Exhibit
      10.31









AMENDED
      AND RESTATED CREDIT AGREEMENT




Effective
      as of July 17, 2008




among




MINERA
      SANTA RITA S. DE R.L. DE C.V.,




and




ORO
      DE
      ALTAR S. DE R.L. DE C.V.,


as
      the
      Borrowers




CAPITAL
      GOLD CORPORATION,


as
      the
      Guarantor




and




STANDARD
      BANK PLC,


as
      the
      Lender










**TABLE
      OF CONTENTS**




PageARTICLE
                IDEFINITIONS
                AND ACCOUNTING TERMSSection 1.01
            Defined
                Terms
            
            1Section
                1.02
            Other
                Interpretive Provisions
            
            23Section
                1.03
            Accounting
                Terms
            
            24Section
                1.04
            Rounding
            
            24Section
                1.05
            Currency
                of Coverage Ratios
            
            25Section
                1.06
            Updates
                of Life of Mine Plan and Financial Model
            
            25Section
                1.07
            Determination
                of Material Adverse Effect, Etc
            
            25ARTICLE
                IITHE
                COMMITMENTS AND THE BORROWINGSSection
                2.01
            The
                Loans
            
            26Section
                2.02
            Borrowings
            
            26Section
                2.03
            Prepayments
            
            27Section
                2.04
            Termination
                or Reduction of Commitment
            
            27Section
                2.05
            Repayment
                of Loans
            
            28Section
                2.06
            Interest
            
            29Section
                2.07
            Commitment
                Fee
            
            30Section
                2.08
            Guarantor
                Warrants
            
            30Section
                2.09
            Computation
                of Interest and Fees
            
            30Section
                2.10
            Evidence
                of Indebtedness
            
            30Section
                2.11
            Payments
                Generally
            
            31ARTICLE
                IIITAXES,
                YIELD PROTECTION AND ILLEGALITYSection
                3.01
            Taxes
            
            31Section
                3.02
            Illegality
            
            32Section
                3.03
            Increased
                Costs; Reserves on Loans
            
            32Section
                3.04
            Compensation
                for Losses
            
            33ARTICLE
                IVCONDITIONS
                PRECEDENTSection
                4.01
            Conditions
                Precedent to Closing Date
            
            34Section
                4.02
            Conditions
                Precedent to All Borrowings
            
            39









TABLE
      OF
      CONTENTS




PageARTICLE
                VREPRESENTATIONS
                AND WARRANTIESSection 5.01
            Representations
                and Warranties of the Borrowers
            
            40Section
                5.02
            Representations
                of the Guarantor
            
            49ARTICLE
                VIACCOUNTSSection
                6.01
            Accounts
            
            51Section
                6.02
            Offshore
                Operating Account
            
            51Section
                6.03
            Insurance
                Proceeds Account
            
            52Section
                6.04
            Payments
                in Trust
            
            52ARTICLE
                VIIAFFIRMATIVE
                COVENANTSSection
                7.01
            Affirmative
                Covenants
            
            53ARTICLE
                VIIINEGATIVE
                COVENANTSSection
                8.01
            Negative
                Covenants
            
            56ARTICLE
                IXFINANCIAL
                COVENANTSSection
                9.01
            Borrowers’
                Financial Covenants
            
            61Section
                9.02
            Guarantor’s
                Financial Covenants
            
            62ARTICLE
                XREPORTING,
                NOTICE AND CALCULATION REQUIREMENTSSection 10.01
            Reporting
                Requirements
            
            62Section
                10.02
            Preparation
                of Environmental Reports
            
            67Section
                10.03
            Calculation
                of Financial Ratios
            
            67Section
                10.04
            Translations
            
            67ARTICLE
                XIEVENTS
                OF DEFAULT AND REMEDIESSection
                11.01
            Events
                of Default
            
            67Section
                11.02
            Remedies
                upon Default
            
            69Section
                11.03
            Right
                of Setoff
            
            70




ii




TABLE
      OF
      CONTENTS




PageARTICLE
                XIIMISCELLANEOUSSection 12.01
            Amendments,
                Etc
            
            70Section
                12.02
            Notices
                and Other Communications; Facsimile Copies
            
            70Section
                12.03
            No
                Waiver; Cumulative Remedies
            
            71Section
                12.04
            Expenses;
                Indemnity; Damage Waiver
            
            71Section
                12.05
            Payments
                Set Aside
            
            72Section
                12.06
            Successors
                and Assigns
            
            73Section
                12.07
            Treatment
                of Certain Information; Confidentiality
            
            75Section
                12.08
            Right
                of Setoff
            
            76Section
                12.09
            Counterparts;
                Effectiveness
            
            76Section
                12.10
            Survival
            
            76Section
                12.11
            Severability
            
            77Section
                12.12
            Consultants
            
            77Section
                12.13
            Benefits
                of Agreement
            
            77Section
                12.14
            Judgment
                Currency
            
            78Section
                12.15
            Language;
                Spanish Translation
            
            78Section
                12.16
            USA
                PATRIOT Act Notice
            
            78Section
                12.17
            Governing
                Law; Jurisdiction; Etc
            
            79Section
                12.18
            WAIVER
                OF JURY TRIAL
            
            80Section
                12.19
            Joint
                and Several Liability
            
            80


iii




TABLE
      OF
      CONTENTS   PageSCHEDULESSchedule
                  1.01(a)
              Mining
                  ConcessionsSchedule
                  1.01(b)
              Liens
                  of RecordSchedule 5.01(c)
              Project
                  ApprovalsSchedule 5.01(e)
              Agreement
                  ApprovalsSchedule 5.01(n)
              Affiliate
                  ContractsSchedule
                  5.01(q)
              Environmental
                  ConditionsSchedule 5.01(v)
              Borrower
                  IndebtednessSchedule
                  5.01(cc)
              Existing
                  InsuranceSchedule
                  7.01(r)
              Required
                  InsuranceSchedule
                  12.02
              Notice
                  InformationEXHIBITSExhibit A
              Form
                  of Compliance CertificateExhibit B
              Form
                  of Amended and Restated GuarantyExhibit C
              Form
                  of Loan NoticeExhibit D
              Form
                  of Revolving NoteExhibit E
              Form
                  of Term NoteExhibit F
              Form
                  of Warrant AgreementExhibit G
              Form
                  of Legal Opinion of Davis Graham & Stubbs LLP, counsel to the Loan
                  PartiesExhibit H
              Form
                  of Legal Opinion of Lizarraga, Robles, Tapia y Cabrera S.C., special
                  Mexican counsel to the Loan PartiesExhibit I
              Form
                  of Amendment to MortgageExhibit J
              Form
                  of Amendment to Equity Pledge AgreementsExhibit K
              Form
                  of Amendment to Movable Assets PledgeExhibit L
              Form
                  of Amendment to Account Pledge Agreement




iv


AMENDED
      AND RESTATED CREDIT AGREEMENT




This
      AMENDED AND RESTATED CREDIT AGREEMENT (“ ***Agreement*** ”)
      is
      entered into on September 18, 2008 (the “ ***Closing
      Date*** ”)
      with
      retroactive effect from July 17, 2008 (the “ ***Effective
      Date*** ”),
      by
      and among MINERA SANTA RITA S. DE R.L. DE C.V., a Mexican company (“ ***MSR*** ”),
      ORO
      DE ALTAR S. DE R.L. DE C.V., a Mexican company (“ ***Oro
      de Altar*** ”
and
      together with MSR, the “ ***Borrowers*** ”
and
      each individually, a “ ***Borrower*** ”),
      CAPITAL GOLD CORPORATION, a Delaware corporation (the “ ***Guarantor*** ”),
      and
      STANDARD BANK PLC, a bank organized under the laws of England and Wales (the
      “ ***Lender*** ”).




PRELIMINARY
      STATEMENTS




The
      Borrowers, the Guarantor, the Lender (as Lender) and the Lender, (as the
      Offshore Account Holder) entered into that certain Credit Agreement, dated
      as of
      August 15, 2006 (the “ ***Original
      Credit Agreement*** ”)
      in
      connection with the Borrowers’ design, construction, financing, furnishing,
      installation, testing, commissioning, ownership, operation and maintenance
      of a
      gold mine (the “ ***Mine*** ”)
      located in the State of Sonora, Mexico (collectively, the “ ***Project*** ”).




Pursuant
      to the Original Credit Agreement, the Lender agreed to (a) establish a senior
      secured non-revolving term credit facility in the aggregate amount of
      U.S.$12,500,000 in favor of the Borrowers, and (b) enter into certain
      hedging arrangements with the Borrowers in order to limit the Borrowers’
exposure to price fluctuations in respect of Gold and interest rate.




The
      parties hereto desire to amend and restate the Original Credit Agreement in
      its
      entirety to, among other things, (a) continue to provide a senior secured
      non-revolving term credit facility in the aggregate amount of up to
      U.S.$12,500,000, (b) establish a senior secured revolving credit facility in
      the
      aggregate principal amount of U.S.$5,000,000 and (c) make certain other
      amendments to the Original Credit Agreement as more fully set forth
      herein.




In
      consideration of the mutual covenants and agreements herein contained, the
      parties hereto covenant and agree as follows:




**ARTICLE
      I**


**DEFINITIONS
      AND ACCOUNTING TERMS**




Section
      1.01  Defined
      Terms .




(a)
      As
      used in this Agreement, the following terms shall have the meanings set forth
      below:




“ ***Abandonment*** ”
means
      a
      period of forty-five (45) consecutive days during which there has been no or
      substantially no operation or maintenance activities of the Mine, other than
      by
      reason of the occurrence and continuance of an Event of Force
      Majeure.




“ ***Account
      Pledge Agreement*** ”
means
      that certain Non-Possessory Pledge Agreement over Bank Accounts, dated August
      24, 2006 between MSR and Lender, as amended on Closing Date.





“ ***Additional
      Project Agreement*** ”
means
      each contract, agreement or other arrangement entered into by, or on behalf
      of,
      either of the Borrowers after the date hereof, involving aggregate consideration
      payable to or by such Borrower of U.S.$250,000 or more in any year or otherwise
      material to the operation or maintenance of the Mine but *excluding* any
      Secured Hedge Agreement.




“ ***Affiliate*** ”
means,
      with respect to any Person, another Person that directly, or indirectly through
      one or more intermediaries, Controls or is Controlled by or is under common
      Control with the Person specified.




“ ***Affiliate
      Contracts*** ”
has
      the
      meaning specified in Section 5.01(n) .




“ ***Agreement*** ”
has
      the
      meaning specified in the introductory paragraph hereto.




“ ***Agreement
      Approvals*** ”
has
      the
      meaning specified in Section 5.01(e)(i) .




“ ***Applicable
      GAAP*** ”
means,
      with respect to (a) any Person (other than the Borrowers, the Guarantor and
      any Person incorporated, formed or organized in the United States), GAAP as
      in
      effect from time to time in the jurisdiction in which such Person is
      incorporated, consistently applied, (b) the Borrowers, Mexican GAAP and
      (c) any Person incorporated, formed or organized in the United States, U.S.
      GAAP.




“ ***Applicable
      Laws*** ”
means,
      with respect to any Person or the Project, collectively, all international,
      foreign, federal, state and local laws, statutes, treaties, rules, guidelines,
      regulations, ordinances, codes and administrative or judicial precedents or
      authorities, including the interpretation or administration thereof by any
      Governmental Authority charged with the enforcement, interpretation or
      administration thereof, and all administrative orders, directed duties,
      requests, licenses, authorizations and permits of, and agreements with, any
      Governmental Authority, in each case whether or not having the force of law,
      applicable to such Person or the Project.




“ ***Applicable
      Margin*** ”
means
      (a) for Term Loans, two and one-half percent (2.50%) per annum and (b) for
      Revolving Loans, two percent (2.00%) per annum.




“ ***Approved
      Bank*** ”
means
      (a) any commercial bank of recognized standing having capital and surplus in
      excess of U.S.$200,000,000, (b) any bank whose short-term commercial paper
      rating from Standard & Poor’s is at least A-1 or the equivalent thereof or
      from Moody’s is at least P-1 or the equivalent thereof or (c) any other bank
      approved in writing by the Lender.




“ ***Approved
      Project Costs*** ”
means
      as of any date of determination, any Project Cost to the extent the total
      expenditures on Project Costs as of such date of determination are no greater
      than 105% of the aggregate total budgeted amount of Project Costs set forth
      in
      the Construction Budget for such date of determination.




“ ***Assignment
      and Transfer*** ”
means
      an assignment and transfer agreement assigning all or a portion of a Lender’s
      interests, rights and obligations under this Agreement pursuant to Section 12.06(d) .


2


“ ***Availability
      Period*** ”
means
      the period from and including the Closing Date to the Revolving Commitment
      Termination Date.




“ ***Average
      Currency Equivalent*** ”
means
      with respect to any amount denominated in Pesos, as of any date of
      determination, the equivalent in Dollars of such amount of Pesos determined
      at
      the average of the exchange rates published by the Banco de México in the Diario
      Oficial de la Federación (Official Gazette of the Federation) for the spot
      purchase in the Mexican foreign exchange market for Dollars with such amount
      of
      Pesos on each of the thirty (30) days preceding such date of
      determination.




“ ***Borrower*** ”
and
      “ ***Borrowers*** ”
have
      the meanings specified in the introductory paragraph hereto.




“ ***Borrowing*** ”
means
      a
      borrowing consisting of Loans having the same Interest Period made by the Lender
      pursuant to Section 2.02 .




“ ***Business
      Day*** ”
means
      any day other than a Saturday, Sunday or other day on which commercial banks
      are
      authorized to close under the laws of, or are in fact closed in, New York,
      New
      York, United States of America, London, England or Mexico City, Mexico and,
      if
      such day relates to any Loan, means any such day on which dealings in Dollar
      deposits are conducted by and between banks in the London interbank eurodollar
      market.




“ ***Business
      Interruption Insurance*** ”
means
      any and all insurance policies obtained by either Borrower insuring against
      loss
      of income occurring as a result of partial or complete interruption of the
      operation of the Mine due to damage to the Mine.




“ ***Business
      Interruption Insurance Proceeds*** ”
means
      any and all proceeds of any Business Interruption Insurance.




“ ***Calculation
      Date*** ”
means
      the last Business Day of each March, June, September and December, commencing
      with the first such day after the First Principal Repayment Date.




“ ***Capital
      Expenditures*** ”
means,
      with respect to any Person for any period, any expenditure in respect of any
      fixed or capital asset (excluding normal replacements and maintenance which
      are
      properly charged to current operations).




“ ***Capitalized
      Leases*** ”
means
      all leases that have been or should be, in accordance with Applicable GAAP,
      recorded as capitalized leases.


3


“ ***Cash
      Equivalents*** ”
means
      (i) marketable securities (A) issued or directly and unconditionally guaranteed
      by the United States of America or (B) issued by any agency or instrumentality
      of the United States of America the obligations of which are backed by the
      full
      faith and credit of the United States, in each case having maturities of not
      more than twelve (12) months from the date of acquisition, (ii) Dollar
      denominated time deposits, certificates of deposit, Eurodollar time deposits
      and
      Eurodollar certificates of deposit of an Approved Bank, in each case with
      maturities of not more than three hundred sixty-four (364) days from the date
      of
      acquisition, (iii) commercial paper rated A-1 (or the equivalent thereof) or
      better by Standard & Poor’s or P-1 (or the equivalent thereof) or better by
      Moody’s and maturing within six (6) months of the date of acquisition, (iv)
      marketable direct obligations of any state of the United States or any political
      subdivision thereof in each case maturing within one (1) year after such date
      and having, at the time of the acquisition thereof, a rating of at least A-1
      from S&P or at least P-1 from Moody’s for which the payment of the
      principal, interest and redemption price shall have been arranged by irrevocably
      deposited government obligations maturing as to principal and interest at times
      and in amounts sufficient to provide such payment, (v) auction preferred stock
      rated in the highest short-term credit rating category by Standard & Poor’s
      or Moody’s and (vi) shares of money market mutual funds or similar funds that
      invest exclusively in assets satisfying the requirements of clauses
      (i) through (v) of this
      definition and that have net assets of not less than U.S.$500,000,000 and the
      highest rating obtainable from either S&P or Moody’s.




“ ***Cash
      Flow Available for Debt Service*** ”
means,
      for any period, the amount of Project Revenues actually received or projected
      to
      be received for such period by the Borrowers minus the sum of the amount of
      Operating Costs and Taxes imposed on or measured by income or receipts actually
      paid or projected to be paid, or accrued with respect to the Subordinated
      Royalty Payments, by the Borrowers during such period, with any projections
      to
      be calculated using the Financial Model.




“ ***Casualty
      Event*** ”
means
      an event that causes any portion of the Mine or any other property of the
      Borrowers intended to be incorporated therein to be damaged, destroyed or
      rendered unfit for normal use for any reason whatsoever.




“ ***Change
      in Law*** ”
means
      the occurrence, after the date of this Agreement, of any of the following:
      (a)
      the adoption or taking effect of any law, rule, regulation or treaty, (b) any
      change in any law, rule, regulation or treaty or in the administration,
      interpretation or application thereof by any Governmental Authority or (c)
      the
      making or issuance of any request, guideline or directive (whether or not having
      the force of law) by any Governmental Authority.




“ ***Closing
      Date*** ”
has
      the
      meaning specified in the introductory paragraph hereto.




“ ***Collateral*** ”
means
      all of the property (whether tangible or intangible) and assets of the Loan
      Parties that are or are intended under the terms of the Collateral Documents
      to
      be subject to Liens in favor of the Lender.




“ ***Collateral
      Documents*** ”
means,
      collectively, the Mexican Collateral Documents, the New York Account Pledge
      Agreement and any other similar agreements, instruments or documents delivered
      to the Lender pursuant to the terms of this Agreement or any other Loan Document
      that creates or purports to create a Lien in favor of the Lender.




“ ***Commitment*** ”
means
      the Term Loan Commitment and the Revolving Loan Commitment, individually or
      collectively, as applicable.




“ ***Compliance
      Certificate*** ”
means
      a
      certificate substantially in the form of Exhibit A .


4


“ ***Constituent
      Documents*** ”
means
      (a) with respect to each of the Borrowers, the *acta
      constitutiva* of
      such
      Borrower *,* the *estatutos
      sociales* of such
      Borrower and any certificate of designation or instrument relating to the rights
      of preferred shareholders or other holders of Equity Interests in such Borrower
      and any shareholder rights agreement or other similar agreement relating to
      such
      Borrower, as the case may be, duly registered before the corresponding public
      registry of commerce of the jurisdiction where such Borrower is domiciled,
      and
      (b) with respect to any other Person, (i) to the extent such other Person is
      a
      corporation, the certificate or articles of incorporation and the bylaws (or
      equivalent or comparable constitutive documents with respect to any non-U.S.
      jurisdiction), (ii) to the extent such other Person is a limited liability
      company, the certificate of formation or articles of formation or organization
      and operating agreement, and (iii) to the extent such other Person is a
      partnership, joint venture, trust or other form of business entity, the
      partnership, joint venture or other applicable agreement of formation or
      organization and any agreement, instrument, filing or notice with respect
      thereto filed in connection with its formation or organization with the
      applicable Governmental Authority in the jurisdiction of its formation or
      organization and, if applicable, any certificate or articles of formation or
      organization of such Person.




“ ***Construction
      Budget*** ”
means
      the budget of the Borrowers for the development and construction of the Mine
      in
      accordance with the Life of Mine Plan through Economic Completion, detailing
      the
      Borrowers’ quantitative monthly projections for Project Costs on an individual
      line item basis and the sources and uses of funds, projected timetable
      sequencing, critical path schedule and milestones applicable to the development
      and construction of the mine and supporting qualitative information, as updated
      and revised from time to time.




“ ***Construction
      Contractor*** ”
means
      M3 Mexicana, S. de R.L. de C.V.




“ ***Construction
      Contract*** ”
means
      the Agreement for Engineering, Procurement, Construction and Construction
      Management Services dated June 1, 2006 between MSR and the Construction
      Contractor.




“ ***Consultant*** ”
means
      the Independent Engineer, the Insurance Consultant or any Replacement
      Consultant.




“ ***Contest*** ”
means,
      with respect to any matter or claim involving any Person, that such Person
      is
      contesting such matter or claim in good faith and by appropriate proceedings
      timely instituted; provided that the following conditions are satisfied: (a)
      such Person has posted a bond or other security acceptable to the Lender or
      has
      established adequate reserves with respect to the contested items in accordance
      with Applicable GAAP; (b) during the period of such contest, the enforcement
      of
      any contested item is effectively stayed; (c) neither such Person nor any of
      its
      officers, directors or employees nor the Lender or its respective officers,
      directors or employees is, or could reasonably be expected to become, subject
      to
      any criminal liability or sanction in connection with such contested items;
      and
      (d) such contest and any resultant failure to pay or discharge the claimed
      or
      assessed amount does not, and could not reasonably be expected to involve a
      risk
      of the sale, forfeiture or loss of, or the creation, existence or imposition
      of
      any Lien on, any of the Collateral, that would have a Material Adverse
      Effect.




“ ***Continuance”

or
“Continuing*** ”
means
      with respect to a Prospective Event of Default or an Event of Default, that
      the
      event or condition that constitutes such Prospective Event of Default or Event
      of Default has occurred and is continuing and that such Prospective Event of
      Default or Event of Default that has occurred or would, with the giving of
      notice or passage of time, or both, occur, has not been remedied or
      waived.


5


“ ***Contractual
      Obligation*** ”
means,
      as to any Person, any provision of any security issued by such Person or of
      any
      agreement, instrument or other undertaking to which such Person is a party
      or by
      which it or any of its property is bound.




“ ***Control*** ”
means
      the possession, directly or indirectly, of the power to direct or cause the
      direction of the management or policies of a Person, whether through the ability
      to exercise voting power, by contract or otherwise. “ ***Controlling*** ”
and
      “ ***Controlled*** ”
have
      meanings correlative thereto.




“ ***Debt
      Service*** ”
means,
      for any period, the sum of any payments due in respect of the Secured
      Obligations payable by the Borrowers during such period.




“ ***Debt
      Service Coverage Ratio*** ”
means,
      on any Calculation Date, the ratio of (a) Cash Flow Available for Debt
      Service actually received by the Borrowers during the Quarterly Period ending
      immediately prior to such Calculation Date to (b) Debt Service actually
      paid by the Borrowers during such Quarterly Period.




“ ***Debtor
      Relief Laws*** ”
means
      the Bankruptcy Code of the United States, the Bankruptcy and Insolvency Law
      of
      Canada, the *Ley
      de Concursos Mercantiles* of
      Mexico and all other liquidation, conservatorship, bankruptcy, assignment for
      the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
      reorganization, or similar debtor relief laws of the United States, Canada,
      Mexico, or other applicable jurisdictions from time to time in effect and
      affecting the rights of creditors generally.




“ ***Default
      Rate*** ”
means
      an interest rate equal to two percent (2.0%) *per
      annum*  *plus* the LIBO
      Rate *plus* the
      Applicable Margin.




“ ***Depositary*** ”
means
      Lender or any other financial institution approved by Lender




“ ***Discount
      Rate*** ”
means,
      as of any date of determination, five percent (5%) *per
      annum* or such
      other percentage agreed to by the Lender.




“ ***Disposition*** ”
or
      “ ***Dispose*** ”
means
      the sale, transfer, license, lease or other disposition (including any sale
      and
      leaseback transaction) of any property by any Person (or the granting of any
      option or other right to do any of the foregoing), including any sale,
      assignment, transfer or other disposal, with or without recourse, of any notes
      or accounts receivable or any rights and claims associated
      therewith.




***“Distribution
      Availability Date”*** has
      the
      meaning specified in Section
      8.01(v).




“ ***Dollar*** ”
or
      “ ***U.S.$*** ”
means
      lawful currency of the United States.




“ ***Effective
      Date*** ”
has
      the
      meaning specified in the introductory paragraph hereto.


6


“ ***Eligible
      Assignee*** ”
means
      (i) a commercial bank organized under the laws of the United States, or any
      State thereof, having total assets in excess of U.S.$500,000,000 or any
      commercial finance or asset based lending affiliate of any such commercial
      bank;
      (ii) a savings and loan association or savings bank organized under the
      laws of the United States, or any State thereof, having a net worth of at least
      U.S.$250,000,000 calculated in accordance with GAAP; and (iii) any
      Affiliate of the Lender.




“ ***Environmental
      Laws*** ”
means
      any federal, state, local or foreign statutes, laws, ordinances, rules,
      regulations, codes, orders, writs, judgments, injunctions, decrees, permits,
      concessions, grants, franchises, licenses, agreements or governmental
      restrictions relating to pollution and the protection of the environment or
      the
      release of any materials into the environment, including those relating to
      hazardous substances or wastes, air emissions and discharges to waste or public
      systems.




“ ***Environmental
      Liability*** ”
means
      any liability, contingent or otherwise (including any liability for damages,
      costs of environmental remediation, fines, penalties or indemnities), of any
      Loan Party or any of their respective Subsidiaries directly or indirectly
      resulting from or based upon (a) violation of any Environmental Law, (b) the
      generation, use, handling, transportation, storage, treatment or disposal of
      any
      Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release
      or
      threatened release of any Hazardous Materials into the environment or (e) any
      contract, agreement or other consensual arrangement pursuant to which liability
      is assumed or imposed with respect to any of the foregoing.




“ ***Environmental
      Management Plan*** ”
means
      the Environmental Management Plan for the Project dated March 2006 prepared
      for
      the Borrowers by Alan Czarnowsky, as amended, modified and changed from time
      to
      time, which has been reviewed and approved by the Lender.




“ ***Environmental
      Permit*** ”
means
      any permit, approval, identification number, license or other authorization
      required under any Environmental Law.




“ ***Equity
      Interests*** ”
means,
      with respect to any Person, all of the shares of capital stock of (or other
      ownership or profit interests in) such Person, all of the warrants, options
      or
      other rights for the purchase or acquisition from such Person of shares of
      capital stock of (or other ownership or profit interests in) such Person, all
      of
      the securities convertible into or exchangeable for shares of capital stock
      of
      (or other ownership or profit interests in) such Person or warrants, rights
      or
      options for the purchase or acquisition from such Person of such shares (or
      such
      other interests), and all of the other ownership or profit interests in such
      Person (including, without limitation, partnership, member or trust interests
      therein), whether voting or nonvoting, and whether or not such shares, warrants,
      options, rights or other interests are outstanding on any date of
      determination.




“ ***Equity
      Pledge Agreements*** ”
means
      that certain Partnership Interest Pledge Agreement, dated August 24, 2006
      between Pledgor and Lender and that certain Partnership Interest Pledge
      Agreement, dated August 24, 2006 between Guarantor and Lender, each as amended
      on the Closing Date.





“ ***ERISA*** ”
means
      the Employee Retirement Income Security Act of 1974.


7


“ ***ERISA
      Affiliate*** ”
means
      any trade or business (whether or not incorporated) under common control with
      either of the Borrowers within the meaning of Section 414(b) or (c) of the
      Internal Revenue Code of 1986 (and Sections 414(m) and (o) of the Internal
      Revenue Code of 1986 for purposes of provisions relating to Section 412 of
      the Internal Revenue Code of 1986).




“ ***ERISA
      Plan*** ”
means
      any “ *Employee
      Benefit Plan* ”
as
      such
      term is defined in Section 3(3) of ERISA or any “ *multiemployer
      plan* ”
as
      such
      term is defined in Section 4001(a)(3) of ERISA that is, or within the
      preceding five (5) years has been, established or maintained, or to which
      contributions are, or within the preceding five (5) years have been, made or
      required to be made, by either of the Borrowers or with respect to which either
      of the Borrowers may have any liability.




“ ***Event
      of Default*** ”
has
      the
      meaning specified in Section 11.01 .




“ ***Event
      of Force Majeure*** ”
means
      (a) any event, whether similar to the following or not, which is not within
      the
      reasonable control of the Borrowers, is not the result of any act or omission
      of
      the Borrowers, cannot be cured, remedied, avoided, offset or otherwise overcome
      by the prompt exercise of commercially reasonable efforts by the Borrowers
      or
      any Person under their control and which makes continued construction,
      development or production commercially impracticable or has a material adverse
      effect on the ability of the Borrowers to construct, develop or operate the
      Project in all material respects in accordance with the Life of Mine Plan,
      and
      shall include, subject to the foregoing, an act of God, labor dispute and
      industrial action of any kind (including a strike, interruption, slowdown and
      other similar action on the part of employees or organized labor), a lockout,
      act of the public enemy, war (declared or undeclared), civil war, sabotage,
      blockade, revolution, riot, insurrection, civil disturbance, terrorism,
      epidemic, cyclone, hurricane, tidal wave, landslide, lightning, earthquake,
      flood, fire, or other unusually severe adverse weather conditions,
      expropriation, nationalization, act of eminent domain, laws, rules, regulations
      or order of any Governmental Authority, actions of non-governmental or similar
      organizations or of native or aboriginal groups, explosion, breakage or accident
      to machinery or equipment or power transmission lines or railroad tracks or
      ports or other facility, embargo, inability to obtain or delay in obtaining
      permits, licenses, approvals, resolutions or similar governmental actions or
      extensions thereto or renewals thereof, or equipment, materials, supplies or
      transport and (b) in the case of any Material Project Agreement or any Material
      Project Party, an event of force majeure or uncontrollable force or other
      similar term as such term is defined or used in such agreement or
      herein.




