exhibit10_1.htm


    
      

    

     

     

     

    EXPLORATION,
DEVELOPMENT AND

    MINE
OPERATING AGREEMENT

    


    By
And Between

    


    U.S.
ENERGY CORP.

    


    And

    


    THOMPSON
CREEK METALS COMPANY USA

    


    Lucky Jack Project, Colorado
USA

    


    August
19, 2008

    


    


    


    


    


    


    


    


    ****The
confidential portions of this Agreement on pages 9, 10, 11, 15, 18, 27, 28, 30,
32, 40, 41, 42, 51 and Exhibit D pages 1, 3 7 and 8 have been omitted and filed
separately with the Securities and Exchange Commission.

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    TABLE
OF CONTENTS

    Page

    


    
      	
              PART
      I  THE TRANSACTION

            	
              1

            
	
              ARTICLE
      I  DEFINITIONS AND CROSS-REFERENCES

            	
              1

            
	
              1.1

            	
              Definitions

            	
              1

            
	
              1.2

            	
              Cross
      References

            	
              1

            
	
              ARTICLE
      II  NAME AND PURPOSES

            	
              2

            
	
              2.1

            	
              General

            	
              2

            
	
              2.2

            	
              Option
      Period and Joint Venture Period

            	
              2

            
	
              2.3

            	
              Purposes

            	
              2

            
	
              2.4

            	
              Limitation

            	
              2

            
	
              ARTICLE
      III  REPRESENTATIONS AND WARRANTIES; TITLE TO
    ASSETS

            	
              3

            
	
              3.1

            	
              Representations
      and Warranties of all Parties

            	
              3

            
	
              3.2

            	
              Representations
      and Warranties of USE

            	
              3

            
	
              3.3

            	
              Knowledge
      of Parties

            	
              5

            
	
              3.4

            	
              Disclosures

            	
              5

            
	
              3.5

            	
              Loss
      of Title

            	
              6

            
	
              3.6

            	
              Royalties,
      Production Taxes and Other Payments Based on Production

            	
              6

            
	
              3.7

            	
              Confidentiality
      of Agreement

            	
              6

            
	
              ARTICLE
      IV  RELATIONSHIP OF THE PARTICIPANTS

            	
              6

            
	
              4.1

            	
              No
      Partnership or Fiduciary Relationship

            	
              6

            
	
              4.2

            	
              Tax
      Matters

            	
              6

            
	
              4.3

            	
              Other
      Business Opportunities

            	
              6

            
	
              4.4

            	
              Waiver
      of Rights to Partition or Other Division of Assets

            	
              7

            
	
              4.5

            	
              Implied
      Covenants

            	
              7

            
	
              4.6

            	
              No
      Third Party Beneficiary Rights

            	
              7

            
	
              PART
      II  OPTION PERIOD

            	
              7

            
	
              ARTICLE
      V  OPTION CONSIDERATION

            	
              7

            
	
              5.1

            	
              Option
      Consideration

            	
              7

            
	
              ARTICLE
      VI  THE OPTION

            	
              7

            
	
              6.1

            	
              Option

            	
              7

            
	
              6.2

            	
              Option
      Stages

            	
              9

            
	
              6.3

            	
              Failure
      to Make Expenditures and Termination

            	
              9

            
	
              6.4

            	
              Obligations
      Upon Termination During Option Period

            	
              10

            
	
              6.5

            	
              Exercise
      of Option and Acquisition of Additional Interest in
    Property

            	
              10

            
	
              6.6

            	
              Royalty

            	
              11

            


    

     

    


     

    


    
      
        
           


        

        
          -i-

          
            

          

        

        
           


        

      

    

    


     

    


     

    
      	
              ARTICLE
      VII  RIGHTS AND OBLIGATIONS DURING THE OPTION
    PERIOD

            	
              12

            
	
              7.1

            	
              Manager
      During Option Period

            	
              12

            
	
              7.2

            	
              Management
      Committee

            	
              12

            
	
              7.3

            	
              Water
      Treatment Facility

            	
              12

            
	
              7.4

            	
              Reports
      During Option Period

            	
              13

            
	
              7.5

            	
              Transferring
      Interests in Property and Dealing With Unpatented Mining
      Claims

            	
              13

            
	
              7.6

            	
              Permit
      Obligations of TCM During Option Period

            	
              13

            
	
              7.7

            	
              Access
      to Property During Option Period

            	
              13

            
	
              7.8

            	
              Maintenance
      of Property During Option Period

            	
              13

            
	
              7.9

            	
              Management
      of Existing Underground Mine Conditions During Exploration

            	
              14

            
	
              7.10

            	
              Indemnification
      of Manager During Option Period

            	
              14

            
	
              7.11

            	
              Programs
      and Budgets

            	
              15

            
	
              7.12

            	
              Presentation
      of Programs and Budgets

            	
              15

            
	
              7.13

            	
              Review
      and Adoption of Proposed Programs and Budgets

            	
              15

            
	
              7.14

            	
              Budget
      Overruns; Program Changes

            	
              16

            
	
              7.15

            	
              Assignment
      During Option Period

            	
              16

            
	
              7.16

            	
              Other
      Provisions

            	
              16

            
	
              PART
      III  THE JOINT VENTURE PERIOD

            	
              16

            
	
              ARTICLE
      VIII  JOINT VENTURE

            	
              16

            
	
              8.1

            	
              Purpose

            	
              16

            
	
              8.2

            	
              Manager

            	
              16

            
	
              8.3

            	
              Initial
      Participating Interests and Contributions

            	
              17

            
	
              8.4

            	
              Changes
      in Participating Interests

            	
              17

            
	
              8.5

            	
              Deemed
      Expenditures

            	
              17

            
	
              8.6

            	
              Conversion
      of Minority Interest.

            	
              18

            
	
              8.7

            	
              Continuing
      Liabilities Upon Adjustments of Participating Interests

            	
              19

            
	
              8.8

            	
              Documentation
      of Adjustments to Participating Interests

            	
              19

            
	
              8.9

            	
              Grant
      of Lien and Security Interest

            	
              19

            
	
              8.10

            	
              Subordination
      of Interests

            	
              20

            
	
              8.11

            	
              Indemnification
      of Manager

            	
              20

            
	
              8.12

            	
              Holding
      of Property

            	
              20

            
	
              8.13

            	
              Holding
      of Joint Venture Property

            	
              20

            
	
              8.14

            	
              Management
      Committee

            	
              20

            
	
              8.15

            	
              Water
      Treatment Facility

            	
              21

            


    

     

    


     

    


    
      
        
           


        

        
          -ii-

          
            

          

        

        
           


        

      

    

    


     

    


     

    
      	
              ARTICLE
      IX  PROGRAMS AND BUDGETS

            	
              21

            
	
              9.1

            	
              Operations
      Pursuant to Programs and Budgets

            	
              21

            
	
              9.2

            	
              Presentation
      of Programs and Budgets

            	
              21

            
	
              9.3

            	
              Review
      and Adoption of Proposed Programs and Budgets

            	
              21

            
	
              9.4

            	
              Election
      to Participate

            	
              23

            
	
              9.5

            	
              Recalculation
      or Restoration of Reduced Interest Based on Actual
      Expenditures

            	
              24

            
	
              9.6

            	
              Budget
      Overruns; Program Changes

            	
              25

            
	
              9.7

            	
              Emergency
      or Unexpected Expenditures

            	
              25

            
	
              ARTICLE
      X  ACCOUNTS AND SETTLEMENTS

            	
              26

            
	
              10.1

            	
              Monthly
      Statements and Applications of this ARTICLE

            	
              26

            
	
              10.2

            	
              Cash
      Calls

            	
              26

            
	
              10.3

            	
              Failure
      to Meet Cash Calls

            	
              26

            
	
              10.4

            	
              Cover
      Payment

            	
              26

            
	
              10.5

            	
              Remedies

            	
              26

            
	
              10.6

            	
              Audits

            	
              29

            
	
              ARTICLE
      XI  DISPOSITION OF PRODUCTION

            	
              30

            
	
              11.1

            	
              Purchase
      and Sale of Products

            	
              30

            
	
              ARTICLE
      XII  SUPPLEMENTAL BUSINESS AGREEMENT

            	
              31

            
	
              12.1

            	
              Supplemental
      Business Agreement

            	
              31

            
	
              ARTICLE
      XIII  TRANSFER OF INTEREST; PREEMPTIVE RIGHT

            	
              32

            
	
              13.1

            	
              General

            	
              32

            
	
              13.2

            	
              Limitations
      on Free Transferability

            	
              32

            
	
              PART
      IV  PROVISIONS APPLICABLE TO BOTH  OPTION period AND
      JOINT VENTURE PERIOD

            	
              34

            
	
              ARTICLE
      XIV  MANAGEMENT COMMITTEE

            	
              34

            
	
              14.1

            	
              Meetings
      of Management Committee

            	
              34

            
	
              14.2

            	
              Action
      Without Meeting in Person

            	
              35

            
	
              14.3

            	
              Matters
      Requiring Approval

            	
              35

            
	
              ARTICLE
      XV  MANAGER

            	
              35

            
	
              15.1

            	
              Powers
      and Duties of Manager

            	
              35

            
	
              15.2

            	
              Standard
      of Care

            	
              39

            
	
              15.3

            	
              Resignation;
      Deemed Offer to Resign

            	
              40

            
	
              15.4

            	
              Administrative
      Charges and Services Agreement

            	
              41

            
	
              15.5

            	
              Transactions
      With Affiliates

            	
              41

            


    

     

    


     

    


    
      
        
           


        

        
          -iii-

          
            

          

        

        
           


        

      

    

    


     

    


     

    
      	
              ARTICLE
      XVI  WITHDRAWAL AND TERMINATION

            	
              41

            
	
              16.1

            	
              Termination

            	
              41

            
	
              16.2

            	
              Withdrawal

            	
              41

            
	
              16.3

            	
              Continuing
      Obligations and Environmental Liabilities

            	
              42

            
	
              16.4

            	
              Disposition
      of Assets on Termination

            	
              42

            
	
              16.5

            	
              Non-Compete
      Covenants

            	
              42

            
	
              16.6

            	
              Right
      to Data After Termination

            	
              42

            
	
              16.7

            	
              Continuing
      Authority

            	
              42

            
	
              ARTICLE
      XVII  ACQUISITIONS WITHIN AREA OF INTEREST

            	
              43

            
	
              17.1

            	
              General

            	
              43

            
	
              17.2

            	
              Notice
      to Non-Acquiring Party

            	
              43

            
	
              17.3

            	
              Election
      to Acquire

            	
              43

            
	
              17.4

            	
              Election
      to Acquire Not Exercised

            	
              44

            
	
              ARTICLE
      XVIII  ABANDONMENT AND SURRENDER OF PROPERTIES

            	
              44

            
	
              18.1

            	
              Abandonment
      and Surrender of Property - Option Period

            	
              44

            
	
              18.2

            	
              Abandonment
      and Surrender of Property – Joint Venture Period

            	
              44

            
	
              ARTICLE
      XIX  DISPUTES

            	
              45

            
	
              19.1

            	
              Governing
      Law

            	
              45

            
	
              19.2

            	
              Dispute
      Resolution

            	
              45

            
	
              19.3

            	
              Mediation

            	
              45

            
	
              19.4

            	
              Arbitration

            	
              45

            
	
              ARTICLE
      XX  CONFIDENTIALITY, OWNERSHIP,  USE AND DISCLOSURE OF
      INFORMATION

            	
              47

            
	
              20.1

            	
              Business
      Information

            	
              47

            
	
              20.2

            	
              Party
      Information

            	
              47

            
	
              20.3

            	
              Permitted
      Disclosure of Confidential Business Information

            	
              48

            
	
              20.4

            	
              Disclosure
      Required By Law

            	
              48

            
	
              20.5

            	
              Permitted
      Disclosure

            	
              49

            
	
              20.6

            	
              Public
      Announcements

            	
              49

            
	
              ARTICLE
      XXI  GENERAL PROVISIONS

            	
              50

            
	
              21.1

            	
              Notices

            	
              50

            
	
              21.2

            	
              Currency

            	
              51

            
	
              21.3

            	
              Headings

            	
              51

            
	
              21.4

            	
              Waiver

            	
              51

            
	
              21.5

            	
              Modification

            	
              51

            
	
              21.6

            	
              Force
      Majeure

            	
              51

            
	
              21.7

            	
              Rule
      Against Perpetuities

            	
              52

            
	
              21.8

            	
              Further
      Assurances

            	
              52

            
	
              21.9

            	
              Entire
      Agreement; Successors and Assigns

            	
              52

            
	
              21.10

            	
              Memorandum

            	
              53

            
	
              21.11

            	
              Counterparts

            	
              53

            


    

    


    


    
      
        
           


        

        
          -iv-

          
            

          

        

        
           


        

      

    

     

    
 

    EXHIBIT
A                                Property
Description

    EXHIBIT
B                                Accounting
Procedures

    EXHIBIT
C                                Tax
Matters

    EXHIBIT
D                                Definitions
and Interpretation

    EXHIBIT
E                                Section
3.2(g) Disclosure

    EXHIBIT
F                                Insurance
Requirements

    EXHIBIT
G                                Services
Agreement

    EXHIBIT
H                               Area
of Interest

    EXHIBIT
I                                Net
Profits Interest

    EXHIBIT
J                                Participating
Interest Transfer Form

    


    


    
      
        
           


        

        
          -i-

          
            

          

        

        
           


        

      

    

     

    
 

    EXPLORATION,
DEVELOPMENT AND MINE OPERATING AGREEMENT

    


    This
Exploration, Development and Mine Operating Agreement is made as of August 19,
2008 (“Agreement Date”)
by and between:

     

    U.S.
ENERGY CORP., a Wyoming corporation, the address of which is 877 North 8th West,
Riverton, Wyoming 82501 (“USE”);

    


    and

    


    THOMPSON
CREEK METALS COMPANY USA, a Colorado corporation, the address of which is 945
West Kenyon Avenue, Unit B, Englewood, Colorado 80110 (“TCM”).

    


    RECITALS

    


    
      	
              A.

            	
              USE
      owns 100% of certain property in Gunnison County, Colorado, known as the
      “Lucky Jack Project” (the “Property”), previously known as the Mt. Emmons
      Project, which Property is described in Exhibit
  A.

            


    

    


    
      	
              B.

            	
              The
      Parties have negotiated the basic terms of an agreement whereby USE will
      grant TCM an exclusive option to acquire certain interests in the Property
      and provide TCM with the right to conduct exploration and, if justified,
      development and mining operations on the
  Property.

            


    

    


    
      	
              C.

            	
              The
      Parties wish to formalize the terms of their agreement by entering into
      this Agreement which defines the relationship of the Parties for two
      distinct periods: (1) the Option Period, during which TCM may choose to
      make certain expenditures that shall entitle TCM to acquire up to a 50%
      interest in the Property; and (2) the Joint Venture Period during which
      TCM may enter into a joint venture with USE to have the opportunity to
      acquire an additional 25% interest in the
  Property.

            


    

    


    NOW
THEREFORE, in consideration of the covenants and conditions contained herein,
USE and TCM agree as follows.

    


    PART
I

    THE
TRANSACTION

    


    ARTICLE
I

    DEFINITIONS
AND CROSS-REFERENCES

    


    1.1           Definitions.  The
terms defined in Exhibit
D and elsewhere shall have the defined meaning wherever used in this
Agreement, including in Exhibits.

    


    1.2           Cross
References.  References to “Exhibits”, “Parts”, “Articles” and “Sections” refer to Exhibits,
Parts, Articles and Sections of this Agreement unless otherwise expressly
indicated.

    


    References
to “Paragraphs” and
“Subparagraphs” refer to
paragraphs and subparagraphs of the referenced Exhibits.

     

     

    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

          
          

           


        

        
           


          
            

          

        

        
           


          -2-

        

      

    

     

    
 

    ARTICLE
II

    NAME
AND PURPOSES

    


    2.1           General.  The
Parties hereby enter into this Agreement for the purposes hereinafter
stated.  All of the rights and obligations of the Parties in
connection with the Assets or the Property and all Operations shall be subject
to and governed by this Agreement.

    


    2.2           Option Period and Joint Venture
Period.  During the Option Period, the Property and Assets
shall be managed and operated by the Parties pursuant to the terms of Part II of
this Agreement, unless otherwise indicated therein.  During the Joint
Venture Period, the Property and Assets shall be managed and operated by the JV
Participants pursuant to the terms of Part III of this Agreement, unless
otherwise indicated therein.  Parts I and IV of this Agreement shall
apply to the Option Period and Joint Venture Period together.

