties
as payment for all expenses incurred as part of the Work Commitment, and not to the Seller (except as reimbursement of expenses
that Seller paid to third parties). The Seller will prepare a detailed budget setting forth the expenses to be paid under the Work
Commitment, which shall be approved by the Company.


 


2.Lone
Star Gold, Inc., a Nevada corporation, owns 99% of the issued and outstanding stock of the Company. The Company will grant and
deliver to the Seller 600,000 restricted shares of the common stock of Lone Star Gold, Inc. as follows:


 


A.100,000
shares within 7 business days of this Agreement.


 


B.200,000
shares within 6 months of signing this Agreement.


 


C.300,000
shares within 12 months of signing this Agreement.






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Such shares of common stock
will be restricted securities, and will carry current and appropriate legends in accordance with United States securities laws.
The Seller agrees to sign a Share Issuance Agreement in connection with each issuance of the Common Stock, acknowledging, among
other things, the restrictions on transfer of the Common Stock. The form of the Share Issuance Agreement is attached as Exhibit
A to this Agreement, and the terms and conditions of the Share Issuance Agreement is incorporated herein by reference.


 


5.RESPONSIBILITIES
OF THE PARTIES.


 


A.The Company
and Seller shall each be responsible for providing the services or components as described herein.


 


B.The Seller
shall manage the day-to-day affairs associated with processing the Tailings, and selling the minerals extracted from the Tailings,
and other activities of the Joint Venture, except as otherwise provided herein. The Seller will open a joint bank account in the
name of both the Company and the Seller, with both the Company and the Seller named as signatories on the account (the “Bank
Account”). Seller will pay all expenses associated with the processing of the Tailings, the selling of the minerals extracted
from the Tailings, the building of the Plant, and other miscellaneous obligations of the Joint Venture from the Bank Account. All
revenues from the processing of the Tailings, the selling of the minerals, and other activities of the Joint Venture will be deposited
in the Bank Account, and the Seller will pay all expenses from the Bank Account. The Seller will not comingle his personal funds
and the Bank Account. Revenues will be divided as set forth in Section 8 below.


 


C.The Seller
will provide such office space, equipment, facilities and supplies, and the services of such secretarial, clerical and other personnel
at its headquarters, as may be required for the reasonable conduct of the business of the Joint Venture. Expenses associated with
the office, such as rent and equipment, shall be paid out of the revenues of the Joint Venture.


 


D.The Company
and the Seller shall jointly develop plans and programs to process the Tailings, formulate policies and objectives and carry out
such plans, programs and policies with regard to the processing of the Tailings and the business of the Joint Venture.


 


E.The Seller
will employ and retain such accountants, attorneys, banks, custodians, engineers, insurance companies and other persons or entities
as may from time to time reasonably be necessary to manage the business operations of the Joint Venture.


 


F.The Seller
will maintain in good order the books of account, ledgers, and records of the Joint Venture. Without limiting the generality of
the foregoing, the Seller shall prepare all requisite accounting reports and interim financial statements of the Joint Venture,
including balance sheets, income statements and statements of cash flows, and shall assist the Joint Venture in selecting an independent
public accounting firm for the purpose of conducting annual financial audit reviews of the Joint Venture and shall aid in coordinating
such audits.  All books and records shall be available upon demand to the Company and Seller. The Seller shall deliver quarterly
financial reports to the Company.






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G.The Seller shall prepare
and file, when due, on behalf of the Joint Venture all reports, forms, documents, permits, authorizations, certificates and other
instruments required by applicable law in order to lawfully process the Tailings, sell any minerals extracted from the Tailings,
maintain the Property in good standing, comply with all legal requirements associated with the Tailings, and conduct the business
and affairs of the Joint Venture as described in this Agreement.


 


H.The Seller agrees to comply
with all regulations for the use and development of the Tailings.


 


I.The Seller
will conduct its activities under this Agreement as a prudent operator, in a good and workmanlike manner.


 


6.OTHER SPECIAL CONDITIONS.The
parties agree to the following:


 


A.The
Seller shall retain title to the Tailings and the Property. However, Seller grants the Company full and unlimited access to the
Seller’s books, drill logs, samples, records, documents of title, business plans, projections, financial and operating data,
assets and operations, and background checks concerning the Property.