“ ***Excluded
      Taxes*** ”
means,
      with respect to the Lender, (a) taxes imposed on or measured by its overall
      net
      income (however denominated), and franchise taxes imposed on it (in lieu of
      net
      income taxes), by the jurisdiction (or any political subdivision thereof) under
      the laws of which such recipient is organized or in which its principal office
      is located; (b) any branch profits taxes imposed by the United States or any
      similar tax imposed by any other jurisdiction in which the Borrowers are
      located; and (c) any withholding tax that is attributable to the Lender’s
      failure or inability (other than as a result of a Change in Law) to comply
      with Section 3.01(e) ,
      except
      to the extent that the Lender was entitled, at the time of designation of a
      new
      lending office, to receive additional amounts from the Borrowers with respect
      to
      such withholding tax pursuant to Section 3.01(a) .


8


“ ***Existing
      Guarantor Warrants*** ”
means
      the common share warrants in the Guarantor issued to the Lender in connection
      with the Original Credit Agreement.




“ ***Expropriatory
      Event*** ”
means
      any action, series of actions, omissions or series of omissions by any
      Governmental Authority (a) to appropriate, confiscate, condemn, expropriate,
      nationalize, seize or otherwise take all or a substantial portion of the Mine
      or
      the property or assets of the Borrowers or of any Equity Interests in the
      Borrowers, (b) to assume custody or control of the property or other assets
      or
      business operations of the Borrowers or any Equity Interests in the Borrowers,
      (c) that results in the dissolution or disestablishment of either of the
      Borrowers, (d) that prevents the Borrowers from carrying on the business or
      operations of the Mine or a substantial portion thereof substantially in
      accordance with the Life of Mine Plan, or (e) that deprives or impairs the
      exercise by the Lender of any material right granted under or by the Collateral
      Documents or otherwise in respect of the Collateral.




“ ***Federal
      Book Entry Regulations*** ”
means
      (a) the federal regulations contained in Subpart B (“ *Treasury/Reserve
      Automated Debt Entry System (TRADES)* ”)
      governing book-entry securities consisting of U.S. Treasury bills, notes and
      bonds and Subpart D (“ *Additional
      Provisions* ”)
      of 31
      C.F.R. Part 357, 31 C.F.R. § 357.2, § 357.10 through § 357.15 and § 357.40
      through § 357.45 and (b) to the extent substantially identical to the federal
      regulations referred to in clause
      (a) above
      (as in effect from time to time), the federal regulations governing other
      book-entry securities.




“ ***Financial
      Model*** ”
means
      the *pro
      forma* financial statements and projections of revenue and expenses and cash flows
      with
      respect to the Project and the Borrowers for each of the computation calendar
      years 2008 through 2012, consistent with the Life of Mine Plan, and including
      projections with respect to projected compliance with the financial covenants
      set forth in Article IX ,
      in form
      and substance reasonably satisfactory to the Lender, as amended or modified
      from
      time to time in accordance with Section
      1.06 or
      pursuant to any updated Financial Model delivered and approved in accordance
      with Section
      10.01(b) from
      time to time.




“ ***First
      Principal Repayment Date*** ”
means
      September 30, 2008.




“ ***Foreign
      Government Scheme or Arrangement*** ”
has
      the
      meaning specified in Section 5.01(t)(ii) .




“ ***Foreign
      Plan*** ”
has
      the
      meaning specified in Section 5.01(t)(ii) .




“ ***FRB*** ”
means
      the Board of Governors of the Federal Reserve System of the United
      States.




“ ***GAAP*** ”
means,
      with respect to any jurisdiction, generally accepted accounting principles
      as
      may be adopted or endorsed by a significant segment of the accounting profession
      in the relevant jurisdiction, that are applicable to the circumstances as of
      any
      date of determination consistently applied.




“ ***Gold*** ”
means
      gold of a purity of at least 0.995 fine in a form readily tradable with members
      of the London Bullion Market Association.


9


“ ***Gold
      Hedge Agreements*** ”
means
      those certain Hedge Agreements entered into by and between Guarantor and the
      Lender prior to the date hereof, including any novation thereof to MSR.




“ ***Governmental
      Authority*** ”
means
      the government of Mexico, the United States or any other nation, or of any
      political subdivision thereof, whether state or local, and any agency,
      authority, instrumentality, regulatory body, court, central bank or other entity
      exercising executive, legislative, judicial, taxing, regulatory or
      administrative powers or functions of or pertaining to government (including
      any
      supra-national bodies such as the European Union or the European Central
      Bank).




“ ***Guarantee*** ”
means,
      as to any Person, (a) any obligation, contingent or otherwise, of such Person
      guaranteeing or having the economic effect of guaranteeing any Indebtedness
      or
      other obligation payable or performable by another Person
      (the “ ***primary
      obligor*** ”)
      in any
      manner, whether directly or indirectly, and including any obligation of such
      Person, direct or indirect, (i) to purchase or pay (or advance or supply funds
      for the purchase or payment of) such Indebtedness or other obligation, (ii)
      to
      purchase or lease property, securities or services for the purpose of assuring
      the obligee in respect of such Indebtedness or other obligation of the payment
      or performance of such Indebtedness or other obligation, (iii) to maintain
      working capital, equity capital or any other financial statement condition
      or
      liquidity or level of income or cash flow of the primary obligor so as to enable
      the primary obligor to pay such Indebtedness or other obligation, or (iv)
      entered into for the purpose of assuring in any other manner the obligee in
      respect of such Indebtedness or other obligation of the payment or performance
      thereof or to protect such obligee against loss in respect thereof (in whole
      or
      in part), or (b) any Lien on any assets of such Person securing any Indebtedness
      or other obligation of any other Person, whether or not such Indebtedness or
      other obligation is assumed by such Person (or any right, contingent or
      otherwise, of any holder of such Indebtedness to obtain any such Lien). The
      amount of any Guarantee shall be deemed to be an amount equal to the stated
      or
      determinable amount of the related primary obligation, or portion thereof,
      in
      respect of which such Guarantee is made or, if not stated or determinable,
      the
      maximum reasonably anticipated liability in respect thereof as determined by
      the
      guaranteeing Person in good faith. The term “ ***Guarantee*** ”
as
      a
      verb has a corresponding meaning.




“ ***Guarantor*** ”
has
      the
      meaning specified in the first paragraph of this Agreement.




“ ***Guarantor
      Warrants*** ”
has
      the
      meaning specified in Section
      2.08 .




“ ***Guaranty*** ”
means
      that certain Guaranty made by the Guarantor in favor of the Lender dated August
      15, 2006, as amended and restated as of the Effective Date, substantially in
      the
      form of Exhibit B .




“ ***Hazardous
      Materials*** ”
means
      all explosive or radioactive substances or wastes and all hazardous or toxic
      substances, wastes or other pollutants, including sodium cyanide, petroleum
      or
      petroleum distillates, asbestos or asbestos-containing materials,
      polychlorinated biphenyls, radon gas, infectious or medical wastes and all
      other
      substances or wastes of any nature regulated pursuant to any Environmental
      Law.


10


“ ***Hedge
      Agreement*** ”
means
      (a) any and all rate swap transactions, basis swaps, credit derivative
      transactions, forward rate transactions, commodity swaps, commodity options,
      forward commodity contracts, equity or equity index swaps or options, bond
      or
      bond price or bond index swaps or options or forward bond or forward bond price
      or forward bond index transactions, interest rate options, forward foreign
      exchange transactions, cap transactions, floor transactions, collar
      transactions, currency swap transactions, cross-currency rate swap transactions,
      currency options, spot contracts, or any other similar transactions or any
      combination of any of the foregoing (including any options to enter into any
      of
      the foregoing), whether or not any such transaction is governed by or subject
      to
      any master agreement, and (b) any and all transactions of any kind, and the
      related confirmations, which are subject to the terms and conditions of, or
      governed by, any form of master agreement published by the International Swaps
      and Derivatives Association, Inc., any International Foreign Exchange Master
      Agreement, or any other master agreement (any such master agreement, together
      with any related schedules, a “ ***Master
      Agreement*** ”),
      including any such obligations or liabilities under any Master
      Agreement.




“ ***Indebtedness*** ”
means,
      as to any Person at a particular time, without duplication, all of the
      following, whether or not included as indebtedness or liabilities in accordance
      with Applicable GAAP:




(a)  all
      obligations of such Person for borrowed money and all obligations of such Person
      evidenced by bonds, debentures, notes, loan agreements or other similar
      instruments;




(b)  the
      maximum amount of all direct or contingent obligations of such Person arising
      under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;




(c)  net
      obligations of such Person under any Hedge Agreement;




(d)  all
      obligations of such Person to pay the deferred purchase price of property or
      services (other than trade accounts payable in the ordinary course of business
      and not past due for more than sixty (60) days after the date on which each
      such
      trade payable or account payable was created or those subject to Contest, as
      long as the failure of such Contest could not reasonably be expected to result
      in a Material Adverse Effect);




(e)  indebtedness
      (excluding prepaid interest thereon) secured by a Lien on property owned or
      being purchased by such Person (including indebtedness arising under conditional
      sales or other title retention agreements), whether or not such indebtedness
      shall have been assumed by such Person or is limited in recourse;




(f)  all
      obligations of such Person under Capitalized Leases or synthetic
      leases;




(g)  all
      obligations of such Person to purchase, redeem, retire, defease or otherwise
      make any payment in respect of any Equity Interests in such Person or any other
      Person or any warrants, rights or options to acquire such Equity Interests,
      valued, in the case of redeemable preferred interests, at the greater of its
      voluntary or involuntary liquidation preference *plus* accrued
      and unpaid dividends; and


11


(h)  all
      Guarantees of such Person in respect of any of the foregoing.




For
      all
      purposes hereof, the Indebtedness of any Person shall include the Indebtedness
      of any partnership or joint venture (other than a joint venture that is itself
      a
      corporation or limited liability company) in which such Person is a general
      partner or a joint venturer, unless such Indebtedness is expressly made
      non-recourse to such Person.




“ ***Indemnified
      Taxes*** ”
means
      Taxes other than Excluded Taxes.




“ ***Indemnitee*** ”
has
      the
      meaning specified in Section 12.04(b) .




“ ***Independent
      Engineer*** ”
means
      SRK Consulting or any other engineering consultant firm selected by the Lender
      and approved by Borrower (such approval not to be unreasonably withheld or
      delayed and such approval not to be required during the Continuance of a
      Prospective Event of Default of an Event of Default).




“ ***Information*** ”
has
      the
      meaning specified in Section 12.07 .




“ ***Insolvency
      Proceeding*** ,”
with
      respect to any Person, means (a) entry by any competent Governmental
      Authority of any jurisdiction or a court having jurisdiction in the premises
      of
      (i) a decree or order for relief in respect of such Person in an
      involuntary case or proceeding under any applicable Debtor Relief Law or
      (ii) an involuntary or contested decree or order adjudging such Person as
      bankrupt or insolvent, or approving as properly filed a petition seeking
      suspension of payment, reorganization, *concurso
      mercantil* ,
      arrangement, adjustment or composition of or in respect of such Person under
      any
      applicable Debtor Relief Law, or appointing a custodian, receiver, liquidator,
      assignee, trustee, *sequestrator* , *síndico* , *visitador* , *conciliador* ,
      or
      other similar official of such Person or of any substantial part of the property
      of such Person, or ordering the dissolution, winding up or liquidation of the
      affairs of such Person and the continuance of any such decree or order unstayed
      and in effect for a period of ninety (90) consecutive days; or
      (b) commencement by such Person of a voluntary case or proceeding under any
      applicable Debtor Relief Law or of any other case or proceeding to be
      adjudicated as bankrupt or insolvent, or the consent by such Person to the
      entry
      of a decree or order for relief in respect of such Person in an involuntary
      case
      or proceeding under any applicable Debtor Relief Law or to the commencement
      of
      any bankruptcy, *concurso
      mercantil* or
      insolvency case or proceeding against such Person, or the filing by such Person
      of a petition or answer or consent seeking reorganization or relief under any
      applicable Debtor Relief Law; or consent by such Person to the filing of such
      petition or to the appointment of or taking possession by a custodian, receiver,
      liquidator, assignee, trustee, *sequestrator* , *síndico* , *visitador* , *conciliador* ,
      or
      other similar official of such Person or of any substantial part of the property
      of such Person, or the making by such Person of an assignment for the benefit
      of
      creditors, or the admission by such Person in writing of its inability to pay
      its debts generally as they become due, or the taking of corporate action by
      such Person in furtherance of any such action.




“ ***Insurance
      Consultant*** ”
means
      Moore-McNeil, LLC or any other insurance consultant firm selected by the Lender
      to advise the Lender in connection with insurance matters relating to the
      Project from time to time.


12


“ ***Insurance
      Proceeds*** ”
means
      any and all proceeds of any insurance, indemnity, warranty or guaranty payable
      from time to time with respect to any Casualty Event other
      than Business Interruption Insurance Proceeds .




“ ***Insurance
      Proceeds Account*** ”
has
      the
      meaning specified in Section
      6.01(b) .




“ ***Interest
      Payment Date*** ”
means
      the last day of each Interest Period applicable to any Loan.




“ ***Interest
      Period*** ”
means
      for each Loan comprising part of the same Borrowing, the period from the date
      on
      which such Loan (or portion thereof) was most recently continued or, if not
      previously continued, on which such Loan was made, to (and including) a date
      selected by Borrowers in accordance with this definition and Article
      II hereof.
      The duration of each Interest Period for any Loan shall be one (1), two (2),
      three (3) or six (6) months (or such other period acceptable to Borrowers and
      Lender), in each case as Borrowers may select in accordance with the terms
      of Section
      2.02 ; *provided* that
      (i) any Interest Period that would otherwise end on a day that is not a
      Business Day shall be extended to the next succeeding Business Day unless such
      Business Day falls in another calendar month, in which case such Interest Period
      shall end on the next preceding Business Day; (ii) any Interest Period that
      begins on the last Business Day of a calendar month (or on a day for which
      there
      is no numerically corresponding day in the calendar month of such Interest
      Period) shall end on the last Business Day of the calendar month at the end
      of
      such Interest Period; and (iii) no Interest Period may commence before and
      end after any Principal Repayment Date unless, after giving effect thereto,
      the
      aggregate outstanding principal amount of Loans which end after such Principal
      Repayment Date shall be less than or equal to the aggregate principal amount
      of
      Loans scheduled to be outstanding after giving effect to the payments required
      to be made on such Principal Repayment Date.




“ ***Investment*** ”
means,
      as to any Person, any direct or indirect acquisition or investment by such
      Person, whether by means of (a) the purchase or other acquisition of Equity
      Interests or debt of another Person, (b) a loan, advance or capital contribution
      to, Guarantee or assumption of debt of, or purchase or other acquisition of
      any
      other debt or equity participation or interest in, another Person, including
      any
      partnership or joint venture interest in such other Person and any arrangement
      pursuant to which the investor incurs debt of the type referred to in clause
      (h) of the
      definition of “ *Indebtedness* ”
set
      forth in this Section 1.01 in
      respect of such Person, or (c) the purchase or other acquisition (in one
      transaction or a series of transactions) of assets of another Person that
      constitute a business unit or all or a substantial part of the business of,
      such
      Person.




“ ***Investment
      Company Act*** ”
means
      the United States Investment Company Act of 1940.




“ ***Judgment
      Currency*** ”
has
      the
      meaning specified in Section 12.14(a) .




“ ***Judgment
      Currency Conversion Date*** ”
has
      the
      meaning specified in Section 12.14(a) .




“ ***Lender*** ”
has
      the
      meaning set forth in the first paragraph of this Agreement.


13


“ ***LIBO
      Rate*** ”
means,
      for any Interest Period:




(a)  the
      rate
      per annum (rounded upwards to the nearest four decimal places) which is the
      offered rate at or about **11:00** a.m.
      London time on the relevant Rate Fixing Day for dollar deposits for a period
      equal to the relevant period which appears on the display designated as the
      British Bankers’ Association Interest Settlement Rate as quoted on the Reuters’
Screen page no. LIBOR01 (or such other page for the purpose of so displaying
      the
      British Bankers’ Association Interest Settlement Rate for London interbank
      offered rates) and, in the absence of any such replacement page, such other
      page
      or any other quoting service as the Lender and the Borrowers may agree;
      or




(b)  if
      no
      such interest rate (or such replacement) is available, the arithmetic mean
      (rounded upwards to the nearest whole multiple of 1/16%) of the rates per annum
      (as quoted to the Lender at its request) at which the principal London office
      of
      the Lender, or such other bank as may be agreed by the Borrowers and the Lender
      from time to time, was offering Dollar deposits in an amount comparable to
      the
      amount of the Loan being made or overdue amount, as the case may be, to leading
      banks in the London interbank market for a period equal to the relevant period
      at or about **11:00** a.m. on
      the applicable Rate Fixing Day (for the purposes of this definition, “relevant
      period” means the period in respect of which the LIBO Rate fails to be
      determined on that day in relation to the Loan or overdue amount).




“ ***Lien*** ”
means
      any mortgage, pledge, hypothecation, assignment, deposit arrangement,
      encumbrance, lien (statutory or other), charge, preference, priority, *fideicomiso* or other
      security interest or preferential arrangement in the nature of a security
      interest of any kind or nature whatsoever (including any conditional sale or
      other title retention agreement, any easement, right of way or other encumbrance
      on title to real property, and any financing lease having substantially the
      same
      economic effect as any of the foregoing).




“ ***Life
      of Mine Plan*** ”
means
      the plan for the development and operation of the Project, as described in
      (i)
      the El Chanate Gold Mine Feasibility Study dated October 14, 2005, which was
      prepared by M3 Engineering & Technology Corp. and (ii) the Technical Report,
      El Chanate Project dated November 2005, which was prepared by SRK Consulting
      in
      compliance with Canadian Securities Administration National Instrument 43-101;
      together with the then-current Operating Budget, as the foregoing documents,
      and
      such Life of Mine Plan for the Project, may be amended, modified and revised
      from time to time in accordance with this Agreement.




“ ***Liquidity*** ”
means
      the sum of the Guarantor’s cash and Cash Equivalents (in each case, which are
      not subject to a Lien, other than a Permitted Lien).




“ ***Loan*** ”
means
      the Term Loan and the Revolving Loan, individually or collectively, as
      applicable.




“ ***Loan
      Documents*** ”
means,
      collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d)
      the Collateral Documents, (e) the Secured Hedge Agreements, and (f) any
      ancillary documents, including any fee letters with the Lender and all
      certificates delivered under or in connection with the documents referred to
      in clauses
      (a) through (e) .


14


“ ***Loan
      Life Coverage Ratio*** ”
means,
      as of any date of determination, the ratio of (a) Net Present Value of
      Future Cash Flow for the period commencing with such date of determination
      and
      ending on the Term Loan Maturity Date **** to
      (b) the Outstanding Amount on such date of determination.




“ ***Loan
      Notice*** ”
means
      a
      notice of a Borrowing, pursuant to Section 2.02(a) ,
      substantially in the form of Exhibit C .




“ ***Loan
      Parties*** ”
means,
      collectively, the Borrowers and the Guarantor.




“ ***Master
      Agreement*** ”
has
      the
      meaning set forth in the definition of “ *Hedge
      Agreement* ”.




“ ***Material
      Adverse Effect*** ”
means
      (a) a material adverse change in, or a material adverse effect upon, the
      operations, business, properties, liabilities (actual or contingent) or
      condition (financial or otherwise) of any of the Loan Parties; (b) a
      material impairment of the rights and remedies of the Lender under any Loan
      Document, or of the ability of any Loan Party or Material Project Party to
      perform its obligations under any Transaction Document to which it is a party;
      or (c) a material adverse effect upon the legality, validity, binding
      effect or enforceability against any Loan Party or Material Project Party of
      any
      Transaction Document to which it is a party.




“ ***Material
      Project Agreement*** ”
means
      each Project Agreement and each Additional Project Agreement.




“ ***Material
      Project Party*** ”
means
      each Person (other than the Borrowers) party to a Material Project Agreement
      from time to time.




“ ***Maturity
      Date*** ”
means
      the Term Loan Maturity Date or the Revolving Commitment Termination Date, as
      applicable.




“ ***Mexican
      Collateral Documents*** ”
means
      the Account Pledge Agreement, the Equity Pledge Agreements, the Mortgage, and
      the Movable Assets Pledge Agreement, as amended, restated or otherwise modified
      from time to time in accordance with its terms.




“ ***Mexican
      GAAP*** ”
means
      GAAP as in effect in Mexico.




“ ***Mexican
      Income Tax Law*** ”
means
      the *Ley
      del Impuesto Sobre la Renta* of
      Mexico.




“ ***Mexico*** ”
means
      the United Mexican States.




“ ***Mine*** ”
has
      the
      meaning specified in the preliminary statements to this Agreement.


15


“ ***Minimum
      Reserve Tail*** ”
means,
      on any date of determination, the ratio of (a) Mining Reserves projected to
      exist on the Term Loan Maturity Date as defined in the most recent approved
      Life
      of Mine Plan to (b) the total Mining Reserves in effect on the Closing
      Date.




“ ***Mining
      Concession*** ”
means
      each of the *títulos
      de concesión* listed
      on Schedule 1.01(a) .




“ ***Mining
      Contract*** ”
means
      that Mining Contract between MSR and the Mining Contractor dated November 24,
      2005.




“ ***Mining
      Contractor*** ”
means
      Sinergia Obras Civiles y Mineras S.A. de C.V., and its successors.




“ ***Mining
      Services Contract*** ”
means
      that certain Mining Contract, dated as of April 1, 2005, between MSR and Caborca
      Industrial, S.A. de C.V.




“ ***Mining
      Reserves*** ”
means
      for any date, the proven and probable number of Ounces of Gold which remain
      to
      be recovered from, and produced at, the Mine as of such date.




“ ***Mortgage*** ”
means
      that certain Mortgage Agreement, dated August 24, 2006, between Oro de Altar
      and
      Lender, as amended on the Closing Date.




“ ***Movable
      Assets Pledge Agreement*** ”
means
      that certain Non-Possessory Pledge Agreement, dated August 24, 2006 between
      MSR
      and Lender, as amended on the Closing Date.




“ ***MSR*** ”
has
      the
      meaning specified in the preliminary statements to this Agreement.




“ ***Net
      Present Value of Future Cash Flow*** ”
means,
      on any date of determination and for any period, the net present value of all
      Cash Flow Available for Debt Service projected to be available to the Borrowers
      for such period calculated as of such date of determination using the Financial
      Model as then in effect and the then-applicable Discount Rate.




“ ***New
      York Account Pledge Agreement*** ”
means
      that certain Account Pledge and Security Agreement, dated October 4, 2006
      between MSR and Lender, as amended and restated as of the Effective
      Date.




“ ***New
      York Control Agreement*** ”
means
      that certain Deposit Account Control Agreement, dated October 4, 2006, among
      MSR, Lender and the Offshore Account Holder.




“ ***Note*** ”
means
      the Term Note and the Revolving Note, individually or collectively, as
      applicable.




“ ***Obligation
      Currency*** ”
has
      the
      meaning specified in Section 12.14(a) .




“ ***Officer’s
      Certificate*** ”
means,
      with respect to any Person, a certificate signed by a Responsible Officer of
      such Person.


16


“ ***Offshore
      Account Holder*** ”
means
      HSBC Bank USA, National Association.




“ ***Offshore
      Operating Account*** ”
has
      the
      meaning specified in Section
      6.01(a) .




“ ***Onshore
      Operating Accounts*** ”
has
      the
      meaning specified in Section
      6.01(c) .




“ ***Operating
      Budget*** ”
means
      the annual operating budget of the Borrowers for the Project with respect to
      Project site management, administration and operation of the Project in
      accordance with the Life of Mine Plan, as updated and revised from time to
      time.




“ ***Operating
      Costs*** ”
means,
      for any period, the sum without duplication of all (a) reasonable and necessary
      expenses of monitoring, administering, managing and operating the Mine, and
      all
      payments and expenses under Contractual Obligations associated therewith, (b)
      all expenditures for reclamation, remediation, mitigation and clean-up with
      respect to the Project, (c) all expenditures for maintenance of any equipment
      and facilities comprising the Mine in accordance with the Operating Budget,
      Prudent Industry Practices or vendor and supplier requirements with respect
      to
      such equipment and facilities, (d) all costs and expenses required to maintain
      the Real Property Interests at the Mine, (e) costs and expenses associated
      with
      the sale and transportation of Gold doré from the Mine and for refining Gold
      doré from the Mine, (f) property, sales, franchise and value added taxes payable
      by any Loan Party (other than taxes imposed on or measured by income or
      receipts) to which the mine may be subject (or payment in lieu of such taxes),
      (g) reasonable and necessary costs, fees and expenses incurred in connection
      with obtaining and maintaining the Project Approvals, the Agreement Approvals
      and insurance for the Borrowers and the Mine, including the Required Insurance,
      (h) reasonable and arm’s length legal, accounting, consulting, engineering,
      metallurgical and other professional fees attendant to any of the foregoing
      items during such period, (i) the reasonable cost of administration and
      enforcement of the Transaction Documents, (j) any other expenses approved in
      writing by the Lender to be Operating Costs (it being understood that the
      reasonableness and necessity of all such expenses shall be determined by the
      Lender after consultation with the Lender’s advisors or counsel, as
      appropriate), (k) all other costs and expenses included in the Operating Budget
      or the Life of Mine Plan then in effect, and (l) all payments and costs
      pursuant to the Subordinated Royalty Payments. In no event shall “Operating
      Costs” include any Taxes imposed on or measured by income or receipts or Capital
      Expenditures (other than as described in clauses
      (c) or (k) above).




“ ***Original
      Credit Agreement*** *”* has
      the
      meaning specified in the preliminary statements to this Agreement.




“ ***Original
      Credit Agreement Closing Date*** *”* means
      August 15, 2006.




“ ***Oro
      de Altar*** ”
has
      the
      meaning specified in the preliminary statements to this Agreement.




“ ***Other
      Taxes*** ”
means
      all present or future stamp or documentary duties or taxes, registration fees,
      filing costs or any other excise or property taxes, charges or similar levies
      arising from any payment made hereunder or under any other Loan Document or
      from
      the execution, delivery, filing, recording, perfection, admissibility in
      evidence or enforcement of, or otherwise with respect to, this Agreement or
      any
      other Loan Document.


17


“ ***Ounce*** ”
means
      a
      fine troy ounce.




“ ***Outstanding
      Amount*** ”
means,
      on any date of determination, the aggregate outstanding principal amount of
      the
      Loans after giving effect to any Borrowings and prepayments or repayments of
      the
      Loans occurring on such date of determination.




“ ***Participant*** ”
has
      the
      meaning specified in Section
      12.06(b) .




“ ***Patriot
      Act*** ”
means
      the Uniting and Strengthening America by Providing Appropriate Tools Required
      to
      Intercept and Obstruct Terrorism (USA Patriot Act of 2001), as
      amended.




“ ***Payment
      Date*** ”
means
      each Interest Repayment Date and each Quarterly Date.




“ ***Permitted
      Liens*** ”
means
      each of the following as to which no enforcement, collection, execution, levy
      or
      foreclosure proceeding shall have been commenced: (a) Liens for taxes, not
      yet due or which are subject to Contest; (b) carriers’, warehousemen’s,
      mechanics’, materialmen’s, repairmen’s or other like Liens arising in the
      ordinary course of business which are not overdue for a period of more than
      sixty (60) days or which are subject to Contest and in either case, individually
      or together with all other Permitted Liens outstanding on any date of
      determination do not materially adversely affect the use of the property to
      which they relate; (c) pledges or deposits in the ordinary course of
      business under worker’s compensation laws or similar legislation, unemployment
      insurance or other types of social security or employment security other than
      any Lien imposed by ERISA or any similar Foreign Government Scheme or
      Arrangement which could be reasonably expected to have a Material Adverse
      Effect; (d) pledges or deposits to secure the performance of reclamation,
      remediation, trade contracts and leases (other than Indebtedness), statutory
      obligations, surety bonds (other than bonds related to judgments or litigation),
      performance bonds and other obligations of a like nature incurred in the
      ordinary course of business; (e) easements, rights of way, rights of use,
      restrictions and other similar encumbrances affecting real property which,
      in
      the aggregate, are not substantial in amount, and which do not in any case
      materially detract from the value of the property subject thereto;
      (f) Liens securing judgments for the payment of money not constituting an
      Event of Default under Section 11.01(g) or
      securing appeal or other surety bonds related to such judgments; (g) Liens
      of record or otherwise registered with the applicable Governmental Authorities
      in Mexico as set forth on Schedule
      1.01(b) ;
      and (h)
      any Liens created in favor of the Lender under or pursuant to the Loan
      Documents.




“ ***Person*** ”
means
      any natural person, corporation, limited liability company, trust, joint
      venture, association, company, partnership, *fideicomiso* , *ejido* ,
      Governmental Authority or other entity.




“ ***Peso*** ”
or
      “ ***P$*** ”
means
      the lawful currency of Mexico.