    


    2.3           Purposes.  This
Agreement is entered into for the following purposes and for no others, and
shall serve as the exclusive means by which each of the Parties accomplishes
such purposes:

    


    
      	
               
      

            	
              (a)

            	
              to
      conduct all permitting studies, work, and governmental submissions to
      allow the Property to be explored, developed and if appropriate
      produced;

            


    

    


    
      	
               
      

            	
              (b)

            	
              to
      conduct Exploration within the Property and Area of
    Interest;

            


    

    


    
      	
               
      

            	
              (c)

            	
              to
      evaluate the possible Development and Mining of the Property, and, if
      justified, to engage in Development and
Mining;

            


    

    


    
      	
               
      

            	
              (d)

            	
              to
      engage in Operations on the
Property;

            


    

    


    
      	
               
      

            	
              (e)

            	
              to
      engage in marketing Products, to the extent provided by this
      Agreement;

            


    

    


    
      	
               
      

            	
              (f)

            	
              to
      complete and satisfy all Environmental Compliance obligations affecting
      the Property; and

            


    

    


    
      	
               
      

            	
              (g)

            	
              to
      perform any other activity necessary, appropriate, or incidental to any of
      the foregoing.

            


    

    


    2.4           Limitation.  Unless
the Parties otherwise agree in writing, the Operations shall be limited to the
purposes described in Section 2.3, and nothing in this Agreement shall be
construed to enlarge such purposes or to change the relationships of the Parties
as set forth in Section 4.1.

    


    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES; TITLE TO ASSETS

    


    3.1           Representations and Warranties of all
Parties.  As of the Agreement Date, each Party warrants and
represents to the other that:

    


    
      	
               
      

            	
              (a)

            	
              it
      is a body corporate duly incorporated and validly existing under the laws
      of its incorporating jurisdiction;

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -3-

      

    

    
 

    
      	
               
      

            	
              (b)

            	
              it
      has full power and authority to own its property and assets and to carry
      on its business and to enter into this
  Agreement;

            


    

    


    
      	
               
      

            	
              (c)

            	
              neither
      the execution and delivery of this Agreement nor any of the agreements
      referred to herein or contemplated hereby shall result in the breach of,
      or accelerate the performance required by, any other agreement or
      arrangement to which it is a party;

            


    

    


    
      	
               
      

            	
              (d)

            	
              it
      is not subject to any governmental order, judgment, decree, debarment,
      sanction or Laws that would preclude the Permitting or implementation of
      Operations under this Agreement;
and

            


    

    


    
      	
               
      

            	
              (e)

            	
              this
      Agreement has been duly executed and delivered by it and is valid and
      binding upon it in accordance with its
terms.

            


    

    


    3.2           Representations and Warranties of
USE.  As of the Agreement Date, USE makes the following
representations and warranties to TCM:

    


    
      	
               
      

            	
              (a)

            	
              USE
      owns a 100% interest in the Property and the Property is properly
      described in Exhibit
      A;

            


    

    


    
      	
               
      

            	
              (b)

            	
              USE
      is in exclusive possession of the Property, has good and marketable title
      to the patented mining claims which are part of the Property, and has Good
      Mining Title to the unpatented lode and millsite claims which are part of
      the Property, and has the right to dispose of the Property, or any
      interest therein, as contemplated in this
  Agreement;

            


    

    


    
      	
               
      

            	
              (c)

            	
              USE
      has delivered to or made available for inspection by TCM all Existing Data
      in its possession or control, and true and correct copies, to the extent
      requested by TCM, of all permits, licenses, leases or other contracts
      relating to the Property;

            


    

    


    
      	
               
      

            	
              (d)

            	
              with
      respect to unpatented lode claims and millsite claims located by USE that
      are included within the Property, except as set forth in the Title Opinion
      and subject
      to the paramount title of the United States:  (i) the unpatented
      mining claims were properly laid out and monumented; (ii) all required
      location and validation work was properly performed; (iii) location
      notices and certificates were properly recorded and filed with appropriate
      governmental agencies; (iv) all assessment work required to hold the
      unpatented mining claims has been or will be performed and all
      Governmental Fees have been or will be paid in a manner consistent with
      that required of the Manager pursuant to Section 15.1(j) through the
      assessment year ending September 1, 2008; (v) all affidavits of assessment
      work, evidence of payment of Governmental Fees, and other filings required
      to maintain the claims in good standing have been properly and timely
      recorded or filed with appropriate governmental agencies; and (vi) USE has
      no knowledge of conflicting mining claims from any third
      parties.  Nothing in this Section, however, shall be deemed to
      be a representation or a warranty that any of the unpatented mining claims
      contains a valuable mineral
deposit;

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -4-

        

      

    

    
 

    
      	
               
      

            	
              (e)

            	
              with
      respect to unpatented lode claims and millsite claims not located by USE
      but which are included within the Property, except as set forth in the
      Title Opinion and subject to the paramount title of the United States: to
      the knowledge of USE (i) all assessment work required to hold the
      unpatented mining claims has been or will be performed and all
      Governmental Fees have been or will be paid in a manner consistent with
      that required of the Manager pursuant to Section 15.1(j) through the
      assessment year ending September 1, 2008; (ii) all affidavits of
      assessment work, evidence of payment of Governmental Fees, and other
      filings required to maintain the claims in good standing have been
      properly and timely recorded or filed with appropriate governmental
      agencies; (iii) the claims are free and clear of Encumbrances or defects
      in title; and (iv) USE has no knowledge of conflicting mining
      claims.  Nothing in this Section, however, shall be deemed to be
      a representation or a warranty that any of the unpatented mining claims
      contains a valuable discovery of
minerals;

            


    

    


    
      	
               
      

            	
              (f)

            	
              solely
      with respect to ownership of the Property, since the acquisition of the
      Property from Phelps Dodge Corporation and Mt. Emmons Mining Company
      (collectively “PD/MEMCO”), there are
      no pending or threatened actions, suits, claims or proceedings, and there
      have been no previous transactions affecting its interests in the Property
      which have not been for fair
consideration;

            


    

    


    
      	
               
      

            	
              (g)

            	
              except
      as to matters otherwise disclosed in writing to TCM prior to the Agreement
      Date as set out in Exhibit
    E:

            


    

    


    
      	
               
      

            	
              (i)

            	
              since
      the acquisition of the Property from PD/MEMCO activities on the Property
      with respect to the Property and its ownership and operation have not been
      in violation of any Laws (including without limitation any Environmental
      Laws), nor caused or permitted any damage (including Environmental Damage,
      as defined below) or impairment to the health, safety, or enjoyment of any
      person at or on the Property or in the general vicinity of the
      Property;

            


    

    
      	
               
      

            	
              (ii)

            	
              since
      the acquisition of the Property from PD/MEMCO there has been no material
      spill, discharge, leak emission, ejection, escape, dumping, or any release
      or threatened release of any kind, of any toxic or hazardous substance or
      waste (as defined by any applicable Laws) from, on, in, or under the
      Property or into the environment, except releases permitted or otherwise
      authorized by applicable Laws;

            


    

    
      	
               
      

            	
              (iii)

            	
              USE
      has not received inquiry from or notice of a pending investigation from
      any governmental agency or of any administrative or judicial proceeding
      concerning the violation of any
Laws;

            


    

    
      	
               
      

            	
              (iv)

            	
              USE
      has no interest in any mineral interest located within two miles of the
      outermost boundary of the Property, with the exception of the Property
      itself; and

            


    

    
      	
               
      

            	
              (v)

            	
              since
      the acquisition of the Property from PD/MEMCO, the water treatment
      facility (the “Facility”) located on
      the Property at all times has been operated within the terms of any and
      all permits and licenses that it is required to be operating under and has
      been operated in accordance with all applicable
  Laws;

            


    

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -5-

      

    

    
 

    
      	
               
      

            	
              (h)

            	
              except
      for patented land within the exterior boundaries of the Property, and
      except as set forth in the Title Opinion all of the land
      within the Property is covered by at least one mining or millsite claim of
      the correct nature for the deposit being located or the use being
      contemplated (e.g., a lode claim was
      used to locate a lode deposit, a placer claim was used to locate a placer
      deposit, and a millsite claim was used to locate the ground for mine
      facilities) which the mining claim records of the United States Department
      of Interior, Bureau of Land Management (LR-2000 system) show as being an
      “active” claim as of August 13,
2008;

            


    

    


    
      	
               
      

            	
              (i)

            	
              except
      for the Permitted Encumbrances, the Property is clear of all
      Encumbrances;

            


    

    


    
      	
               
      

            	
              (j)

            	
              no
      consent or approval of any third party or governmental agency is required
      for the execution, delivery or performance of this Agreement by USE or the
      transfer or acquisition of any interest in the Property;
    and

            


    

    


    
      	
               
      

            	
              (k)

            	
              no
      proceedings are pending for and USE is not aware of any basis for the
      institution of any proceedings leading to the dissolution or winding-up of
      USE or the placing of USE into bankruptcy or subject to any other laws
      governing the affairs of insolvent
persons.

            


    

    


    The
representations and warranties set forth above shall survive the execution and
delivery of any documents of Transfer provided under this
Agreement.

    


    3.3           Knowledge of
Parties.  For a representation or warranty made to a Party’s
“knowledge,” the term
“knowledge” shall mean the actual knowledge on the part of the officers and
directors of the applicable Party, or of facts that would reasonably lead to the
indicated conclusions, and it is a requirement that such persons must have made
the enquiries that are reasonably necessary to enable the applicable Party to
make the representation, statement or disclosure.

    


    3.4           Disclosures.  Each
of the Parties represents and warrants that it is unaware of any material facts
or circumstances that have not been disclosed in this Agreement that should be
disclosed to the other Parties in order to prevent the representations and
warranties in this Article III from being materially misleading.  USE
has disclosed to TCM all information it believes to be relevant concerning the
Assets and Property, and has provided to or made available for inspection by TCM
all such information, but does not make any representation or warranty, express
or implied, as to the value of the Assets or Property.  Each Party
represents to the other that in negotiating and entering into this Agreement it
has relied solely on its own appraisals and estimates as to the value of the
Assets and Property and upon its own geologic and engineering interpretations
related thereto.

    


    3.5           Loss of Title.  Any
failure or loss of title to any of the Assets, and all costs of defending,
curing and clarifying title, shall be charged to the Business Account, and TCM
shall be entitled to include such costs as Expenditures.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -6-

        

      

    

    


     

    3.6           Royalties, Production Taxes and Other
Payments Based on Production.  All required payments of
production taxes and other payments to private parties and governmental entities
shall be determined and made by the Manager.  In the event that the
Manager fails to make any such required payment, the other Party shall have the
right to make such payment and shall thereby become subrogated to the rights of
such third party; provided, however, the making of any such payment on behalf of
the Manager shall not constitute acceptance by the paying Party of any liability
to such third party for the underlying obligation.

    


    3.7           Confidentiality of
Agreement.  Without limiting any other provision hereof
concerning confidentiality of information, each Party agrees to keep the terms
and conditions of this Agreement strictly confidential, unless disclosure of any
such terms and conditions is required by law or unless the other Party consents
in writing to such disclosure in advance, such consent not to be unreasonably
withheld.

    


    ARTICLE
IV

    RELATIONSHIP
OF THE PARTICIPANTS

    


    4.1           No Partnership or Fiduciary
Relationship.  The Parties agree and declare that this
Agreement must not be construed as constituting an association, corporation,
mining partnership or any other kind of partnership, except for the tax
partnership described in Exhibit C and except for the
agency of the Manager specifically provided for in this Agreement, nothing in
this Agreement shall be deemed to constitute any Party a partner, agent or legal
representative of any other Party for any purpose whatsoever and nothing in this
Agreement shall create or be deemed to create a fiduciary relationship between
the Parties, nor between the Manager and the other Parties or any of
them.  The rights, duties, obligations and liabilities of the Parties
shall be several and not joint or collective.  Each Party shall be
responsible only for its obligations as herein set out and shall be liable only
for its share of the costs and expenses as provided herein, and it is the
express purpose and intention of the Parties that their ownership of Assets and
the rights acquired hereunder shall be as tenants in common.

    


    4.2           Tax Matters.  All
tax matters affecting the Parties under this Agreement shall be governed by the
terms and conditions set out in Exhibit C.

    


    4.3           Other Business
Opportunities.  Except as expressly provided in this Agreement,
each Party shall have the right to engage in and receive full benefits from any
independent business activities or operations, whether or not competitive with
this Business, without consulting with, or obligation to, the other
Parties.  The doctrines of corporate opportunity or business
opportunity shall not be applied to this Business nor to any other activity or
operation of any of the Parties.  Subject to ARTICLE XVII none of the
Parties shall have any obligation to the other with respect to any opportunity
to acquire any property outside the Property at any time, or, except as
otherwise provided in Section 16.5, within the Property after the termination of
the Business.  Unless otherwise agreed in writing and subject to 0, none of the Parties shall have any obligation to
mill, beneficiate or otherwise treat any Products in any facility owned or
controlled by the other Party.

    


    4.4           Waiver of Rights to Partition or
Other Division of Assets.  The Parties hereby waive and release
all rights of partition, or of sale in lieu thereof, or other division of
Assets, including any such rights provided by Law.

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -7-

      

    

     

     

    4.5           Implied
Covenants.  There are no implied covenants contained in this
Agreement other than those of good faith and fair dealing.

    


    4.6           No Third Party Beneficiary
Rights.  This Agreement shall be construed to benefit the
Parties and their respective successors and assigns only, and shall not be
construed to create third party beneficiary rights in any other party or in any
governmental organization or agency, except to the extent required by Project
Financing and as provided in this Agreement.

    


    PART
II

    OPTION
PERIOD

    


    ARTICLE
V

    OPTION
CONSIDERATION

    


    5.1           Option
Consideration.

    


    
      	
               
      

            	
              (a)

            	
              On
      the Agreement Date, TCM shall pay USE $500,000 as consideration for the
      Option.  Such amount shall be
      non-refundable.  However, such amount shall be credited toward
      the Expenditures required under Section 6.1(a)(i)(A) if TCM incurs such
      Expenditures in accordance with Section
  6.1(a)(i)(A).

            


    

    


    
      	
               
      

            	
              (b)

            	
              Additionally,
      on January 1, 2009, and on January 1 each year thereafter up to and
      including January 1, 2014 (i.e., for a period of six years), TCM shall pay
      USE $1,000,000 (i.e., $6,000,000 over the six-year
      period).  Such payments shall be credited toward the
      Expenditures required under Section
6.1.

            


    

    


    ARTICLE
VI

    THE
OPTION

    6.1           Option.

    


    
      	
               
      

            	
              (a)

            	
              USE
      grants to TCM the exclusive option (the “Option”) to acquire up
      to an undivided 50% interest in the Property (in two stages as detailed in
      Section 6.2) in exchange for incurring Expenditures totaling
      $50,000,000.  TCM, in its sole discretion, may exercise the
      Option according to the following requirements and
    schedule:

            


    

    


    (i)           Initial
Project Expenditures.

    


    
      	
               
      

            	
              (A)

            	
              At
      any time before but no later than December 31, 2008, TCM shall incur at
      least $2,500,000 in Expenditures on or related to the
      Property.  If TCM incurs such Expenditures, the $500,000
      consideration provided under Section 5.1(a) shall be credited toward this
      amount.

            


    

    
      	
               
      

            	
              (B)

            	
              At
      any time before but no later than December 31, 2009, TCM shall incur at
      least $5,000,000 in additional Expenditures (for a minimum aggregate of
      $7,500,000) on or related to the
Property.

            


    

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -8-

      

    

     

     

    
      	
               
      

            	
              (C)

            	
              At
      any time before but no later than December 31, 2010, TCM shall incur at
      least $5,000,000 in additional Expenditures (for a minimum aggregate of
      $12,500,000) on or related to the
Property.

            


    

    
      	
               
      

            	
              (D)

            	
              At
      any time before but no later than June 30, 2011, TCM shall incur at least
      $2,500,000 in additional Expenditures (for a minimum aggregate of
      $15,000,000) on or related to the
Property.