 


B.Seller
hereby allows the Company to review any and all permits and licenses required by federal, state municipal or local authorities.


 


C.Seller
is solely responsible for obtaining and paying the cost of any and all of the pertinent permits and licenses required by federal,
state municipal or local authorities, during the term of this Agreement.


 


D.Seller
is solely responsible for the payment and cost of the pertinent insurance policy at, Company’s satisfaction, in connection
with the Tailings and the Property.


 


E.Seller
will provide any documentation at any time required by the Company regarding legal documents evidencing the legal authority of
the individual(s) that will sign this Agreement, if any.


 


F.Seller
will evidence his legal authority to sign this Agreement with appropriate documentation requested by the Company including documentation
evidencing Seller’s legal authority with respect to (i) receiving the Purchase Price, (ii) appointing a bank
account to deliver the Purchase Price and (iii) signing any document relating to this Agreement.






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G.The
Seller will satisfy all requirements with the proper Mexican authorities, and will take all actions necessary to keep the Property
in good standing during the term of this Agreement.


 


7.ACCESS TO THE PROPERTY.The
Seller will give the Company full access to the Tailings and the Property during the term of this Agreement, including, without
limitation, full right and ability to enter and leave the Property, to use the Tailings in any manner, to remove the Tailings from
the Property, to perform tests on the Tailings, to drill on the Property, to allow its employees and contractors to access the
Property, and to conduct its business as to the Tailings and the Property in any manner it sees fit, in the Company’s sole
discretion. The Seller grants the Company an easement for the purposes stated in this section 7 and otherwise in this Agreement.
The Company has no obligation to preserve the Property or the Tailings, and will not be liable to the Seller for any damage done
to the Property or the Tailings. At the end of the term, the Company has no obligation to return the Property in the condition
in which it exists on the date of this Agreement.


 


8.ALLOCATION
OF REVENUES. All revenues received by either party from the processing of the Tailings,
the sale of any minerals derived from the processing of the Tailings, or any ancillary business of the Joint Venture, after the
payment of any and all expenses incurred by the Company or the Seller in connection with the processing of the Tailings or the
operation of the Joint Venture under this Agreement, shall be allocated and paid as follows (the “Sharing Ratios”):


 





65% to the Company


35% to the Seller.


 


Revenues shall be distributed and paid monthly
(whether in payment of expenses or as a distribution in accordance with the Sharing Ratios) within 30 days following the end of
the calendar month in which such revenues are received. Seller shall pay and and all amounts due to the Company directly into the
Company’s bank account, as directed by the Company. Seller will prepare a detailed accounting of all revenues and expenses
of the Joint Venture at the end of each calendar month.


 


9.TERMINATION.This
Agreement will terminate upon the completion of processing the Tailings, as determined by the Company in its sole discretion. In
addition, if the Seller materially breaches this Agreement, the Company has the right, but not the obligation, to terminate this
Agreement upon thirty (30) days notice to the Seller. The Seller has no right to terminate this Agreement before the processing
of the Tailings is complete. Upon termination of this Agreement, the Company will forfeit all of the Property, plant and equipment,
into the control of the Seller, and will be released from all future responsibilities and any involvement with the project after
the pile of Tailings on the Property has been processed.


 


10.DEFAULT AND REMEDIES.



 


A.Default.Either
Party (a “Defaulting Party”) will be in default upon the occurrence of the following events (an “Event of Default”):






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(a)The
Seller (i) dies, (ii) becomes mentally or physically incapacitated, or (iii) for any other reason is no longer able to perform
his obligations under this Agreement.


 


		(b)	The bankruptcy, insolvency or termination of the Company.



 


		(c)	Either the Seller or the Company has
been found liable for intentional misconduct, gross negligence or fraud in the performance of his or its duties and obligations
under this Agreement.



 


(d)Either Party breaches
the terms or conditions of this Agreement or fails to comply with any material obligation under this Agreement, and such failure
is not cured within 10 days after receipt of written notice specifying such failure.