“ ***Pledgor*** ”
means
      Leadville Mining & Milling Holding Corporation.




“ ***Principal
      Repayment Date*** ”
means
      each Quarterly Date commencing on the First Principal Repayment Date.


18


“ ***Process
      Agent*** ”
means
      any Person appointed as agent by another Person to receive on behalf of itself
      and its property services of copies of summons and complaint or any other
      process which may be served in connection with any action or proceeding before
      any court arising out of or relating to this Agreement or any of the other
      Loan
      Documents to which it is a party.




“ ***Project*** ”
has
      the
      meaning specified in the preliminary statements to this Agreement.




“ ***Project
      Agreements*** ”
means
      the Construction Contract, Real Estate Rights Agreements, the Mining Services
      Contract and the Mining Contract.




“ ***Project
      Approvals*** ”
has
      the
      meaning specified in Section 5.01(c)(i) .




“ ***Project
      Costs*** ”
means
      the costs and expenses incurred by or on behalf of the Borrowers set forth
      in
      the Construction Budget plus, to the extent not included therein,
      (i) funding of the Debt Service Reserve Requirement and (ii) other
      amounts approved in writing by the Lender.




“ ***Project
      Revenues*** ”
means,
      for any period, the sum, computed without duplication, of all cash revenues
      received by the Borrowers during such period (or, in the case of any future
      period, projected to be received by the Borrowers in accordance with the
      Financial Model (as modified from time to time) during such period) from
      (a) cash flow generated by the Mine in the ordinary course of business; (b) Business
      Interruption Insurance Proceeds and any other payments received in respect
      of
      any loss of profit or delay in startup insurance or interruption
      of operations; (c) refunds of deposits and Tax refunds; (d) proceeds
      resulting from positive financial settlements arising under any Secured Hedge
      Agreement; and (e) all other income, proceeds or receipts howsoever earned
      or received by the Borrowers; *provided* , *however* ,
      that
      notwithstanding the foregoing, “ ***Project
      Revenues*** ”
shall
      not include (i) proceeds of Loans or any other Indebtedness;
      (ii) Insurance Proceeds or (iii)  any equity contributions made by the
      Guarantor or other Affiliate of the Borrowers to the Borrowers.




“ ***Prospective
      Event of Default*** ”
means
      any event or condition that, with the giving of notice or lapse of time, or
      both, would constitute an Event of Default.




“ ***Prudent
      Industry Practices*** ”
means
      those practices, methods, techniques, specifications and standards of safety
      and
      performance, as they may be modified from time to time, that (a) are generally
      accepted in the mining industry as good, safe and prudent engineering practices
      in connection with the operation, maintenance, repair or use of mining
      facilities, and (b) conform in all material respects to the manufacturer’s
      operation and maintenance guidelines, in each case as applicable to the
      equipment in question, taking into account such equipment’s size, service and
      type. “ *Prudent
      Industry Practices* ”
are
      not
      necessarily the optimum practice or method to the exclusion of others, but
      rather refer to commonly used and reasonable practices and methods.




“ ***Quarterly
      Date*** ”
means
      March 31 st ,
      June
      30 th ,
      September 30 th and
      December 31 st of each
      calendar year.


19


“ ***Quarterly
      Period*** ”
means
      each fiscal quarter of the Borrowers ending on a Quarterly Date commencing
      with
      the fiscal quarter ending September 30, 2006.




“ ***Rate
      Fixing Day*** ”
in
      relation to any period for which an interest rate is to be determined hereunder,
      means the day on which quotations would ordinarily be given by prime banks
      in
      the London Interbank Market for deposits in dollars for delivery on the first
      day of that period.




“ ***Real
      Estate Rights Agreement*** ”
means,
      collectively, any agreement, document or instrument relating to any Real
      Property Interest owned by or granted in favor of either of the Borrowers in
      connection with the Project, including, without limitation, the Mining
      Concessions.




“ ***Real
      Property Interest*** ”
means
      any fee owned land, Mining Concession or leasehold, easement, right of way,
      license, concession or other real property right.




“ ***Related
      Parties*** ”
means,
      with respect to any Person, such Person’s Affiliates and the partners,
      directors, officers, employees, agents and advisors of such Person and of such
      Person’s Affiliates.




“ ***Replacement
      Consultant*** ”
has
      the
      meaning specified in Section 12.12(a) .




“ ***Reportable
      Event*** ”
means
      any of the events set forth in Section 4043(c) of ERISA, other than events
      for which the thirty (30)-day notice period has been waived.




“ ***Required
      Insurance*** ”
has
      the
      meaning specified in Section
      7.01(r) .




“ ***Responsible
      Officer*** ”
means
      the chief executive officer, president, chief operating officer, chief financial
      officer, treasurer or vice president of a Loan Party with knowledge of the
      particular matter at hand. Any document delivered hereunder that is signed
      by a
      Responsible Officer of any Person shall be conclusively presumed to have been
      authorized by all necessary corporate, partnership and/or other action on the
      part of such Person and such Responsible Officer shall be conclusively presumed
      to have acted on behalf of such Person.




“ ***Restricted
      Payments*** ”
has
      the
      meaning specified in Section
      8.01(v) .




“ ***Revolving
      Commitment*** ”
has
      the
      meaning specified in Section
      2.01(b) .




“ ***Revolving
      Commitment Termination Date*** ”
means
      the earliest to occur of (a) the date that is one (1) year following the
      Closing Date and (b) the date of termination of the Commitments in full
      pursuant to Section
      11.02(a) ,
      as such
      date may be extended by Lender in its sole discretion pursuant to Section
      2.05(b) .




“ ***Revolving
      Loans*** ”
has
      the
      meaning specified in Section
      2.01(b).




“ ***Revolving
      Note*** ”
means
      a
      promissory note issued by the Borrowers payable to the order of the Lender,
      in
      substantially the form of Exhibit
      D hereto,
      evidencing the aggregate indebtedness of the Borrowers to the Lender resulting
      from Revolving Loans made by the Lender.


20


“ ***SEC*** ”
means
      the Securities and Exchange Commission, or any Governmental Authority succeeding
      to any of its principal functions.




“ ***Secured
      Hedge Agreement*** ”
means
      any Hedge Agreement that the Borrowers are permitted to enter into pursuant
      to Section 7.01(p) .




“ ***Secured
      Obligations*** ”
means
      all advances to, and debts, liabilities, obligations, covenants and duties
      of,
      any Loan Party arising under any Loan Document or otherwise with respect to
      any
      Loan or Secured Hedge Agreement, whether direct or indirect (including those
      acquired by assumption), absolute or contingent, due or to become due, now
      existing or hereafter arising and including interest and fees that accrue after
      the commencement by or against any Loan Party or any Affiliate thereof of any
      proceeding under any Debtor Relief Laws naming such Person as the debtor in
      such
      proceeding, regardless of whether such interest and fees are allowed claims
      in
      such proceeding; *provided* that
      notwithstanding the foregoing, “ ***Secured
      Obligations*** ”
shall
      not include any obligations, covenants or duties of the Borrowers owed to the
      Guarantor or any other Affiliate of the Borrowers.




“ ***Solvent*** ”
and
      “ ***Solvency*** ”
mean,
      with respect to any Person on any date of determination, that on such date
      (a) the fair value of the property of such Person is greater than the total
      amount of liabilities, including, without limitation, contingent liabilities,
      of
      such Person, (b) the present fair salable value of the assets of such
      Person is not less than the amount that will be required to pay the probable
      liability of such Person on its debts as they become absolute and matured,
      (c) such Person does not intend to, and does not believe that it will,
      incur debts or liabilities beyond such Person’s ability to pay such debts and
      liabilities as they mature and (d) such Person is not engaged in business
      or a transaction, and is not about to engage in business or a transaction,
      for
      which such Person’s property would constitute an unreasonably small capital. The
      amount of contingent liabilities at any time shall be computed as the amount
      that, in the light of all the facts and circumstances existing at such time,
      represents the amount that can reasonably be expected to become an actual or
      matured liability.




“ ***Stock
      Purchase Agreement*** ”
means
      that Stock Purchase Option Agreement, dated effective December 15, 2000, among
      AngloGold (Jerritt Canyon) Corp., AngloGold North America Inc., Leadville Mining
      & Milling Corporation and Pledgor, as amended.




“ ***Subordinated
      Royalty Payments*** ”
means
      (a) the net profits interest royalty payable pursuant to the Stock Purchase
      Agreement and (b) the net profits interest royalty payable pursuant to the
      Termination Agreement.




“ ***Subsidiary*** ”
of
      a
      Person means a corporation, partnership, joint venture, limited liability
      company or other business entity of which a majority of the shares of securities
      or other interests having ordinary voting power for the election of directors
      or
      other governing body (other than securities or interests having such power
      only
      by reason of the happening of a contingency) are at the time beneficially owned,
      or the management of which is otherwise Controlled, through one or more
      intermediaries, or both, by such Person.


21


“ ***Support
      Instrument*** ”
means
      any guarantee, letter of credit, surety, payment or performance bond or other
      similar agreement or instrument relating to the performance by any Person of
      its
      obligations under any Transaction Document to which it is a party.




“ ***Tangible
      Net Worth*** ”
means,
      as of any date, (a) the total assets of the Guarantor and its Subsidiaries
      that would be reflected on the Guarantor’s consolidated balance sheet as of such
      date prepared in accordance with GAAP, after eliminating all amounts properly
      attributable to minority interests, if any, in the stock and surplus of the
      Subsidiaries, *minus* (b) the sum of (i) the total liabilities of the Guarantor and its
      Subsidiaries that would be reflected on the Guarantor’s consolidated balance
      sheet as of such date prepared in accordance with GAAP, (ii) the amount of
      any write-up in the book value of any assets resulting from a revaluation
      thereof or any write-up in excess of the cost of such assets acquired reflected
      on the consolidated balance sheet of the Guarantor as of such date prepared
      in
      accordance with GAAP, and (iii) the net book amount of all assets of the
      Guarantor and its Subsidiaries that would be classified as intangible assets
      on
      a consolidated balance sheet of the Guarantor as of such date prepared in
      accordance with GAAP.




“ ***Taxes*** ”
means
      all present or future levies, imposts, duties, deductions, withholdings
      (including with respect to Mexican withholding tax applicable interest income
      sourced in Mexico), assessment, fees or other charges imposed by any
      Governmental Authority, including any interest, additions to tax or penalties
      applicable thereto.




“ ***Termination
      Agreement*** ”
means
      that certain Termination Agreement, dated effective March 31, 2004, between
      MSR and Grupo Minero FG S.A. de C.V.




“ ***Term
      Loan*** ”
has
      the
      meanings specified in Section 2.01(a).




“ ***Term
      Loan Commitment*** ”
has
      the
      meaning specified in Section 2.01(a).




“ ***Term
      Loan Maturity Date*** ”
means
      December 31, 2011.




“ ***Term
      Note*** ”
means
      a
      promissory note issued by the Borrowers payable to the order of the Lender,
      in
      substantially the form of Exhibit
      E hereto,
      evidencing the aggregate indebtedness of the Borrowers to the Lender resulting
      from Term Loans made by the Lender.




“ ***Terrorism
      Laws*** ”
means
      any of the following (a) Executive Order 13224 issued by the President of the
      United States, (b) the Terrorism Sanctions Regulations (Title 31 Part 595 of
      the
      U.S. Code of Federal Regulations), (c) the Terrorism List Governments Sanctions
      Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), (d)
      the
      Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of
      the
      U.S. Code of Federal Regulations), (e) the Patriot Act, (f) all other present
      and future legal requirements of any Governmental Authority addressing, relating
      to, or attempting to eliminate, terrorist acts and acts of war and (g) any
      regulations promulgated pursuant thereto or pursuant to any legal requirements
      of any Governmental Authority governing terrorist acts or acts of
      war.




“ ***Threshold
      Amount*** ”
means
      U.S.$250,000.


22


“ ***Transaction
      Document*** ”
means
      each of the Loan Documents, the Material Project Agreements and the Real Estate
      Rights Agreements.




“ ***UCC*** ”
means
      the Uniform Commercial Code as in effect, from time to time, in the State of
      New
      York.




“ ***United
      States*** ”
and
      “ ***U.S.*** ”
mean
      the United States of America.




“ ***U.S.
      GAAP*** ”
means
      generally accepted accounting principles in the United States set forth in
      the
      opinions and pronouncements of the Accounting Principles Board and the American
      Institute of Certified Public Accountants and statements and pronouncements
      of
      the Financial Accounting Standards Board or such other principles as may be
      approved by a significant segment of the accounting profession in the United
      States, that are applicable to the circumstances as of the date of
      determination, consistently applied.




(b)  Unless
      otherwise defined in this Agreement, terms defined in Article 8 or 9 of the
      UCC
      and/or in the Federal Book Entry Regulations are used in this Agreement as
      such
      terms are defined in such Article 8 or 9 and/or the Federal Book Entry
      Regulations.




Section
      1.02  Other
      Interpretive Provisions .
      With
      reference to this Agreement and each other Loan Document, unless otherwise
      specified herein or in such other Loan Document:




(a)
      The
      words “ *herein* ,”
      “ *hereto* ,”
      “ *hereof* ”
and
      “ *hereunder* ”
and
      words of similar import when used in any Loan Document shall refer to such
      Loan
      Document as a whole and not to any particular provision thereof.




(b)
      Article, section, clause, schedule, exhibit, annex and appendix references
      are
      to the Loan Document in which such reference appears.




(c)
      The
      term “ *including* ”
is
      by
      way of example and not limitation.




(d)
      The
      word “ *or* ”
is
      not
      exclusive.




(e)
      The
      term “ *documents* ”
      includes any and all instruments, documents, agreements, certificates, notices,
      reports, financial statements and other writings, however evidenced, whether
      in
      physical or electronic form.




(f)
      In
      computation of periods of time from a specified date to a later specified date,
      the word “ *from* ”
means
      “ *from
      and including* ,”
the
      words “ *to* ”
and
      “ *until* ”
each
      mean “ *to
      but excluding* ”
and
      the
      word “ *through* ”
means
      “ *to
      and including* .”




(g)
      The
      table of contents and headings set forth herein and in the other Loan Documents
      are included for convenience of reference only and shall not affect the
      interpretation of this Agreement or any other Loan Document.


23


(h)
      References to any Constituent Document, any Agreement Approval, any Project
      Approval, any Environmental Permit, any agreement (including any Loan Document
      or any other Transaction Document) and any other contractual instrument shall
      be
      deemed to include (i) all schedules, exhibits, annexes, appendices or other
      attachments thereto and (ii) all subsequent amendments, restatements,
      extensions, supplements and other modifications thereto, but only to the extent
      that such amendments, restatements, extensions, supplements and other
      modifications are not prohibited by any Loan Document.




(i)
      References to any law shall include all statutory and regulatory provisions
      consolidating, amending, replacing, supplementing or interpreting such
      law.




(j)
      References to any Person shall include such Person’s successors and permitted
      assigns (and in the case of any Governmental Authority, any Person succeeding
      to
      such Governmental Authority’s functions and capacities).




(k)
      References to “ *days* ”
shall
      mean calendar days, unless the term “ *Business
      Days* ”
shall
      be used. References to a time of day shall mean such time in New York City,
      New
      York, unless otherwise specified.




(l)
      With
      respect to any term that is defined by reference to any Transaction Document,
      such term shall continue to have the original definition of such term in such
      Transaction Document notwithstanding any termination, expiration or modification
      of such Transaction Document except to the extent the Lender and the Borrowers
      may otherwise agree.




Section
      1.03  Accounting
      Terms .




(a) Generally .
      All
      accounting terms not specifically or completely defined herein shall be
      construed in conformity with, and all financial data (including financial ratios
      and other financial calculations) required to be submitted pursuant to this
      Agreement or any other Loan Document shall be prepared in English and in
      conformity with Applicable GAAP reconciled to U.S. GAAP (including principles
      of
      consolidation where appropriate) applied on a consistent basis, as in effect
      from time to time.




(b) Changes
      in Applicable GAAP or U.S. GAAP .
      If at
      any time any change in Applicable GAAP or U.S. GAAP, as the case may be, would
      affect the computation of any financial ratio or requirement set forth in any
      Loan Document, and either of the Borrowers or the Lender shall so request,
      the
      Lender and the Borrowers shall negotiate in good faith to amend such ratio
      or
      requirement to preserve the original intent thereof in light of such change
      in
      Applicable GAAP or U.S. GAAP, as the case may be; *provided* that,
      until so amended, (i) such ratio or requirement shall continue to be computed
      in
      accordance with Applicable GAAP or U.S. GAAP, as the case may be, prior to
      such
      change therein and (ii) the Borrowers shall provide to the Lender financial
      statements and other documents required under this Agreement or as reasonably
      requested hereunder setting forth a reconciliation between calculations of
      such
      ratio or requirement made before and after giving effect to such change in
      Applicable GAAP or U.S. GAAP, as the case may be.




Section
      1.04  Rounding .
      Any
      financial ratios required to be maintained by the Borrowers pursuant to this
      Agreement shall be calculated by dividing the appropriate component by the
      other
      component, carrying the result to one place more than the number of places
      by
      which such ratio is expressed herein and rounding the result up or down to
      the
      nearest number (with a rounding-up if there is no nearest number).


24


Section
      1.05  Currency
      of Coverage Ratios .
      For
      purposes of the Loan Documents, the Debt Service Coverage Ratio and the Loan
      Life Coverage Ratio shall each be expressed in Dollars, as follows:




(a) Debt
      Service Coverage Ratio .
      In
      connection with the calculation of the Debt Service Coverage Ratio for any
      period any Peso denominated component of Operating Costs shall be expressed
      in
      Dollars using the Peso-to-Dollar rate of exchange actually applied upon the
      transfer of any amounts to the Operating Account during the relevant
      period.




(b) Loan
      Life Coverage Ratio .
      In
      connection with the calculation of the Loan Life Coverage Ratio for any period,
      any projected Peso-denominated component of Operating Costs shall be expressed
      in Dollars based on the Average Currency Equivalent of such projected
      Peso-denominated Operating Costs.




Section
      1.06  Updates
      of Life of Mine Plan and Financial Model .




(a)
      If at
      any time the actual construction and/or operating history of the Project as
      reflected in the most recent reports delivered by the Borrowers pursuant to Section
      10.01 for any
      three (3) month period or Quarterly Period, as the case may be, is inconsistent
      with the projections therefor set forth in the then effective Financial Model
      or
      Life of Mine Plan, and such inconsistency shall show an actual adverse variation
      in the Project Costs, Operating Costs or Project Revenues, in each case taken
      as
      a whole, or in Gold production, of twenty-five percent (25%) or more for such
      period from that set forth for such period in the then effective Life of Mine
      Plan or Financial Model, then the Life of Mine Plan and the Financial Model
      shall be amended to reflect data and assumptions reasonably determined by the
      Lender and the Borrowers which accurately reflect actual Project Costs,
      Operating Costs, Project Revenues or Gold production, as the case may
      be.




(b)
      In
      the event that the Borrowers (on the one hand) and the Lender (on the other
      hand) are unable to agree as to the adjustment to the Financial Model and the
      Life of Mine Plan in accordance with this Section
      1.06 ,
      either
      the Borrowers or the Lender may refer such dispute to the Independent Engineer
      for resolution. The findings of the Independent Engineer with respect to any
      adjustments to the Financial Model and the Life of Mine Plan so presented to
      it
      for resolution hereunder shall be binding upon the parties.




(c)
      Promptly after any amendment to the Life of Mine Plan or the Financial Model
      pursuant to this Section
      1.07 ,
      the
      Borrowers shall deliver to the Lender an updated copy of the Life of Mine Plan
      or the Financial Model, as the case may be.




Section
      1.07  Determination
      of Material Adverse Effect, Etc .
      To the
      extent that any provision herein or in any other Loan Document requires that
      the
      Borrowers or any other Person be in compliance in all material respects with
      Applicable Laws, Project Approvals, Agreement Approvals, any Material Project
      Agreement or any other agreement or contractual instrument, the Lender shall
      have the right to make its own determination as to whether such compliance
      has
      been achieved by the Borrowers or such other Person.


25


**ARTICLE
      II**


**THE
        COMMITMENTS AND THE BORROWINGS**




Section
      2.01  The
      Loans .




(a) Term
      Loans .
      The
      Borrowers and the Lender acknowledge that, pursuant to the Original Credit
      Agreement, the Lender made a term loan (each such loan, a “ ***Term*** ** ***Loan*** ”)
      to the
      Borrowers, in the aggregate principal amount of Twelve Million Five Hundred
      Dollars (U.S.$12,500,000) (as such aggregate maximum amount may be reduced
      from
      time to time as provided in Section
      2.04 ,
      the
“ ***Term
      Loan Commitment*** ”).
      Term
      Loan amounts repaid or prepaid may not be reborrowed.




(b) Revolving
      Loans .
      During
      the Availability Period, subject to the terms and conditions set forth herein,
      the Lender agrees to make revolving loans (“ ***Revolving
      Loans*** ”)
      to the
      Borrowers from time to time in an aggregate principal amount not to exceed
      Five
      Million Dollars (U.S.$5,000,000) (as such aggregate maximum amount may be
      reduced from time to time as provided in Section
      2.04 ,
      the
“ ***Revolving
      Commitment*** ”).
      Revolving Loans may be repaid and reborrowed in accordance with the provisions
      hereof.




Section
      2.02  Borrowings .




(a) Term
      Loan Borrowings .
      The
      Borrowers shall request a Term Loan borrowing by delivering a written Loan
      Notice, appropriately completed and signed by a Responsible Officer of the
      Borrowers and delivered to the Lender; *provided* that the
      Borrowers shall not be entitled to request a Borrowing more than once in any
      calendar month. Each such notice shall be irrevocable and must be received
      by
      the Lender not later than 11:00 a.m. six (6) Business Days prior to the
      requested date of any Borrowing. Each Borrowing shall be in a principal amount
      of U.S.$1,000,000 or a whole multiple of U.S.$250,000 in excess thereof; *provided* that
      such limits shall not apply to the final Borrowing, which may be in aggregate
      amount equal to the unused Commitment at such time. Each Loan Notice shall
      specify (i) the requested date of the Borrowing (which shall be a Business
      Day), (ii) the principal amount of Loans to be Borrowed and (iii) the
      Interest Period for such Borrowing.




(b) Revolving
      Loan Borrowings .
      The
      Borrowers shall request a Revolving Loan borrowing by delivering a written
      Loan
      Notice, appropriately completed and signed by a Responsible Officer of the
      Borrowers and delivered to the Lender; *provided* that the
      Borrowers shall not be entitled to request a Borrowing more than once in any
      calendar month. Each such notice shall be irrevocable and must be received
      by
      the Lender not later than 11:00 a.m. five (5) Business Days prior to the
      requested date of any Borrowing of a Revolving Loan. Each Revolving Loan shall
      be in a minimum aggregate amount of U.S.$250,000 and in integral multiples
      of
      U.S.$50,000 in excess thereof (or the remaining amount of the Revolving
      Commitment, if less). Each such Loan Notice shall specify (i) the requested
      date of the Borrowing (which shall be a Business Day), (ii) the principal
      amount of Revolving Loans to be Borrowed and (iii) the Interest Period for
      such
      Borrowing.


26


(c) Funding .
      Following receipt of a Loan Notice, and upon satisfaction of the applicable
      conditions set forth in Sections
      4.01 ,
      and 4.02 ,
      as
      applicable, the Lender shall make the principal amount specified in such Loan
      Notice available to the Borrowers in immediately available funds by causing
      such
      Term Loan funds to be credited to, or deposited into the Onshore Operating
      Account and such Revolving Loan funds to be credited to, or deposited into
      the
      Offshore Operating Account, in each case, not later than 1:00 p.m. on the
      Business Day specified in the applicable Loan Notice.




Section
      2.03  Prepayments .




(a) Optional .
      The
      Borrowers may, upon notice to the Lender, at any time (i) after the First
      Principal Repayment Date in the case of Term Loans or (ii) during the
      Availability Period in the case of Revolving Loans, voluntarily prepay Loans
      in
      whole or in part without premium or penalty; *provided* that (A)
      such notice must be received by the Lender not later than 11:00 a.m. three
      (3)
      Business Days prior to any date of prepayment; and (B) any prepayment shall
      be in a principal amount of at least U.S.$250,000 or a whole multiple of
      U.S.$50,000 in excess thereof or, if less, the entire principal amount thereof
      then outstanding. Each such notice shall specify the date and amount of such
      prepayment. If such notice is given by the Borrowers, the Borrowers shall make
      such prepayment and the payment amount specified in such notice shall be due
      and
      payable on the date specified therein. Each such payment shall be accompanied
      by
      payment of any amounts required by Section
      3.04 hereof.




(b) Mandatory .
      On each
      Quarterly Date, the Borrowers shall prepay an aggregate principal amount of
      the
      Loans equal to the amount of any Insurance Proceeds received by the Borrowers
      or
      the Lender that are not permitted to be applied to repair, reconstruct or
      replace any of the damaged property as contemplated by Section 6.03(b)(ii) .




(c) Prepayments
      Generally .




(i)  Each
      prepayment of Loans pursuant to this Section 2.03 shall be
      applied (x) first, to the principal repayment installments of the Term Loans
      in
      inverse order of maturity and (y) second to the outstanding Revolving
      Loans.




(ii)  Each
      prepayment under this Section
      2.03 shall be
      accompanied by all accrued interest thereon, together with any additional
      amounts required pursuant to Section
      3.04 .
      Any
      amounts required to be applied to prepay the Loans pursuant to Section 2.03(b) shall be
      applied solely to the repayment of principal, interest and breakage costs for
      the account of the Borrowers.




Section
      2.04  Termination
      or Reduction of Commitment .




(a) Mandatory .




(i)  The
      Term
      Loan Commitment shall be automatically and permanently reduced on the date
      of
      each Borrowing of a Term Loan after giving effect to each such Borrowing by
      the
      amount of such Borrowing.




(ii)  Any
      unused portion of the Revolving Commitment shall be automatically and
      permanently reduced on the last day of the Availability Period (after giving
      effect to any Loans to be made on such day).


27


(b) Voluntary. The
      Borrowers shall have the right to terminate or permanently reduce the unused
      portion of the Revolving Commitment at any time or from time to time upon not
      less than ten (10) Business Days’ prior notice thereof to the Lender, which
      notice shall specify the effective date of such termination or reduction, the
      amount of any such reduction, which shall be in a minimum amount of U.S.$250,000
      or a whole multiple of U.S.$50,000 in excess thereof and shall be irrevocable
      and effective upon receipt by the Lender, provided that no
      such reduction or termination shall be permitted if after giving effect thereto
      and to any prepayments of the Loans made on the effective date thereof, the
      sum
      of the outstanding Revolving Loans would exceed the Revolving
      Commitment.




(c) Revolving
      Commitment Reductions .
      All
      fees accrued pursuant to Section
      2.07 until
      the effective date of any termination or reduction of the Revolving Commitment
      shall be paid on the effective date of such termination or
      reduction.




Section
      2.05  Repayment
      of Loans .




(a) Term
      Loan .
      On each
      Principal Repayment Date, the Borrowers shall repay to the Lender the aggregate
      principal amount of all Term Loans outstanding in the respective amounts set
      forth opposite such dates (which amounts shall be reduced as a result of the
      application of prepayments or Commitment reductions in accordance with the
      order
      of priority set forth in Section 2.03(b)(i) )
      as
      follows:





**Principal**
              **Repayment
                Date**
            
            **Amount**September
                30, 2008
            
            U.S.$
            1,000,000December
                31, 2008
            
            U.S.$
            1,125,000March
                31, 2009
            
            U.S.$
            1,000,000June
                30, 2009
            
            U.S.$
            1,000,000September
                30, 2009
            
            U.S.$
            750,000December
                31, 2009
            
            U.S.$
            750,000March
                31, 2010
            
            U.S.$
            750,000June
                30, 2010
            
            U.S.$
            875,000September
                30, 2010
            
            U.S.$
            875,000December
                31, 2010
            
            U.S.$
            875,000March
                31, 2011
            
            U.S.$
            875,000June
                30, 2011
            
            U.S.$
            875,000September
                30, 2011
            
            U.S.$
            875,000December
                31, 2011
            
            U.S.$
            875,000




*provided* ,
      however, that the final principal repayment installment of the Term Loans shall
      be repaid on or before the Maturity Date and in any event shall be in an amount
      equal to the aggregate principal amount of all Term Loans outstanding on such
      date.


28


(b) Revolving
      Loan .
      The
      Borrowers shall repay to the Lender the aggregate principal amount of all
      Revolving Loans outstanding on the Revolving Commitment Termination Date. The
      Borrowers shall have the right to request up to two (2) one (1) year extensions
      of the Revolving Commitment Termination Date by giving written notice to the
      Lender no later than one (1) month prior to the first (1 st )
      or
      second (2 nd )
      anniversary of the Closing Date. No such extension shall be effective unless
      and
      until (i) the Lender, in its sole discretion, agrees in writing to such
      extension, (ii) the Borrowers pay an extension fee of U.S.$30,000 to the Lender
      and (iii) no Prospective Event of Default or Event of Default shall have
      occurred and be Continuing.