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Additional
      Project Expenditures.  By July
      31, 2018, TCM shall incur additional Expenditures on or related to the
      Property in an amount equal to the difference between the total
      Expenditures incurred under Section 6.1(a)(i) and the $50,000,000 amount
      required to acquire a 50% interest in the
  Property.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Any
      excess Expenditures completed in advance of a due date specified in
      Section 6.1(a) shall be carried over and shall qualify, and be accounted
      for, as Expenditures completed by the subsequent due
      date.  Further, the Expenditure deadlines described above
      establish only the maximum period of time within which TCM must make such
      Expenditures; nothing in this Agreement will preclude TCM from making, in
      its sole discretion, any or all such Expenditures at any time or from time
      to time ahead of such deadlines.  In this respect, TCM may, in
      its sole discretion, make any or all such Expenditures in advance by
      paying any or all of the amounts required under Section 6.1(a) to an
      interest bearing escrow account maintained by TCM for the benefit of the
      Property.  Such payments shall be referred to as “Advance
      Payments.”  If this Agreement is terminated before TCM
      acquires any interest in the Property under Section 6.2, USE shall be
      entitled to all such Advance Payments and interest, if any, remaining in
      escrow.  If this Agreement is terminated after TCM has acquired
      an interest in the Property under Section 6.2, all such Advance Payments
      and interest, if any, remaining in escrow shall be considered Business
      capital.  Such Advance Payments, including interest, may be
      withdrawn and applied as necessary only towards future Expenditures by TCM
      on or related to the Property; provided, however, such
      amounts may not be used to meet other Expenditure requirements of TCM
      hereunder or in any way reduce the aggregate Expenditures that TCM must
      incur by a deadline in Section 6.1(a) in order to acquire any interest in
      the Property.

            


    

    


    
      	
               
      

            	
              (c)

            	
              TCM
      may elect to pay to an interest bearing escrow account on or before a due
      date specified in Section 6.1(a) the dollar amount equal to any shortfall
      in Expenditures required to be completed by TCM by such due date in lieu
      of completing such Expenditures, and such amounts shall thereupon be
      deemed to have satisfied such requirement for the completion of
      Expenditures by a deadline in Section 6.1(a), as
      applicable.  Such payments shall be referred to as “Shortfall
      Payments.”  If this Agreement is terminated, USE shall be
      entitled to all such Shortfall Payments and interest, if any, remaining in
      escrow.  So long as this Agreement remains in effect, such
      Shortfall Payments, including interest, may be withdrawn and applied as
      necessary only towards future Expenditures by TCM on or related to the
      Property; provided,
      however, such amounts may not be used to meet other Expenditure
      requirements of TCM hereunder or in any way reduce the 

               

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -9-

      

    

     

     

    aggregate
Expenditures that TCM must incur by a deadline in Section 6.1(a) in order to
acquire any interest in the Property.


    6.2           Option Stages.  The
Option shall be exercised in two stages as follows (as further described in
Section 6.5):

    


    
      	
               
      

            	
              (a)

            	
              Upon
      TCM incurring at least $15,000,000 in Expenditures as described in Section
      6.1(a)(i), TCM may, in its sole discretion, elect to acquire a 15%
      interest in the Property upon written notice to USE at any time within
      thirty-six months after the last day of the month in which TCM has
      incurred the $15,000,000 in Expenditures as described in Section
      6.1(a)(i).  (By way of example, if TCM incurs the full
      $15,000,000 on August 12, 2010, it would then have thirty-six months from
      August 31, 2010, or until August 31, 2013, to exercise its
      election.)  Failure by TCM to make such election within the
      required thirty-six months shall be deemed to be an election by TCM to
      acquire such 15% interest in the
Property.

            


    

    


    
      	
               
      

            	
              (b)

            	
              If
      TCM incurs the additional Expenditures as described in Section 6.1(a)(ii)
      by July 31, 2018 (which amount, combined with the Expenditures incurred
      under Section 6.1(a)(i), shall equal $50,000,000), TCM may, in its sole
      discretion, elect to acquire an additional 35% (or aggregate 50%) interest
      in the Property, with such election being made by written notice to USE
      within 30 days after the date of the TCM accounting statement that shows
      that TCM has incurred all such Expenditures, and a failure to make such
      election shall be deemed to be an election by TCM to acquire such
      additional 35% (aggregate 50%) interest in the
  Property.

            


    

    


    6.3           Failure
to Make Expenditures and Termination.

    


    
      	
               
      

            	
              (a)

            	
              Failure
      by TCM to make all Expenditures required under Section 6.1(a)(i) (or
      Advance Payments or Shortfall Payments in lieu thereof) by the applicable
      due dates for such Expenditures (subject to Section 21.6) shall be deemed
      to be a termination of this Agreement by TCM under Section 6.3(b) if,
      within 30 days after receipt of written notice from USE regarding such
      failure, TCM does not cure such
failure.

            


    

    


    
      	
               
      

            	
              (b)

            	
              TCM
      may by written notice to USE terminate this Agreement at any time during
      the Option Period prior to electing to acquire (pursuant to Section
      6.2(a)) a 15% interest in the Property.  Upon such termination,
      the provisions of Section 6.4 shall apply; ****.

            


    

    


    
      	
               
      

            	
              (c)

            	
              TCM
      may by written notice to USE terminate this Agreement at any time during
      the Option Period after having elected to acquire (pursuant to Section
      6.2(a)) a 15% interest in the Property.  Upon such termination,
      the provisions of Section 6.4 shall apply.  ****.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -10-

        

      

    

    


     

    6.4           Obligations Upon Termination During
Option Period.  Upon termination of this Agreement by TCM
during the Option Period, TCM must file all work and/or pay all such fees to
maintain the Property in good standing for a period of three months after such
termination and deliver to USE all records, reports, studies, data, computer
programs and other information necessary and appropriate to carry out Permitting
and other Operations on the Property in a manner consistent with industry
standards and good workmanlike practices; additionally, upon such termination,
USE (or a designated Affiliate of USE) shall receive a blanket assignment of any
permits issued in TCM’s name; ****.

    


    6.5           Exercise
of Option and Acquisition of Additional Interest in Property.

    


    
      	
               
      

            	
              (a)

            	
              Within
      six months of electing to acquire a 50% interest in the Property as
      provided in Section 6.2(b), TCM shall, in its sole discretion, choose one
      of two options:

            


    

    


    
      	
               
      

            	
              (i)

            	
              Form
      a Joint Venture on the terms set out in PART III;
  or

            


    

    


    
      	
               
      

            	
              (ii)

            	
              Form
      a Joint Venture on the terms set out in PART III but continue to fund 100%
      of all Expenditures on or related to the Property up to an additional
      $350,000,000, with the opportunity to acquire up to an additional 25%
      interest in the Property (for an aggregate 75% interest) upon incurring
      such additional $350,000,000 (which amount, combined with the initial
      $50,000,000 in Expenditures under Section 6.1(a), totals
      $400,000,000).  Upon incurring $70,000,000 in additional
      Expenditures pursuant to this Section 6.5(a)(ii) (which amount, combined
      with the initial $50,000,000 in Expenditures under Section 6.1(a), totals
      $120,000,000), TCM’s interest in the Property shall increase by 2.5% to
      52.5%.

            


    

    


    During
such time that TCM has incurred expenditures in excess of $120,000,000 in total,
but less than $400,000,000 in total, TCM’s percentage interest in the Joint
Venture shall be calculated as follows:

    


    TCM
Interest = 50 + [(Actual Expenditures - $50
Million) x 12.5]

    $350 Million

    Where:

    “TCM
Interest” means TCM’s percentage interest in the Joint Venture during the period
in which it has incurred Expenditures in excess of $120,000,000, but less than
$400,000,000.

    


    “Actual
Expenditures” means all Expenditures incurred by TCM pursuant to this
Agreement.

    


    Upon
spending the last dollar required to reach the $350,000,000 amount hereunder,
TCM’s interest in the Property shall be increased to 75% total.

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -11-

      

    

    
 

    
      	
               
      

            	
              (b)

            	
              If
      TCM elects to proceed under Section 6.5(a)(ii), then TCM shall reimburse
      USE for any Expenditures incurred by USE between the time that TCM elects
      to acquire a 50% interest in the Property as provided under Section 6.2(b)
      and the time that TCM elects to proceed under Section 6.5(a)(ii), and any
      such reimbursements shall count towards TCM’s Expenditure obligations
      under Section 6.5(a)(ii).  At any time prior to incurring the
      entire $350,000,000 required to earn an additional 25% interest in the
      Property under Section 6.5(a)(ii), TCM may in its sole discretion
      determine that upon the beginning of the next Program and Budget adopted
      pursuant to ARTICLE IX it shall cease funding 100% of all Expenditures on
      or related to the Property and the Parties shall thereafter share such
      Expenditures in proportion to their respective Participating Interests;
      provided,
      however, TCM shall provide written notice to USE of such decision
      at least 90 days prior to the expiration of the current Program and
      Budget.

            


    

    


    6.6           Royalty.

    


    
      	
               
      

            	
              (a)

            	
              Subject
      to Section 6.6(b), Section 8.6(a) and the Permitted Encumbrances, any
      interest in the Property that TCM acquires under this Agreement shall not
      be subject to any overriding
royalty.

            


    

    


    
      	
               
      

            	
              (b)

            	
              TCM
      shall pay any Production Royalty (as defined under the **** to the Grantee (as
      defined under the ****) or any
      successor-in-interest to the Grantee as may be required under the ****.  Any
      and all such Production Royalty payments, plus administrative costs and
      third party costs necessarily incurred by TCM in relation thereto, for a
      given month shall be offset against the total amount payable by TCM to USE
      (based on the Final Price as defined in Section 11.1) pursuant to ARTICLE
      XI for that same month; provided, however, to
      the extent that Production Royalty payments and related administrative
      costs and third party costs for a given month exceed the total amount
      payable by TCM to USE pursuant to ARTICLE XI for that same month, TCM
      shall bear that excess amount entirely without compensation or
      reimbursement from USE.

            


    

    


    ARTICLE
VII

    RIGHTS
AND OBLIGATIONS DURING THE OPTION PERIOD

    


    7.1           Manager During Option
Period.  During the Option Period, TCM shall be the Manager of
all Programs on the Property, subject to the direction and control of the
Management Committee.  The provisions of ARTICLE XV shall apply to the
Manager during the Option Period, including the exercise of all powers, the
completion of all duties and the standard of care detailed in ARTICLE XV with
the exception of Section 15.1(m).  To the extent that any provision of
ARTICLE XV conflicts with the powers, duties, and standards detailed in this
ARTICLE VII, this Article shall prevail.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -12-

        

      

    

    


     

    7.2           Management
Committee.  During the Option Period, the Parties shall
establish a “Management
Committee” consisting of four members to direct and control operations
and the activities of the Manager during the Option Period.  TCM and
USE each shall be entitled to appoint two regular members to the Management
Committee.  Acting through their respective appointed members, TCM and
USE shall have an aggregate of two votes each; provided, however, in the
event of a tie vote, the Management Committee members representing TCM shall
have the deciding vote.  Both TCM and USE may appoint alternate
members to act in the absence of regular members.  Any alternates so
acting shall be deemed members.  The alternates may attend meetings of
the Management Committee even if the regular members attend; provided, however, they shall
not have the right to vote except in the place of absent regular
members.  Appointments of members by TCM and USE shall be made or
changed by notice to the other members.  Decision making of the
Management Committee shall be by majority vote.  The Management
Committee shall have the power and authority to approve all Programs and Budgets
for the Exploration of and Development and Mining from the
Property.  The provisions concerning the Management Committee detailed
in ARTICLE XIV shall apply during the Option Period.

    


    7.3           Water Treatment
Facility.  During the Option Period an independent contractor
engaged by USE or, once TCM has acquired an interest in the Property pursuant to
Section 6.2, any subsequent independent contractor appointed by the Management
Committee, shall operate the Facility.  Such contractor shall carry
adequate insurance for operations and for any liabilities related to operations
of the Facility.  Until TCM elects to acquire an interest in the
Property pursuant to Section 6.2, USE shall pay all operating costs for the
Facility.  Unless and until TCM elects to acquire an interest in the
Property pursuant to Section 6.2, TCM shall have no decision making authority
with respect to Facility operations.  Prior to TCM’s acquiring an
interest in the Property pursuant to Section 6.2, the Facility shall not be
considered part of the Business.  Upon TCM’s acquiring an interest in
the Property pursuant to Section 6.2, the Facility shall be part of the
Business.

    


    7.4           Reports During Option
Period.  No later than 15 days after the last day of each
calendar month, TCM shall provide to USE monthly summary reports of its
activities on the Property.  No later than 45 days after the end of
each calendar year ending December 31 TCM shall provide to USE an annual
detailed progress report of all Programs and activities on the
Property.  These reports shall include monthly statements of account
reflecting in reasonable detail the Expenditures during the previous month as
well as the matters required by Section 15.1(n), as applicable.

    


    7.5           Transferring
Interests in Property and Dealing With Unpatented Mining Claims.

    


    
      	
               
      

            	
              (a)

            	
              The
      transfer of any interest in the Property from USE to TCM shall be effected
      through a special warranty deed substantially in the form of that provided
      in Exhibit J.

            


    

    


    
      	
               
      

            	
              (b)

            	
              TCM
      and USE shall cooperate and do all things mutually determined to be
      necessary or advisable to:

            


    

    


    
      	
               
      

            	
              (i)

            	
              convert
      any unpatented mining claims contained in the Property to unpatented
      millsite claims; and

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -13-

      

    

    
 

    
      	
               
      

            	
              (ii)

            	
              amend
      or abandon any unpatented claims that overlap with other unpatented claims
      as set out in the Title Opinion,

            


    

    


    even if
this necessitates the formal abandonment of some or all of the existing
unpatented mining claims.

    


    7.6           Permit Obligations of TCM During
Option Period.  TCM shall, with the cooperation of USE as
required, use its best efforts to obtain all appropriate permits prior to the
commencement of work or any required reclamation resulting from TCM’s work on
the Property.  The permits shall be in the name of
USE.  During the Option Period, decisions and actions related to
permit compliance shall be the obligation of the Management Committee, which
shall direct the actions of the Manager with respect to permit
compliance.

    


    7.7           Access to Property During Option
Period.  TCM shall at all times during the term of the Option
Period have the exclusive right to enter and engage in Operations on the
Property in accordance with this Agreement, and USE shall take all steps
reasonably necessary to permit TCM to exercise such rights.  To
facilitate the proper operation of the Facility, TCM shall keep USE informed of
TCM’s activities on the Property and as necessary coordinate such activities
with USE and the independent contractor engaged under Section 7.3.

    


    7.8           Maintenance of Property During Option
Period.  TCM shall maintain the Property in good standing and
free of all liens, other than Permitted Encumbrances, and such costs shall be
included in the Expenditures, subject to Section 18.1.