 


B.Remedies.
If an Event of Default occurs, then, and without need for judicial order, review, or decree, (i) the Defaulting Party’s rights
to participate in the Joint Venture are immediately suspended, (ii) if the Defaulting Party is the Seller, the Company may step
into the role of the Seller under this Agreement, and perform the duties and obligations to be performed by Seller in its place,
without further action on the part of the Company, (iii) the Defaulting Party shall have no right to share in the revenues of the
Joint Venture until the breach is cured, and (iv) the Nondefaulting Party shall have the right to sue the Defaulting Party for
any damages incurred by the Joint Venture or the Nondefaulting Party as a result of the Event of Default, in addition to any other
rights and remedies under this Agreement or otherwise provided by law or at equity.


 


11.CLOSING COSTS. The parties
agree to be equally liable for notary public fees, appraisal fees, taxes, recording fees, and any other fees relating to this Agreement,
the transfer of the Tailings and use of the Property.


 


12.TAXES. The parties agree
to be equally liable for any and all taxes in connection with the Property and Tailings and/or processing of the Tailings.


 


13.NON–EXISTENCE OF PARTNERSHIP. The
Parties shall conduct the commercial activities contemplated by this Agreement as co-venturers and not as general or limited partners
or otherwise in the context of any partnership, as such term is construed under applicable law.  Accordingly, neither Party
shall have any right or obligation to control the activities of the other Party to this Agreement nor any conduct of the other
Party, including such Party’s agents, in furtherance of the Joint Venture.


 


14. COMMUNICATIONS. Any communications
between the parties shall be in writing and addressed to the following addresses.


 



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	The Seller	The Company
	 	 
	Miguel Angel Jaramillo Tapia	Amiko Kay, S de R L de CV
	Calle Montevideo #7110	c/o Lone Star Gold, Inc.
	Col. Panamericana	Dan Ferris, President
	Chihuahua, Chihuahua	Lone Star Gold Inc.
	C.P.31206	6565 Americas Parkway, Ste.200
	 	Albuquerque, New Mexico 87110


 


15.MISCELLANEOUS. Title and
headings are for reference only and do not define or limit its scope. All decisions to be made by a Party hereunder shall be at
such Party’s sole and arbitrary discretion, except as otherwise provided for herein. This Agreement shall be construed fairly
with no inference drawn against the drafting Party. Any provision herein that may reasonably be interpreted as being intended to
survive this Agreement’s termination or expiration shall do so. All payments required herein are due in United States Dollars
from an immediately available source. This Agreement’s time periods shall be computed by excluding the first day and including
the last. Except if otherwise specifically noted, time is of the essence and all periods referencing days shall be measured by
calendar days, and, if the last day in a given period falls on a weekend or legal holiday, then the last day thereof shall be the
next business day thereafter. For convenience, this Agreement will be translated into Spanish; however, in case of a conflict or
dispute, the English version will control.


 


16. ASSIGNMENTS. Neither
this Agreement nor the rights and obligations hereunder shall be assigned or transferred by either Party, or to or by any third
party (including by court order, operation of law, merger, statute, regulation, ordinance or otherwise) without the other Party’s
prior express written consent; provided, however, that the Company may assign this Agreement to another subsidiary of Lone
Star Gold, Inc. without any action on the part of the Seller. Any attempt to otherwise assign this Agreement will be ineffective.


 


17. JURISDICTION
AND APPLICABLE LAW. This Agreement is governed by the laws of the state of Nevada, without reference to its choice of law rules.
All disputes or controversies arising from this Agreement shall be resolved by arbitration under the rules of the British Columbia
International Commercial Arbitration Centre (“BCICAC”) by a sole arbitrator. The appointing authority for the arbitration
will be the BCICAC. The place for the arbitration will be Vancouver, British Columbia, Canada, and the language of the arbitration
will be English.


 


The final decision issued by the arbitrator
shall be binding and irrevocable for the parties to this Agreement and the parties shall acknowledge such decision as final.


 


(Signature Page Follows)


 



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This Agreement was executed on the date indicated
below, but is effective for all purposes as of January 25, 2012.


 


COMPANY


 


AMIKO KAY, S de RL  de CV


 


 


	By:	/s/ Daniel Ferris	 


Name: Daniel Ferris


Title: CEO Lone Star Gold


 


 


	Date:	1/26/12	 


 


 


SELLER


 


 





	By:	/s/ Miguel Angel Jaramillo Tapia	 
	 	Miguel Angel Jaramillo Tapia	 


 


 


	Date:	1/26/12	 


 


 


 


 



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EXHIBIT A


SHARE ISSUANCE AGREEMENT


 


 


 


 






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