Section
      2.06  Interest .




(a) Interest
      Rate .
      Subject
      to the provisions of Section 2.06(b) ,
      each
      Loan shall bear interest on the outstanding principal amount thereof for each
      Interest Period at a rate *per
      annum* equal to
      the LIBO Rate for such Interest Period *plus* the
      Applicable Margin.




(b) Default
      Interest .




(i)  If
      any
      amount payable by the Borrowers under any Loan Document is not paid when due,
      whether at stated maturity, by acceleration or otherwise, such amount shall
      thereafter bear interest at a fluctuating interest rate *per
      annum* at all
      times equal to the Default Rate to the fullest extent permitted by Applicable
      Law.




(ii)  Accrued
      and unpaid interest on past due amounts (including interest on past due
      interest) shall be due and payable upon demand, to the extent permitted by
      Applicable Law.




(c) Interest
      Due Dates .
      Interest on each Loan shall be due and payable in arrears on each Interest
      Payment Date applicable thereto and at such other times as may be specified
      herein. Interest hereunder shall be due and payable in accordance with the
      terms
      hereof before and after judgment, and before and after the commencement of
      any
      Insolvency Proceeding, to the extent permitted by Applicable Law.




(d) Interest
      Periods .
      (i)
      Borrowers may not at any time have outstanding more than an aggregate of eight
      (8) different Interest Periods relating to outstanding Loans and each such
      Interest Period shall be in respect of a principal amount of Loans of not less
      than U.S.$250,000; and (ii) Borrowers may contact Lender at any time prior
      to
      the end of an Interest Period for a quotation of the LIBO Rates in effect at
      such time for given Interest Periods, and Lender shall provide such quotation
      promptly upon request. If Borrowers fail to notify Lender of the next Interest
      Period for any Loan at least three (3) Business Days prior to the end of the
      then current Interest Period, such Loan shall automatically continue with the
      same Interest Period at the close of business on the last day of the then
      current Interest Period therefor, unless such Interest Period would extend
      beyond the applicable Maturity Date, in which case Lender shall choose an
      Interest Period that is closest in duration to the remainder of the term of
      the
      Loans. Lender shall as soon as practicable (and, in any case, within three
      (3)
      Business Days) notify Borrowers of each determination of the interest rate
      applicable to each Loan.


29


Section
      2.07  Commitment
      Fee .
      The
      Borrowers shall pay to the Lender a commitment fee payable (x) in arrears on
      each Quarterly Date and on the last day of the Availability Period and (y)
      on
      the date of any cancellation or termination of the Revolving Commitment in
      respect of the cancelled or terminated portion of the Revolving Commitment,
      in
      each case at the rate of one and one half percent (1.50%) *per
      annum* on the
      average daily unused portion of the Revolving Commitment. The commitment fee
      shall accrue at all times during the Availability Period, including at any
      time
      during which one or more of the conditions in Article
      IV is not
      met.




Section
      2.08  Guarantor
      Warrants .
      On or
      prior to the Closing Date, Borrowers shall cause the Guarantor to issue and
      deliver to the Lender warrants to purchase 600,000 common shares in the
      Guarantor (the “ ***Guarantor
      Warrants*** ”),
      in
      the form of Exhibit F hereto.




Section
      2.09  Computation
      of Interest and Fees .
      All
      computations of fees and interest shall be made on the basis of a three hundred
      sixty (360)-day year and actual days elapsed (including the first day but
      excluding the last day) occurring in the period for which such fees or interest
      are payable. Interest shall accrue on each Loan for the day on which the Loan
      is
      made, and shall not accrue on a Loan, or any portion thereof, for the day on
      which the Loan or such portion is paid. Each determination by the Lender of
      an
      interest rate or fee hereunder shall be conclusive and binding for all purposes,
      absent manifest error.




Section
      2.10  Evidence
      of Indebtedness .




(a) Accounts
      and Records .
      The
      Loans shall be evidenced by one or more accounts or records maintained by the
      Lender in the ordinary course of business. The accounts or records maintained
      by
      the Lender shall be conclusive absent manifest error of the amount of the Loans
      made by the Lender to the Borrowers and the interest and payments thereon.
      Any
      failure to so record or any error in doing so shall not, however, limit or
      otherwise affect the obligation of the Borrowers hereunder to pay any amount
      owing with respect to the Secured Obligations.




(b) Notes .
      The
      Borrowers agree that, in addition to such accounts or records set forth in Section 2.09(a) ,
      to
      evidence their obligation to repay each Loan made hereunder, with interest
      accrued thereon, it shall issue and deliver to the Lender on the Closing Date
      a
      Term Note and a Revolving Note each payable to the Lender in the aggregate
      principal amount of the Commitment. The Lender may attach schedules to its
      Note
      and endorse thereon the date, amount and maturity of its Loans and payments
      with
      respect thereto. In the event that any amount hereunder or under any Note is
      not
      paid by the Borrowers when due (whether at the stated maturity, by acceleration
      or otherwise), the Lender may take all such actions as it sees fit to recover
      such amount, including, without limitation, the commencement and maintenance
      of
      proceedings in the State of New York, United States of America.




(c) Effect
      of Account Entries .
      Entries
      made in good faith by the Lender in its account or accounts pursuant to Section 2.09(a) ,
      shall
      be *prima
      facie* evidence
      of the amount of principal and interest due and payable or to become due and
      payable from the Borrowers to the Lender, under this Agreement and the other
      Loan Documents, absent manifest error; *provided* that the
      failure of the Lender to make an entry, or any finding that an entry is
      incorrect, in such account or accounts shall not limit or otherwise affect
      the
      obligations of the Borrowers under this Agreement and the other Loan
      Documents.


30




Section
      2.11  Payments
      Generally .
      All
      payments to be made by the Borrowers shall be made without condition or
      deduction for any counterclaim, defense, recoupment or setoff. Except as
      otherwise expressly provided herein, all payments by the Borrowers hereunder
      shall be made to the Lender in Dollars and in immediately available funds not
      later than 2:00 p.m. on the date specified herein. All payments received by
      the
      Lender after 2:00 p.m. shall be deemed received on the next succeeding Business
      Day and any applicable interest or fee shall continue to accrue.




**ARTICLE
      III**


**TAXES,
      YIELD PROTECTION AND ILLEGALITY**




Section
      3.01  Taxes .




(a) Payments
      Free of Taxes .
      Any and
      all payments by or on account of any obligation of the Borrowers hereunder
      or
      under any other Loan Document shall be made free and clear of and without
      reduction or withholding for any Indemnified Taxes or Other Taxes; *provided* that if
      the Borrowers shall be required by Applicable Law to deduct any Indemnified
      Taxes (including any Other Taxes) from such payments, then (i) the sum payable
      shall be increased as necessary so that after making all required deductions
      (including deductions applicable to additional sums payable under this Section 3.01 )
      the
      Lender receives an amount equal to the sum it would have received had no such
      deductions been made, (ii) the Borrowers shall make such deductions and (iii)
      the Borrowers shall timely pay the full amount deducted to the relevant
      Governmental Authority in accordance with Applicable Law.




(b) Payment
      of Other Taxes by the Borrowers .
      Without
      limiting the provisions of clause
      (a) above,
      the Borrowers shall timely pay any Other Taxes to the relevant Governmental
      Authority in accordance with Applicable Law.




(c) Indemnification
      by the Borrowers .
      The
      Borrowers shall indemnify the Lender, within ten (10) days after demand
      therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
      Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
      under this Section 3.01 )
      paid by
      the Lender, as the case may be, and any penalties, interest and reasonable
      expenses arising therefrom or with respect thereto, whether or not such
      Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
      by the relevant Governmental Authority. A certificate as to the amount of such
      payment or liability delivered to the Borrowers by the Lender shall be
      conclusive absent manifest error.




(d) Evidence
      of Payments .
      As soon
      as practicable after any payment of Indemnified Taxes or Other Taxes by the
      Borrowers to a Governmental Authority, the Borrowers shall deliver to the Lender
      the original or a certified copy of a receipt issued by such Governmental
      Authority evidencing such payment, a copy of the return reporting such payment
      or other evidence of such payment reasonably satisfactory to the
      Lender.


31


(e) Status
      of Lender .
      If the
      Lender is entitled to an exemption from or reduction of withholding tax under
      the laws of the jurisdiction in which the Borrowers are resident for tax
      purposes, or any treaty to which such jurisdiction is a party, with respect
      to
      payments hereunder or under any other Loan Document, the Lender shall deliver
      to
      the Borrowers, at the time or times prescribed by Applicable Law or reasonably
      requested by the Borrowers, such properly completed and executed documentation
      prescribed by Applicable Law as will permit such payments to be made without
      withholding or at a reduced rate of withholding. In addition, the Lender, if
      requested by the Borrowers, shall deliver such other documentation prescribed
      by
      Applicable Law or reasonably requested by the Borrowers as will enable the
      Borrowers to determine whether or not the Lender is subject to backup
      withholding or information reporting requirements.




Section
      3.02  Illegality .
      If any
      Applicable Law has made it unlawful, or any Governmental Authority has asserted
      that it is unlawful, for the Lender or its applicable lending office to make,
      maintain or fund any Loans, or to determine or charge interest rates based
      upon
      the LIBO Rate, or any Governmental Authority has imposed material restrictions
      on the authority of the Lender to purchase or sell, or to take deposits of,
      Dollars in the London interbank market, then, on notice thereof by the Lender
      to
      the Borrowers, any obligation of the Lender to make or continue Loans shall
      be
      suspended until the Lender either changes its lending office or notifies the
      Borrowers that the circumstances giving rise to such determination no longer
      exist or have been otherwise mitigated. Upon receipt of notice from the Lender
      that Loans at the LIBO Rate cannot be maintained due to any of the foregoing
      actions, the Borrowers shall, upon demand from the Lender, prepay all Loans,
      either on the last day of the Interest Period therefor, if the Lender may
      lawfully continue to maintain such Loans to such day, or immediately, if the
      Lender may not lawfully continue to maintain such Loans. Upon any such
      prepayment, the Borrowers shall also pay accrued interest on the amount so
      prepaid. The Lender agrees to use reasonable efforts (including reasonable
      efforts to change its lending office) to avoid or to minimize any amounts which
      might otherwise be payable pursuant to this Section 3.02, at the cost and
      expense of the Borrowers.




Section
      3.03  Increased
      Costs; Reserves on Loans .




(a) Increased
      Costs Generally .
      If any
      Change in Law shall:




(i)  impose,
      modify or deem applicable any reserve, special deposit, compulsory loan,
      insurance charge or similar requirement against assets of, deposits with or
      for
      the account of, or credit extended or participated in by, the
      Lender;




(ii)  subject
      the Lender to any tax of any kind whatsoever with respect to this Agreement,
      any
      Loan made by it, or change the basis of taxation of payments to the Lender
      in
      respect thereof (except for Taxes or Other Taxes covered by Section 3.01 );
      or




(iii)  impose
      on
      the Lender or the London interbank eurodollar market any other condition, cost
      or expense affecting this Agreement or Loans made by the
      Lender;


32


and
      the
      result of any of the foregoing shall be to increase the cost to the Lender
      of
      making or maintaining any Loan (or of maintaining its obligation to make any
      such Loans), or to reduce the amount of any sum received or receivable by the
      Lender hereunder (whether of principal, interest or any other amount) then,
      upon
      request of the Lender, the Borrowers will pay to the Lender, such additional
      amount or amounts as certified by the Lender as being required to compensate
      the
      Lender for such additional costs actually incurred or reduction actually
      suffered. The Lender agrees to use reasonable efforts (including reasonable
      efforts to change its lending office) to avoid or to minimize any amounts which
      might otherwise be payable pursuant to this Section 3.03, at the cost and
      expense of the Borrowers.




(b) Capital
      Requirements .
      If any
      Change in Law affecting the Lender regarding capital requirements has or would
      have the effect of reducing the rate of return on the Lender’s capital or on the
      capital of the Lender’s holding company, if any, as a consequence of this
      Agreement, the Commitment or the Loans made by the Lender, to a level below
      that
      which the Lender or the Lender’s holding company could have achieved but for
      such Change in Law (taking into consideration the Lender’s policies and the
      policies of the Lender’s holding company with respect to capital adequacy), then
      from time to time the Borrowers will pay to the Lender, as the case may be,
      such
      additional amount or amounts as certified by the Lender as being required to
      compensate the Lender or the Lender’s holding company for any such reduction
      actually suffered. The Lender agrees to use reasonable efforts (including
      reasonable efforts to change its lending office) to avoid or to minimize any
      amounts which might otherwise be payable pursuant to this Section 3.03, at
      the
      cost and expense of the Borrowers.




(c) Certificates
      for Reimbursement .
      A
      certificate of the Lender setting forth the amount or amounts necessary to
      compensate the Lender or its holding company, as the case may be, as specified
      in clause (a) or (b) of this Section 3.03 and
      delivered to the Borrowers shall be conclusive absent manifest error. The
      Borrowers shall pay the Lender the amount shown as due on any such certificate
      within ten (10) days after receipt thereof.




(d) Delay
      in Requests .
      Failure
      or delay on the part of the Lender to demand compensation pursuant to the
      foregoing provisions of this Section 3.03 shall
      not constitute a waiver of the Lender’s right to demand such
      compensation.




Section
      3.04  Compensation
      for Losses .
      Upon
      demand of the Lender from time to time, the Borrowers shall promptly compensate
      the Lender for and hold the Lender harmless from any loss, cost or expense
      incurred by it as a result of:




(a)
      any
      continuation, payment or prepayment of any Loan on a day other than the last
      day
      of the Interest Period for such Loan (whether voluntary, mandatory, automatic,
      by reason of acceleration, or otherwise); or




(b)
      any
      failure by the Borrowers (for a reason other than the failure of the Lender
      to
      make a Loan) to prepay, borrow or continue any Loan on the date or in the amount
      notified by the Borrowers,




including,
      in each case, any loss or expense arising from the liquidation or reemployment
      of funds obtained by it to maintain such Loan or from fees payable to terminate
      the deposits from which such funds were obtained .
      The
      Borrowers shall also pay any customary administrative fees charged by the Lender
      in connection with the foregoing.


33


For
      purposes of calculating amounts payable by the Borrowers to the Lender under
      this Section 3.04 ,
      the Lender shall be
      deemed to have funded each Loan made by it at the LIBO Rate for such Loan by
      a
      matching deposit or other borrowing in the London interbank eurodollar market
      for a comparable amount and for a comparable period, whether or not such Loan
      was in fact so funded. A certificate of the Lender setting forth the amount
      or
      amounts necessary to compensate the Lender or its holding company, as the case
      may be, as specified in this Section 3.04 and
      delivered to the Borrowers shall be conclusive absent manifest
      error.




**ARTICLE
      IV**


**CONDITIONS
      PRECEDENT**




Section
      4.01  Conditions
      Precedent .
      The
      following conditions precedent shall have been satisfied or waived on or prior
      to the Closing Date, as determined by the Lender:




(a) Delivery
      of Certain Documents, Certificates, Etc .
      The
      Lender’s receipt of the following, each of which shall be originals or
      facsimiles (followed promptly by originals) unless otherwise specified, with
      each Loan Document properly executed by a Responsible Officer of the signing
      Loan Party and dated the Closing Date (or in the case of certificates of
      governmental officials, a recent date before the Closing Date), and with each
      of
      the following in form and substance reasonably satisfactory to the
      Lender:




(i)  executed
      counterparts of this Agreement and the Guaranty, sufficient in number for
      distribution to the Lender and each Loan Party;




(ii)  a
      Term
      Note and a Revolving Note each on safety paper executed by the Borrowers in
      favor of the Lender;




(iii)  an
      Officer’s Certificate (which Officer’s Certificate shall be accompanied by
      copies of all documents referred to in such Officer’s Certificate, in each case
      as in effect as of the Closing Date (and, if not in English with an English
      translation thereof), of each Loan Party in respect of (A) its Constituent
      Documents, (B) its address and other information that will allow the Lender
      to identify it in accordance with Applicable Law, and (C) the actions of
      its Equity Interest holders, shareholders, partners, board of managers or other
      similar corporate supervisory body taken to authorize the execution, delivery
      and performance of this Agreement and each other Transaction Document to which
      it is or is to be a party;




(iv)  a
      certificate of each Loan Party in respect of the identity, authority, capacity,
      incumbency and true signature of each Person who has signed or will sign this
      Agreement and each other Transaction Document on behalf of such Loan Party
      for
      the purposes of signing documents in connection with this Agreement and any
      other Transaction Document and the transactions contemplated hereby and
      thereby;


34


(v)  to the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) amended or supplemented since the Original Credit Agreement Closing Date,
      copies of each Material Project Agreement and each Affiliate Contract in effect
      on the Closing Date (and, if not in English, an English translation thereof),
      including any amendments or supplements thereto, accompanied by an Officer’s
      Certificate of a Borrower, certifying that (A) the copies of the Material
      Project Agreements and Affiliate Contracts delivered pursuant to this Section
      4.01(a)(v) are
      true, correct and complete copies of such Material Project Agreement or
      Affiliate Contract, as the case may be, (B) no term or condition of any Material
      Project Agreement or Affiliate Contract has been amended from the form thereof
      delivered pursuant to this Section
      4.01(a)(v) (other
      than in connection with any such amendments or supplements so delivered), (C)
      each Material Project Agreement and Affiliate Contract delivered pursuant to
      this Section
      4.01(a)(v) is in
      full force and effect, enforceable against each Person party thereto in
      accordance with its terms, (D) neither the Borrowers nor, to the knowledge
      of
      such Borrower, any other Person party to any Material Project Agreement or
      Affiliate Contract delivered pursuant to this Section
      4.01(a)(v) is in
      default thereunder, (E) each of the Real Estate Rights Agreements delivered
      pursuant to this Section
      4.01(a)(v) has been
      filed for registration in the relevant public registry in which such filing
      is
      necessary or appropriate in order to render such Real Estate Rights Agreement
      enforceable against any third party in interest in respect of the Real Property
      Interests conveyed to the Borrowers under such Real Estate Rights Agreement
      and
      (F) the Borrowers and to the knowledge of the Borrowers each other Person party
      to each Material Project Agreement and Affiliate Contract delivered pursuant
      to
      this Section
      4.01(a)(v) have
      complied with all conditions precedent to their obligations under such Material
      Project Agreement or Affiliate Contract, as the case may be, required to be
      performed or complied with by any such Person on or before the Closing
      Date;




(vi)  to the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) renewed or supplemented since the since the Original Credit Agreement
      Closing Date, copies
      of each Project Approval and Agreement Approval necessary or required under
      the
      terms of the Transaction Documents or Applicable Law to be obtained as of the
      Closing Date (and if not in English ,
      an
      English translation thereof), including any amendments and supplements thereto,
      accompanied by an Officer’s Certificate of a Borrower certifying that (A) the
      copies of each of the Project Approvals and Agreement Approvals delivered
      pursuant to this Section
      4.01(a)(vi) are
      true, correct and complete copies of such Project Approval or Agreement
      Approval, as the case may be, (B) no term or condition of any such Project
      Approval or Agreement Approval has been amended from the form thereof delivered
      pursuant to this Section
      4.01(a)(vi) (other
      than in connection with any such amendments or supplements so delivered), (C)
      each Project Approval and Agreement Approval delivered pursuant to this Section
      4.01(a)(vi) is in
      full force and effect, is not subject to any pending appeal, intervention or
      similar proceeding or any unsatisfied condition that may result in modification
      or revocation thereof, (D) to the knowledge of such Borrower, no event has
      occurred that could reasonably be expected to result in the modification,
      cancellation or revocation of any Project Approval or Agreement Approval
      required to be delivered pursuant to this Section
      4.01(a)(vi) ,
      and (E)
      such Borrower has no reason to believe that those Project Approvals and
      Agreement Approvals that are not necessary under the terms of the Transaction
      Documents or Applicable Law as of the Closing Date will not be obtained in
      the
      ordinary course as and when required;




(vii)  the
      following legal opinions in the English language (with sufficient copies thereof
      for each addressee): (A) the opinion of Davis Graham & Stubbs LLP, counsel
      to the Loan Parties, addressed to the Lender, substantially in the form of Exhibit G ;
      and (B)
      the opinion of Lizarraga, Robles, Tapia y Cabrera S.C., Mexican counsel to the
      Loan Parties, addressed to the Lender, substantially in the form of Exhibit H .


35




(viii)  to
      the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) amended or supplemented since the Original Credit Agreement Closing Date,
      a
      copy of the Life of Mine Plan accompanied by an Officer’s Certificate of a
      Borrower stating that the Life of Mine Plan and all components thereof (A)
      were
      prepared in good faith by the Borrowers or at the direction of the Borrowers,
      (B) are based upon assumptions that are consistent with the requirements of
      the
      Transaction Documents, the Agreement Approvals, the Project Approvals and the
      Applicable Law and which the Borrowers consider to be reasonable in light of
      the
      conditions existing as of the Closing Date, and (C) in the Borrowers’ reasonable
      judgment, represent the Borrowers’ best estimate of the information set forth
      therein as of the Closing Date;




(ix)  to
      the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) amended or supplemented since the Original Credit Agreement Closing Date,
      a
      hard copy of, and an electronic copy containing, the Financial Model accompanied
      by an Officer’s Certificate of a Borrower stating that the Financial Model and
      its underlying models and assumptions (A) were prepared in good faith by the
      Borrowers, (B) are based on assumptions that are consistent with the
      requirements of the Life of Mine Plan, the Transaction Documents, the Agreement
      Approvals, the Project Approvals and Applicable Law and that the Borrowers
      consider to be reasonable in light of the conditions existing as of the Closing
      Date and (C) in the Borrowers’ reasonable judgment, represent their best
      estimate of the information set forth therein as of the Closing
      Date;




(x)  to
      the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) amended or supplemented since the Original Credit Agreement Closing
      Date, a copy
      of the Environmental Management Plan;




(xi)  copies
      of
      the most recent audited and unaudited financial statements of the Borrowers
      and
      the Guarantor on a consolidated basis, accompanied by an Officer’s Certificate
      of each such Person, certifying that the copies of such financial statements
      fairly present the financial condition of such Person and its Subsidiaries
      (to
      the extent applicable) as of the date of such financial statements and the
      results of operations of such Person and its Subsidiaries (to the extent
      applicable) for the period indicated in such financial statements, all in
      accordance with Applicable GAAP or U.S. GAAP, as the case may be, subject,
      in
      the case of interim statements, to year-end audit adjustments and the absence
      of
      footnotes;




(xii)  to
      the
      extent (i) not previously delivered pursuant to the Original Credit Agreement
      or
      (ii) amended or supplemented since the Original Credit Agreement Closing Date,
      copies of each Hedge Agreement in effect as of the Closing Date;




36




(xiii)  copies
      of
      all policies, endorsements and other documents required under Section
      7.01(r) to be in
      effect as of the Closing Date, accompanied by: (A) letters from the Borrowers’
insurance brokers or insurers (commonly referred to as “ *undertaking
      letters* ”),
      dated
      not earlier than fifteen (15) days prior to the Closing Date, stating with
      respect to each insurance policy that (1) such policy is in full force and
      effect, (2) all premiums theretofore due and payable thereon have been paid
      and
      (3) the underwriters of such insurance have agreed that the policies, when
      issued, will contain the provisions required under Section
      7.01(r) ,
      and (B)
      a report from the Insurance Consultant in form and substance reasonably
      satisfactory to the Lender confirming that such Required Insurance is in full
      force and effect in accordance with the terms of this Agreement;




(xiv)  the
      Mortgage, as amended to reflect the terms of this Agreement, in substantially
      the form of Exhibit
      I hereto,
      duly authorized and executed by each Person party thereto before a notary public
      in Mexico, together with evidence of the completion of all actions, recordings
      and filings of or with respect to the Mortgage that the Lender may deem
      necessary or desirable in order to create, perfect and protect a first priority
      lien, mortgage and encumbrance over the real property and assets described
      therein, including, without limitation, the filing of the Mortgage in the
      relevant public registries in connection therewith;




(xv)  the
      Equity Pledge Agreements, as amended to reflect the terms of this Agreement,
      in
      substantially the form of Exhibit
      J hereto,
      duly executed by the Guarantor and Pledgor, together with evidence of the
      completion of all other actions, recordings and filings of or with respect
      to
      such Equity Pledge Agreements that the Lender may deem necessary or desirable
      in
      order to perfect and protect the Liens created thereby;




(xvi)  the
      Movable Assets Pledge Agreement, as amended to reflect the terms of this
      Agreement, in substantially the form attached hereto as Exhibit
      K hereto,
      duly authorized and executed by each Person party thereto before a notary public
      in Mexico, together with evidence of the completion of all recordings and
      filings of and any other actions with respect to the Movable Assets Pledge
      Agreement that the Lender may deem necessary or appropriate in order to create,
      perfect and protect a first priority pledge, lien and encumbrance over the
      movable assets described therein as contemplated thereunder, including, without
      limitation, the filing of the Movable Assets Pledge Agreement in the relevant
      public registries in connection therewith;




(xvii)  the
      Account Pledge Agreement, as amended to reflect the terms of this Agreement,
      in
      substantially the form attached hereto as Exhibit
      L ,
      duly
      authorized and executed by each Person party thereto before a notary public
      in
      Mexico, together with evidence of the completion of all recordings and filings
      of and any other actions with respect to the Account Pledge Agreement that
      the
      Lender may deem necessary or appropriate in order to create, perfect and protect
      a first priority pledge, lien and encumbrance over the accounts as contemplated
      therein, including, without limitation, the filing of the Account Pledge
      Agreement in the relevant public registries in connection therewith;
      and




37




(xviii)  an
      irrevocable power of attorney, duly notarized, appointing Lender, as
      attorney-in-fact of the Borrowers, with the power and right, in the name or
      on
      behalf of the Borrowers, without notice to or assent by the Borrowers, in terms
      of the first three paragraphs of Article 2554 of the Mexican Federal Civil
      Code
      and the correlative articles of the other States of Mexico and the Federal
      District and Article 9 of the General Law of Negotiable Instruments and Credit
      Transactions to the extent permitted by Applicable Law, to take any action
      in
      connection with any lawsuits and collections, acts of administration and acts
      of
      ownership, and to execute any instruments which the Lender reasonably may deem
      necessary to create, preserve, continue or perfect any Lien granted or purported
      to be granted under or pursuant to any Mexican Collateral Document and for
      no
      other purpose, but the power of attorney provided in this clause
      (xix) shall be
      used and exercised only if the Borrowers or counsel for the Borrowers fail
      to
      timely take any of the above creation, preservation, continuation or perfection
      actions, and the power of attorney granted hereby shall not cause any Loan
      Party
      to pay to the appointed attorneys in fact a compensation, fee or remuneration
      apart and different from those expressly specified hereunder; and




(xix)  evidence
      reasonably satisfactory to the Lender that the Borrowers have title consistent
      with the Borrowers’ representations and warranties in Section 5.01(j) hereof to
      all Real Property Interests necessary for the development, construction and
      operation of the Mine in accordance with Applicable Law, the Project Approvals
      and the Transaction Documents and as otherwise contemplated by the Life of
      Mine
      Plan, free and clear of any Liens, other than Permitted Liens.




(b) Taxes,
      Etc .
      All
      Taxes and Other Taxes due and payable on or prior to the Closing Date (i) in
      connection with the execution, delivery, filing, recording or admissibility
      in
      evidence of any Transaction Document or to ensure the legality, validity,
      enforceability, perfection or admissibility in evidence of the Transaction
      Documents, and (ii) in connection with the consummation of the transactions
      contemplated by, and the performance of, the Transaction Documents, shall have
      been duly paid in full or an appropriate exemption therefrom shall have been
      obtained.




(c) Representations
      and Warranties .
      The
      representations and warranties of each Loan Party, and to the Borrowers’
knowledge each Material Project Party, contained in any Transaction Document,
      or
      which are contained in any certificate furnished at any time under it pursuant
      to any Transaction Document shall be true and correct in all material respects
      on and as of the Closing Date with the same force and effect as if made on
      and
      as of such date (or, if any such representation or warranty specifically speaks
      of an earlier date, such representation or warranty shall have been true and
      correct in all material respects on and as of such earlier date).




(d) Absence
      of Defaults .
      No
      Prospective Event of Default or Event of Default shall have occurred and be
      Continuing.




(e) Material
      Adverse Effect .
      Since
      July 31, 2007, there shall not have occurred any event which has had or
      could be reasonably expected to have, either individually or in the aggregate,
      a
      Material Adverse Effect.




(f) Certain
      Fees and Expenses .
      The
      Borrowers shall have paid all accrued reasonable expenses of the Lender
      (including all reasonable fees and expenses of the Consultants, advisors and
      counsel to the Lender) and any fees due to the Lender as of the Closing Date
      and
      shall have delivered to the Lender the Guarantor Warrants.




38




(g) Hedge
      Agreements .
      Each of
      the Hedge Agreements required to be entered into as of the Closing Date pursuant
      to Section 7.01(p)(i) shall be
      in full force and effect.




(h) **[Reserved.]**




(i) Compliance
      with Original Credit Agreement .
      Lender
      shall be satisfied that Borrowers have complied in all material respects with
      all reporting and notice requirements set forth in the Original Credit
      Agreement.