    


    7.9           Management of Existing Underground
Mine Conditions During Exploration.  USE has informed TCM that
the underground mine workings located on or beneath the Property contain liquid,
semi-solid and/or
solid material or waste associated with previous mining activities, including,
but not limited to, metal bearing sludges and mine water present behind
bulkheads and other underground mine containment structures (“underground mine
materials”).  The Parties agree that the management by TCM of
underground mine materials to prevent the uncontrolled release of such materials
into the environment may be required prior to commencement of Exploration
activities during the Option Period.  Such management may include, but
not be limited to, removal of metal-bearing sludges or other waste materials
identified by TCM and the breaching of underground bulkheads or other
containment structures and the collection, management and treatment of waste or
mine water present in the underground workings in accordance with applicable
Laws.  To facilitate the proper management of these materials, TCM
shall coordinate the management of underground mine materials existing in the
underground workings prior to or in coordination with TCM’s Exploration
activities.  As TCM determines necessary, management of the
underground waste and mine material shall be specified in a Program and
Budget.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -14-

        

      

    

    


     

    7.10           Indemnification
of Manager During Option Period.

    


    
      	
               
      

            	
              (a)

            	
              Indemnification of
      Manager.  During the Option Period, USE and TCM shall in
      equal proportion mutually hold harmless, release, indemnify and defend TCM
      (including TCM’s Affiliates and their respective directors, officers,
      employees, agents and consultants) from and against any and all claims,
      demands, liabilities or losses (including legal fees) arising from or
      relating to TCM’s acts as Manager, except to the extent that such claims,
      demands, liabilities or losses arise from TCM’s gross negligence or
      willful misconduct.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Indemnification of TCM
      by USE for Pre-Existing Conditions.  Until TCM elects to
      acquire an interest in the Property pursuant to Section 6.2, USE shall be
      solely responsible for and shall hold harmless, release, indemnify and
      defend TCM (including TCM’s Affiliates and their respective directors,
      officers, employees, agents and consultants) from and against any and all
      claims, demands, liabilities or losses (including legal fees) arising from
      or relating to conditions on the Property in existence as of the date of
      this Agreement, including Environmental Liabilities and Environmental
      Damage, except that USE’s duty to hold harmless, release, indemnify and
      defend TCM (including TCM’s Affiliates and their respective directors,
      officers, employees, agents and consultants) from and against such claims,
      demands, liabilities or losses shall be proportionately reduced to the
      extent, if any, that such claims, demands, liabilities or losses are
      caused or aggravated by TCM’s activities on the Property, either as
      Manager or as a Party to this Agreement.  The indemnification of
      TCM by USE pursuant to this Section 7.10(b) shall cease and be of no
      further effect at the time that TCM elects to acquire an interest in the
      Property pursuant to Section 6.2.  At the time that TCM elects
      to acquire an interest in the Property pursuant to Section 6.2, the
      Parties shall share liabilities arising from or relating to conditions on
      the Property at any time, including Environmental Damage, in equal
      proportion, provided, however, that should TCM acquire an interest in the
      Property in excess of 50 percent, the Parties shall share liabilities
      arising from or relating to conditions on the Property at any time,
      including Environmental Liabilities and Environmental Damage, in
      proportion to their respective interests in the
  Property.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Indemnification of TCM
      by USE relating to the Facility.  Until TCM elects to
      acquire an interest in the Property pursuant to Section 6.2, USE shall be
      solely responsible for and shall hold harmless, release, indemnify and
      defend TCM (including TCM’s Affiliates and their respective directors,
      officers, employees, agents and consultants) from and against any and all
      claims, demands, liabilities or losses (including legal fees) arising from
      or relating to the Facility.  The indemnification of TCM by USE
      pursuant to this Section 7.10(c) shall cease and be of no further effect
      at the time that TCM elects to acquire an interest in the Property
      pursuant to Section 6.2.  At the time that TCM elects to acquire
      an interest in the Property pursuant to Section 6.2, the Parties shall
      share liabilities arising from or relating to the Facility in equal
      proportion, provided, however, that should TCM acquire an interest in the
      Property in excess of 50 percent, the Parties shall share liabilities
      arising from or relating to the Facility in proportion to their respective
      interests in the Property.

            


    

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -15-

      

    

     

     

    7.11           Programs and
Budgets.  During the Option Period, except for emergency
operations, all Operations shall be conducted, all expenses shall be incurred,
and all Assets shall be acquired or sold only pursuant to Programs and Budgets
duly adopted by the Management Committee.  Every Program and Budget
adopted pursuant to this Agreement shall provide for accrual of reasonably
anticipated Environmental Compliance expenses for all Operations contemplated
under the Program and Budget.  Any emergency shall be addressed in
accordance with Section 9.7.

    


    7.12           Presentation of Programs and
Budgets.  Proposed Programs and Budgets shall be prepared by
the Manager for a period of one year or any other period as approved by the
Management Committee, and shall be submitted to the Management Committee for
review and consideration.  All proposed Programs and Budgets may
include Exploration, securing any and all necessary and appropriate permits,
Development, Mining and Expansion or Modification Operations components, or any
combination thereof, and shall be reviewed and adopted upon a vote of the
Management Committee in accordance with Section 7.13.  Each Program
and Budget adopted by the Management Committee, regardless of length, shall be
reviewed at least once a year at a meeting of the Management
Committee.  During the period encompassed by any Program and Budget,
and at least 3 months prior to its expiration, a proposed Program and Budget for
the succeeding period shall be prepared by the Manager and submitted to the
Management Committee for review, consideration and adoption.

    


    7.13           Review
and Adoption of Proposed Programs and Budgets.

    


    
      	
               
      

            	
              (a)

            	
              Within
      20 days after submission of a proposed Program and Budget, the Management
      Committee must approve, reject or modify the proposed Program and
      Budget.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Until
      a new Program and Budget is adopted, the Program and Budget from the prior
      year shall govern Operations on the
Property.

            


    

    


    
      	
               
      

            	
              (c)

            	
              If
      no Budget has been adopted within **** after the
      expiration of the latest adopted Program and Budget, either USE or TCM may
      elect to terminate the Agreement by giving 30 days notice of termination
      to the other Parties and complying with the termination procedures
      specified in Sections 6.3 and 6.4.

            


    

    


    7.14           Budget Overruns; Program
Changes.  The Manager shall immediately notify the Management
Committee of any material departure from an adopted Program and
Budget.  If the Manager exceeds an adopted Budget by more than 20% in
the aggregate, then the excess over 20%, unless directly caused by an emergency
or unexpected expenditure made pursuant to Section 9.7, unless related to the
adopted Program and Budget, or unless directly attributable to Exploration or
Development activities, must be approved by the Management Committee at its next
scheduled meeting, and once approved shall be borne by the Business
Account.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -16-

        

      

    

    


     

    7.15           Assignment During Option
Period.  During the Option Period, no Party shall assign any of
its rights under this Agreement without the prior written approval of the
non-transferring Party, which approval shall not be unreasonably withheld,
unless such assignment is made to an Affiliate of the transferring Party;
likewise, USE shall not transfer any of its rights to the Assets without the
prior written approval of TCM, which approval shall not be unreasonably
withheld. Any assignment or transfer in violation of this Section shall be
void.  In the event of any assignment or transfer in accordance with
this Section, the transferee shall assume all obligations and liabilities of the
transferring Party under this Agreement.

    


    7.16           Other
Provisions.  The Provision of PART IV shall apply during the
Option Period.

    


    PART
III

    THE JOINT VENTURE
PERIOD

    


    ARTICLE
VIII

    JOINT
VENTURE

    


    8.1           Purpose.  The Joint
Venture deemed to be formed between USE and TCM under Sections 6.5(a)(i) or
6.5(a)(ii) shall be for the purpose of carrying out all such acts which are
necessary or appropriate, directly or indirectly, to hold the Property, explore
the Property for minerals, and if feasible develop a mine thereon, and so long
as it is feasible, operate such mine and exploit the mineral extracted from the
Property, and for those purposes set out in Section 2.3. The name of the Joint
Venture shall be the “Lucky
Jack Joint Venture.”

    


    8.2           Manager.  TCM shall be the
Manager of all Programs on the Property during the Joint Venture.  The
Provisions of ARTICLE XV shall apply to the Manager during the Joint
Venture.

    


    8.3           Initial
Participating Interests and Contributions.

    


    
      	
               
      

            	
              (a)

            	
              Upon
      TCM’s incurring $ 50,000,000 in Expenditures under Section 6.1 and its
      electing to acquire a 50% interest in the Property under Section 6.2 and
      the formation of the Joint Venture pursuant to Section 6.5(a), the JV
      Participants shall have the following initial Participating
      Interests:

            


    

    


    USE                                           -
50%

    TCM                                         -
50%

    


    
      	
               
      

            	
               (b)

            	
              If
      TCM elects under Section 6.5(a)(ii) to fund 100% of all Expenditures on or
      related to the Property, TCM’s Participating Interest shall increase (and
      USE’s Participating Interest shall correspondingly decrease) according to
      the provisions of Section
6.5(a)(ii).

            


    

    


    
      	
               
      

            	
              (c)

            	
              Subject
      to TCM’s election to fund 100% of all Expenditures in accordance with
      Sections 6.5(a)(ii), the JV Participants shall contribute funds to adopted
      Programs and Budgets in proportion to their respective Participating
      Interests.

            


    

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -17-

      

    

     

     

    8.4           Changes in Participating
Interests.  In addition to any adjustments made to the
Participating Interests pursuant to Section 6.5(a)(ii), the Participating
Interests shall be eliminated or changed as follows:

    


    
      	
               
      

            	
              (a)

            	
              upon
      withdrawal or deemed withdrawal as provided in Section 8.6, Section
      10.5(b)(ii) and ARTICLE XIV;

            


    

    


    
      	
               
      

            	
              (b)

            	
              upon
      an election by either JV Participant pursuant to Section 9.4 to contribute
      less to an adopted Program and Budget than the percentage equal to its
      Participating Interest, or to contribute nothing to an adopted Program and
      Budget;

            


    

    


    
      	
               
      

            	
              (c)

            	
              in
      the event of default by either JV Participant in making its agreed-upon
      contribution to an adopted Program and Budget, followed by an election by
      the other JV Participant to invoke any of the remedies in Section
      9.4;

            


    

    


    
      	
               
      

            	
              (d)

            	
              upon
      Transfer by either JV Participant of part or all of its Participating
      Interest in accordance with ARTICLE XIII;
or

            


    

    


    
      	
               
      

            	
              (e)

            	
              upon
      acquisition by either JV Participant of part or all of the Participating
      Interest of the other JV Participant, however
  arising;

            


    

    


    8.5           Deemed
Expenditures.

    


    
      	
               
      

            	
              (a)

            	
              Subject
      to Section 8.5(c), upon the formation of a Joint Venture hereunder for the
      purpose of calculating dilution before the presentation of the first
      Program and Budget after the formation of the Joint
    Venture:

            


    

    


    
      	
               
      

            	
              (i)

            	
              TCM’s
      deemed expenditures to the Joint Venture shall be its initial
      Participating Interest under Section 8.3(a) multiplied by its aggregate
      actual Expenditures incurred prior to the formation of the Joint Venture;
      and

            


    

    


    
      	
               
      

            	
              (ii)

            	
              USE’s
      deemed expenditures to the Joint Venture shall be its initial
      Participating Interest under Section 8.3(a) multiplied by TCM’s aggregate
      actual Expenditures incurred prior to the formation of the Joint
      Venture.

            


    

    


    
      	
               
      

            	
              (b)

            	
              After
      the presentation of the first Program and Budget after the formation of
      the Joint Venture, and subject to Section 8.5(c), the provisions of
      Section 8.6, 9.4, 9.5 and 10.5 shall control the calculation of interests
      for dilution.

            


    

    


    
      	
               
      

            	
               (c)

            	
              If
      TCM elects to fund 100% of all Expenditures under Section 6.5(a)(ii), then
      the provisions of Section 8.6, 9.4, 9.5 and 10.5 shall not apply, and USE
      shall not be subject to dilution, until such time as TCM has earned a 75%
      interest pursuant to Section 6.5(a)(ii) or, prior to earning such 75%
      interest, has ceased funding 100% of all Expenditures on or related to the
      Property as provided in Section
6.5(b).

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -18-

        

      

    

    


     

    8.6           Conversion
of Minority Interest.

    


    
      	
               
      

            	
              (a)

            	
              If
      a JV Participant’s Participating Interest becomes less than **** such Participating
      Interest shall convert to a **** Net Profits
      Interest as provided in Exhibit I and that JV
      Participant (the “Reduced
      Participant”) shall be deemed to have withdrawn from the Business.
      Such relinquished Participating Interest shall be deemed to have accrued
      automatically to the other JV Participant.  The Capital Account
      of the Reduced Participant shall be transferred to the remaining JV
      Participant.  The Reduced Participant shall thereafter have no
      further right, title or interest in or to the Assets or under this
      Agreement, with the exception of the **** Net Profits
      Interest detailed above, and any tax partnership that may have been
      created shall dissolve.  In such event, the Reduced Participant
      shall execute and deliver an appropriate conveyance of all of its right,
      title and interest in and to the Assets to the remaining JV
      Participant.

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      relinquishment, withdrawal and entitlements for which this Section 8.6
      provides shall be effective as of the effective date of the recalculation
      under Sections 9.4 or 10.5.  However, if the final adjustment
      provided under Section 9.5 for any recalculation under Section 9.4 results
      in a Participating Interest of 5% or more:  (i) the
      Participating Interest shall be deemed, effective retroactively as of the
      first day of the Program Period, to have automatically revested; (ii) the
      Reduced Participant shall be reinstated as a JV Participant, with all of
      the rights and obligations pertaining thereto; (iii) the right to a Net
      Profits Interest under Section 8.6(a) shall terminate; and (iv) the
      Manager, on behalf of the JV Participants, shall make any necessary
      reimbursements, reallocations of Products, contributions and other
      adjustments as provided in Section 9.5(d).  Similarly, if such
      final adjustment under Section 9.5 results in a Participating Interest for
      either JV Participant of less than **** for a Program
      Period as to which the provisional calculation under Section 9.4 had not
      resulted in a Participating Interest of less than ****, then such
      Participant, at its election within 30 days after notice of the final
      adjustment, may contribute an amount resulting in a revised final
      adjustment and resultant Participating Interest of ****.  If no
      such election is made, such JV Participant shall be deemed to have
      withdrawn under the terms of Section 8.6(a) as of the beginning of such
      Program Period, and the Manager, on behalf of the JV Participants, shall
      make any necessary reimbursements, reallocations of Products,
      contributions and other adjustments as provided in Section 9.5(d),
      including of any Net Profits Interest to which such JV Participant may be
      entitled for such Program Period.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -19-

        

      

    

    


     

    8.7           Continuing Liabilities Upon
Adjustments of Participating Interests.  Any reduction or
elimination of either JV Participant’s Participating Interest under Sections
8.3(b), 8.3(c) or 8.4 shall not relieve such JV Participant of its share of any
liability, including, without limitation, Continuing Obligations, Environmental
Liabilities and Environmental Compliance, whether arising out of acts or
omissions occurring or conditions existing prior to the Agreement Date or out of
Operations conducted during the term of this Agreement but prior to such
reduction or elimination, regardless of when any funds may be expended to
satisfy such liability.  For purposes of this Section 8.7, such JV
Participant’s share of such liability shall be equal to its Participating
Interest at the time the act or omission giving rise to the liability occurred,
after first taking into account any reduction, readjustment and restoration of
Participating Interests under Sections 8.6, 9.4, 9.5 and 10.5 (or, as to such
liability arising out of acts or omissions occurring or conditions existing
prior to the Agreement Date, equal to such JV Participant’s initial
Participating Interest).  Should the cumulative cost of satisfying
Continuing Obligations be in excess of cumulative amounts accrued or otherwise
charged to the Environmental Compliance Fund, each of the JV Participants shall
be liable for its proportionate share (i.e., Participating Interest
at the time of the act or omission giving rise to such liability occurred),
after first taking into account any reduction, readjustment and restoration of
Participating Interests under Sections 8.6, 9.4, 9.5 and 10.5,
of the cost of satisfying such Continuing Obligations, notwithstanding that
either JV Participant has previously withdrawn from the Business or that its
Participating Interest has been reduced or converted to an interest in Net
Profits Interest pursuant to Section 8.6(a).

    


    8.8           Documentation of Adjustments to
Participating Interests.  Adjustments to the Participating
Interests need not be evidenced during the term of this Agreement by the
execution and recording of appropriate instruments, but each JV Participant’s
Participating Interest and related Equity Account balance shall be shown in the
accounting records of the Manager, and any adjustments thereto, including any
reduction, readjustment, and restoration of Participating Interests under
Sections 8.6, 9.4, 9.5 and 10.5, shall be made monthly.  However,
either JV Participant, at any time upon the request of the other JV Participant,
shall execute and acknowledge instruments necessary to evidence such adjustments
in form sufficient for filing and recording in the jurisdiction where the
Property is located.

    


    8.9           Grant
of Lien and Security Interest.

    


    
      	
               
      

            	
              (a)

            	
              Subject
      to Section 8.10, each JV Participant may grant to the other JV Participant
      a lien upon and a security interest in its Participating Interest,
      including all of its right, title and interest in the Assets, whenever
      acquired or arising, and the proceeds from and accessions to the
      foregoing.

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      liens and security interests granted by Section 8.9(a) shall secure every
      obligation or liability of the JV Participant granting such lien or
      security interest created under this Agreement, including the obligation
      to repay a Cover Payment in accordance with Section 10.4.  Each
      JV Participant hereby agrees to take all action necessary to perfect such
      lien and security interest and hereby appoints the other JV Participant
      its attorney-in-fact to execute, file and record all financing statements
      and other documents necessary to perfect or maintain such lien and
      security interest.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -20-

        

      

    

    


     

    8.10           Subordination of
Interests.  Each JV Participant may, from time to time, take
all necessary actions, including execution of appropriate agreements, to pledge
and subordinate its Participating Interest, any liens it may hold which are
created under this Agreement other than those created pursuant to Sections
8.9(a) and 8.9(b), and any other right or interest it holds with respect to the
Assets (other than any statutory lien of the Manager) to any secured borrowings
for Operations approved by the Management Committee.