Section
      4.02  Conditions
      Precedent to All Borrowings .
      The
      obligations of the Lender to make any Loan is subject to the fulfillment or
      waiver in writing of the following conditions precedent as determined by the
      Lender prior to the related Borrowing:




(a) Taxes,
      Etc .
      All
      Taxes and Other Taxes due and payable on or prior to the date of such Borrowing
      (i) in connection with the execution, delivery, filing, recording or
      admissibility in evidence of any Transaction Document or to ensure the legality,
      validity, enforceability, perfection or admissibility in evidence of the
      Transaction Documents, and (ii) in connection with the consummation of the
      transactions contemplated by, and the performance of, the Transaction Documents,
      shall have been duly paid in full or an appropriate exemption therefrom shall
      have been obtained.




(b) Representations
      and Warranties .
      The
      representations and warranties of each Loan Party and, to the Borrowers’
knowledge each Material Project Party contained in any Transaction Document,
      or
      which are contained in any certificate furnished at any time under or pursuant
      to any Transaction Document, shall be true and correct in all material respects
      on and as of the date of such Borrowing with the same force and effect as if
      made on and as of such date (or, if any such representation and warranty
      specifically speaks of an earlier date, such representation and warranty shall
      have been true and correct in all material respects on and as of such earlier
      date).




(c) Absence
      of Defaults .
      No
      Prospective Event of Default or Event of Default shall have occurred and be
      Continuing or would result from such Borrowing or from the application of
      proceeds therefrom.




(d) Material
      Adverse Effect .
      Since
      July 31, 2007, there shall not have occurred any event which has had or could
      be
      reasonably expected to have, either individually or in the aggregate, a Material
      Adverse Effect.




(e) Loan
      Notice .
      The
      Lender shall have received a Loan Notice in accordance with the requirements
      hereof.




(f) Fees
      and Expenses .
      The
      Borrowers shall have paid all accrued reasonable expenses of the Lender
      (including all reasonable fees and expenses of the Consultants, advisors and
      counsel to the Lender) and any fees due to the Lender as of the date of such
      Borrowing.




39




(g) Other
      Documents .
      The
      Lender shall have received such other approvals, documents, certificates and
      opinions relating to the Project as it may reasonably request.




(h) Due
      Diligence .
      The
      Lender shall have completed a due diligence investigation of the Borrowers,
      the
      Guarantor and the Project in scope, and with results, satisfactory to the
      Lender, and nothing shall have come to the attention of the Lender during the
      course of such due diligence investigation to lead it to believe (i) that
      any information provided to the Lender in connection with the Project or any
      aspect of the Life of Mine Plan has become misleading, incorrect or incomplete
      in any material respect, (ii) that the Borrowers will not have valid title
      to all material Real Property Interests comprising the Mine, and (iii) that
      any event shall have occurred which has had or could be reasonably expected
      to
      have, either individually or in the aggregate, a Material Adverse Effect




**ARTICLE
      V**


**REPRESENTATIONS
      AND WARRANTIES**




Section
      5.01  Representations
      and Warranties of the Borrowers .
      Each of
      the Borrowers represents and warrants to the Lender that:




(a) Organization
      and Ownership .




(i)  Each
      of
      Oro de Altar and MSR (A) is a *sociedad
      de responsabilidad limitada de capital variable* ,
      duly
      organized and validly existing under the laws of Mexico, (B) has all power
      and authority to own or lease and operate its property and, in the case of
      MSR,
      to carry out the development, construction, completion, ownership and operation
      of the Mine and (C) is duly qualified and is licensed and in good standing
      under the laws of each other jurisdiction where its ownership, lease or
      operation of properties or the conduct of its business requires such
      qualification or license, except where the failure to be so qualified could
      not
      reasonably be expected to have a Material Adverse Effect. The Borrowers do
      not
      own any properties or assets and have not engaged in any business or activity
      other than those relating to or to be used in connection with the Mine and
      the
      Project. All of the outstanding Equity Interests in each of the Borrowers have
      been validly issued in compliance with the Constituent Documents of such
      Borrower and Applicable Law, are fully paid, non-assessable and free and clear
      of all Liens, except for Liens for taxes not yet due or which are subject to
      Contest and any Liens created in favor of the Lender under or pursuant to
      the Loan Documents.




(ii)  As
      of the
      date hereof, the Guarantor owns 99.99% of the authorized Equity Interests in
      MSR
      and 51% of the authorized Equity Interests in Oro de Altar and the Pledgor
      owns
      0.01% of the authorized Equity Interests in MSR and 49% of the authorized Equity
      Interests in Oro de Altar.




40




(b) Authorization;
      No Contravention .
      The
      execution, delivery and performance by it of each Transaction Document to which
      it is or is to be a party are within its corporate or other organizational
      powers, have been duly authorized by all necessary corporate or other
      organizational action, and do not and will not (i) contravene the terms of
      its
      Constituent Documents; (ii) conflict with or result in any breach or
      contravention of, or the creation of any Lien under, or require any payment
      to
      be made under (A) any Contractual Obligation to which it is a party or affecting
      it or its properties or (B) any order, injunction, writ or decree of any
      Governmental Authority or any arbitral award to which it or its property is
      subject; or (c) violate any Applicable Law. It is not in breach of any
      Contractual Obligation, the breach of which has had or could be reasonably
      expected to have, either individually or in the aggregate, a Material Adverse
      Effect.




(c) Consents
      and Approvals for Project, Etc .




(i)  Other
      than those Project Approvals which are not currently necessary or required
      for
      the development or operation of the Mine as contemplated by the Life of Mine
      Plan or otherwise required to be in effect under the terms of Applicable Law,
      this Agreement or the other Transaction Documents, as of the Closing Date,
      no
      approval, consent, exemption, authorization (including any Environmental Permit)
      or other action by, or notice to, or filing with, any Governmental Authority
      or
      any other Person is necessary or required as of such Closing Date in connection
      with the development, construction or operation of the Mine in accordance with
      Applicable Law and as otherwise contemplated by this Agreement, the other
      Transaction Documents and the Life of Mine Plan, except for the approvals,
      consents, exemptions, authorizations, actions, notices, filings and licenses
      listed on Schedule 5.01(c) hereto
      (the “ ***Project
      Approvals*** ”)
      all of
      which, as of the Closing Date and except as otherwise noted on Schedule
      5.01(c), (A) have been duly obtained, taken, given or made, (B) are in full
      force and effect, (C) are not subject to appeal, intervention or similar
      proceeding, and (D) are free from material conditions or requirements that
      have not been met or complied with.




(ii)  It
      does
      not reasonably expect that any of the Project Approvals which have not been
      obtained as of the date this representation or warranty is made or deemed to
      be
      made, but which will be required in the future, will not be obtained in the
      ordinary course as and when required under the terms of the Transaction
      Documents, the Life of Mine Plan and Applicable Law or that such Project
      Approvals will be subject to any conditions or requirements that cannot be
      met
      or complied with.




(iii)  All
      applicable waiting periods in connection with any Project Approval required
      to
      be in effect as of the date this representation or warranty is made or deemed
      to
      be made for the operation of the Mine as contemplated by the Life of Mine Plan
      or pursuant to the terms of Applicable Law, this Agreement or the other
      Transaction Documents have expired without any action having been taken by
      any
      Governmental Authority restraining, preventing or imposing materially adverse
      conditions upon any such Project Approval and no event has occurred that could
      reasonably be expected to result in the revocation, termination or adverse
      modification of any such Project Approval.




(d) Binding
      Agreement .
      This
      Agreement has been, and each other Transaction Document to which it is or will
      become a party, when delivered hereunder, will have been duly executed and
      delivered by it. This Agreement constitutes, and each other Transaction Document
      when delivered hereunder will constitute its legal, valid and binding obligation
      enforceable against it in accordance with its terms.




41




(e) Consents
      and Approvals for Agreements .




(i)  No
      approval, consent, exemption or authorization or other action by, or notice
      to,
      or filing with, any Governmental Authority or any other Person is necessary
      for
      (A) the execution, delivery and performance by, or enforcement against, it
      of each of the Transaction Documents to which it is a party, (B) the grant
      by the Loan Parties of the Liens created under the Collateral Documents,
      (C) the perfection and maintenance of the Liens created under the
      Collateral Documents (including the first priority nature thereof), or
      (D) the exercise by the Lender of its rights under the Loan Documents or
      the remedies in respect of the Collateral pursuant to the Collateral Documents,
      except for the approvals, consents, exemptions, authorizations, actions, notices
      and filings listed on Schedule 5.01(e) (the “ ***Agreement
      Approvals*** ”),
      all
      of which, on or prior to the Closing Date, (1) have been duly obtained, taken,
      given or made, (2) are in full force and effect, (3) are not subject to
      appeal, intervention or similar proceeding and (4) are free from conditions
      or requirements that have not been met or complied with, other than those
      Agreement Approvals which are not currently necessary or required to be in
      effect under the terms of Applicable Law, this Agreement or the other
      Transaction Documents as indicated in Schedule 5.01(e) .




(ii)  It
      does
      not reasonably expect that any of the Agreement Approvals which have not been
      obtained as of the date of this representation or warranty is made or deemed
      to
      be made, but which will be required in the future, will not be obtained in
      due
      course as and when required under the terms of the Transaction Documents, the
      Life of Mine Plan and Applicable Law or that such Agreement Approvals will
      be
      subject to conditions or requirements that cannot be met or complied
      with.




(iii)  All
      applicable waiting periods in connection with any Agreement Approval required
      to
      be in effect as of the date this representation or warranty is made or deemed
      to
      be made pursuant to the terms of Applicable Law, this Agreement or the other
      Transaction Documents have expired without any action having been taken by
      any
      Governmental Authority restraining, preventing or imposing materially adverse
      conditions upon any such Agreement Approval and no event has occurred that
      could
      reasonably be expected to result in the revocation, termination or adverse
      modification of any such Agreement Approval.




(f) Litigation .
      There
      are no actions, suits, proceedings, claims or disputes pending or, to its
      knowledge after due and diligent investigation, threatened or contemplated,
      at
      law, in equity, in arbitration or before any Governmental Authority by or
      against it or against any of its properties, assets or revenues that
      (i) purport to affect or pertain to this Agreement or any other Transaction
      Document or the consummation of the transactions contemplated hereby or thereby,
      or (ii) either individually or in the aggregate, if determined adversely, could
      reasonably be expected to have a Material Adverse Effect.




42




(g) Financial
      Statements .




(i)  Each
      of
      its financial statements and the related consolidated statements of income
      or
      operations, shareholders’ equity and cash flows delivered to the Lender pursuant
      to Sections
      4.01(a)(ix) and 10.01(b) (A) were
      prepared in accordance with Mexican GAAP or U.S. GAAP, as applicable,
      consistently applied throughout the period covered thereby, except as otherwise
      expressly noted therein, subject, in the case of quarterly financial statements,
      to year-end adjustments and the absence of footnotes; (B) fairly present its
      financial condition as of the date thereof and its results of operations for
      the
      period covered thereby, subject in the case of any such unaudited financial
      statements and related statements of income or operations, shareholders’ equity
      and cash flows, to the absence of footnotes and to normal year-end adjustments;
      and (C) show all of its material Indebtedness and other material liabilities,
      direct or contingent, as of the date thereof, including liabilities for
      taxes.




(ii)  Since
      the
      date of its most recently delivered audited annual financial statements, there
      has been no event or circumstance, either individually or in the aggregate,
      that
      has had or could reasonably be expected to have a Material Adverse
      Effect.




(h) Project
      Information .




(i)  It
      has
      disclosed or provided to the Lender all agreements, instruments and corporate
      or
      other restrictions to which it is subject, and all other matters known to it,
      that, individually or in the aggregate, could reasonably be expected to result
      in a Material Adverse Effect. No report, financial statement, certificate or
      other information prepared and furnished by it, and to its knowledge none of
      the
      reports or other information furnished on its behalf, to the Lender in
      connection with the Project and the negotiation of this Agreement or otherwise
      prepared and delivered hereunder or any other Loan Document (as modified or
      supplemented by other information so furnished) contains any material
      misstatement of fact or omits to state any material fact necessary to make
      the
      statements therein, taken as a whole, in the light of the circumstances under
      which they were made, not misleading. There are no facts or circumstances known
      to it which, individually or in the aggregate, could reasonably be expected
      to
      have a Material Adverse Effect and which have not been disclosed to the Lender
      (other than facts and circumstances which are available to the
      public).




(ii)  The
      forecasted balance sheets, income statements and cash flow statements as well
      as
      other projections and other forward-looking statements and forecasts with
      respect to it and the Project (including those contained in the Financial Model
      or the Life of Mine Plan) delivered to the Lender are a fair and reasonable
      description of what they purport to describe and were prepared in good faith
      on
      the basis of the assumptions stated therein, which assumptions were fair in
      the
      light of the conditions existing at the time of delivery of such projections,
      statements or forecasts and represented, at the time of delivery, its best
      estimate of its future financial performance.




(i) No
      Immunity .
      Neither
      it nor any of its properties has any immunity from jurisdiction of any court
      otherwise having valid subject matter and personal jurisdiction or from set-off
      or any legal process (whether through service or notice, attachment prior to
      judgment, attachment in aid of execution, execution or otherwise). The
      execution, delivery and performance by it of the Transaction Documents to which
      it is a party are private and commercial acts performed for private and
      commercial purposes.




43




(j) Title
      to Properties, Etc .




(i)  It,
      together with the other Borrower, has valid, registered title to, or a valid
      leasehold interest in or other right to use, all Real Property Interests
      necessary for the operation of the Mine in accordance with Applicable Law,
      the
      Project Approvals and the Material Project Agreements and as otherwise
      contemplated by the Life of Mine Plan, free and clear of any Liens, other than
      Permitted Liens. To its knowledge, the Mining Concessions and any other Real
      Estate Rights Agreement relating to any Real Property Interest necessary for
      the
      operation of the Mine in accordance with Applicable Law, the Project Approvals
      and the Material Project Documents and as otherwise contemplated by the Life
      of
      Mine Plan have been validly granted to it and registered (to the extent required
      by Applicable Law to insure valid title) in its name or the name of the other
      Borrower and are in full force and effect in accordance with their
      terms.




(ii)  It
      has
      good, legal and valid title to all of its personal property and assets, free
      and
      clear of any Liens, other than Permitted Liens.




(iii)  All
      of
      the services, utilities, equipment and materials or supplies necessary at the
      time of this representation to develop, construct, operate and maintain the
      Mine
      in accordance with Applicable Law, the Project Approvals and the Transaction
      Documents and as otherwise contemplated by the Life of Mine Plan are available
      or will be made available to the Borrowers or the Mining Contractor, including
      those available from time to time at commercially reasonable rates consistent
      with those contemplated in the Life of Mine Plan and the Financial Model.




(iv)  Collectively,
      the Borrowers possess or have the direct or indirect benefit of all other rights
      necessary for them to develop and operate the Mine in compliance with Applicable
      Law, the Project Approvals and the Transaction Documents and as otherwise
      contemplated by the Life of Mine Plan.




(v)  The
      Mine,
      if built and operated in accordance with the plans and specifications contained
      in the Life of Mine Plan, is reasonably expected to conform to and comply in
      all
      material respects with all covenants, conditions, restrictions and reservations
      in Applicable Law, the Project Approvals and the Transaction Documents.




(vi)  It
      has
      not executed or delivered any powers of attorney, including, without limitation,
      any general powers of attorney for acts of domain ( *poderes
      generales para actos de dominio* ),
      other
      than any such powers of attorney necessary for the normal operation of the
      Project in the ordinary course of business in a manner otherwise consistent
      with
      its obligations and undertakings under this Agreement and the other Transaction
      Documents.




(vii)  No
      mortgage, pledge, financing statement or other instrument or recordation similar
      in effect covering all or any part of the Collateral purported to be covered
      by
      the Collateral Documents or listing such Borrower or any trade name of such
      Borrower as debtor is on file in any recording office, except such as may have
      been filed in favor of the Lender or in respect of any other Permitted
      Lien.




44




(k) Payment
      of Taxes .




(i)  It
      has
      filed or caused to be filed all tax returns and reports required to be filed
      and
      has paid all taxes, assessments, fees and other governmental charges levied
      or
      imposed upon it or its properties, income or assets otherwise due and payable
      (including all income, withholding, value added, real and personal property
      taxes and asset taxes ( *impuesto
      al activo* )),
      except those which are subject to Contest.




(ii)  There
      is
      no proposed tax assessment against it, including, without limitation, any tax
      liability in respect of withholding taxes, in connection with the Project,
      which
      is not specifically reflected in the Financial Model. The Financial Model
      accurately reflects all material taxes that will be due and payable by it under
      current Applicable Law, assuming that it has the income and expenses reflected
      in the Financial Model.




(iii)  It
      is not
      a party to any tax sharing agreement.




(l) Taxes,
      Fees and Duties .




(i)  All
      applicable Other Taxes have been paid in full (except as may be required for
      the
      registration of the Collateral Documents which will be paid (or have been paid)
      in full on or prior to the Closing Date).




(ii)  No
      Taxes
      are required to be paid in connection with the execution, delivery, filing,
      recording, perfection, priority, validity, enforceability or admissibility
      in
      evidence of the Transaction Documents except as may be required for the
      registration of the Collateral Documents which will be paid (or have been paid)
      in full on or prior to the Closing Date.




(iii)  No
      Taxes
      whatsoever are, under Applicable Law, imposed, assessed, levied or collected
      by
      Mexico or any political subdivision or taxing authority thereof or therein
      on,
      or in respect of, principal, interest, commissions or other amounts payable
      to
      the Lender under the Loan Documents, except, as of the date hereof, in respect
      of interest payments as to which there is a withholding tax payable in
      accordance with Article 195 of the Mexican Income Tax Law (except to the extent
      exempt pursuant to Article 196 of the Mexican Income Tax Law) or with the
      Mexico-US tax treaty if applicable.




(m) Ranking .
      The
      Secured Obligations are its direct, unconditional, and unsubordinated senior
      secured obligations, and such Secured Obligations rank, in right of payment,
      senior in right of payment and collateral security to all of its other
      obligations or Indebtedness, other than those obligations or Indebtedness
      secured by a Permitted Lien.




(n) Contracts
      with Affiliates .
      Each
      agreement, arrangement, understanding or dealing entered into by it with any
      of
      its Affiliates (the “ ***Affiliate
      Contracts*** ”)
      on or
      prior to the Closing Date is listed in Schedule 5.01(n) or has
      otherwise been entered into after the Closing Date in compliance with the terms
      of this Agreement.




45




(o) Material
      Project Agreements, Etc .




(i)  A
      copy of
      each Material Project Agreement, Support Instrument related thereto, Secured
      Hedge Agreement, Affiliate Contract, and if available, Agreement Approval and
      Project Approval presently in effect has been furnished or provided to the
      Lender, and each such copy is true, correct and complete in all material
      respects.




(ii)  None
      of
      the Material Project Agreements, or Support Instruments related thereto, has
      been amended, modified or supplemented or has been rescinded, terminated,
      invalidated, suspended or otherwise impaired, other than in accordance with
      any
      restrictions on the foregoing actions contained in this Agreement.




(iii)  Each
      Material Project Agreement and each Support Instrument related thereto that
      is
      required for the operation of the Mine in accordance with the Life of Mine
      Plan
      is in full force and effect.




(iv)  No
      default by it or, to its knowledge, any other party, has occurred and is
      continuing, or would result from the consummation of the transactions
      contemplated under the Loan Documents, under any of the Material Project
      Agreements, Support Instruments related thereto, Affiliate Contracts, Agreement
      Approval or Project Approvals in effect as of the date on which this
      representation is made.




(p) Compliance .
      It is
      in compliance with the requirements of all Applicable Laws, Agreement Approvals,
      Project Approvals and all orders, writs, injunctions and decrees applicable
      to
      it or to its properties (such compliance to include, without limitation,
      compliance with the Foreign Corrupt Practices Act of 1977, the Patriot Act,
      Terrorism Laws and all other Applicable Laws relating to money laundering or
      terrorist activities), except in such instances in which (i) such requirement
      of
      Applicable Law, Agreement Approval, Project Approval or order, writ, injunction
      or decree is subject to Contest or (ii) the failure to comply therewith, either
      individually or in the aggregate, could not reasonably be expected to have
      a
      Material Adverse Effect.




(q) Environmental
      Compliance .




(i)  Except
      as
      set forth on Schedule
      5.01(q) hereto,
      its operations and properties comply in all material respects with all
      applicable Environmental Laws and Environmental Permits, all past non-compliance
      with such Environmental Laws and Environmental Permits by the Borrowers has
      been, or will be, resolved as required by applicable Environmental Laws and
      Environmental Permits, and no circumstances exist at the Mine that could
      reasonably be likely to have a Material Adverse Effect.




(ii)  It
      conducts in the ordinary course of business a review of the effect of existing
      Environmental Laws and claims alleging potential liability or responsibility
      for
      violation of any Environmental Law with respect to the Mine, and as a result
      thereof it has reasonably concluded that such Environmental Laws and claims
      could not, individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect.




46




(iii)  To
      its
      knowledge, there is no asbestos or asbestos-containing material on any property
      currently owned or operated by it and Hazardous Materials have not been
      released, discharged or disposed on any property owned or operated by it other
      than in material compliance with Environmental Laws and Environmental
      Permits.




(iv)  As
      of the
      Closing Date, it is not undertaking, and has not completed, either individually
      or together with other potentially responsible parties, any investigation or
      assessment or remedial or response action relating to any actual or threatened
      release, discharge or disposal of Hazardous Materials at any site, location
      or
      operation, either voluntarily or pursuant to the order of any Governmental
      Authority or the requirements of any Environmental Law, except as set forth
      in
      the Environmental Management Plan; and all Hazardous Materials generated, used,
      treated, handled or stored at, or transported to or from, any property owned
      or
      operated by it have been disposed of in a manner consistent with any applicable
      Environmental Laws and not reasonably expected to result in a material liability
      other than remediation expense or other expenses set
      forth
      in the Environmental Management Plan .




(r) Investment
      Company .
      Neither
      it nor any Person Controlling it is or is required to be registered as an
“ *investment
      company* ”
under
      the Investment Company Act. Neither the making of any Loan nor the application
      of the proceeds or repayment thereof by it, nor the consummation of the other
      transactions contemplated by the Transaction Documents, will violate any
      provision of any such Act or any rule, regulation or order of the SEC
      thereunder.




(s) Proper
      Legal Form .
      This
      Agreement and each other Loan Document to which it is a party are in proper
      legal form under the laws of Mexico for the enforcement thereof in accordance
      with their terms against it (including enforcement of the choice of law
      provisions), and, to ensure the legality, validity, enforceability and
      admissibility in evidence of each Loan Document in Mexico, it is not necessary
      that any Loan Document or any other document be filed or recorded with any
      court
      or other authority in Mexico or that any stamp or similar tax be paid on or
      in
      respect of any Loan Document, except for those Agreement Approvals which are
      not
      currently necessary as indicated in Schedule
      5.01(e) and
      which it in good faith expects will be obtained in the ordinary course as and
      when required; *provided* , *however* ,
      that a
      Spanish translation by a Mexican court-approved translator will be required
      for
      the recordation in Mexico of any such document not written in
      Spanish.




(t) ERISA,
      Etc .




(i)  It
      is
      neither a “ *plan
      sponsor* ”
(as
      defined in Section 3(16)(B) of ERISA) of an ERISA Plan nor a participating
      employer in an ERISA Plan and has incurred no obligation in connection with
      an
      ERISA Plan. It is not, and has not been within the preceding six (6) years,
      an
      ERISA Affiliate of any Person. Neither the execution of this Agreement or any
      other Transaction Document nor the consummation of the transactions contemplated
      hereby or thereby will involve a “ *prohibited
      transaction* ”
within
      the meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue
      Code of 1986 which is not exempt under Section 406 of ERISA or under Section
      4975 of the Internal Revenue Code of 1986.




47




(ii)  With
      respect to each employee benefit scheme or arrangement mandated by a government
      other than the United States (a “ ***Foreign
      Government Scheme or Arrangement*** ”)
      and
      with respect to each employee benefit plan maintained or contributed to by
      it in
      accordance therewith (a “ ***Foreign
      Plan*** ”):




(A)
      Any
      employer and employee contributions required by law or by the terms of any
      Foreign Government Scheme or Arrangement or any Foreign Plan have been made,
      or,
      if applicable, accrued, in accordance with normal accounting
      practices.




(B)
      The
      accrued contributions are sufficient pursuant to Applicable Law to procure
      or
      provide for the accrued benefit obligations, as of the date hereof, with respect
      to all current and former participants in such Foreign Plan according to the
      actuarial assumptions and valuations most recently used to account for such
      obligations in accordance with applicable GAAP.




(C)
      Each
      Foreign Plan required to be registered has been registered and has been
      maintained in good standing with applicable regulatory authorities as required
      by Applicable Law.




(u) Use
      of
      Proceeds .
      The
      proceeds of the Term Loans will be used solely to pay Approved Project Costs.
      The proceeds of the Revolving Loans shall be used to fund general corporate
      and
      working capital requirements of the Borrowers including the acquisition and/or
      lease of real estate and mineral concessions and rights in Mexico and activities
      incidental thereto.




(v) Indebtedness .
      Set
      forth on Schedule 5.01(v) is a
      complete and accurate list and description of all Indebtedness owed by it or
      the
      Guarantor as of the date of this Agreement.




(w) Investments
      and Subsidiaries .




(i)  As
      of the
      date of this Agreement, it has no Investments.




(ii)  It
      has no
      Subsidiaries and is not a general or limited partner in any general or limited
      partnership or party to any joint venture.




(iii)  It
      has
      not engaged in any business other than entering into the Transaction Documents
      to which it is a party and participating in the transactions contemplated
      thereby, and such other business as may be reasonably incidental in the ordinary
      course to the development, construction, financing, ownership, maintenance,
      management and operation of the Mine and the Project in accordance with the
      Life
      of Mine Plan and the Transaction Documents.




48




(iv)  It
      is not
      party to or bound by any Contractual Obligation other than as contemplated
      by
      the Transaction Documents to which it is a party or those Contractual
      Obligations not prohibited by this Agreement.




(x) Margin
      Regulations .
      It is
      not engaged and will not engage, principally or as one of its important
      activities in the business of purchasing or carrying *margin
      stock* (within
      the meaning of Regulation U issued by the FRB), or extending credit for the
      purpose of purchasing or carrying margin stock and no proceeds of any Borrowing
      will be used to purchase or carry any margin stock or to extend credit to others
      for the purpose of purchasing or carrying any margin stock.




(y) Intellectual
      Property .
      It
      owns, or possesses the right to use, all of the trademarks, service marks,
      trade
      names, copyrights, patents, patent rights, franchises, licenses and other
      intellectual property rights currently required in connection with the
      development and operation of the Mine.




(z) Perfection,
      Etc .
      As of
      the Closing Date, all filings and other actions necessary or desirable to
      perfect and protect the security interest in the Collateral created under the
      Collateral Documents have been duly made or taken and are in full force and
      effect, and on and after the Closing Date, the Collateral Documents create
      in
      favor of the Lender a valid and, together with such filings and other actions,
      perfected first priority security interest in the Collateral, subject to
      Permitted Liens, securing the payment of the Secured Obligations. It is the
      legal and beneficial owner of the Collateral purported to be granted by it
      under
      the Collateral Documents free and clear of any Lien, except for the Liens and
      security interests created or permitted under the Loan Documents.




(aa) Events
      of Default, Etc .
      No
      Prospective Event of Default or Event of Default has occurred and is
      Continuing.




(bb) Translations .
      To the
      Borrowers’ knowledge, all English translations of Transaction Documents executed
      in a language other than English and delivered by or on behalf of it to the
      Lender pursuant to the terms of the Loan Documents are true, correct and
      complete translations thereof.




(cc) Insurance .
      Attached hereto as Schedule
      5.01(cc) is a
      true and complete list of all insurance polices maintained or caused to be
      maintained by or for the Borrowers or their assets (including without limitation
      any casualty, liability, automobile, directors and officers insurance) as of
      the
      date hereof.




(dd) Original
      Credit Agreement Notice and Reporting .
      It has
      complied in all material respects with its reporting and notice obligations
      under the Original Credit Agreement.




Section
      5.02  Representations
      of the Guarantor .
      The
      Guarantor hereby represents and warrants to the Lender that:




(a) Organization .
      It (i)
      is a corporation duly organized and validly existing under the laws of the
      State
      of Delaware, (ii) has all power and authority to own or lease and operate
      its property and (iii) is duly qualified and is licensed and in good
      standing under the laws of each other jurisdiction where its ownership, lease
      or
      operation of properties or the conduct of its business requires such
      qualification or license, except where the failure to be so qualified could
      not
      reasonably be expected to have a Material Adverse Effect.