    


    8.11           Indemnification of
Manager.  Following the formation of the Joint Venture, USE and
TCM shall in proportion to their Participating Interests mutually hold harmless,
release, indemnify and defend the Manager (including the Manager’s Affiliates
and their respective directors, officers, employees, agents and consultants)
from and against any and all claims, demands, liabilities or losses (including
legal fees) arising from or relating to the Manager’s acts as Manager, except to
the extent that such claims, demands, liabilities or losses arise from the
Manager’s gross negligence or willful misconduct.

    


    8.12           Holding
of Property.

    


    
      	
               
      

            	
              (a)

            	
              From
      the date of the formation of the Joint Venture, during the term of the
      Joint Venture, the Property must be transferred to and held in the names
      of the JV Participants in proportion to their respective Participating
      Interests from time to time.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Each
      JV Participant must promptly at its own cost do all things (including
      executing and if necessary delivering all documents) necessary or
      desirable to give full effect to Section 8.12(a) or the formation of the
      Joint Venture.

            


    

    


    8.13           Holding of Joint Venture
Property.  Subject to Section 8.12, all Assets, whether
acquired before or after the Agreement Date, must wherever practicable be held
by the Manager or a JV Participant who must hold it in trust for the JV
Participants as tenants in common in proportion to their respective
Participating Interests for the time being and from time to time. All Assets
held by the Manager or a JV Participant must be held, used, dealt with or
applied solely for the purposes of the Joint Venture or as otherwise permitted
under the Agreement.

    


    8.14           Management
Committee.  Upon the formation of the Joint Venture, the JV
Participants shall establish a Management Committee consisting of four regular
members to direct and control the operations of the Joint Venture, which may be
the same Management Committee provided for by Section 7.2.  Each JV
Participant shall be entitled to appoint two regular members to the Management
Committee.  Each JV Participant, acting through its appointed
member(s) in attendance at a meeting, shall have the votes on the Management
Committee in proportion to its Participating Interest; provided, however, in the
event of a tie vote, the Management Committee members representing TCM shall
have the deciding vote with regard to all matters except for the adoption of
proposed Programs and Budgets under Section 9.3(b).  In the event of a
tie vote on the adoption of a proposed Program and Budget under Section 9.3(b),
the provisions of Section 9.3(b) shall control.  Each JV Participant
may appoint alternate members to act in the absence of regular
members.  Any alternates so acting shall be deemed
members.  The alternates may attend meetings of the Management
Committee even if the regular members attend; provided however, they shall
not have the right to vote except in the place of absent regular
members.  Appointments by a JV Participant shall be made or changed by
notice

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -21-

      

    

     

     

    to the
other members.  Decision making of the Management Committee shall be
by majority vote.  USE and TCM shall each bear their own costs to have
their representative attend meetings of the Management Committee, and such costs
shall not be an Expenditure.

    


    8.15           Water Treatment
Facility.  During the Joint Venture Period, an independent
contractor engaged by the Management Committee shall operate the Facility, and
such independent contractor shall carry adequate insurance for operations and
for any liabilities related to such operations. TCM and the USE (as Joint
Venture partners) shall each be liable for the operating costs of the Facility
in proportion to their respective Participating Interests.

    


    ARTICLE
IX

    PROGRAMS
AND BUDGETS

    


    9.1           Operations Pursuant to Programs and
Budgets.  Except as otherwise provided in Section 9.7, and
ARTICLE XVII, Operations shall be conducted, expenses shall be incurred, and
Assets shall be acquired only pursuant to Management Committee adopted Programs
and Budgets.  Every Program and Budget adopted pursuant to this
Agreement shall provide for accrual of reasonably anticipated Environmental
Compliance expenses for all Operations contemplated under the Program and
Budget.

    


    9.2           Presentation of Programs and
Budgets.  Proposed Programs and Budgets shall be prepared by
the Manager for a period of 1 year or any other period as approved by the
Management Committee, and shall be submitted to the Management Committee for
review and consideration.  All proposed Programs and Budgets may
include Permitting, Exploration, feasibility study, Development, Mining and
Expansion or Modification Operations components, or any combination thereof, and
shall be reviewed and adopted upon a vote of the Management Committee in
accordance with Section 9.3.  Each Program and Budget adopted by the
Management Committee, regardless of length, shall be reviewed at least once a
year at a meeting of the Management Committee.  During the period
encompassed by any Program and Budget, and at least 3 months prior to its
expiration, a proposed Program and Budget for the succeeding period shall be
prepared by the Manager and submitted to the Management Committee for review and
consideration.

    


    9.3           Review and Adoption of Proposed
Programs and Budgets.

    


    
      	
               
      

            	
              (a)

            	
              When
      TCM bears all operating and financing costs of the Joint Venture pursuant
      to Section 6.5(a)(ii) or when TCM holds a Participating Interest greater
      than 50%, within 30 days after submission of a proposed Program and
      Budget, each JV Participant shall submit in writing to the Management
      Committee:

            


    

    


    
      	
               
      

            	
              (i)

            	
              notice
      that the JV Participant approves any or all of the components of the
      proposed Program and Budget;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              modifications
      proposed by the JV Participant to the components of the proposed Program
      and Budget; or

            


    

    


    
      	
               
      

            	
              (iii)

            	
              notice
      that the JV Participant rejects any or all of the components of the
      proposed Program and Budget.

            


    

     

    
 

    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -22-

        

      

    

    


     

    If a
Participant fails to give any of the foregoing responses within the allotted
time, the failure shall be deemed to be a vote by the JV Participant for
adoption of the Manager’s proposed Program and Budget.  If a JV
Participant makes a timely submission to the Management Committee pursuant to
Sections 9.3(a)(ii) or (iii), then the Manager working with the other JV
Participant shall seek for a period of time not to exceed 20 days to develop a
complete Program and Budget acceptable to both JV Participants.  The
Manager shall then call a Management Committee meeting for purposes of reviewing
and voting upon the proposed Program and Budget.

    


    
      	
               
      

            	
              (b)

            	
              When
      TCM and USE each hold a Participating Interest of 50% and TCM is not
      bearing all operating and financing costs of the Joint Venture pursuant to
      Section 6.5(a)(ii) (in other words, the Parties are each funding Programs
      and Budgets in proportion to their respective Participating Interests),
      within 30 days after submission of a proposed Program and Budget, each JV
      Participant shall submit in writing to the Management
      Committee:

            


    

    


    
      	
               
      

            	
              (i)

            	
              notice
      that the JV Participant approves any or all of the components of the
      proposed Program and Budget;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              modifications
      proposed by the JV Participant to the components of the proposed Program
      and Budget; or

            


    

    


    
      	
               
      

            	
              (iii)

            	
              notice
      that the JV Participant rejects any or all of the components of the
      proposed Program and Budget.

            


    

    


    If a
Participant fails to give any of the foregoing responses within the allotted
time, the failure shall be deemed to be a vote by the JV Participant for
adoption of the Manager’s proposed Program and Budget.  If a JV
Participant makes a timely submission to the Management Committee pursuant to
Sections 9.3(b)(ii) or (iii), then the Manager working with the other JV
Participant shall seek for a period of time not to exceed 20 days to develop a
complete Program and Budget acceptable to both JV Participants.  In
the event no Program and Budget acceptable to both JV Participants can be
completed within the 20 day period, the Program and Budget from the preceding
year shall remain in place except that the

    


    Budget
shall be increased by 5%.  The JV Participants shall continue
negotiations to agree upon a Program and Budget.

    


    9.4           Election to
Participate.  Except where TCM bears all operating and
financing costs of the Joint Venture pursuant to Section 6.5(a)(ii), the
following provisions shall apply with respect to adopted Programs and
Budgets.

    


    
      	
               
      

            	
              (a)

            	
              By
      notice to the Management Committee within 20 days after the final vote
      adopting a Program and Budget, and notwithstanding its vote concerning
      adoption of a Program and Budget, a JV Participant may elect to
      participate in the approved Program and
Budget:

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -23-

        

      

    

    


     

    
      	
               
      

            	
              (i)

            	
              in
      proportion to its respective Participating Interest.  If USE
      elects to participate in proportion to its respective Participating
      Interest, USE may request that TCM bear the initial cost and receive
      reimbursement of such amount, plus interest at a rate to be agreed upon by
      the Parties, out of production.  The election to bear such
      initial costs is within the sole discretion of TCM, which shall accept or
      deny the request within 10 Business Days of the request by USE, and is
      subject to the Parties’ agreement on the interest rate to be applied to
      such amounts borne by TCM
hereunder;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              in
      some lesser amount than its respective Participating Interest,
      or

            


    

    


    
      	
               
      

            	
              (iii)

            	
              not
      at all.

            


    

    


    
      	
               
      

            	
              (b)

            	
              In
      case of an election under Sections 9.4(a)(ii) or 9.4(a)(iii), its
      Participating Interest shall be recalculated as provided in Section 9.4(c)
      below, with dilution effective as of the first day of the Program Period
      for the adopted Program and Budget.  If a JV Participant fails
      to so notify the Management Committee of the extent to which it elects to
      participate, the JV Participant shall be deemed to have elected to
      contribute to such Program and Budget in proportion to its respective
      Participating Interest as of the beginning of the Program
      Period.

            


    

    


    
      	
               
      

            	
              (c)

            	
              If
      a JV Participant elects to contribute to an adopted Program and Budget
      some lesser amount than in proportion to its respective Participating
      Interest, or not at all, and the other JV Participant elects to fund all
      or any portion of the deficiency, the Participating Interest of the
      Reduced Participant shall be provisionally recalculated as
      follows:

            


    

    


    
      	
               
      

            	
              (i)

            	
              for
      an election made before Payout, by dividing: (A) the sum of (1) the total
      of all of the Reduced Participant’s contributions under Section 8.3(b),
      and (2) the amount, if any, the Reduced Participant elects to contribute
      to the adopted Program and Budget by (B) the sum of (1) and (2) above for
      both Participants, and then multiplying the result by one hundred;
      or

            


    

    


    
      	
               
      

            	
              (ii)

            	
              for
      an election made after Payout, by reducing its Participating Interest in
      an amount equal to two times the amount by which it would have been
      reduced under Section 9.4(a)(i) if such election were made before
      Payout.

            


    

    


    The
Participating Interest of the other JV Participant shall be increased by the
amount of the reduction in the Participating Interest of the reduced JV
Participant, and if the other JV Participant elects not to fund the entire
deficiency, the Manager shall adjust the Program and Budget to reflect the funds
available.

    


    
      	
               
      

            	
               (d)

            	
              Whenever
      the Participating Interests are recalculated pursuant to this Section 9.4,
      (i) the Equity Accounts of both JV Participants shall be revised to bear
      the same ratio to each other as their recalculated Participating
      Interests; and (ii) the portion of Capital Account attributable to the
      reduced Participating Interest of the reduced JV Participant shall be
      transferred to the other JV
Participant.

            


    

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -24-

      

    

     

     

    9.5           Recalculation or Restoration of
Reduced Interest Based on Actual Expenditures.  This Section
9.5 only applies where TCM does not bear all operating and financing costs of
the Joint Venture pursuant to Section 6.5(a)(ii).

    


    
      	
               
      

            	
              (a)

            	
              If
      a Participant makes an election under Sections 9.4(a)(ii) or 9.4(a)(iii),
      then within 30 days after the conclusion of such Program and Budget, the
      Manager shall report the total amount of money expended plus the total
      obligations incurred by the Manager for such
  Budget.

            


    

    


    
      	
               
      

            	
              (b)

            	
              If
      the Manager expended funds or incurred obligations that were more or less
      than the adopted Budget, the Participating Interests shall be recalculated
      pursuant to Section 9.4(b) by substituting each JV Participant’s actual
      contribution to the adopted Budget for that JV Participant’s estimated
      contribution at the time of the reduced JV Participant’s election under
      Section 9.4(a).

            


    

    


    
      	
               
      

            	
              (c)

            	
              If
      the Manager expended funds or incurred obligations of less than 80% of the
      adopted Budget, within 30 days of receiving the Manager’s report on
      Expenditures, the reduced JV Participant may notify the other JV
      Participant of its election to reimburse the other JV Participant for the
      difference between any amount contributed by the reduced JV Participant to
      such adopted Program and Budget and the reduced JV Participant’s
      proportionate share (at the reduced JV Participant’s former Participating
      Interest) of the actual amount expended or incurred for the Program, plus
      interest at two percentage points above the Prime Rate.  The
      reduced JV Participant shall deliver the appropriate amount (including
      interest) to the other JV Participant with such notice.  Failure
      of the reduced JV Participant to so notify and tender such amount shall
      result in dilution occurring in accordance with this ARTICLE XI and shall
      bar the reduced JV Participant from its rights under this Section 9.5(c)
      concerning the relevant adopted Program and
  Budget.

            


    

    


    
      	
               
      

            	
               (d)

            	
              All
      recalculations under this Section 9.5 shall be effective as of the first
      day of the Program Period for the Program and Budget.  The
      Manager, on behalf of both JV Participants, shall make such
      reimbursements, reallocations of Products, contributions and other
      adjustments as are necessary so that, to the extent possible, each JV
      Participant shall be placed in the position it would have been in had
      their Participating Interests as recalculated under this Section been in
      effect throughout the Program Period for such Program and
      Budget.  If the JV Participants are required to make
      contributions, reimbursements or other adjustments pursuant to this
      Section, the Manager shall have the right to purchase or sell a JV
      Participant’s share of Products in the same manner as under Section
      11.1and to apply the proceeds of such purchase or sale to satisfy that JV
      Participant’s obligation to make such contributions, reimbursements or
      adjustments.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -25-

        

      

    

    


     

    
      	
               
      

            	
              (e)

            	
              Whenever
      the Participating Interests are recalculated pursuant to this Section 9.5,
      (i) the JV Participants’ Equity Accounts shall be revised to bear the same
      ratio to each other as their recalculated Participating Interests; and
      (ii) the portion of Capital Account attributable to the reduced
      Participating Interest of the reduced JV Participant shall be transferred
      to the other JV Participant.

            


    

    


    9.6           Budget Overruns; Program
Changes.  For Programs and Budgets adopted by the Management
Committee, the Manager shall immediately notify the Management Committee of any
material departure from an adopted Program and Budget.  If the Manager
exceeds an adopted Budget by more than 20% in the aggregate, then the excess
over 20%, unless directly caused by an emergency or unexpected expenditure made
pursuant to Section 9.7, unless related to the adopted Program and Budget, or
unless directly attributable to Exploration or Development activities, must be
ratified and approved by the Management Committee at its next scheduled meeting,
and once approved shall be borne by the JV Participants (subject to Section
6.5(a)(ii) in proportion to their respective Participating
Interests.

    


    The
Manager may amend or alter the approved Program and Budget by presenting a
special item budget for review by the Management Committee.  The
Committee shall accept or reject the amendment within 10 Business Days of its
presentation. If the Committee fails to approve or reject the proposal within 10
Business Days of the presentation, the special item budget shall be deemed
approved.  The JV Participants may approve, reject, or propose
modifications for the proposed amendment in accordance with Section
9.3.

    


    9.7           Emergency or Unexpected
Expenditures.  In case of emergency, the Manager may take any
reasonable action it deems necessary to protect life or property, to protect the
Assets or to comply with Laws.  The Manager may make reasonable
expenditures on behalf of the JV Participants for unexpected events that are
beyond its reasonable control and that do not result from a breach by it of its
standard of care.  The Manager shall promptly notify the JV
Participants of the emergency or unexpected expenditure, and (subject to Section
6.5(a)(ii)) the Manager shall be reimbursed for all resulting costs by the JV
Participants in proportion to their respective Participating
Interests.

    


    ARTICLE
X

    ACCOUNTS
AND SETTLEMENTS

    


    10.1           Monthly Statements and Applications
of this ARTICLE.  During the Joint Venture Period, the Manager
shall promptly submit to the Management Committee monthly statements of account
reflecting in reasonable detail the charges and credits to the Business Account
during the preceding month.  Except for Sections 10.1 and 10.6 which
shall apply in all cases, the provisions of this ARTICLE X shall not apply if
and when TCM is funding all operating and financing costs of the Joint Venture
pursuant to Section 6.5(a)(ii).

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -26-

        

      

    

    


     

    10.2           Cash Calls.  On the
basis of each adopted Program and Budget, the Manager shall submit prior to the
last day of each month a billing for estimated cash requirements for the next
month.  Within 10 days after receipt of each billing, or a billing
made pursuant to Section 9.7 or 16.3, each JV Participant shall advance its
proportionate share of such cash requirements.  The Manager shall
record all funds received in the Business Account.  The Manager shall
at all times maintain a cash balance approximately equal to the rate of
disbursement for up to 60 days.  All funds in excess of immediate cash
requirements shall be invested by the Manager for the benefit of the Business in
cash management accounts and investments selected at the discretion of the
Manager, which accounts may include, but are not limited to, money market
investments and money market funds.

    


    10.3           Failure to Meet Cash
Calls.  A JV Participant that fails to meet cash calls in the
amount and at the times specified in Section 10.2 shall be in default, and the
amounts of the defaulted cash call shall bear interest from the date due at an
annual rate equal to five percentage points over the Prime Rate, but in no event
shall the rate of interest exceed the maximum permitted by Law.  Such
interest shall accrue to the benefit of and be payable to the non-defaulting JV
Participant, but shall not be deemed as amounts contributed by the
non-defaulting JV Participant in the event dilution occurs in accordance with
ARTICLE IX.  In addition to any other rights and remedies available to
it by Law, the non-defaulting Participant shall have those other rights,
remedies and elections specified in Sections 10.4 and 10.5.

    


    10.4           Cover Payment.  If a
JV Participant defaults in making a contribution or cash call required by an
adopted Program and Budget, the non-defaulting JV Participant may, but shall not
be obligated to, advance some portion or all of the amount in default on behalf
of the defaulting JV Participant (a “Cover
Payment”).  Each and every Cover Payment shall constitute a
demand loan bearing interest from the date of the advance at the rate provided
in Section 10.3.  If more than one Cover Payment is made, the Cover
Payments shall be aggregated and the rights and remedies described herein
pertaining to an individual Cover Payment shall apply to the aggregated Cover
Payments.  The failure to repay such loan upon demand shall be a
default; provided, however, if TCM has made a Cover Payment on behalf of USE,
TCM may, at its option, treat the Cover Payment as a loan to USE, with interest
at a rate agreed upon by the Parties, to be paid out of production from the
Business.

    


    10.5           Remedies.  The JV
Participants acknowledge that if either JV Participant defaults in making a
contribution required by ARTICLE IX or a cash call, or in repaying a loan, as
required under Sections 10.2, 10.3 or 10.4, whether or not a Cover Payment is
made, it shall be difficult to measure the damages resulting from such default
(it being hereby understood and agreed that the Participants have attempted to
determine such damages in advance and determined that the calculation of such
damages cannot be ascertained with reasonable certainty).  Both JV
Participants acknowledge and recognize that the damage to the non-defaulting JV
Participant could be significant.  In the event of such default, as
reasonable liquidated damages, the non-defaulting JV Participant may, with
respect to any such default not cured within 30 days after notice to the
defaulting JV Participant of such default, elect any of the following remedies
by giving notice to the defaulting JV Participant. Such election may be made
with respect to each failure to meet a cash call relating to a Program and
Budget, regardless of the frequency of such cash calls, provided such cash calls
are made in accordance with Section 10.2.

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -27-

      

    

     

     

    
      	
               
      

            	
              (a)

            	
              The
      defaulting JV Participant grants to the non-defaulting JV Participant a
      power of sale as to all or any portion of its interest in any Assets or in
      its Participating Interest that is subject to the lien and security
      interest granted in Section 8.9 (whether or not such lien and security
      interest has been perfected), upon a default under Sections 10.3 or
      10.4.  Such power shall be exercised in the manner provided by
      applicable Law or otherwise in a commercially reasonable manner and upon
      reasonable notice.  If the non-defaulting JV Participant elects
      to enforce the lien or security interest pursuant to the terms of this
      Section, the defaulting JV Participant shall be deemed to have waived any
      available right of redemption, any required valuation or appraisal of the
      secured property prior to sale, any available right to stay execution or
      to require a marshalling of assets, and any required bond in the event a
      receiver is appointed, and the defaulting JV Participant shall be liable
      for any deficiency.

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      non-defaulting JV Participant may elect to have the defaulting JV
      Participant’s Participating Interest diluted or eliminated as
      follows:

            


    

    


    
      	
               
      

            	
              (i)

            	
              For
      a default occurring before Payout relating to a Program and Budget
      covering in whole or in part Permitting or Exploration Operations, the
      reduced JV Participant’s Participating Interest shall be recalculated by
      dividing: (A): (1) the total of all of the reduced JV Participant’s
      contributions under Section 8.3(b) and (2) the amount, if any, the reduced
      JV Participant contributed to the adopted Program and Budget with respect
      to which the default occurred by (B) the sum of (1) and (2) above for both
      JV Participants, and then multiplying the result by one
      hundred.  For such a default occurring after Payout, the reduced
      JV Participant’s Participating Interest shall be reduced in an amount
      equal to two times the amount by which it would have been reduced if such
      default had occurred before Payout.  For such a default, whether
      occurring before or after Payout, the Participating Interest shall then be
      further reduced for a default relating exclusively to an Exploration
      Program and Budget by multiplying the recalculated Participating Interest
      by the following percentage: 150%.

            


    

    


    The
Participating Interest of the other JV Participant shall be increased by the
amount of the reduction in the Participating Interest of the reduced JV
Participant, including the further reduction under Section
10.5(b)(i).

    


    
      	
               
      

            	
              (ii)

            	
              For
      a default relating to a Program and Budget covering in whole or in part
      Development or Mining, at the non-defaulting JV Participant’s election,
      the defaulting JV Participant shall be deemed to have withdrawn and to
      have automatically relinquished its interest in the Assets to the
      non-defaulting JV Participant; provided, however, the
      defaulting Participant shall have the right to receive only from **** of Net Profits, if
      any, and not from any other source, an amount up to **** of the defaulting
      JV Participant’s Equity Account balance at the time of such
      default.  Upon receipt of such amount the defaulting JV
      Participant shall thereafter have no further right, title or interest in
      the Assets, but shall remain liable to the extent provided in Section
      8.7.

            


    

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -28-

      

    

    
 

    
      	
               
      

            	
              (iii)

            	
              Dilution
      under this Section 10.5(b) shall be effective as of the date of the
      original default, and Section 9.5 shall not apply.  The amount
      of any Cover Payment under Section 10.4 and interest thereon, or any
      interest accrued in accordance with Section 10.3, shall be deemed to be
      amounts contributed by the non-defaulting JV Participant, and not as
      amounts contributed by the defaulting JV
  Participant.

            


    

    


    
      	
               
      

            	
              (iv)

            	
              Whenever
      the Participating Interests are recalculated pursuant to this Section
      10.5(b), (A) the Equity Accounts of both JV Participants shall be adjusted
      to bear the same ratio to each other as their recalculated Participating
      Interests; and (B) the portion of Capital Account attributable to the
      reduced Participating Interest of the reduced JV Participant shall be
      transferred to the other JV
Participant.

            


    

    


    
      	
               
      

            	
              (c)

            	
              If
      a JV Participant has defaulted in meeting a cash call or repaying a loan,
      and if the non-defaulting JV Participant has made a Cover Payment, then,
      in addition to a reduction in the defaulting JV Participant’s
      Participating Interest effected pursuant to Section 10.5(b), the
      non-defaulting JV Participant shall have the right, if the indebtedness
      arising from a default or Cover Payment is not discharged within 10 days
      of the default and upon not less than 30 days advance notice to the
      defaulting JV Participant, to elect to purchase all the right, title, and
      interest, whenever acquired or arising, of the defaulting JV Participant
      in and to the Assets, including but not limited to its Participating
      Interest or a Net Profits Interest, together with all proceeds from and
      accessions of the foregoing (collectively the “Defaulting JV Participant’s
      Entire Interest”) at a purchase price equal to **** of the fair market
      value thereof as determined by a qualified independent appraiser appointed
      by the non-defaulting JV Participant.  If the defaulting JV
      Participant conveys notice of objection to the person so appointed within
      10 days after receiving notice thereof, then an independent and qualified
      appraiser shall be appointed by the joint action of the appraiser
      appointed by the non-defaulting JV Participant and a qualified independent
      appraiser appointed by the defaulting JV Participant; provided, however, that
      if the defaulting JV Participant fails to designate a qualified
      independent appraiser for such purpose within 10 days after giving notice
      of such objection, then the person originally designated by the
      non-defaulting JV Participant shall serve as the appraiser; provided further, that
      if the appraisers appointed by each of the JV Participants fail to appoint
      a third qualified independent appraiser within 5 days after the
      appointment of the last of them, then an appraiser shall be appointed by a
      judge of a court of competent jurisdiction in the state in which the
      Assets are situated upon the application of either JV
      Participant.  There shall be withheld from the purchase price
      payable, upon transfer of the Defaulting Participant’s Entire Interest,
      the amount of any Cover Payment under Section 10.4 and unpaid interest
      thereon to the date of such transfer, or any unpaid interest accrued in
      accordance with Section 14.3 to the date of such transfer.  Upon
      payment of such purchase price, the defaulting JV Participant shall be
      deemed to have relinquished all of the Defaulting JV Participant’s Entire
      Interest to the non-defaulting Participant, but shall remain liable to the
      extent provided in Section 8.7.

            


    

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -29-

      

    

     

     

    10.6           Audits.

    


    
      	
               
      

            	
              (a)

            	
              During
      the Joint Venture Period, within 60 days after the end of each calendar
      year an audit shall be completed by certified public accountants selected
      by, and independent of, the Manager.  The audit shall be
      conducted in accordance with GAAP and shall cover all books and records
      maintained by the Manager pursuant to this Agreement, all Assets and
      Encumbrances, and all transactions and Operations conducted during such
      calendar year, including production and inventory records, Expenditures
      and all costs for which the Manager sought reimbursement under this
      Agreement, together with all other matters customarily included in such
      audits.  All written exceptions to and claims upon the Manager
      for discrepancies disclosed by such audit shall be made not more than 3
      months after receipt of the audit report, unless either JV Participant
      elects to conduct an independent audit pursuant to Section 10.6(b) which
      is ongoing at the end of such 3 month period, in which case such
      exceptions and claims may be made within the period provided in Section
      10.6(b).  Failure to make any such exception or claim within
      such period shall mean the audit is deemed to be correct and binding upon
      the Participants.  The cost of all audits under this subsection
      shall be charged to the Business
Account.

            


    

    


    In
conjunction with the audit, the JV Participants shall procure a review of
internal controls in compliance with Sarbanes-Oxley Act of 2002
and the standards and rules of the Public Company Accounting Oversight
Board.  The contractor conducting this review shall not be an
employee, officer or director of either of the JV Participants and shall be
chosen by mutual agreement.

    


    
      	
               
      

            	
              (b)

            	
              Notwithstanding
      the annual audit conducted by certified public accountants selected by the
      Manager, each JV Participant shall have the right to have an independent
      audit of all Business books, records and accounts, including all charges
      to the Business Account.  This audit shall review all issues
      raised by the requesting JV Participant, with all costs borne by the
      requesting JV Participant.  The requesting JV Participant shall
      give the other JV Participant 30 days’ prior written notice of such
      audit.  Any audit conducted on behalf of either JV Participant
      shall be made during the Manager’s normal business hours and shall not
      interfere with Operations.  Neither JV Participant shall have
      the right to audit records and accounts of the Business relating to
      transactions or Operations more than 24 months after the calendar year
      during which such transactions, or transactions related to such
      Operations, were charged to the Business Account.  All written
      exceptions to and claims upon the Manager for discrepancies disclosed by
      such audit shall be made not more than 3 months after completion and
      delivery of such audit, or they shall be deemed
  waived.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -30-

        

      

    

    


     

    ARTICLE
XI

    DISPOSITION
OF PRODUCTION

    


    11.1           Purchase and Sale of
Products.  The Parties shall enter into an agreement under
which USE shall sell and TCM shall purchase all Products attributable to USE’s
Interest (the “Moly Sale Agreement”).  The Moly Sale Agreement shall
include the following terms and conditions:

    


    
      	
               
      

            	
              (a)

            	
              Price.  The
      price of all Products sold pursuant to this Section 11.1 (the “Price)
      shall be calculated as follows: ****.  The
      Price shall be calculated and expressed in accuracy to three decimal
      places.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Sulfide Discount Cap
      and Floor.  From the Agreement Date until January 1,
      2014, the Sulfide Discount shall be no greater than **** (the “Discount
      Cap”) and no less than **** (the “Discount
      Floor”).  On January 1, 2014, and every five years thereafter,
      the Discount Cap and the Discount Floor shall be adjusted so that they
      increase or decrease to reflect changes in the Gross Domestic Product
      (“GDP”) published by the United States Department of Commerce, Bureau of
      Economic Analysis, using a GDP implicit price deflator (“GDP Deflator”)
      measured against the first year of the new five year period, and the first
      year of the last five year period.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Changes in
      Indices.  If the MW Price or the GDP Deflator has been
      permanently discontinued or materially modified, the Parties shall agree
      to a substitute index (being an index or price series or combination of
      indices or price series as close as possible in effect to the discontinued
      index or indices, with only such adjustments thereto as may be necessary
      to reflect more closely the movements of the index which has been
      discontinued).  If they Parties cannot agree to a substitute
      index, then the dispute shall be resolved by arbitration pursuant to
      Section 19.4 of this Agreement.  During the pendency of the
      dispute, the Price shall be set by the arbitrator, and subject to
      adjustment and reimbursement or setoff upon resolution of the
      dispute.

            


    

    


    
      	
               
      

            	
              (d)

            	
              Point of
      Sale.  The purchased Product shall be molybdenum
      concentrate, with payable metal equal to **** of contained
      molybdenum in the concentrate.  The point of sale shall be FCA
      mine site as loaded on a truck for shipment as arranged by
      TCM.  TCM shall covenant to use its commercially reasonable
      efforts to deliver Product pursuant to this Section 11.1, and, except for
      commercially reasonable purposes, shall not deliver from other properties
      owned or controlled by TCM in preference to this mine
  site.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Payment
      Terms.  Payments made during a calendar month for
      delivery of Product FCA mine site (“Delivery”) during that month shall be
      paid at the Price calculated for the preceding month (the “Provisional
      Price”).  TCM shall pay USE the Provisional Price within 20 days
      of Delivery.  ****.  Final
      payment between TCM and USE shall be made promptly upon determination of
      the Final Price.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -31-

        

      

    

    


     

    
      	
               
      

            	
              (f)

            	
              Audit
      Rights.  USE shall have the right, at its expense, to
      engage an independent third party to audit the procedures and inspect the
      equipment by which TCM weighs and assays Product for Delivery upon giving
      reasonable notice to TCM, provided that (a) such independent third party
      auditor is reputable, (b) in any such audit, USE shall not be obligated to
      disclose to TCM any confidential information relating to any such
      transaction, and (c) in any such audit, TCM shall not be obligated to
      disclose to the independent auditor any confidential information unless
      and until such auditor first agrees with TCM to be bound by a
      confidentiality agreement on terms and conditions reasonably satisfactory
      to TCM.  USE shall give TCM at least one month’s notice of its
      intent to audit and appoint independent auditors.  If such
      independent auditor finds a material error or material incorrectness in
      the procedures or equipment by which TCM weighs and assays Product for
      Delivery, TCM shall reimburse USE for the cost of that
    audit.

            


    

    


    
      	
               
      

            	
              (g)

            	
              Assays.  The
      Parties shall resolve all disputes concerning assays of Products through
      negotiations to the greatest extent possible, and shall make adjustments
      to future invoices to reflect such adjustments.  Disputes
      concerning assays that cannot be resolved through negotiation shall be
      subject to dispute resolution pursuant to Section
  19.4.