49




(b) Authorization;
      No Contravention .
      The
      execution, delivery and performance by it of each Transaction Document to which
      it is or is to be a party are within its corporate or other powers, have been
      duly authorized by all necessary corporate or other organizational action,
      and
      do not and will not (i) contravene the terms of its Constituent Documents;
      (ii)
      conflict with or result in any breach or contravention of, or the creation
      of
      any Lien under, or require any payment to be made under (A) any Contractual
      Obligation to which it is a party or affecting it or its properties or (B)
      any
      order, injunction, writ or decree of any Governmental Authority or any arbitral
      award to which it or its property is subject; or (c) violate any Applicable
      Law.
      It is not in breach of any Contractual Obligation, the breach of which has
      had
      or could be reasonably expected to have, either individually or in the
      aggregate, a Material Adverse Effect.




(c) Binding
      Agreement .
      This
      Agreement has been, and each other Transaction Document to which it is or will
      become a party, when delivered hereunder, will have been duly executed and
      delivered by it. This Agreement constitutes, and each other Transaction Document
      when delivered hereunder will constitute its legal, valid and binding obligation
      enforceable against it in accordance with its terms.




(d) Consents
      and Approvals for Agreements .
      No
      approval, consent, exemption or authorization or other action by, or notice
      to,
      or filing with, any Governmental Authority or any other Person is necessary
      for the execution, delivery and performance by, or enforcement against, it
      of each of the Transaction Documents to which it is a party other than those
      that have been obtained or made in connection herewith.




(e) Litigation .
      There
      are no actions, suits, proceedings, claims or disputes pending or, to its
      knowledge after due and diligent investigation, threatened or contemplated,
      at
      law, in equity, in arbitration or before any Governmental Authority by or
      against it or against any of its properties, assets or revenues that
      (i) purport to affect or pertain to this Agreement or any other Transaction
      Document or the consummation of the transactions contemplated hereby or thereby,
      or (ii) either individually or in the aggregate, if determined adversely, could
      reasonably be expected to have a Material Adverse Effect.




(f) Financial
      Statements .
      Each of
      its financial statements and the related consolidated statements of income
      or
      operations, shareholders’ equity and cash flows delivered to the Lender pursuant
      to Sections
      4.01(a)(ix) and 10.01(b) (i) were
      prepared in accordance with Applicable GAAP, consistently applied throughout
      the
      period covered thereby, except as otherwise expressly noted therein; (ii) fairly
      present its financial condition as of the date thereof and its results of
      operations for the period covered thereby, subject in the case of any such
      unaudited financial statements and related statements of income or operations,
      shareholders’ equity and cash flows, to the absence of footnotes and to normal
      year-end adjustments; and (iii) show all of its material Indebtedness and other
      material liabilities, direct or contingent, as of the date thereof, including
      liabilities for taxes.




50




(g) Ownership
      of Pledgor .
      It owns
      one hundred percent (100%) of the Equity Interests in the Pledgor.




**ARTICLE
      VI**


**ACCOUNTS**




Section
      6.01  Accounts .




(a) Offshore
      Operating Account .
      The
      Borrowers shall continue to maintain a bank operating account in New York City,
      New York with the Offshore Account Holder (the “ ***Offshore
      Operating Account*** ”),
      provided that the Offshore Operating Account shall continue to be subject to
      the
      terms of the New York Account Pledge Agreement and the New York Control
      Agreement.




(b) Insurance
      Proceeds Account .
      The
      Borrower shall establish or cause to be established an Insurance Proceeds
      Account (the “ ***Insurance
      Proceeds Account*** ”)
      in New
      York City, New York with the Offshore Account Holder, provided that the Offshore
      Account Holder shall execute an account control agreement, in form and substance
      satisfactory to Lender with respect to such account.




(c) Onshore
      Operating Accounts .
      Borrower may continue to maintain bank accounts in Mexico (the “ ***Onshore
      Operating Accounts*** ”),
      provided that the average balance on deposit during any consecutive thirty
      (30)
      day period in the Onshore Operating Accounts shall not exceed three (3) months
      Operating Costs and provided further that the Onshore Operating Accounts shall
      be subject to the lien of the Account Pledge Agreement and the Lenders shall
      have the right to direct payments from the Onshore Operating Accounts in
      accordance with the terms of the Account Pledge Agreement.




Section
      6.02  Offshore
      Operating Account .




(a) Loan
      Proceeds .
      The
      proceeds of all Loans advanced hereunder shall be directly deposited into,
      or
      credited to, the Offshore Operating Account.




(b) Offshore
      Operating Account .
      Subject
      to Sections
      6.02(a) and 6.03 ,
      the
      Borrowers shall irrevocably direct each Person from whom they receive or are
      entitled to receive any Project Revenues or any other amounts payable to the
      Borrowers, including, without limitation, (i) any proceeds from the sale of
      any property or assets permitted under Section 8.01(f), (ii) any Business
      Interruption Proceeds, and (iii) all amounts payable by the Lender under
      any Secured Hedge Agreement, to pay such Project Revenues or other amounts
      to
      the Lender for deposit into, or credit to, the Offshore Operating Account.
      Prior
      to the occurrence of an Event of Default, the Borrowers shall have the right
      to
      make deposits to or withdrawals from the Offshore Operating Account in
      accordance with the terms of the New York Control Agreement. Upon the occurrence
      of an Event of Default, the Lender shall have the right to provide a notice
      of
      default to the Offshore Account Holder in accordance with the terms of the
      New
      York Control Agreement and Borrower shall no longer be permitted to make any
      withdrawals from such Offshore Operating Account.


51




Section
      6.03  Insurance
      Proceeds Account .




(a) Lender
      Control .
      The
      Borrowers shall direct each Person from whom they receive or are entitled to
      receive Insurance Proceeds to pay such Insurance Proceeds directly to the Lender
      for deposit into, or credit to, the Insurance Proceeds Account. If the Borrowers
      or any Affiliate shall receive any such Insurance Proceeds, the Borrowers shall
      deliver, or shall cause such Affiliate to deliver, such Insurance Proceeds
      in
      the exact form received (with any necessary endorsement) to the Lender together
      with instructions that such Insurance Proceeds be deposited into, or credited
      to, the Insurance Proceeds Account. The Lender shall have the right to receive
      all Insurance Proceeds directly from the Persons paying the same. All Insurance
      Proceeds received by the Lender and identified as such shall be promptly
      deposited into, or credited to, the Insurance Proceeds Account. The Borrowers
      shall not have any rights against or to Insurance Proceeds on deposit in, or
      credited to, the Insurance Proceeds Account, as third-party beneficiary or
      otherwise. In no event shall any Insurance Proceeds deposited into, or credited
      to, the Insurance Proceeds Account, be registered in the name of the Borrowers,
      payable to the order of the Borrowers, or specially endorsed to the Borrowers,
      except to the extent that the foregoing have been specially endorsed to the
      Lender or endorsed in blank.




(b) Deposits .
      Any
      Insurance Proceeds deposited into, or credited to, the Insurance Proceeds
      Account shall be applied as follows:




(i)  if
      no
      Event of Default has occurred and is Continuing and the net proceeds received
      by
      the Lender in respect of any Casualty Event are less than U.S.$2,000,000, the
      Lender shall transfer portions of such sum from the Insurance Proceeds Account
      to the Offshore Operating Account from time to time upon the request of the
      Borrowers for the purpose of making payments required to finance the repair,
      reconstruction or replacement of the damaged property as required hereunder;
      and




(ii)  if
      the
      net proceeds received by the Lender in respect of any Casualty Event are greater
      than or equal to U.S.$2,000,000, on the next occurring Quarterly Date, the
      Lender shall apply the funds as a mandatory prepayment of the Loans in
      accordance with Section
      2.03 ;
      provided that if the Lender in its sole discretion determines that the Borrowers
      may repair, reconstruct or replace the damaged property, such amounts shall
      be
      made available to the Borrowers in accordance with clause (i)
      above.




(c) Event
      of Default .
      Notwithstanding anything in this Section
      6.03 to the
      contrary, if any Prospective Event of Default or Event of Default shall have
      occurred and be Continuing, any funds on deposit in, or credited to, the
      Insurance Proceeds Account shall be applied in the sole discretion of the
      Lender.




Section
      6.04  Payments
      in Trust .
      If any
      payments are remitted to the Borrowers or another Person in violation of Section
      6.02 or 6.03 ,
      then
      the Borrowers or such other Person shall receive such payments into a
      constructive trust for the benefit of the Lender and subject to the Lender’s
      security interest, and shall (or shall use its commercially reasonable efforts
      to cause the Person receiving such payments to) promptly remit such payments,
      properly identified, to the Offshore Operating Account or the Insurance Proceeds
      Account as required by Section
      6.02 or 6.03 .




52




**ARTICLE
      VII**


**AFFIRMATIVE
      COVENANTS**




Section
      7.01  Affirmative
      Covenants .
      So long
      as the Lender shall have any Commitment hereunder, any Secured Hedge Agreement
      shall be in effect or any Loan or other Secured Obligation hereunder or under
      any other Loan Document which is accrued and payable shall remain unpaid or
      unsatisfied, each of the Borrowers and, with respect to clauses
      (a) , (b) , (d)(i) , (e) , (h) and (j) below,
      the Guarantor, shall:




(a) Compliance
      with Laws, Etc .
      Comply
      in all respects with all Applicable Laws and all orders, writs, injunctions
      and
      decrees applicable to it or to its business or property, except in such
      instances in which such requirement of Applicable Law or order, writ, injunction
      or decree is subject to Contest or where the failure to so comply could not
      reasonably be expected to have, individually or in the aggregate, a Material
      Adverse Effect.




(b) Payment
      of Obligations .
      Pay and
      discharge as the same shall become due and payable all of its obligations and
      liabilities unless the same are subject to Contest, including (i) all Taxes
      or Other Taxes, assessments and governmental charges or levies upon it or its
      properties or assets, unless the same are subject to Contest; (ii) all
      lawful claims that, if unpaid, would by law become a Lien upon its properties,
      unless the same are subject to Contest; and (iii) all Indebtedness as and
      when due and payable, but subject to any subordination provisions contained
      in
      any instrument or agreement evidencing such Indebtedness, unless the same are
      subject to Contest; except, in each case, where the failure to so pay or
      discharge could not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect.




(c) Compliance
      with Environmental Laws, Etc .
      Except
      where the foregoing could not reasonably be expected to have, individually
      or in
      the aggregate, a Material Adverse Effect (i) comply, and use commercially
      reasonable efforts to cause each other Person operating or occupying its
      properties to comply, with all applicable Environmental Laws (including any
      such
      Environmental Laws relating to the discharge, release, transport, disposal
      and
      cleanup of Hazardous Materials), Environmental Permits and the Environmental
      Management Plan; (ii) obtain and renew all Environmental Permits necessary
      at such point in time for its operation of the Mine; and (iii) conduct any
      investigation, study, sampling and testing, and undertake any cleanup, removal,
      remedial or other action necessary to mitigate or remediate Hazardous Materials
      at its properties, as required in accordance with applicable
      Environmental Laws and the Environmental Management Plan ; *provided* , *however* ,
      that
      the Borrowers shall not be required to undertake any such cleanup, removal,
      remedial or other action to the extent that its obligation to do so is subject
      to Contest.




(d) Preservation
      of Existence, Etc .
      (i)
      Preserve, renew and maintain in full force and effect its legal existence under
      the laws of its jurisdiction; (ii) take all reasonable action to obtain and
      maintain in full force and effect all Agreement Approvals, Project Approvals
      and
      all other rights, privileges, permits, licenses and franchises necessary at
      such
      point in time for the development and operation of the Mine in accordance with
      the Life of Mine Plan, except to the extent that failure to do so could not
      reasonably be expected to have a Material Adverse Effect; and (iii) preserve
      or
      renew all of its registered patents, trademarks, trade names and service marks,
      the non-preservation of which could reasonably be expected to have, either
      individually or in the aggregate, a Material Adverse Effect.




53




(e) Books
      and Records .
      (i)
      Maintain proper books of record and account in which full, true and correct
      entries in conformity with Applicable GAAP consistently applied shall be made
      of
      all financial transactions and matters involving its assets and business and
      (ii) maintain such books of record and account in material conformity with
      applicable requirements of any Governmental Authority having regulatory
      jurisdiction over it.




(f) Inspection
      Rights .
      Permit
      representatives and independent contractors of the Lender, including without
      limitation, the Independent Engineer, to visit and inspect any of its
      properties, to examine its corporate, financial and operating records, and
      make
      copies thereof or abstracts therefrom, and to discuss its affairs, finances
      and
      accounts with its directors, officers and independent public accountants, all
      at
      such reasonable times during normal business hours and as often as may be
      reasonably desired, upon reasonable advance notice to such Borrower and subject
      to (i) conducting such inspections in a manner that does not unreasonably
      disrupt the Borrowers’ operations, (ii) the confidentiality provisions set
      forth in Section
      12.07 and
      (iii) applicable health and safety laws and regulations and policies
      adopted by either Borrower; *provided* , *however* that
      when an Event of Default exists the Lender (or any of its respective
      representatives or independent contractors) may do any of the foregoing at
      the
      expense of the Borrowers at any time during normal business hours and without
      advance notice, but otherwise subject to the restrictions set forth in this
      Section 7.01(f).




(g) Maintenance
      of Properties, Etc .
      (i) Maintain, preserve and protect all its material properties and
      equipment necessary in the operation of the Mine in good working order and
      condition, ordinary wear and tear excepted, and in accordance with Prudent
      Industry Practices and (ii) make, or use commercially reasonable efforts to
      cause to be made, all necessary repairs thereto and renewals and replacements
      thereof, except, in each case, where the failure to do so could not reasonably
      be expected to have, either individually or in the aggregate, a Material Adverse
      Effect.




(h) Further
      Assurances .
      Promptly upon the request of the Lender, (i) correct any material defect or
      error that may be discovered in any Loan Document or in the execution,
      acknowledgment, filing or recordation thereof; and (ii) do, execute,
      acknowledge, deliver, record, re-record, file, re-file, register and re-register
      any and all such further acts, deeds, conveyances, pledge agreements, mortgages,
      deeds of trust, trust deeds, assignments, financing statements and continuations
      thereof, termination statements, notices of assignment, transfers, certificates,
      assurances and other instruments as the Lender may reasonably require from
      time
      to time in order to (A) carry out more effectively the purposes of the Loan
      Documents, (B) to the fullest extent permitted by Applicable Law, subject
      its properties, assets, rights or interests to the Liens now or hereafter
      intended to be covered by any of the Collateral Documents, (C) perfect and
      maintain the validity, effectiveness and priority of any of the Collateral
      Documents and any of the Liens intended to be created thereunder, subject to
      Permitted Liens and (D) assure, convey, grant, assign, transfer, preserve and
      protect and confirm more effectively unto the Lender the rights granted or
      now
      or hereafter intended to be granted, to the Lender under any Loan Document
      or
      under any other instrument executed in connection with any Loan Document to
      which it is or is to be a party.




54




(i) Material
      Project Agreements and Real Estate Rights Agreements .
      (i)
      Perform and observe in all material respects the terms and provisions of each
      Material Project Agreement to be performed or observed by it, subject to those
      being Contested, (ii) maintain each Material Project Agreement and any
      Support Instrument relating thereto in full force and effect in accordance
      with
      its terms and for the period of time covered thereby, (iii) exercise in all
      material respects its rights and remedies under each Material Project Agreement
      and related Support Instrument in accordance with their respective terms and
      in
      a manner consistent with (and subject to) its obligations under the Loan
      Documents, and (iv) notify the Lender of any proposed material amendment,
      termination, modification or waiver of any Material Project
      Agreement.




(j) Transactions
      with Affiliates .
      Conduct
      all transactions with any of its Affiliates on terms that are commercially
      fair
      and reasonable and no less favorable to it than it would obtain in a comparable
      arm’s-length transaction with a Person not an Affiliate.




(k) Use
      of
      Proceeds .
      Use the
      proceeds of all Term Loans solely to pay approved Project Costs. Use the
      proceeds of the Revolving Loans solely to fund general corporate and working
      capital requirements of the Borrowers including the acquisition and/or lease
      of
      real estate and mineral concessions and rights in Mexico and activities
      incidental thereto.




(l) Ranking .
      Undertake that its Secured Obligations shall at all times rank in right of
      payment and collateral security senior to all of its other obligations or
      Indebtedness, other than to the extent (i) secured by a Permitted Lien, (ii)
      pursuant to the Subordinated Royalty Payments and (iii) given priority under
      Applicable Law.




(m) Construction
      and Operation of the Project .
      Use its
      commercially reasonable efforts to cause the design, construction, completion
      and operation of the Mine to be carried out and completed with due diligence
      and
      continuity and in accordance with Applicable Law, sound, generally accepted
      construction and engineering practices, the plans and specifications set forth
      in the Life of Mine Plan and Prudent Industry Practices.




(n) Translation
      of Loan Documents .
      Within
      sixty (60) days of the date of this Agreement, deliver to the Lender copies
      of
      Spanish translations of this Agreement, certified by a Mexican court-approved
      translator to be true, complete and correct translations of each such Loan
      Document.




(o) Covenant
      to Give Security .
      Upon
      the acquisition of any property which is not already subject to a perfected
      first priority security interest in favor of the Lender, at its own expense,
      (i)
      within ten (10) Business Days of such acquisition, furnish to the Lender a
      description of the property so acquired, (ii) within thirty (30) days of such
      acquisition, duly execute and deliver a mortgage, pledge, assignment and other
      security agreements, as specified by and in form and substance reasonably
      satisfactory to the Lender, securing payment of all of the Secured Obligations
      and constituting Liens on all such properties, (iii) within thirty (30) days
      of
      such acquisition, take whatever action (including, without limitation, the
      recording of mortgages, the filing of UCC financing statements, the giving
      of
      notices and the endorsement of notices on title documents) may be necessary
      or
      advisable in the opinion of the Lender to vest in the Lender valid and
      subsisting Liens on the properties purported to be subject to the mortgages,
      pledges, assignments and security agreements delivered pursuant to this Section 7.01(o) ,
      enforceable against all third parties in accordance with their terms, and (iv)
      within sixty (60) days after such acquisition, deliver to the Lender, if the
      Lender so requests, a signed copy of an opinion, addressed to the Lender, of
      counsel for the Borrowers reasonably acceptable to the Lender as to the matters
      contained in clauses
      (ii) and (iii) above,
      as to such mortgages, pledges, assignments and security agreements being legal,
      valid and binding obligations of the Borrowers enforceable in accordance with
      their terms, as to the matters contained in clause
      (iii) above,
      and to such recordings, filings, notices, endorsements and other actions being
      sufficient to create valid perfected Liens on such properties, and as to such
      other matters as the Lender may reasonably request; provided however this
      Section 7.01(o) shall not apply to acquisitions of property where the aggregate
      consideration paid for such property does not exceed $1,000,000.




55




(p) Hedge
      Agreements .




(i)  Maintain
      at all times thereafter with the Lender the Gold Hedge Agreements or other
      gold
      Hedge Agreements with a counterparty reasonably acceptable to the Lender
      covering the aggregate scheduled monthly production of Gold that would have
      been
      covered at such time by the Gold Hedge Agreement as in effect on the date
      hereof.




(ii)  Without
      duplication of the Hedge Agreements contemplated by clause
      (i) ,
      enter
      into on or prior to the Closing Date, and maintain at all times thereafter
      with
      the Lender pursuant to a Master Agreement, on terms and conditions reasonably
      satisfactory to the Lender interest rate Hedge Agreements which effectively
      enable the Borrowers, as at any date, to protect the Borrowers against London
      interbank offered rates in a manner and to the extent reasonably satisfactory
      to
      the Lender.




(q) Maintenance
      of Supplies .
      Use
      commercially reasonable efforts to cause the Mining Contractor to maintain
      at
      all times an adequate supply of spare parts and consumables or maintain at
      all
      times, or cause the Mining Contractor to maintain at all times in full force
      and
      effect contracts providing for an adequate supply of spare parts and
      consumables, in each case as may be necessary for the Project




(r) Required
      Insurance .
      Procure
      or cause others to procure at their own expense and maintain in full force
      and
      effect such insurance policies, including Business Interruption Insurance
      policies, required by Schedule 7.01(r) (the “ ***Required
      Insurance*** ”).
      All
      Required Insurance shall name the Lender as an additional insured and as sole
      loss payee with respect to any claim payments.




**ARTICLE
      VIII**


**NEGATIVE
      COVENANTS**




Section
      8.01  Negative
      Covenants .
      So long
      as the Lender shall have any Commitment, any Secured Hedge Agreement shall
      be in
      effect or any Loan or other Secured Obligation hereunder or under any other
      Loan
      Document which is accrued and payable shall remain unpaid or unsatisfied, each
      of the Borrowers and, with respect to clauses
      (a) , (b) , (e) , (f) , (g) , (h) , (l) - (n) , (q)(iv) and (r) below,
      the Guarantor, shall not directly or indirectly:




56




(a) Limitation
      on Liens .
      Other
      than Permitted Liens and in the case of the Guarantor, Liens incurred in the
      ordinary course of its business that do not secure assets in excess of
      U.S.$1,000,000, (i) create, incur, assume or suffer to exist any Lien upon
      any
      of its properties, assets or revenues, whether now owned or hereafter acquired,
      (ii) sign or file or suffer to exist, under the Applicable Laws of any
      jurisdiction (including the Uniform Commercial Code of any jurisdiction), a
      financing statement that names it as debtor or sign or suffer to exist any
      security agreement authorizing any secured party thereunder to file such
      financing statement, (iii) file or suffer to exist any agreement in respect
      of
      its properties assets or revenues on file with the Recorder of Deeds in the
      District of Columbia, United States of America or with any public registry
      of
      property and commerce located in Mexico or (iv) assign any accounts or other
      right to receive income.




(b) Limitation
      on Indebtedness .
      Create,
      incur, assume or suffer to exist any Indebtedness other than:




(i)  Indebtedness
      under the Loan Documents;




(ii)  obligations
      (contingent or otherwise) existing or arising under any Hedge Agreement entered
      into by it in accordance with Section
      7.01(p) ;




(iii)  Indebtedness
      existing as of the Closing Date as referenced in the financial statements
      delivered to the Lender and set out more specifically in Schedule
      5.01(v) hereto;




(iv)  Indebtedness
      consisting of Capitalized Leases or Indebtedness incurred to provide all or
      a
      portion of the purchase price of furniture, fixtures and equipment, provided
      that (i) such Indebtedness when incurred shall not exceed the purchase price
      or
      cost of construction of such furniture, fixture or equipment, (ii) no such
      Indebtedness shall be refinanced for a principal amount in excess of the
      principal balance outstanding thereon at the time of such refinancing and (iii)
      the total amount of all such Indebtedness shall not exceed U.S.$1,000,000 at
      any
      time outstanding;




(v)  Indebtedness
      (a) incurred in the ordinary course of business in connection with Operating
      Costs associated with the purchase or acquisition of equipment, property and
      assets (by way of open accounts and credit extended by suppliers on normal
      trade
      terms in connection with purchases of goods and services) (b) owing under
      documentary letters of credit for the purchase of goods or other merchandise
      generally made in the ordinary course of business and (c) reclamation,
      performance, surety, bid, appeal or similar bonds or deposits arising in the
      ordinary course of business, provided that the total amount of all such
      Indebtedness shall not exceed U.S.$3,000,000 at any time
      outstanding;




(vi)  unsecured
      intercompany Indebtedness among the Loan Parties, so long as such Indebtedness
      is expressly subordinated to the Loans;




(vii)  Indebtedness
      in respect of Taxes, assessments or charges of Governmental Authorities, and
      Indebtedness in respect of amounts accrued and payable in connection with
      employment, materials or supplies; and




57




(viii)  in
      the
      case of the Guarantor, Indebtedness incurred in the ordinary course of business
      provided that the total amount of all such Indebtedness shall not exceed
      U.S.$1,000,000 at any time outstanding.




(c) Change
      in Nature of Business or Project .




(i)  Engage
      in
      any business other than the current business of the Borrowers, including
      development and operation of the Project and activities related thereto or
      associated therewith.




(ii)  Change
      the purpose, nature or scope of the Project from that described in the Life
      of
      Mine Plan.




(d) Principal
      Place of Business .
      Maintain any place of business outside of Mexico.




(e) Mergers,
      Etc .
      Merge,
      dissolve, liquidate, consolidate with or into any Person or otherwise Dispose
      of
      (whether in one transaction or a series of transactions) all or substantially
      all of its properties or assets (whether now or hereafter acquired) to or in
      favor of any Person or acquire all or substantially all of the assets of any
      Person, except for, in the case of the Guarantor, mergers with another Person
      where the Guarantor is the surviving party and acquisitions of all or
      substantially all the assets of another Person, in each case so long as the
      aggregate consideration paid by the Guarantor does not exceed U.S.$3,000,000
      per
      year.




(f) Disposition .
      Make
      any Disposition or enter into any agreement to make any Disposition,
      except:




(i)  Dispositions
      of Gold or other minerals in the ordinary course of business;




(ii)  Dispositions
      of obsolete or worn out property, whether now owned or hereafter acquired,
      in
      the ordinary course of business;




(iii)  Dispositions
      of or reductions in or diminution of mining land or other Real Property
      Interests or abandonment of or desisting from mining claims or other Real
      Property Interests, when such right, title or interest is not necessary for
      the
      development of the Project in accordance with the Life of Mine Plan and such
      Disposition, abandonment, reduction or desistment could not reasonably be
      expected to have a Material Adverse Effect; and




(iv)  in
      the
      case of the Guarantor, Dispositions of property provided that the total amount
      of all such Dispositions shall not exceed U.S.$2,000,000 in the aggregate per
      year.




(g) Investments .
      Make or
      hold any Investments in any Person except for (i) Investments consisting of
      extensions of credit in the nature of accounts receivable or notes receivable
      arising from the grant of trade credit in the ordinary course of business,
      (ii)
      Investments received in satisfaction or partial satisfaction thereof from
      financially troubled account debtors to the extent reasonably necessary in
      order
      to prevent or limit loss, (iii) cash or Cash Equivalents, (iv) Investments
      made
      by a Loan Party in or to another Loan Party, or (v) in the case of the
      Guarantor, Investments not exceeding U.S.$5,000,000 in the aggregate per
      year.




58




(h) Amendments
      of Constituent Documents .
      Amend
      in any material respect any of its Constituent Documents.




(i) Accounting
      Changes, Etc .
      Make
      any change in (i) accounting policies or reporting practices, except as required
      by Mexican GAAP or (ii) its fiscal year.




(j) Prepayments,
      Etc., of Indebtedness .
      Prepay,
      redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
      thereof in any manner, or make any payment in violation of any subordination
      terms of, any Indebtedness, except prepayments of the Secured
      Obligations.




(k) Material
      Project Agreements, Etc. (i)
      Cancel or terminate any Material Project Agreement or consent to or accept
      any
      cancellation or termination thereof, except in each case if such Contractual
      Obligations terminate at the end of their term or except as otherwise approved
      in writing by the Lender; (ii) amend, modify or change in any material manner
      any term or condition of any Material Project Agreement or any Support
      Instrument related thereto or give any material consent, waiver or approval
      thereunder; (iii) waive any material defaults under or any material breach
      of any term or condition of any Material Project Agreement or any Support
      Instrument related thereto; (iv) consent to any assignment or transfer of
      material rights under any Material Project Agreement or any Support Instrument
      related thereto or any Project Approval or Agreement Approval (other than as
      required by the Collateral Documents); or (v) take any other action in
      connection with any Material Project Agreement or any Support Instrument related
      thereto that would materially impair the value of its interest or rights
      thereunder or that would impair the rights or interests of the
      Lender.




(l) Subsidiaries .
      (i)
      Organize more than two Subsidiaries, or (ii) invest in a Subsidiary, except
      (with respect to this clause (ii)):




(i)  in
      the
      case of the Borrowers, where the Indebtedness of such Subsidiary does not exceed
      U.S.$1,000,000;




(ii)  in
      the
      case of the Guarantor: (A) investments in a Borrower; and (B) with respect
      to
      Subsidiaries other than the Borrowers, where the Indebtedness of such Subsidiary
      does not exceed U.S.$1,000,000.




(m) Partnerships,
      Etc .
      Become
      a general or limited partner in any general or limited partnership or party
      to
      any joint venture, except for exploration or mining partnerships or joint
      ventures that require expenditures or Investments, or the incurrence of
      liabilities or monetary obligations, by a Loan Party of no more than
      U.S.$1,000,000 in the aggregate per year.




(n) Hedge
      Transactions .
      (i)
      Enter into Hedge Agreements covering more than seventy percent (70%) of the
      scheduled monthly production of Gold from the Mine determined by reference
      to
      the Life of the Mine Plan and (ii) novate the Gold Hedge Agreements unless
      and
      until the condition precedents specified in Sections
      4.01(a)(xiv) - (xvii) have
      been satisfied;




59




(o) Capital
      Expenditures .
      Following the First Principal Repayment Date, make any Capital Expenditures
      other than Capital Expenditures contemplated by the Life of Mine Plan or the
      Operating Budget, or as otherwise approved by the Lender.