            


    

    


    ARTICLE
XII

    SUPPLEMENTAL
BUSINESS AGREEMENT

    


    12.1           Supplemental Business Agreement.
At any time during the Joint Venture Period, the Management Committee may
determine by unanimous vote of both JV Participants that it is appropriate to
segregate the Area of Interest into areas subject to separate Programs and
Budgets for purposes of conducting further Permitting, Exploration, Development
or Mining.  At such time, the Management Committee shall designate
which portion of the Property shall constitute an area of interest under a
separate business arrangement (“Supplemental Business”), and
the JV Participants shall enter into a new agreement (“Supplemental Business
Agreement”) for the purpose of further exploring, analyzing, developing,
and mining such portion of the Property.  The Supplemental Business
Agreement shall be in substantially the same form as that portion of this
Agreement governing the Joint Venture, with rights and interests of the JV
Participants in the Supplemental Business identical to the rights and interests
of the JV Participants in this Business at the time of the designation, unless
otherwise agreed by the JV Participants, and with the JV Participants agreeing
to new Capital and Equity Accounts and other terms necessary for the
Supplemental Business Agreement to comply with the nature and purpose of the
designation.  Following execution of the Supplemental Business
Agreement, this Agreement shall terminate insofar as it affects the Property
covered by the Supplemental Business Agreement.

    


    ARTICLE
XIII

    TRANSFER
OF INTEREST; PREEMPTIVE RIGHT

    


    13.1           General.  During the
Joint Venture Period a JV Participant shall have the right to Transfer to a
third party an interest in its Participating Interest, including an interest in
this Agreement or the Assets, solely as provided in this Article.

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -32-

      

    

    
 

    13.2           Limitations on Free
Transferability.  During the Joint Venture Period, any Transfer
by either JV Participant under Section 13.1 shall be subject to the following
limitations:

    


    
      	
               
      

            	
              (a)

            	
              neither
      JV Participant shall Transfer any interest in this Agreement or the Assets
      (including, but not limited to, any royalty, profits or other interest in
      the Products) except in conjunction with the Transfer of part or all of
      its Participating Interest;

            


    

    


    
      	
               
      

            	
              (b)

            	
              no
      JV Participant shall Transfer any interest in this Agreement or the
      Property until the selling JV Participant offers to the other JV
      Participant the opportunity to purchase the portion of the selling JV
      Participant’s Participating Interest it intends to sell (“Right of First Refusal”)
      at a price chosen by the selling JV Participant.  If the other
      JV Participant fails to purchase the Participating Interest within 20
      days, the selling JV Participant may proceed with the sale of the
      Participating Interest pursuant to this Section. The sale may not be for a
      price less than that offered to the non-selling JV
      Participant.  No transferee of all or any part of a JV
      Participant’s Participating Interest shall have the rights of a JV
      Participant unless and until the transferring JV Participant has provided
      to the other JV Participant notice of the Transfer and the transferee, as
      of the effective date of the Transfer, has committed in writing to assume
      and be bound by this Agreement to the same extent as the transferring JV
      Participant;

            


    

    


    
      	
               
      

            	
              (c)

            	
              neither
      JV Participant shall make a Transfer that shall violate any Law, or
      without the consent of the other JV Participant, or result in the
      cancellation of any permits, licenses or other similar
      authorization;

            


    

    


    
      	
               
      

            	
              (d)

            	
              no
      Transfer permitted by this Article XIII shall relieve the transferring JV
      Participant of its share of any liability, whether accruing before or
      after such Transfer, which arises out of Operations conducted prior to
      such Transfer or exists on the Agreement
Date;

            


    

    


    
      	
               
      

            	
              (e)

            	
              neither
      JV Participant, without the consent of the other JV Participant, shall
      make a Transfer that shall cause termination of the tax partnership
      established in Exhibit
      C.  If such termination is caused, the transferring JV
      Participant shall indemnify the other JV Participant for, from and against
      any and all loss, cost, expense, damage, liability or claim therefore
      arising from the Transfer, including without limitation any **** received by the
      Indemnified JV Participant;

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -33-

        

      

    

    


     

    
      	
               
      

            	
              (f)

            	
              if
      the Transfer is the grant of an Encumbrance in a Participating Interest to
      secure a loan or other indebtedness of either JV Participant in a bona
      fide transaction, other than a transaction approved unanimously by the
      Management Committee or Project Financing approved by the Management
      Committee, such Encumbrance shall be granted only in connection with such
      JV Participant’s financing payment or performance of that JV Participant’s
      obligations under this Agreement and shall be subject to the terms of this
      Agreement and the rights and interests of the other JV Participant
      hereunder (including without limitation under Section
      8.10).  Any such Encumbrance shall be further subject to the
      condition that the Chargee of such Encumbrance first enters into a written
      agreement with the other JV Participant in form satisfactory to the other
      JV Participant, acting reasonably, binding upon the Chargee, to the effect
      that:

            


    

    


    
      	
               
      

            	
              (i)

            	
              the
      Chargee shall not enter into possession or institute any proceedings for
      foreclosure or partition of the encumbering JV Participant’s Participating
      Interest and that such Encumbrance shall be subject to the provisions of
      this Agreement;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              the
      Chargee’s remedies under the Encumbrance shall be limited to the sale of
      the whole (but only of the whole) of the encumbering JV Participant’s
      Participating Interest to the other JV Participant, or, failing such a
      sale, at a public auction to be held at least 30 days after prior notice
      to the other JV Participant, such sale to be subject to the purchaser
      entering into a written agreement with the other JV Participant whereby
      such purchaser assumes all obligations of the encumbering JV Participant
      under the terms of this Agreement.  The price of any pre-emptive
      sale to the other JV Participant shall be the remaining principal amount
      of the loan plus accrued interest and related expenses, and such
      pre-emptive sale shall occur within 60 days of the Chargee’s notice to the
      other JV Participant of its intent to sell the encumbering JV
      Participant’s Participating Interest.  Failure of a sale to the
      other JV Participant to close by the end of such period, unless failure is
      caused by the encumbering JV Participant or by the Chargee, shall permit
      the Chargee to sell the encumbering JV Participant’s Participating
      Interest at a public sale; and

            


    

    


    
      	
               
      

            	
              (iii)

            	
              the
      charge shall be subordinate to any then-existing debt, including Project
      Financing previously approved by the Management Committee, encumbering the
      transferring JV Participant’s Participating
  Interest;

            


    

    


    If a sale
or other commitment or disposition of Products or proceeds from the sale of
Products by either JV Participant upon distribution to it pursuant to ARTICLE XV
creates in a third party a security interest by Encumbrance in Products or
proceeds therefrom prior to such distribution, such sales, commitment or
disposition shall be subject to the terms and conditions of this Agreement,
including without limitation, Section 8.10.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -34-

        

      

    

    


     

    PART
IV

    PROVISIONS APPLICABLE TO
BOTH

    OPTION period AND JOINT
VENTURE PERIOD

    


    ARTICLE
XIV

    MANAGEMENT
COMMITTEE

    


    14.1           Meetings
of Management Committee.

    


    
      	
               
      

            	
              (a)

            	
              The
      Management Committee shall hold regular meetings at least quarterly at a
      location to be mutually agreed upon.  The Manager shall give 20
      days notice to TCM and USE (both referred to in this ARTICLE XIV as an
      “MC Participant”)
      of such meetings.  Additionally, either MC Participant may call
      a special meeting upon 7 days’ notice to the other MC
      Participant.  In case of an emergency, reasonable notice of a
      special meeting shall suffice.  There shall be a quorum if at
      least one regular member or alternate member representing each MC
      Participant is present; provided, however, that
      if a MC Participant fails to attend two consecutive properly called
      meetings, then a quorum shall exist at the second meeting if the other MC
      Participant is represented by at least one appointed member, and a vote of
      such MC Participant shall be considered the vote required for the purposes
      of the conduct of all business properly noticed even if such vote would
      otherwise require unanimity.

            


    

    


    
      	
               
      

            	
              (b)

            	
              If
      business cannot be conducted at a regular or special meeting due to the
      lack of a quorum, either MC Participant may call the next meeting upon 10
      days’ notice to the other MC
Participant.

            


    

    


    
      	
               
      

            	
               (c)

            	
              Each
      notice of a meeting shall include an itemized agenda prepared by the
      Manager in the case of a regular meeting or by the MC Participant calling
      the meeting in the case of a special meeting, but any matters may be
      considered if either MC Participant adds the matter to the agenda at least
      5 days before the meeting or with the consent of the other MC
      Participant.  The Manager shall prepare minutes of all meetings
      and shall distribute copies of such minutes to the other MC Participant
      within 10 days after the meeting.  Either MC Participant may
      electronically record the proceedings of a meeting with the consent of the
      other MC Participant.  The MC Participants shall sign and return
      or object to the minutes prepared by the Manager within 30 days after
      receipt, and failure to do either shall be deemed acceptance of the
      minutes as prepared by the Manager.  The minutes, when signed or
      deemed accepted by both MC Participants, shall be the official record of
      the decisions made by the Management Committee.  Decisions made
      at a Management Committee meeting shall be implemented in accordance with
      adopted Programs and Budgets.  If a MC Participant timely
      objects to minutes proposed by the Manager, the members of the Management
      Committee shall seek, for a period not to exceed 30 days from receipt by
      the Manager of notice of the objections, to agree upon minutes acceptable
      to both MC Participants.  If the Management Committee does not
      reach agreement on the minutes of the meeting within such 30 day period,
      the minutes of the meeting as prepared by the Manager together with the
      objecting MC Participant’s proposed


            


    

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -35-

      

    

     

     

    changes shall collectively
constitute the record of the meeting.  If personnel employed in
Operations are required to attend a Management Committee meeting, reasonable
costs incurred in connection with such attendance shall be charged to the
Business Account.  All other costs shall be paid by the Participants
individually.

     

    14.2           Action Without Meeting in
Person.  In lieu of meetings in person, the Management
Committee may conduct meetings by telephone or video conference, so long as
minutes of such meetings are prepared in accordance with Section
14.1.  The Management Committee may also take actions in writing
signed by all members.

    


    14.3           Matters Requiring
Approval.  Except as otherwise delegated to the Manager in
Section 15.1, the Management Committee shall have exclusive authority to
determine all matters related to overall policies, objectives, procedures,
methods and actions under this Agreement.  The Parties shall keep each
other informed of all material legal and regulatory matters of which they become
aware during the Option Period and the JV Period and shall consult with each
other concerning these matters.

    


    ARTICLE
XV

    MANAGER

    


    15.1           Powers and Duties of
Manager.  The Manager shall have the following powers and
duties, which shall be discharged in accordance with adopted Programs and
Budgets during the Option Period and Joint Venture Period, as
applicable.

    


    
      	
               
      

            	
              (a)

            	
              The
      Manager shall manage, direct and control Operations, and shall prepare and
      present to the Management Committee proposed Programs and Budgets as
      provided in ARTICLE VII during the Option Period and ARTICLE IX during the
      Joint Venture Period.

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      Manager shall implement the decisions of the Management Committee, shall
      make all Expenditures necessary to carry out adopted Programs, and shall
      promptly advise the Management Committee if it lacks sufficient funds to
      carry out its responsibilities under this
  Agreement.

            


    

    


    
      	
               
      

            	
              (c)

            	
              The
      Manager shall use reasonable efforts to:  (i) purchase or
      otherwise acquire all material, supplies, equipment, water, utility and
      transportation services required for Operations, such purchases and
      acquisitions to be made to the extent reasonably possible on the best
      terms available, taking into account all of the circumstances; (ii) obtain
      such customary warranties and guarantees as are available in connection
      with such purchases and acquisitions; and (iii) keep the Assets free and
      clear of all Encumbrances, except any Permitted Encumbrances and those
      Encumbrances specifically approved by the Management
      Committee.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -36-

        

      

    

    


    
      	
               

               
      

            	
              (d)

            	
              The
      Manager shall:  (i) make or arrange for all payments required by
      leases, licenses, permits, contracts and other agreements related to the
      Assets; (ii) pay all taxes, assessments and like charges on Operations and
      Assets except taxes determined or measured by a JV Participant’s sales
      revenue or net income and taxes, including production taxes, attributable
      to a JV Participant’s share of Products, and shall otherwise promptly pay
      and discharge expenses incurred in Operations; provided, however, if
      authorized by the Management Committee, the Manager shall have the right
      to contest (in the courts or otherwise) the validity or amount of any
      taxes, assessments or charges if the Manager deems them to be unlawful,
      unjust, unequal or excessive, or to undertake such other steps or
      proceedings as the Manager may deem reasonably necessary to secure a
      cancellation, reduction, readjustment or equalization thereof before the
      Manager shall be required to pay them, but in no event shall the Manager
      permit or allow title to the Assets to be lost as the result of the
      nonpayment of any taxes, assessments or like charges; and (iii) do all
      other acts reasonably necessary to maintain the
  Assets.

            


    

    


    
      	
               
      

            	
              (e)

            	
              The
      Manager shall:  (i) apply for all necessary permits, licenses
      and approvals; (ii) comply with all Laws; (iii) notify promptly the
      Management Committee of any allegations of substantial violation thereof;
      and (iv) prepare and file all reports or notices required for or as a
      result of Operations.  The Manager shall not be in breach of
      this provision if a violation has occurred in spite of the Manager’s good
      faith efforts to comply consistent with its standard of care under Section
      15.2.  In the event of any such violation, the Manager shall
      timely cure or dispose of such violation on behalf of both JV Participants
      through performance, payment of fines and penalties, or both, and the cost
      thereof shall be charged to the Business
  Account.

            


    

    


    
      	
               
      

            	
              (f)

            	
              The
      Manager shall prosecute and defend on behalf of the Joint Venture, but
      shall not initiate without consent of the Management Committee, any
      litigation or administrative proceedings arising out of
      Operations.  The non-managing JV Participant shall have the
      right to participate if it chooses to participate individually, at its own
      expense, in such litigation or administrative proceedings.  The
      non-managing JV Participant shall approve in advance any settlement
      involving payments, commitments or obligations in excess of one hundred
      thousand Dollars ($100,000) in cash or
value.

            


    

    


    
      	
               
      

            	
              (g)

            	
              The
      Manager shall provide insurance for the benefit of the JV Participants as
      provided in Exhibit
      F or as may otherwise be determined from time to time by the
      Management Committee.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -37-

        

      

    

    


     

    
      	
               
      

            	
              (h)

            	
              The
      Manager may dispose of Assets, whether by abandonment, surrender, or
      Transfer in the ordinary course of business, except that Property may be
      abandoned or surrendered only as provided in ARTICLE
      XVIII.  Without prior authorization from the Management
      Committee, however, the Manager shall not:  (i) dispose of
      Assets in any one transaction (or in any series of related transactions)
      having a value in excess of seventy-five thousand Dollars ($75,000); (ii)
      enter into any sales contracts or commitments for Product, except as
      permitted in Section 11.1; (iii) begin a liquidation of the Business; or
      (iv) dispose of all or a substantial part of the Assets necessary to
      achieve the purposes of the
Business.

            


    

    


    
      	
               
      

            	
              (i)

            	
              The
      Manager shall have the right to carry out its responsibilities hereunder
      through agents, Affiliates and independent
  contractors.

            


    

    


    
      	
               
      

            	
              (j)

            	
              The
      Manager shall perform or cause to be performed all assessment and other
      work and shall pay all Governmental Fees required by Law in order to
      maintain the unpatented mining claims, mill sites and tunnel sites
      included within the Property.  The Manager shall have the right
      to perform the assessment work required hereunder pursuant to a common
      plan of exploration and continued actual occupancy of such claims and
      sites shall not be required.  The Manager shall not be liable on
      account of any determination by any court or governmental agency that the
      work performed by the Manager does not constitute the required annual
      assessment work or occupancy for the purposes of preserving or maintaining
      ownership of the claims, provided that the work done is pursuant to an
      adopted Program and Budget and is performed in accordance with the
      Manager’s standard of care under Section 15.2.  The Manager
      shall timely record with the appropriate county and file with the
      appropriate United States agency any required affidavits, notices of
      intent to hold and other documents in proper form attesting to the payment
      of Governmental Fees, the performance of assessment work or intent to hold
      the claims and sites, in each case in sufficient detail to reflect
      compliance with the requirements applicable to each claim and
      site.  The Manager shall not be liable on account of any
      determination by any court or governmental agency that any such document
      submitted by the Manager does not comply with applicable requirements,
      provided that such document is prepared and recorded or filed in
      accordance with the Manager’s standard of care under Section
      15.2.