(p) Additional
      Contracts .
      Enter
      into or permit to exist any Contractual Obligation other than (i) the Loan
      Documents, (ii) the Project Agreements, (iii) agreements, arrangements,
      understandings or dealings entered into in the ordinary course of business
      and
      which could not reasonably be expected to result in liability or cost to it
      of
      more than U.S.$2,000,000 in the aggregate in any year, or (iv) to the extent
      reflected in or required by the Operating Budget or the Life of Mine Plan; *provided* that (A)
      any such Contractual Obligation that is entered into with any Affiliate complies
      with Section
      7.01(j) ,
      and (B)
      no such Contractual Obligation (other than this Agreement or any other Loan
      Document) shall (1) limit its ability to create, incur, assume or suffer to
      exist Liens on its property or assets, or (2) require the grant of a Lien by
      it
      to secure such Contractual Obligation.




(q) Equity
      Interests .




(i)  Issue
      or
      sell any additional Equity Interests in it other than additional issuances
      or
      sales to the Guarantor or the Pledgor of additional Equity Interests that are
      pledged to the Lender.




(ii)  Issue
      or
      authorize to be issued any certificates representing any of its Equity
      Interests.




(iii)  Permit
      any Person to become, after the date hereof, a holder of any Equity Interests
      in
      it other than the Guarantor and the Pledgor.




(iv)  with
      respect to the Guarantor only, cause or permit to be issued or sold any
      additional Equity Interests in the Pledgor or the Borrowers other than
      additional issuances or sales to the Guarantor or the Pledgor of additional
      Equity Interests that are pledged to the Lender.




(r) Insolvency
      Proceedings .
      Commence or consent to any Insolvency Proceeding in respect of
      itself.




(s) ERISA .
      Maintain or contribute to (or have any obligation to contribute to) or permit
      any ERISA Affiliate to maintain or contribute to (or have any obligation to
      contribute to), any ERISA Plan.




(t) Powers
      of Attorney .
      Execute
      or deliver any powers of attorney, including, without limitation, any general
      powers of attorney for acts of domain ( *poderes
      generales para actos de dominio* ),
      other
      than any such powers of attorney necessary for the business of the Borrowers
      in
      the ordinary course of business; *provided* , *however* ,
      that
      such powers of attorney shall otherwise be consistent with its obligations
      under
      this Agreement and the other Transaction Documents.




(u) Accounts .
      Maintain any deposit or securities account other than the Offshore Operating
      Account, the Insurance Proceeds Account or the Onshore Operating
      Accounts.




60




(v) Restricted
      Payment .
      Declare
      or pay any dividend on, or make any payment or other distribution of assets,
      properties, cash, rights, obligations or securities on account of, any ownership
      interest in any Borrower, or make any payment, or purchase, redeem, retire,
      or
      otherwise acquire for value any ownership interest in any Borrower, or any
      warrants, rights or options to acquire any such ownership interest, now or
      hereafter outstanding (any such transaction being a “ ***Restricted
      Payment*** ”),
      except that the Borrowers may make Restricted Payments on a Distribution
      Availability Date, subject to satisfaction of the following conditions on such
      date:




(i)  no
      Prospective Event of Default or Event of Default has occurred and is continuing
      or would result from the making of such Restricted Payment;




(ii)  the
      aggregate annual amount of such Restricted Payment shall not exceed thirty-three
      percent (33%) **** of
      the
      net income of the Borrowers as specified in its most recent audited annual
      report.




A
      “Distribution Availability Date” may occur only once during each fiscal quarter
      and shall be a date on or prior to the tenth (10th) day following a Payment
      Date. Notwithstanding the foregoing, a Restricted Payment shall not include
      (a)
      payment of a dividend where the dividend is payable solely in the Equity
      Interests of a Borrower or (b) payment of a dividend or other distribution
      to
      any Loan Party (directly or indirectly through Subsidiaries).




**ARTICLE
      IX**


**FINANCIAL
      COVENANTS**




Section
      9.01  Borrowers’
      Financial Covenants .
      So long
      as the Lender shall have any Commitment hereunder, any Secured Hedge Agreement
      shall be in effect or any Loan or other Secured Obligations hereunder or under
      any other Loan Document which is accrued and payable shall remain unpaid or
      unsatisfied, the Borrowers, shall:




(a) Debt
      Service Coverage Ratio .
      Maintain as of any date of determination a Debt Service Coverage Ratio of not
      less than 1.2:1.0.




(b) Loan
      Life Coverage Ratio .
      Maintain as of any date of determination, a Loan Life Coverage Ratio of at
      least
      1.5:1.0.




(c) Minimum
      Reserve Tail .
      Maintain, as of any date of determination, a Minimum Reserve Tail of at least
      thirty percent (30%), which, for the avoidance of doubt, on the date of this
      Agreement is 76,800 Ounces of Gold.




(d) Excess
      Operating Costs .
      Not
      incur Operating Costs in any Quarterly Period that exceed one hundred twenty
      (120%) of Operating Costs budgeted for such Quarterly Period pursuant to the
      then-applicable Operating Budget.




(e) Gold
      Deficiency .
      Not
      permit any deficiency in production of Gold in any Quarterly Period that results
      in a production level for such Quarterly Period that is less than eighty percent
      (80%) of the production level of Gold contemplated for such Quarterly Period
      by
      the Life of Mine Plan.




61




Section
      9.02  Guarantor’s
      Financial Covenants .
      So long
      as the Lender shall have any Commitment hereunder, any Secured Hedge Agreement
      shall be in effect or any Loan or other Secured Obligations hereunder or under
      any other Loan Document which is accrued and payable shall remain unpaid or
      unsatisfied, the Guarantor, shall, (a) maintain a ratio of current assets to
      current liabilities at all times greater than or equal to 1.20:1.00, (b)
      maintain a minimum Tangible Net Worth at all times of al least U.S.$15,000,000,
      for each quarter on and after the First Principal Repayment Date, and (c)
      maintain an average minimum Liquidity of U.S.$500,000 for such quarter.




**ARTICLE
      X**


**REPORTING,
      NOTICE AND**


**CALCULATION
      REQUIREMENTS**




Section
      10.01  Reporting
      Requirements .
      So long
      as the Lender shall have any Commitment hereunder, any Secured Hedge Agreement
      shall be in effect or any Loan or other Secured Obligations hereunder or under
      any other Loan Document which is accrued and payable shall remain unpaid or
      unsatisfied, the Borrowers shall:




(a) Operating
      Reports .
      Deliver
      to the Lender, as soon as available, but in any event no later than fifteen
      (15)
      days after the end of each calendar month occurring after the first 5,000 tons
      of ore have been placed on the Project’s leach pad, a summary of operations for
      each such calendar month and a summary of the calendar year-to-date operations,
      in each case including comparisons to the Operating Budget and the Financial
      Model, including information in reasonable detail concerning: (A) Mine
      production during such calendar month, (B) the Borrowers’ inventory of Gold
      (i) on the leach pads, (ii) in solution, (iii) in the
      adsorption-desorption-recovery plant or (iv) in doré, in each case at the
      end of such calendar month, (C) the Ounces of Gold shipped from the Mine
      during such calendar month, (D) Project Revenues received during such
      calendar month, (E) Operating Costs paid during such calendar month,
      (F) any Capital Expenditures paid during such calendar month, (G) the
      Borrowers’ most recent cash planning forecast by month covering at least the
      next six (6) months, (H) any material developments that occurred during
      such calendar month in Mine operations which have had or could reasonably be
      expected to have, either individually or in the aggregate, a Material Adverse
      Effect, (I) a description of any material noncompliance with Project
      Approvals and Agreement Approvals or the Environmental Management Plan, and
      (J) without duplication of any of the foregoing, a description of any
      defects or malfunctions at the Mine that have had, or could reasonably be
      expected to have, either individually or in the aggregate, a material adverse
      effect on actual or expected Operating Costs and Project Revenues or on Mining
      Reserves.




62




(b) Updated
      Life of Mine Plan and Financial Model .




(i)  On
      or
      prior to each September 30 th ,
      the
      Borrowers shall deliver to the Lender an updated Life of Mine Plan and Financial
      Model. Each updated Life of Mine Plan and Financial Model delivered pursuant
      to
      this clause
      (b) shall
      (A) set forth the expected economic life of the Mine, (B) update the Mining
      Reserves and estimate the expected Gold production of the Mine through the
      expected economic life of the Mine, (C) include an annual Operating Budget
      and
      operating plan, which shall consist of (1) fair and good faith reasonable
      Dollar- and Peso-denominated estimates of Project Revenues and Operating Costs
      on an individual line item basis and Debt Service and *pro
      forma* cash
      flow
      projections for each month covered by such Operating Budget, (2) a summary
      of the Mine’s major maintenance schedule to the end of the then current long
      term major maintenance cycle (and any related scheduled cessation of mining
      activities), (3) the Borrowers’ fair and good faith reasonable estimates of
      the costs of such maintenance and its envisioned effect on the Mine’s
      operations, and (4) the Project’s program for spare parts (including the
      proposed suppliers thereof and prices therefor, inventory management and fuel
      supply management) and (5) such other information as may be reasonably requested
      by the Lender, (D) address any other matters associated with the Project as
      the
      Lender or the Independent Engineer may reasonably request, and (E) be
      accompanied by an Officer’s Certificate of a Borrower stating that the updated
      Life of Mine Plan and the updated Financial Model, and its underlying models
      and
      assumptions, (1) were prepared in good faith by the Borrowers, (2) are based
      upon assumptions and projections that are consistent with the requirements
      of
      the Transaction Documents, the Agreement Approvals, the Project Approvals and
      Applicable Law and that the Borrowers consider to be reasonable in light of
      the
      conditions existing as of the delivery of such updated Life of Mine Plan and
      Financial Model, and (3) represent the Borrowers’ best estimate of the
      information set forth therein as of the date of delivery.




(ii)  No
      later
      than thirty (30) days after receipt of the updated Life of Mine Plan and
      Financial Model, the Lender shall approve such Life of Mine Plan and Financial
      Model or shall advise the Borrowers of any changes thereto reasonably necessary
      for approval by the Lender. Until such time as the Lender has approved the
      updated Life of Mine Plan or Financial Model, the then existing Life of Mine
      Plan and Financial Model shall continue to apply for all purposes of this
      Agreement and the other Loan Documents. If
      the
      Lender objects to such updated Life of Mine Plan or Financial Model and the
      Borrowers and the Lender are unable to agree on revisions to the Life of Mine
      Plan or the Financial Model, then such dispute will be resolved as set forth
      in
      Section 1.06(b).




(c) Financial
      Statements .




(i)  Deliver
      to the Lender, in the form submitted by Guarantor to the SEC in accordance
      with
      Guarantor’s reporting requirements (or if not so submitted to the SEC, in form
      and detail satisfactory to the Lender), as soon as available, but in any event
      within forty-five (45) days after the end of each of the first three Quarterly
      Periods of each fiscal year of the Loan Parties a consolidated balance sheet
      of
      each of the Loan Parties as at the close of such Quarterly Period, and the
      related consolidated statements of income or operations, shareholders’ equity
      and cash flows for such Quarterly Period and for the portion of such Loan
      Party’s fiscal year then ended, setting forth in each case in comparative form
      the figures for the corresponding Quarterly Period of the previous fiscal year
      and the corresponding portion of the previous year, all in reasonable detail
      and
      certified by a Responsible Officer of such Loan Party as fairly presenting
      the
      financial condition, results of operations, shareholders’ equity and cash flows
      of such Loan Party in accordance with Applicable GAAP and reconciled to U.S.
      GAAP, subject only to normal year-end audit adjustments and the absence of
      footnotes; and




63




(ii)  Deliver
      to the Lender, in the form submitted by Guarantor to the SEC in accordance
      with
      Guarantor’s reporting requirements (or if not so submitted to the SEC, in form
      and detail satisfactory to the Lender), as soon as available, but in any event
      within one hundred twenty (120) days after the end of each fiscal year of the
      Loan Parties, a consolidated balance sheet of each of the Loan Parties as at
      the
      end of such fiscal year, and the related consolidated statements of income
      or
      operations, shareholders’ equity and cash flows for such fiscal year, setting
      forth in each case in comparative form the figures for the previous fiscal
      year,
      all in reasonable detail and prepared in accordance with Applicable GAAP and
      reconciled to U.S. GAAP, audited, which opinion shall be prepared in accordance
      with generally accepted auditing standards and shall not be subject to any
      “ *going
      concern* ”
or
      like
      qualification or exception or any qualification or exception as to the scope
      of
      such audit.




(d) Certificates;
      Other Information .
      Deliver
      to the Lender, in form and detail satisfactory to it:




(i)  concurrently
      with the delivery of the financial statements referred to in Section
      10.01(b)(i) and 10.01(b)(ii) ,
      a duly
      completed Compliance Certificate signed by a Responsible Officer of the relevant
      Loan Party and, in the event of any change in GAAP used in the preparation
      of
      such financial statements, the Borrowers shall also provide, if necessary for
      the determination of compliance with Section
      9.01 ,
      a
      statement of reconciliation conforming such financial statements to Applicable
      GAAP;




(ii)  promptly
      after any request by the Lender, and subject to any applicable confidentiality
      restrictions, copies of any detailed audit reports, management letters or
      recommendations submitted to the board of managers or equivalent governing
      body
      (or the audit committee of the board of managers or equivalent governing body)
      of either of the Borrowers in connection with the accounts or books of such
      Borrower, or any audit of such Borrower;




(iii)  promptly
      after the same are available, copies of each annual report, proxy or financial
      statement or other report or communication sent to the stockholders of any
      of
      the Loan Parties, and copies of all annual, regular, periodic and special
      reports and registration statements which any of the Loan Parties may file
      or be
      required to file with any Governmental Authority, and in any case not otherwise
      required to be delivered to the Lender pursuant hereto;




(iv)  as
      soon
      as available and in any event within thirty (30) days after the end of each
      fiscal year, a report summarizing the insurance coverage (specifying type,
      amount and carrier) in effect for the Borrowers and containing such additional
      information as the Lender may reasonably specify;




(v)  promptly
      and in any event within five (5) Business Days after receipt thereof by the
      Borrowers, copies of each material notice or other material correspondence
      received from any Governmental Authority regarding the Borrowers or the
      Mine;




64




(vi)  promptly
      upon receipt thereof, copies of all material notices, requests and other
      documents received by the Borrowers under or pursuant to any Material Project
      Agreement, any Support Instrument related to any Material Project Agreement,
      Affiliate Contract or other material instrument, indenture, loan or credit
      or
      similar agreement regarding or related to any breach or default by any party
      thereto or any other event that could materially impair the value of the
      interests or the rights of the Borrowers or otherwise have a Material Adverse
      Effect and copies of any amendment, modification or waiver of any Material
      Project Agreement, any Support Instrument related to any Material Project
      Agreement, Affiliate Contract or other material instrument, indenture, loan
      or
      credit or similar agreement and, from time to time upon request by the Lender,
      such information and reports regarding the Material Project Agreements, the
      Support Instruments related to any such Material Project Agreements, Affiliate
      Contracts or other material instrument, indenture, loan or credit or similar
      agreement as the Lender may reasonably request;




(vii)  promptly
      after the assertion or occurrence thereof, notice of any action, suit, demand,
      demand letter, claim, notice of non-compliance or violation, notice of liability
      or potential liability, investigation, proceeding, consent order or consent
      agreement received by the Borrowers and relating in any way to any applicable
      Environmental Law or Environmental Permit or to a release of Hazardous Material
      from, or threat to health and safety or the environment at, the Mine, including,
      without limitation, (a) by any Governmental Authority for enforcement, cleanup,
      removal, response, remedial or other actions or damages with respect to the
      Mine
      and (b) by any Governmental Authority or third party for damages, contribution,
      indemnification, cost recovery, compensation or injunctive relief against,
      or of
      any non-compliance by the Borrowers with, any applicable Environmental Law
      or
      Environmental Permit that could reasonably be expected to have a Material
      Adverse Effect; and




(viii)  promptly,
      such additional information regarding the business, financial, legal or
      corporate affairs of any Loan Party or any Subsidiary, or compliance with the
      terms of the Loan Documents, as the Lender may from time to time reasonably
      request.




(e) Additional
      Project Agreements, Etc .
      Promptly after the execution and delivery thereof, but in any event within
      five
      (5) Business Days, deliver to the Lender copies of any Additional Project
      Agreement or any new Support Instrument, Real Estate Rights Agreement or Hedge
      Agreement entered into from time to time in accordance with this Agreement
      after
      the Closing Date (together with, as promptly as practicable thereafter, an
      English translation of any document originally delivered in a language other
      than English), accompanied in the case of any Additional Project Agreement
      by an
      Officer’s Certificate of a Borrower to a similar effect to the Officer’s
      Certificate delivered pursuant to Section
      4.01(a)(v) .




(f) Agreement
      Approvals, Etc .
      Promptly upon receipt thereof, but in any event within five (5) Business Days,
      deliver to the Lender copies of any Agreement Approvals or Project Approvals
      or
      other material approvals, franchises, licenses, permits, approvals, consents,
      easements, leases, rights of way, other real property rights and other rights
      related to the Project, including any amendments or supplements thereto or
      modifications thereof (together with, as promptly as practicable thereafter,
      an
      English translation of any document originally delivered in a language other
      than English), accompanied by an Officer’s Certificate of a Borrower to a
      similar effect to the Officer’s Certificate delivered pursuant to Section
      4.01(a)(vi) .




65




(g) Notices .
      Promptly notify the Lender of:




(i)  the
      occurrence of any Prospective Event of Default or Event of Default;




(ii)  any
      material default (including any payment default) under, or any material
      amendment or termination of, any Material Project Agreement;




(iii)  any
      action, suit, investigation, litigation or proceeding that is instituted or,
      to
      its knowledge threatened, against the Borrowers, any other Loan Party or
      Material Project Party that (A) could be reasonably expected to have, either
      individually or in the aggregate, a Material Adverse Effect, (B) purports to
      affect the Project or the ability of the Borrowers, any other Loan Party or
      Material Project Party to perform their respective obligations under any of
      the
      Transaction Documents, or (C) purports to affect the legality, validity or
      enforceability of any Transaction Document or the consummation of the
      transactions contemplated hereby or thereby;




(iv)  the
      occurrence of any Casualty Event;




(v)  any
      notice of cancellation of, threatened cancellation of, or change in, the
      insurance policies maintained by or on behalf of the Borrowers in respect of
      the
      Mine;




(vi)  any
      material change in accounting policies or financial reporting practices by
      the
      Borrowers;




(vii)  the
      receipt of any Insurance Proceeds;




(viii)  the
      occurrence of any Expropriatory Event;




(ix)  the
      occurrence of any Insolvency Proceeding;




(x)  the
      occurrence of any labor or employee issues with respect to the Borrowers or
      the
      Mine that could reasonably be expected to have a Material Adverse
      Effect;




(xi)  of
      any
      other matter that has resulted or could reasonably be expected to result in
      a
      Material Adverse Effect, including a breach or non-performance of, or any
      default under, a Contractual Obligation of a Borrower.




66




Section
      10.02  Preparation
      of Environmental Reports .
      The
      Borrowers shall, at the reasonable request of the Lender from time to time
      (with
      such request to be made no more than once per year unless an Event of Default
      has occurred and is continuing), provide to the Lender within sixty (60) days
      after such request, at the expense of the Borrowers, an environmental site
      assessment report for any of its properties described in such request, prepared
      by an environmental consulting firm acceptable to the Lender, indicating the
      presence or absence of Hazardous Materials and the estimated cost of any
      compliance, removal or remedial action in connection with any Hazardous
      Materials on such properties; without limiting the generality of the foregoing,
      if the Lender determines at any time that a material risk exists that any such
      report will not be provided within the time referred to above, the Lender may
      retain an environmental consulting firm to prepare such report at the expense
      of
      the Borrowers, and the Borrowers hereby grant at the time of such request to
      the
      Lender, such firm and any agents or representatives thereof an irrevocable
      non-exclusive license, subject to the rights of tenants, to enter onto their
      respective properties to undertake such an assessment, subject to the inspection
      conditions set forth in Section
      7.01(f) .




Section
      10.03  Calculation
      of Financial Ratios .
      On each
      Calculation Date, calculate the Loan Life Coverage Ratio for the relevant
      period, and the Debt Service Coverage Ratio and the Minimum Reserve Tail as
      of
      such Calculation Date, which calculations shall be confirmed by the
      Lender.




Section
      10.04  Translations .
      If any
      notice, certificate, instrument, communication or other document required to
      be
      delivered to any Person pursuant to this Article X is not
      originally executed, delivered or given in English, the Borrowers shall
      concurrently with the delivery of such document, additionally provide to such
      Person a certified English translation thereof.




**ARTICLE
      XI**


**EVENTS
      OF DEFAULT AND REMEDIES**




Section
      11.01  Events
      of Default .
      Any of
      the following shall constitute an “ ***Event
      of Default*** ”:




(a) Nonpayment .
      Any
      Borrower fails to pay (i) when and as required to be paid herein, or
      pursuant to any Secured Hedge Agreement, any amount of principal of any Loan
      or
      corresponding amount due under any Secured Hedge Agreement, or (ii) (except
      as specified in Section 11.01(a)(i) )
      within
      three (3) days after the same becomes due, any interest on any Loan or any
      fee
      or obligation due hereunder or under any Secured Hedge Agreement, or
      (iii) within five (5) days after the same becomes due, any other amount
      payable hereunder or under any other Loan Document; or




(b) Representations
      and Warranties .
      Any
      representation, warranty, certification or statement of fact made or deemed
      made
      by or on behalf of the Borrowers or any other Loan Party herein, in any other
      Transaction Document, or in any document executed by the Borrowers and delivered
      in connection herewith or therewith shall be incorrect or misleading in any
      material respect when made or deemed to be made; or




(c) Reporting,
      Notice and Calculation Requirements .
      Any
      Loan Party fails to perform or observe any covenant or agreement contained
      in
      Article X hereof and such failure is Continuing for thirty (30) days after
      written notification of such failure is given to the relevant Loan Party in
      accordance with the notice procedures set forth in Section 12.02;




67




(d) Other
      Covenants .
      Any
      Loan Party fails to perform or observe any covenant or agreement (not specified
      in Section
      11.01(a) or (c) )
      contained in any Loan Document on its part to be performed or observed and
      such
      failure is Continuing for thirty (30) days after written notification of such
      failure is given to the relevant Loan Party in accordance with the notice
      procedures set forth in Section 12.02; or




(e) Insolvency
      Proceedings .
      Any
      Insolvency Proceeding occurs with respect to any of the Loan Parties;
      or




(f) Cross-Default .
      Any
      Loan Party (i) fails to make any payment when due (whether by scheduled
      maturity, required prepayment, acceleration, demand or otherwise) in respect
      of
      any Indebtedness or Guarantee (other than Indebtedness hereunder or under any
      Secured Hedge Agreement) having an aggregate principal amount (including undrawn
      committed or available amounts and including amounts owing to all creditors
      under any combined or syndicated credit arrangement) of more than the Threshold
      Amount, or (ii) fails to observe or perform any other agreement or condition
      relating to any such Indebtedness or Guarantee or contained in any instrument
      or
      agreement evidencing, securing or relating thereto, or any other event occurs,
      the effect of which default or other event is to cause, or to permit the holder
      or holders of such Indebtedness or the beneficiary or beneficiaries of such
      Guarantee (or a trustee or agent on behalf of such holder or holders or
      beneficiary or beneficiaries) to cause, with the giving of notice if required,
      such Indebtedness to be demanded or to become due or to be repurchased, prepaid,
      defeased or redeemed (automatically or otherwise), or an offer to repurchase,
      prepay, defease or redeem such Indebtedness to be made, prior to its stated
      maturity, or such Guarantee to become payable or cash collateral in respect
      thereof to be demanded; or




(g) Judgments .
      There
      is entered against either of the Borrowers or, the Guarantor, (i) a judgment
      or
      order for the payment of money in an aggregate amount exceeding the Threshold
      Amount (unless it is covered by insurance provided by an insurer that complies
      with Section
      7.01(r) of this
      Agreement, such insurer has been notified of the potential claim and has not
      disputed coverage for a period in excess of ninety (90) days), or (ii) any
      one
      or more non-monetary judgments that have, or could reasonably be expected to
      have, individually or in the aggregate, a Material Adverse Effect and, in either
      case, such judgments are not dismissed or discharged and (A) enforcement
      proceedings are commenced by any creditor upon such judgment or order, or (B)
      there is a period of fifteen (15) days during which a stay of enforcement of
      such judgment, by reason of a pending appeal or otherwise, is not in effect;
      or




(h) Invalidity
      of Loan Documents .
      Any
      material provision of any Transaction Document, at any time after its execution
      and delivery and for any reason other than as expressly permitted hereunder
      or
      thereunder or satisfaction in full of all the Secured Obligations, ceases to
      be
      in full force and effect; or any Loan Party or any other Person Contests in
      any
      manner the validity or enforceability of any material provision of any
      Transaction Document; or any Loan Party or Material Project Party denies that
      it
      has any or further liability or obligation under any Transaction Document,
      or
      purports to revoke, terminate or rescind any Transaction Document;
      or




68




(i) Change
      of Control .
      The
      Guarantor and the Pledgor (i) shall collectively cease to own and control
      legally and beneficially, either directly or indirectly, Equity Interests in
      each of the Borrowers representing one hundred (100%) of the combined voting
      power of all of the Equity Interests entitled to vote for members of the board
      of managers or equivalent governing body of the Borrowers on a fully-diluted
      basis (and taking into account all such Equity Interests that such person or
      group has the right to acquire pursuant to any option right) or (ii) shall
      have
      granted any contractual right of control to any Person over the management
      or
      policies of, or Equity Interests in, the Borrowers; or




(j) Collateral
      Document .
      Any
      Collateral Document after delivery thereof pursuant to Section
      4.01(a)(xiv) - (xviii) or 7.01(o) shall
      for any reason (other than pursuant to the terms thereof) cease to create a
      valid and perfected first priority lien on and security interest in the
      Collateral purported to be covered thereby, other than Permitted
      Liens;




(k) Material
      Adverse Effect .
      Any
      event or circumstance shall arise which shall have a Material Adverse Effect;
      or




(l) Material
      Project Agreements .
      (i) The
      Borrowers or any Material Project Party fails to perform or observe, in any
      material respect, any material term, covenant or agreement contained in any
      Material Project Agreement and, if such failure to perform or observe is of
      a
      nature such that it can be remedied, such failure to perform or observe shall
      continue unremedied beyond any applicable cure period set forth therein, unless
      the same is subject to a Contest; or (ii) any default or event of default shall
      have occurred and be continuing under any Material Project Agreement and such
      default or event of default shall continue unremedied beyond any applicable
      cure
      period set forth therein, unless the same is subject to a Contest;
      or




(m) Abandonment .
      Abandonment shall have occurred; or




(n) Expropriation .
      An
      Expropriatory Event shall have occurred and such event is not withdrawn,
      rescinded, revoked or reversed within thirty (30) days thereof or is not subject
      to a stay pending appeal for a period of more than thirty (30)
      days.




Section
      11.02  Remedies
      upon Default .




(a) Acceleration,
      Etc .
      If any
      Event of Default occurs and is Continuing, the Lender may take any or all of
      the
      following actions:




(i)  declare
      the Commitment to make Loans to be terminated, whereupon such Commitment and
      obligations shall be terminated; and




(ii)  declare
      the unpaid principal amount of all outstanding Loans, all interest accrued
      and
      unpaid thereon, and all other amounts owing or payable hereunder or under any
      other Loan Document to be immediately due and payable, without presentment,
      demand, protest or other notice of any kind, all of which are hereby expressly
      waived by the Borrowers;




*provided,
      howeve* r,
      that
      upon the occurrence of any Insolvency Proceeding with respect to either of
      the
      Borrowers, the obligation of the Lender to make Loans shall automatically
      terminate, and the unpaid principal amount of all outstanding Loans and all
      interest and other amounts as aforesaid shall automatically become due and
      payable.




69




(b) Operation
      and Maintenance .
      The
      Lender shall have the right (but not the obligation) to allow the management
      of
      the Borrowers to continue performing their respective duties or to require
      the
      Borrowers to appoint a manager on terms and conditions acceptable to the Lender,
      for the purpose of performing such services for, and rendering such assistance
      on behalf of, the Borrowers as is required by the Lender. In the latter case,
      the manager may be a Person who shall become an employee of, or consultant
      to,
      the Borrowers or may be another Person which enters into a management or
      operations contract with the Borrowers.




Section
      11.03  Right
      of Setoff .
      The
      Borrowers hereby authorizes the Lender, if and to the extent payment owed to
      the
      Lender is not made when due hereunder or under any other Loan Document, to
      charge from time to time against any or all of the Borrowers’ accounts with the
      Lender any amount so due.




**ARTICLE
      XII**


**MISCELLANEOUS**




Section
      12.01  Amendments,
      Etc .
      No
      amendment or waiver of any provision of this Agreement or any other Loan
      Document, and no consent to any departure by the Borrowers or any other Loan
      Party therefrom, shall be effective unless in writing signed by the Lender
      and
      the applicable Loan Party and each such waiver or consent shall be effective
      only in the specific instance and for the specific purpose for which
      given.




Section
      12.02  Notices
      and Other Communications; Facsimile Copies .




(a) Manner
      of Delivery .
      Except
      in the case of notices and other communications expressly permitted to be given
      by telephone, all notices and other communications provided for herein shall
      be
      in writing and shall be delivered by hand or overnight courier service, mailed
      by certified or registered mail or sent by telecopier to the address, telecopier
      number or electronic mail address, as applicable, specified for such Person
      on Schedule
      12.02 ,
      and all
      notices and other communications expressly permitted hereunder to be given
      by
      telephone shall be made to the applicable telephone number specified for such
      Person on Schedule
      12.02 .




(b) Receipt .
      Notices
      sent by hand or overnight courier service, or mailed by certified or registered
      mail, shall be deemed to have been given when received; notices sent by
      telecopier shall be deemed to have been given when sent (except that, if not
      given during normal business hours for the recipient, shall be deemed to have
      been given at the opening of business on the next business day for the
      recipient).




(c) Reliance
      by Lender . **** The
      Lender shall be entitled to rely and act upon any notices purportedly given
      by
      or on behalf of the Borrowers even if (i) such notices were not made in a manner
      specified herein, were incomplete or were not preceded or followed by any other
      form of notice specified herein, or (ii) the terms thereof, as understood
      by the recipient, varied from any confirmation thereof. The Borrowers shall
      indemnify the Lender and its Related Parties from all losses, costs, expenses
      and liabilities resulting from the reliance by such Person on each notice
      purportedly given by or on behalf of the Borrowers if given in accordance with
      this Agreement. All telephonic notices to and other telephonic communications
      with the Lender may be recorded by the Lender, and each of the parties hereto
      hereby consents to such recording.




70




Section
      12.03  No
      Waiver; Cumulative Remedies .
      No
      failure by the Lender to exercise, and no delay by any such Person in
      exercising, any right, remedy, power or privilege hereunder or any other Loan
      Document shall operate as a waiver thereof; nor shall any single or partial
      exercise of any right, remedy, power or privilege hereunder preclude any other
      or further exercise thereof or the exercise of any other right, remedy, power
      or
      privilege. The rights, remedies, powers and privileges herein provided, and
      provided under each other Loan Document, are cumulative and not exclusive of
      any
      rights, remedies, powers and privileges provided by law.




Section
      12.04  Expenses;
      Indemnity; Damage Waiver .




(a) Costs
      and Expenses .
      The
      Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by the
      Lender and its Affiliates (including the reasonable fees, charges and
      disbursements of counsel or consultants (including technical, environmental
      or
      insurance consultants) for the Lender), in connection with the preparation,
      negotiation, execution, delivery, perfection of security and administration
      of
      this Agreement and the other Loan Documents or any amendments, modifications
      or
      waivers of the provisions hereof or thereof (whether or not the transactions
      contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket
      expenses incurred by the Lender (including the fees, charges and disbursements
      of any counsel for the Lender, and shall pay all fees and time charges for
      attorneys who may be employees of the Lender, in connection with the enforcement
      or protection of its rights in connection with this Agreement and the other
      Loan
      Documents, including its rights under this Section
      12.04 ,
      including in connection with any workout, restructuring or negotiations in
      respect of the Loans. After the Closing Date, the Borrowers shall pay or
      reimburse the Lender for the reasonable out-of-pocket costs and expenses of
      two
      site visits to the Project per year by a maximum of two (2) people for each
      visit.




(b) Indemnification
      by the Borrowers .
      The
      Borrowers shall indemnify the Lender and its Related Parties (each such Person
      being called an “ ***Indemnitee*** ”)
      against, and hold each Indemnitee harmless from, any and all losses, claims,
      damages, liabilities and related expenses (including the reasonable fees,
      charges and disbursements of any counsel for any Indemnitee), and shall
      indemnify and hold harmless each Indemnitee from all reasonable fees and time
      charges and disbursements for attorneys who may be employees of any Indemnitee,
      incurred by any Indemnitee or asserted against any Indemnitee by any third
      party
      or by any Loan Party arising out of, in connection with, or as a result of
      (i)
      the execution or delivery of this Agreement, any other Loan Document or any
      agreement or instrument contemplated hereby or thereby, the performance by
      the
      parties hereto of their respective obligations hereunder or thereunder or the
      consummation of the transactions contemplated hereby or thereby, (ii) any Loan
      or the use or proposed use of the proceeds therefrom, (iii) any actual or
      alleged presence or release of Hazardous Materials on or from any property
      owned
      or operated by the Borrowers, or any Environmental Liability related in any
      way
      to the Borrowers, or (iv) any actual or prospective claim, litigation,
      investigation or proceeding relating to any of the foregoing, whether based
      on
      contract, tort or any other theory, whether brought by a third party or by
      any
      Loan Party or any of such Loan Party’s managers, directors, partners,
      shareholders or creditors, and regardless of whether any Indemnitee is a party
      thereto and whether or not any of the transactions contemplated hereunder or
      under any of the other Loan Documents is consummated, in all cases, whether
      or
      not caused by or arising, in whole or in part, out of the comparative,
      contributory or sole negligence of the Indemnitee; *provided* that
      such indemnity shall not, as to any Indemnitee, be available to the extent
      that
      such losses, claims, damages, liabilities or related expenses (A) are determined
      by a court of competent jurisdiction by final and non-appealable judgment to
      have resulted from the gross negligence or willful misconduct of such Indemnitee
      or (B) result from a claim brought by any Loan Party against an Indemnitee
      for
      breach in bad faith of such Indemnitee’s obligations hereunder or under any
      other Loan Document, if such Loan Party has obtained a final and non-appealable
      judgment in its favor on such claim as determined by a court of competent
      jurisdiction; *provided,
      further* ,
      that
      (i) each Indemnitee shall notify the Borrowers in writing upon becoming aware
      of
      the initiation of any claims against it, (ii) the Borrowers shall be entitled
      to
      participate in the defense of any such claim and, if the Borrowers so chooses,
      to assume the defense, at the Borrowers’ expense, of any such claim with counsel
      selected by the Borrowers (it being understood that any Indemnitee shall have
      the right to participate in such defense and employ counsel separate from the
      counsel employed by the Borrowers, and that such counsel shall be at the expense
      of such Indemnitee unless such Indemnitee shall have been advised by counsel
      that there may be legal defenses available to it that are inconsistent with
      or
      in addition to those available to the Borrowers, in which case the reasonable
      fees and expenses of such counsel shall be at the Borrowers’ expense) and (iii)
      no Indemnitee shall settle any such claim without the Borrowers’ prior written
      consent (such consent not to be unreasonably withheld).




71




(c) Waiver
      of Consequential Damages, Etc .
      To the
      fullest extent permitted by Applicable Law, the Borrowers shall not assert,
      and
      hereby waive, any claim against any Indemnitee, on any theory of liability,
      for
      special, indirect, consequential or punitive damages (as opposed to direct
      or
      actual damages) arising out of, in connection with, or as a result of, this
      Agreement, any other Loan Document or any agreement or instrument contemplated
      hereby, the transactions contemplated hereby or thereby, any Loan or the use
      of
      the proceeds thereof. No Indemnitee referred to in clause (b) above
      shall be liable for any damages arising from the use by unintended recipients
      of
      any information or other materials distributed by it through telecommunications,
      electronic or other information transmission systems in connection with this
      Agreement or the other Loan Documents or the transactions contemplated hereby
      or
      thereby.




(d) Payments .
      All
      amounts due under this Section
      12.04 shall be
      payable not later than ten (10) Business Days after demand
      therefor.




Section
      12.05  Payments
      Set Aside .
      To the
      extent that any payment by or on behalf of the Borrowers is made to the Lender,
      or the Lender exercises its right of setoff, and such payment or the proceeds
      of
      such setoff or any part thereof is subsequently invalidated, declared to be
      fraudulent or preferential, set aside or required (including pursuant to any
      settlement entered into by the Lender in its discretion) to be repaid to a
      trustee, receiver or any other party, in connection with any Insolvency
      Proceeding or otherwise, then to the extent of such recovery, the obligation
      or
      part thereof originally intended to be satisfied shall be revived and continued
      in full force and effect as if such payment had not been made or such setoff
      had
      not occurred.




72




Section
      12.06  Successors
      and Assigns .




(a) Successors
      and Assigns Generally .
      The
      provisions of this Agreement shall be binding upon and inure to the benefit
      of
      the parties hereto and their respective successors and assigns permitted hereby,
      except that none of the Loan Parties may assign or otherwise transfer any of
      its
      rights or obligations hereunder without the prior written consent of the Lender.
      Nothing in this Agreement, expressed or implied, shall be construed to confer
      upon any Person (other than the parties hereto, their respective successors
      and
      assigns permitted hereby, Participants to the extent provided in clause
      (b) of this Section
      12.06 and, to
      the extent expressly contemplated hereby, the Related Parties of the Lender)
      any
      legal or equitable right, remedy or claim under or by reason of this
      Agreement.




(b) Participations .
      The
      Lender may at any time, without the consent of, or notice to, the Borrowers,
      sell participations to any Person (other than a natural person or the Borrowers
      or any of the Borrowers’ Affiliates) (each, a “ ***Participant*** ”)
      in all
      or a portion of the Lender’s rights and/or obligations under this Agreement
      (including all or a portion of its Commitment and/or the Loans owing to it); *provided* that (i)
      the Lender’s and the Loan Parties’ obligations under this Agreement shall remain
      unchanged, (ii) the Lender shall remain solely responsible to the other parties
      hereto for the performance of such obligations and (iii) the Borrowers shall
      continue to deal solely and directly with the Lender in connection with the
      Lender’s rights and obligations under this Agreement. Any agreement or
      instrument pursuant to which the Lender sells such a participation shall provide
      that the Lender shall retain the sole right to enforce this Agreement and to
      approve any amendment, modification or waiver of any provision of this
      Agreement. The Borrowers agree that each Participant shall be entitled to the
      benefits of Sections
      3.01 , 3.03 , 3.04 ** and 12.08 ** to
      the
      same extent as if it were the Lender.




(c) Certain
      Pledges .
      The
      Lender may at any time pledge or assign a security interest in all or any
      portion of its rights under this Agreement (including under its Note, if any)
      to
      secure obligations of the Lender, including any pledge or assignment to secure
      obligations to a Federal Reserve Bank; *provided* that no
      such pledge or assignment shall release the Lender from any of its obligations
      hereunder or substitute any such pledgee or assignee for the Lender as a party
      hereto.




73




(d) Assignments . The
      Lender may, with the consent of the Borrowers, assign to one or more Eligible
      Assignees all or a portion of its interests, rights and obligations under this
      Agreement; provided , **** however ,
      that
      (i) each such assignment shall be of a constant, and not a varying, percentage
      of all the Lender’s rights and obligations under this Agreement, (ii) the
      parties to each such assignment shall execute and deliver to the Lender an
      Assignment and Transfer, together with any Note or Notes subject to such
      assignment and (iii) such assignment shall not, without the consent of such
      Borrower, require a Borrower to file a registration statement with the SEC
      or
      apply to or qualify the Loans or the Notes under the blue sky laws of any state.
      Upon such execution, delivery, acceptance and recording, from and after the
      effective date specified in each Assignment and Transfer, which effective date
      shall be at least five (5) Business Days after the execution thereof, (i) the
      assignee thereunder shall be a party hereto and, to the extent provided in
      such
      Assignment and Transfer, have the rights and obligations of a Lender hereunder,
      and (ii) the Lender assignor thereunder shall, to the extent provided in
      such assignment, be released from its obligations under this
      Agreement.  By
      executing and delivering an Assignment and Transfer, the Lender assignor
      thereunder and the assignee thereunder confirm to and agree with each other
      and
      the other parties hereto as follows: (i) other than the representation and
      warranty that it is the legal and beneficial owner of the interest being
      assigned thereby free and clear of any adverse claim, such Lender assignor
      makes
      no representation or warranty and assumes no responsibility with respect to
      any
      statements, warranties or representations made in or in connection with this
      Agreement or the execution, legality, validity, enforceability, genuineness,
      sufficiency or value of this Agreement or any other instrument or document
      furnished pursuant hereto or with respect to the financial condition of any
      Borrower or the performance or observance by any Borrower of any of its
      obligations under this Agreement or any other instrument or document furnished
      pursuant hereto; (ii) such assignee confirms that it has received a copy of
      this
      Agreement and such other documents and information as it has deemed appropriate
      to make its own credit analysis and decision to enter into such Assignment
      and
      Transfer; (iii) such assignee will, independently and without reliance upon
      the
      Lender assignor, and based on such documents and information as it shall deem
      appropriate at the time, continue to make its own credit decisions in taking
      or
      not taking action under this Agreement; (iv) such assignee confirms that it
      is
      an Eligible Assignee; (v) such assignee appoints and authorizes the Lender
      to
      take such action as agent on its behalf and to exercise such powers under this
      Agreement and the other Loan Documents as are delegated to the Lender by the
      terms hereof and thereof, together with such powers as are reasonably incidental
      thereto; and (vi) such assignee agrees that it will perform in accordance with
      their terms all of the obligations which by the terms of this Agreement are
      required to be performed by it as a Lender.




74




Section
      12.07  Treatment
      of Certain Information; Confidentiality .
      The
      Lender agrees to maintain the confidentiality of the Information, except that
      Information may be disclosed (i) to its Affiliates and to its Affiliates’
respective partners, directors, officers, employees, agents, advisors and
      representatives (it being understood that the Persons to whom such disclosure
      is
      made will be informed of the confidential nature of such Information and
      instructed to keep such Information confidential); (ii) to the extent requested
      by any regulatory authority purporting to have jurisdiction over it; (iii)
      to
      the extent required by Applicable Law or regulations or by any subpoena or
      similar legal process; (v) to any other party to this Agreement; (iv) in
      connection with the exercise of any remedies hereunder or any suit, action
      or
      proceeding relating to this Agreement or the enforcement of rights hereunder;
      (vi) subject to an agreement containing provisions substantially the same as
      those of this Section
      12.07 ,
      to (A)
      any Participant in any of its rights or obligations under this Agreement or
      (B)
      any direct or indirect contractual counterparty or prospective counterparty
      (or
      such contractual counterparty’s or prospective counterparty’s professional
      advisor) to any credit derivative transaction relating to obligations of the
      Loan Parties; (vii) with the consent of the Borrowers; (viii) to the extent
      such
      Information (i) becomes publicly available other than as a result of a breach
      of
      this Section
      12.07 or
      (ii) becomes available to the Lender or any of its Affiliates on a
      nonconfidential basis from a source other than the Borrowers; (ix) to any state,
      federal or foreign authority or examiner (including the National Association
      of
      Insurance Commissioners or any other similar organization) regulating the
      Lender; or (x) to any rating agency when required by it (it being understood
      that, prior to any such disclosure, such rating agency shall undertake to
      preserve the confidentiality of any Information relating to the Loan Parties
      received by it from the Lender). In addition, the Lender may disclose the
      existence of this Agreement and information about this Agreement to market
      data
      collectors, similar service providers to the lending industry, and service
      providers to the Lender in connection with the administration and management
      of
      this Agreement, the other Loan Documents, the Commitments, and the Borrowings.
      For the purposes of this Section
      12.07 ,
      “ ***Information*** ”
means
      all information received from any Loan Party relating to any Loan Party or
      its
      business, other than any such information that is available to the Lender on
      a
      non-confidential basis prior to disclosure by any Loan Party. Any Person
      required to maintain the confidentiality of Information as provided in this Section
      12.07 shall be
      considered to have complied with its obligation to do so if such Person has
      exercised the same degree of care to maintain the confidentiality of such
      Information as such Person would accord to its own confidential
      information.




75




Section
      12.08  Right
      of Setoff .
      If an
      Event of Default shall have occurred and be Continuing, the Lender and each
      of
      its Affiliates is hereby authorized at any time and from time to time, to the
      fullest extent permitted by Applicable Law, to set off and apply any and all
      deposits (general or special, time or demand, provisional or final, in whatever
      currency) at any time held and other obligations (in whatever currency) at
      any
      time owing by the Lender or any such Affiliate to or for the credit or the
      account of any Loan Party against any and all of the obligations of such Loan
      Party now or hereafter existing under this Agreement or any other Loan Document
      to the Lender, irrespective of whether or not the Lender shall have made any
      demand under this Agreement or any other Loan Document and although such
      obligations of the Loan Party may be contingent or unmatured or are owed to
      a
      branch or office of the Lender different from the branch or office holding
      such
      deposit or obligated on such indebtedness. The rights of the Lender and its
      Affiliates under this Section
      12.08 are in
      addition to other rights and remedies (including other rights of setoff) that
      the Lender or its Affiliates may have. The Lender agrees to notify the Borrowers
      promptly after any such setoff and application; *provided* that the
      failure to give such notice shall not affect the validity of such setoff and
      application.




Section
      12.09  Counterparts;
      Effectiveness .
      This
      Agreement may be executed in counterparts (and by different parties hereto
      in
      different counterparts), each of which shall constitute an original, but all
      of
      which when taken together shall constitute a single contract. Except as provided
      in Section
      4.01 ,
      this
      Agreement shall become effective when it shall have been executed by the Lender
      and when the Lender shall have received counterparts hereof that, when taken
      together, bear the signatures of each of the other parties hereto. Delivery
      of
      an executed counterpart of a signature page of this Agreement by telecopy shall
      be effective as delivery of a manually executed counterpart of this
      Agreement.




Section
      12.10  Survival .
      Notwithstanding anything in this Agreement to the contrary, Article
      III , Sections  12.04 , 12.14 , 12.17 , 12.18 and 12.19 shall
      survive any termination of this Agreement. In addition, each representation
      and
      warranty made hereunder and in any other Loan Document or other document
      delivered pursuant hereto or thereto or in connection herewith or therewith
      shall survive the execution and delivery hereof and thereof. Such
      representations and warranties have been or will be relied upon by the Lender,
      regardless of any investigation made by the Lender or on its behalf and
      notwithstanding that the Lender may have had notice or knowledge of any
      Prospective Event of Default or Event of Default at the time of any Borrowing,
      and shall continue in full force and effect as long as any Loan or any other
      Secured Obligation hereunder or under any other Loan Document shall remain
      unpaid or unsatisfied.




76




Section
      12.11  Severability .
      If any
      provision of this Agreement or the other Loan Documents is held to be illegal,
      invalid or unenforceable, (a) the legality, validity and enforceability of
      the
      remaining provisions of this Agreement and the other Loan Documents shall not
      be
      affected or impaired thereby and (b) the parties shall endeavor in good faith
      negotiations to replace the illegal, invalid or unenforceable provisions with
      valid provisions the economic effect of which comes as close as possible to
      that
      of the illegal, invalid or unenforceable provisions. The invalidity of a
      provision in a particular jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.




Section
      12.12  Consultants .




(a) Removal
      of Consultants .
      The
      Lender may, in its sole discretion, remove any of the Consultants. If any of
      the
      Consultants is removed or resigns and thereby ceases to act for purposes of
      this
      Agreement and the other Loan Documents, the Lender may designate a replacement
      firm (each, a “ ***Replacement
      Consultant*** ”)
      with
      the prior consent of the Borrowers, not to be unreasonably withheld (such
      consent not to be required during the continuance of a Prospective Event of
      Default or Event of Default).




(b) Consultants’
      Fees and Expenses .
      The
      Borrowers shall reimburse each of the Consultants for the reasonable fees and
      documented expenses of such Consultant retained on behalf of the Lender pursuant
      to this Section
      12.12 ,
      including, without limitation, the report to be provided by the Insurance
      Consultant as contemplated by Sections 4.01(a)(xiii)  and
      any
      dispute resolution provided by the Independent Engineer pursuant to Section
      1.06(b) ,
      and
      site visits by the Independent Engineer provided that Borrowers shall not be
      required to reimburse the Independent Engineer for more than one site visit
      in
      any year unless a Prospective Event of Default or an Event of Default has
      occurred, in which case the Borrowers shall reimburse the Independent Engineer
      for all site visits.




(c) Certifications
      by Consultants .
      In all
      cases in which this Agreement provides for any Consultant to “ *agree* ,”
      “ *approve* ,”
      “ *certify* ”
or
      “ *confirm* ”
any
      report or other document or any fact or circumstance, such Consultant may make
      the determinations and evaluations required in connection therewith based upon
      information provided by the Borrowers or other sources reasonably believed
      by
      such Consultant, to be knowledgeable and responsible, without independently
      verifying such information; *provided* that,
      notwithstanding the foregoing, such Consultant shall engage in such independent
      investigations or findings as it may from time to time deem necessary in its
      reasonable discretion to support the determinations and evaluations required
      of
      it.




Section
      12.13  Benefits
      of Agreement .
      Nothing
      in this Agreement or any other Loan Document, express or implied, shall give
      to
      any Person, other than the parties hereto, and each of their successors and
      permitted assigns under this Agreement or any other Loan Document, any benefit
      or any legal or equitable right or remedy under this Agreement.




77




Section
      12.14  Judgment
      Currency .




(a) Obligation
      to Pay in Dollars .
      The
      Borrowers’ obligations under this Agreement or any of the other Loan Documents
      to make payment in Dollars (the “ ***Obligation
      Currency*** ”),
      shall
      not be discharged or satisfied by any tender or recovery pursuant to any
      judgment expressed in or converted into any currency other than the Obligation
      Currency, except to the extent that such tender or recovery results in the
      effective receipt of the full amount of the Obligation Currency expressed to
      be
      payable under this Agreement or the other Loan Documents. If, for the purpose
      of
      obtaining or enforcing judgment against the Borrowers in any court or in any
      jurisdiction, it becomes necessary to convert into or from any currency other
      than the Obligation Currency (such other currency being hereinafter referred
      to
      as the “ ***Judgment
      Currency*** ”)
      an
      amount due in the Obligation Currency, the conversion shall be made at the
      rate
      of exchange at which the Lender could purchase Dollars with such Judgment
      Currency in accordance with normal banking procedures in New York City,
      State of New York, United States, with respect to Dollars as of the day
      (or, if such day is not a Business Day, on the next succeeding Business Day)
      on
      which the judgment is given (such Business Day being hereinafter referred to
      as
      the “ ***Judgment
      Currency Conversion Date*** ”).




(b) Additional
      Amounts .
      If
      there is a change in the rate of exchange prevailing between the Judgment
      Currency Conversion Date and the date of actual payment of the amount due from
      the Borrowers, the Borrowers covenant to pay, or cause to be paid, such
      additional amounts, if any (but, in any event, not a lesser amount), as may
      be
      necessary to ensure that the amount paid in the Judgment Currency, when
      converted at the applicable rate of exchange prevailing on the date of payment,
      will produce the amount of the Obligation Currency that could have been
      purchased with the amount of Judgment Currency stipulated in the judgment or
      judicial award against it at the rate of exchange prevailing on the Judgment
      Currency Conversion Date. If there is a change in the rate of exchange
      prevailing between the Judgment Currency Conversion Date and the date of actual
      payment of the amount due that results in the Borrowers paying an amount in
      excess of that necessary to discharge or satisfy any judgment against it, the
      Lender shall transfer or cause to be transferred to the Borrowers the amount
      of
      such excess (net of any Taxes and reasonable and customary costs incurred in
      connection therewith).




(c) Determination
      of Amount .
      For
      purposes of determining the applicable currency equivalent or other rate of
      exchange under this Section 12.14 ,
      such
      amount shall include any premium and costs payable in connection with the
      purchase of the Obligation Currency.




Section
      12.15  Language;
      Spanish Translation .
      The
      Spanish translation of this Agreement and any other Loan Document prepared
      by
      the Borrowers and delivered pursuant to Section
      7.01(n) shall be
      the agreed Spanish translation hereof for all purposes. Such translation and
      no
      other shall be used in any proceeding in Mexico. For all purposes, the English
      language version hereof shall be the original instrument and, in case of a
      conflict between the English and the Spanish versions, the English version
      shall
      control.




Section
      12.16  USA
      PATRIOT Act Notice .
      The
      Lender hereby notifies the Borrowers that pursuant to the requirements of the
      Patriot Act, it is required to obtain, verify and record information that
      identifies the Borrowers, which information includes the name and address of
      the
      Borrowers and other information that will allow the Lender to identify the
      Borrowers in accordance with the Patriot Act.




78




Section
      12.17  Governing
      Law; Jurisdiction; Etc .




(a) GOVERNING
      LAW .
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF NEW YORK, UNITED STATES.




(b) SUBMISSION
      TO JURISDICTION .
      EACH
      PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
      PROPERTY, TO (I) THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
      OF
      NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT
      FOR
      THE SOUTHERN DISTRICT OF NEW YORK, OR (II) THE COURTS OF ITS DOMICILE, AND
      ANY
      APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
      OR
      RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR
      ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
      UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
      PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT; EACH PARTY IRREVOCABLY
      AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      THE JURISDICTION OF ANY OTHER COURTS TO SUCH ACTION OR PROCEEDING; EACH OF
      THE
      PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
      SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
      JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.




(c) WAIVER
      OF VENUE .
      THE
      LOAN PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT
      PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE
      TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
      TO
      THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION 12.17 .
      EACH OF
      THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
      BY
      APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
      SUCH
      ACTION OR PROCEEDING IN ANY SUCH COURT.




(d) Appointment
      of Process Agent and Service of Process .
      Each of
      the Borrowers hereby irrevocably appoints the Guarantor with an office on the
      date hereof at 76 Beaver Street, 26 th Floor,
      New York, New York 10005, United States of America, as its agent to receive
      on
      behalf of itself and its property services of copies of the summons and
      complaint and any other process which may be served in any such action or
      proceeding. Such service may be made by mailing or delivering a copy of such
      process to the Borrowers in care of the Guarantor at the Guarantor’s above
      address, and each of the Borrowers irrevocably authorizes and directs the
      Guarantor to accept such service on its behalf.




(e) Immunity .
      To the
      extent that either of the Borrowers has or hereafter may acquire any immunity
      from jurisdiction of any court or from any legal process (whether through
      service or notice, attachment prior to judgment, attachment in aid of execution,
      execution or otherwise) with respect to itself or its property, such Borrower
      hereby irrevocably and unconditionally waives such immunity in respect of its
      obligations under the Loan Documents and, without limiting the generality of
      the
      foregoing, agrees that the waivers set forth in this Section 12.17(d) shall
      have the fullest scope permitted under the Foreign Sovereign Immunities Act
      of
      1976 of the United States and are intended to be irrevocable for purposes of
      such Act.




79




Section
      12.18  WAIVER
      OF JURY TRIAL .
      EACH
      PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
      APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
      DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
      OTHER
      LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED
      ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
      NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
      PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
      LOAN
      DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
      THIS SECTION
      12.18 .




Section
      12.19  Joint
      and Several Liability .
      Each of
      the Borrowers acknowledges that (i) it is a co-borrower hereunder and shall
      be
      jointly and severally, with the other Borrower, directly and primarily liable
      for the Secured Obligations regardless of which Borrower actually receives
      Loans
      or other extensions of credit hereunder or the amount of such Loans or other
      extensions of credit received or the manner in which the Lender accounts for
      such Loans or other extensions of credit on its books and records, (ii) each
      of
      the Secured Obligations shall be secured by all of the Borrowers’ collateral,
      (iii) each of the Borrowers shall have the obligations of co-maker and shall
      be
      primary obligors with respect to the Loans, the Notes, and the other Secured
      Obligations, it being agreed that the Loans to each Borrower inure to the
      benefit of both Borrowers, and (iv) the Lender is relying on such joint and
      several liability of the Borrowers as co-makers in extending the Loans and
      the
      other extensions of credit under the Loan Documents. Each Borrower’s Secured
      Obligations with respect to Loans and other extensions of credit made to it,
      and
      each Borrower’s Secured Obligations arising as a result of the joint and several
      liability of the Borrowers hereunder, with respect to Loans and other extensions
      of credit made to the other Borrower hereunder, shall be separate and distinct
      obligations, but all such Secured Obligations shall be primary obligations
      of
      each Borrower. Each Borrower hereby unconditionally and irrevocably agrees
      that
      upon default in the payment when due (whether at stated maturity, by
      acceleration or otherwise) of any principal of, or interest on, any Loan or
      other Secured Obligation payable by it to the Lender, it will forthwith pay
      the
      same, without notice of demand. Notwithstanding anything to the contrary
      contained in this Agreement, the Lender shall be entitled to rely upon any
      Loan
      Notice or other request, notice or other communication received by it from
      any
      Borrower on behalf of both Borrowers, and shall be entitled to treat its giving
      of any notice hereunder pursuant to Section
      12.02 hereof
      as notice to each and all Borrowers.




80


*IN
      WITNESS WHEREOF,* the
      parties hereto have caused this Agreement to be duly executed as of the date
      first above written.


**MINERA
                  SANTA RITA S. DE R.L. DE C.V.**By:
              /s/
                  Gifford A. DieterleName:
              Gifford
                  A. DieterleTitle:
              President**ORO
                  DE ALTAR S. DE R.L. DE C.V.**By:
              /s/
                  Gifford A. DieterleName:
              Gifford
                  A. DieterleTitle:
              President**CAPITAL
                  GOLD CORPORATION**By:
              /s/
                  Christopher M. ChipmanName:
              Christopher
                  M. ChipmanTitle:
              CFO**STANDARD
                  BANK PLC**By:
              /s/
                  Arnaud StaraName:
              Arnaud
                  StarkTitle:
              DirectorBy:
              /s/
                  Maria Elena FunegraName:
              Maria
                  Elena FunegraTitle:
              Senior
                  Vice-President