            


    

    


    
      	
               
      

            	
              (k)

            	
              If
      authorized by the Management Committee, the Manager may:  (i)
      locate, amend or relocate any unpatented mining claim or mill site or
      tunnel site, (ii) locate any fractions resulting from such amendment or
      relocation, (iii) apply for patents or mining leases or other forms of
      mineral tenure for any such unpatented claims or sites, (iv) abandon any
      unpatented mining claims for the purpose of locating mill sites or
      otherwise acquiring from the United States rights to the ground covered
      thereby, (v) abandon any unpatented mill sites for the purpose of locating
      mining claims or otherwise acquiring from the United States rights to the
      ground covered thereby, (vi) exchange with or convey to the United States
      any of the Property for the purpose of acquiring rights to the ground
      covered thereby or other adjacent ground, and (vii) convert any unpatented
      claims or mill sites into 

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -38-

      

    

     

     

    one or more
leases or other forms of mineral tenure pursuant to any Law hereafter
enacted.


    
      	
               
      

            	
              (l)

            	
              The
      Manager shall keep and maintain all required accounting and financial
      records pursuant to the procedures described in Exhibit B and in
      accordance with customary cost accounting practices in the mining
      industry, and shall ensure appropriate separation of accounts unless
      otherwise agreed by the JV Participants.  All accounting
      practices and audits shall comply with the GAAP and all reports, reviews
      of internal controls, and related activities shall be conducted in
      compliance with the requirements of the Sarbanes Oxley Act of
      2002.

            


    

    


    
      	
               
      

            	
              (m)

            	
              After
      the formation of the Joint Venture, the Manager shall maintain Equity
      Accounts for each JV Participant.  Each JV Participant’s Equity
      Account shall be credited with the value of such JV Participant’s
      contributions under Section 8.3(b).  Each JV Participant’s
      Equity Account shall be charged with the cash and the fair market value of
      Assets distributed to such JV Participant (net of liabilities assumed by
      such JV Participant and liabilities to which such distributed Assets are
      subject).  Contributions and distributions shall include all
      cash contributions or distributions plus the agreed value (expressed in
      dollars) of all in-kind contributions or distributions.  Solely
      for purposes of determining the Equity Account balances of the JV
      Participants, the Manager shall reasonably estimate the fair market value
      of all Products distributed to the JV Participants, and such estimated
      value shall be used regardless of the actual amount received by each JV
      Participant upon disposition of such
Products.

            


    

    


    
      	
               
      

            	
              (n)

            	
              The
      Manager shall keep the Management Committee advised of all Operations by
      submitting in writing to the members of the Management
      Committee:  (i) monthly progress reports that include statements
      of expenditures and comparisons of such expenditures to the adopted
      Budget; (ii) periodic summaries of data acquired; (iii) copies of reports
      concerning Operations; (iv) a detailed final report within sixty (60) days
      after completion of each Program and Budget, which shall include
      comparisons between actual and budgeted expenditures and comparisons
      between the objectives and results of Programs; and (v) such other reports
      as any member of the Management Committee may reasonably
      request.  Subject to ARTICLE XX, at all reasonable times the
      Manager shall provide the Management Committee, or other representative of
      a JV Participant upon the request of such JV Participant’s member of the
      Management Committee, access to, and the right to inspect and, at such
      Participant’s cost and expense, copy the Existing Data and all maps, drill
      logs and other drilling data, core, pulps, reports, surveys, assays,
      analyses, production reports, operations, technical, accounting and
      financial records, and other Business Information, to the extent preserved
      or kept by the Manager, subject to ARTICLE XX.  In addition, the
      Manager shall allow the non-managing JV Participant, at the latter’s sole
      risk, cost and expense, and subject to reasonable safety regulations, to
      inspect the Assets and Operations at all reasonable times, so long as the
      non-managing JV Participant does not unreasonably interfere with
      Operations.

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -39-

      

    

    
 

    
      	
               
      

            	
              (o)

            	
              The
      Manager shall prepare for Management Committee approval an Environmental
      Compliance plan for all Operations consistent with the requirements of any
      applicable Laws or contractual obligations and shall include in each
      Program and Budget sufficient funding to implement the Environmental
      Compliance plan and to satisfy the financial assurance requirements of any
      applicable Law or contractual obligation pertaining to Environmental
      Compliance.  To the extent practical, the Environmental
      Compliance plan shall incorporate concurrent reclamation of Property
      disturbed by Operations.  The Environmental Compliance plan
      shall not be implemented until approved by the Management
      Committee.

            


    

    


    
      	
               
      

            	
              (p)

            	
              The
      Manager shall undertake to perform Continuing Obligations when and as
      economic and appropriate, whether before or after termination of the
      Business.  The Manager shall have the right to delegate
      performance of Continuing Obligations to persons having demonstrated skill
      and experience in relevant disciplines.  As part of each Program
      and Budget submittal, the Manager shall specify in such Program and Budget
      the measures to be taken for performance of Continuing Obligations and the
      cost of such measures.  The Manager shall keep the other
      Participant reasonably informed about the Manager’s efforts to discharge
      Continuing Obligations.  Authorized representatives of each
      Participant shall have the right from time to time to enter the Property
      to inspect work directed toward satisfaction of Continuing Obligations and
      audit books, records, and accounts related
  thereto.

            


    

    


    
      	
               
      

            	
              (q)

            	
              The
      funds that are to be deposited into the Environmental Compliance Fund
      shall be maintained by the Manager in a separate, interest bearing cash
      management account, which may include, but is not limited to, money market
      investments and money market funds, and/or in longer term investments if
      approved by the Management Committee.  Such funds shall be used
      solely for Environmental Compliance and Continuing Obligations, including
      the committing of such funds, interests in property, insurance or bond
      policies, or other security to satisfy Laws regarding financial assurance
      for the reclamation or restoration of the Property, and for other
      Environmental Compliance
requirements.

            


    

    


    
      	
               
      

            	
              (r)

            	
              If
      Participating Interests are adjusted in accordance with this Agreement the
      Manager shall propose from time to time one or more methods for fairly
      allocating costs for Continuing
Obligations.

            


    

    


    
      	
               
      

            	
              (s)

            	
              The
      Manager shall undertake all other activities reasonably necessary to
      fulfill the foregoing, and to implement the policies, objectives,
      procedures, methods and actions determined by the Management
      Committee.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -40-

        

      

    

    


     

    15.2           Standard of
Care.  The Manager shall discharge its duties under Section
15.1 and conduct all Operations in a good, workmanlike and efficient manner, in
accordance with sound mining and other applicable industry standards and
practices, and in accordance with Laws and with the terms and provisions of
leases, licenses, permits, contracts and other agreements pertaining to the
Assets.  The Manager shall not be liable to the other JV Participant,
the Business or the Joint Venture for any act or omission resulting in damage or
loss except to the extent caused by or attributable to the Manager’s willful
misconduct or gross negligence.  The Manager shall not be in default
of any of its duties under Section 15.1 if its inability or failure to perform
results from the failure of the other Participant to perform acts or to
contribute amounts required of it by this Agreement.

    


    15.3           Resignation; Deemed Offer to
Resign.  The Manager may resign upon not less than 60 days’
prior notice to the other JV Participant, in which case the other JV Participant
may elect to become the new Manager by notice to the resigning JV Participant
within 10 days after the notice of resignation.  If any of the
following shall occur, the Manager shall be deemed to have resigned upon the
occurrence of the event described in each of the following subsections, with the
successor Manager to be appointed by the other JV Participant at a subsequently
called meeting of the Management Committee, at which the Manager shall not be
entitled to vote, and the other JV Participant may appoint itself or a third
party as the Manager:

    


    
      	
               
      

            	
              (a)

            	
              during
      the Joint Venture Period, the aggregate Participating Interest of the
      Manager and its Affiliates becomes less than ****

            


    

    


    
      	
               
      

            	
              (b)

            	
              the
      Manager is in Material Breach of an obligation imposed upon it under this
      Agreement and such failure continues for a period of 60 days after notice
      from the other JV Participant demanding
  performance;

            


    

    


    
      	
               
      

            	
              (c)

            	
              the
      Manager fails to pay or contest in good faith its bills and Business debts
      as such obligations become due;

            


    

    


    
      	
               
      

            	
              (d)

            	
              a
      receiver, liquidator, assignee, custodian, trustee, sequestrator or
      similar official for a substantial part of its assets is appointed and
      such appointment is neither made ineffective nor discharged within 60 days
      after the making thereof, or such appointment is consented to, requested
      by, or acquiesced in by the
Manager;

            


    

    


    
      	
               
      

            	
              (e)

            	
              the
      Manager commences a voluntary case under any applicable bankruptcy,
      insolvency or similar law now or hereafter in effect; or consents to the
      entry of an order for relief in an involuntary case under any such law or
      to the appointment of or taking possession by a receiver, liquidator,
      assignee, custodian, trustee, sequestrator or other similar official of
      any substantial part of its assets; or makes a general assignment for the
      benefit of creditors; or takes corporate or other action in furtherance of
      any of the foregoing; or

            


    

    


    
      	
               
      

            	
              (f)

            	
              entry
      is made against the Manager of a judgment, decree or order for relief
      affecting its ability to serve as Manager or a substantial part of its
      Participating Interest or its other assets by a court of competent
      jurisdiction in an involuntary case commenced under any applicable
      bankruptcy, insolvency or other similar law of any jurisdiction now or
      hereafter in effect.

            


    

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -41-

      

    

     

     

    Under
Sections 15.3(d), 15.3(e) or 15.3(f) above, the appointment of a successor
Manager shall be deemed to pre-date the event causing a deemed
resignation.

    


    15.4           Administrative
Charges and Services Agreement.

    


    
      	
               
      

            	
              (a)

            	
              The
      administration charges of TCM as Manager (the “Administrative
      Charges”) shall be determined according to the provisions of Exhibit
    B.

            


    

    


    
      	
               
      

            	
              (b)

            	
              TCM
      and USE shall enter into a Services Agreement to provide for compensation
      to USE for the use of its employees to perform administrative and
      operating functions, as further provided in Exhibit G.

            


    

    


    15.5           Transactions With
Affiliates.  If the Manager engages Affiliates to provide
services hereunder, it shall do so on terms no less favorable than would be the
case in arm’s-length transactions with unrelated persons.

    


    ARTICLE
XVI

    WITHDRAWAL
AND TERMINATION

    


    16.1           Termination.

    


    
      	
               
      

            	
              (a)

            	
              Termination on Terms
      or by Agreement.  This Agreement shall terminate as
      provided under Sections 6.3(b), 6.3(c), 7.13(c), 21.6(c) or this ARTICLE
      XVI, unless earlier terminated by written agreement by the
      Parties.

            


    

    


    
      	
               
      

            	
               (b)

            	
              Termination by
      Notice.  During the Joint Venture Period, TCM may
      terminate this Agreement at any time by written notice to USE (including
      during an event of force majeure as set out in Section
      21.6).  Upon termination of this Agreement under this Section,
      TCM must file all work and/or pay all such fees to maintain the Property
      in good standing for a period of three months after such termination and
      deliver to USE all records, reports, studies, data, computer programs and
      other information necessary and appropriate to carry out Permitting and
      other Operations on the Property in a manner consistent with industry
      standards and good workmanlike practices; additionally, upon such
      termination, USE (or a designated Affiliate of USE) ****.  Other
      than filing such work, paying such fees and making such deliveries and
      assignments under this Section, ****.

            


    

    


    16.2           Withdrawal.  During
the Joint Venture Period, a JV Participant may elect to withdraw from the
Business by giving notice to the other JV Participant of the effective date of
withdrawal, which shall be the later of the end of the then current Program
Period or 30 days after the date of the notice.  Upon such withdrawal,
the Business shall terminate, and the withdrawing JV Participant shall be deemed
to have transferred to the remaining JV Participant, all of its Participating
Interest, including all of its interest in the Assets, without cost and free and
clear of all Encumbrances arising by, through or under such withdrawing JV
Participant, except Permitted Encumbrances and those to which both JV
Participants have agreed.  The withdrawing JV Participant shall
execute and deliver all instruments as may be necessary in the reasonable
judgment of the other JV Participant to effect the transfer of its interests in
the Assets to the other 

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -42-

      

    

     

     

    JV
Participant.  If within a 60 day period both JV Participants elect to
withdraw, then the Business shall instead be deemed to have been terminated by
written agreement of the JV Participants pursuant to Section 16.1.

    


    16.3           Continuing Obligations and
Environmental Liabilities.  On termination of the Business
under Section 16.1 or 16.2, each Party shall remain liable for its respective
share of liabilities to third persons (whether such arises before or after such
withdrawal), including Environmental Liabilities and Continuing
Obligations.  The withdrawing JV Participant’s share of such
liabilities shall be equal **** under Sections 8.6, 9.4,
9.5 and 10.5.

    


    16.4           Disposition of Assets on
Termination.  Promptly after termination of the Agreement under
Section 16.1, the Manager shall take all action necessary to wind up the
activities of the Business.  All costs and expenses incurred in
connection with the termination of the Business shall be expenses chargeable to
the Business Account.

    


    16.5           Non-Compete
Covenants.  Neither JV Participant that withdraws pursuant to
Section 16.2, or is deemed to have withdrawn pursuant to Sections 8.6 or 10.5,
nor any Affiliate of such a JV Participant, shall directly or indirectly acquire
any interest or right to explore or mine, or both, on any property any part of
which is within the Property for 24 months after the effective date of
withdrawal.  If a withdrawing JV Participant, or the Affiliate of a
withdrawing JV Participant, breaches this Section, such JV Participant shall be
obligated to offer to convey to the non-withdrawing JV Participant, without
cost, any such property or interest so acquired (or ensure its Affiliate offers
to convey the property or interest to the non-withdrawing JV Participant, if the
acquiring party is the withdrawing JV Participant’s Affiliate).  Such
offer shall be made in writing and can be accepted by the non-withdrawing JV
Participant at any time within 10 days after the offer is received by such
non-withdrawing JV Participant.  Failure of a JV Participant’s
Affiliate to comply with this Section shall be a breach by such JV Participant
of this Agreement.

    


    16.6           Right to Data After
Termination.  After termination of the Business pursuant to
Sections 16.1, each Party shall be entitled to make copies of all applicable
information acquired hereunder, but a withdrawing Party shall not be entitled to
any such copies after withdrawal except as may be required in the course of any
judicial, administrative, regulatory or other legal process to which the
withdrawing Party is subject.

    


    16.7           Continuing
Authority.  On termination of the Business under Sections 16.1
or 16.2 or the deemed withdrawal of any Party pursuant to Sections 8.6 or 10.5, the Party which
was the Manager prior to such termination or withdrawal (or the other Party in
the event of a withdrawal by the Manager) shall have the power and authority to
do all things on behalf of the Parties which are reasonably necessary or
convenient to: (a) wind up Operations and (b) complete any transaction and
satisfy any obligation, unfinished or unsatisfied, at the time of such
termination or withdrawal, if the transaction or obligation arises out of
Operations prior to such termination or withdrawal.  The Manager shall
have the power and authority to grant or receive extensions of time or change
the method of payment of an already existing liability or obligation, prosecute
and defend actions on behalf of the Parties and the Business, and take any other
reasonable action in any matter with respect to which the former Parties
continue to have, or appear or are alleged to have, a common interest or a
common liability.

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -43-

      

    

     

     

    ARTICLE
XVII

    ACQUISITIONS
WITHIN AREA OF INTEREST

    


    17.1           General.  Any
interest or right to acquire any interest in real property, mineral rights,
water rights or property rights related thereto within the Area of Interest
(“Rights”) either
acquired or proposed to be acquired during the term of this Agreement by or on
behalf of any Party (“Acquiring
Party”) or any Affiliate of such Party shall be subject to this
Agreement.  For further clarification a reference to “Parties” in this Article
shall mean USE and TCM, and a reference to “Party” shall mean one of
them.  The Parties and their respective Affiliates for their separate
account shall be free to acquire lands and interests in lands outside the Area
of Interest and to locate mining claims outside the Area of
Interest.  Failure of any Affiliate of any Party to comply with this
Article shall be a breach by such Party of this Agreement.

    


    17.2           Notice to Non-Acquiring
Party.  Within 15 days after any acquisition or proposed
acquisition of Rights wholly or partially within the Area of Interest (except
Rights acquired by the Manager pursuant to a Program), the Acquiring Party shall
notify the non-acquiring Party of such acquisition by it or its
Affiliate.  For purposes of this Article, if any of the Rights subject
to acquisition or proposed acquisition fall partially within the Area of
Interest, then all such Rights (i.e., the part within the
Area of Interest and the part outside the Area of Interest) shall be subject to
this Article.  The Acquiring Party’s notice shall describe in detail
the acquisition, the acquiring party if that party is an Affiliate, the lands
and minerals covered thereby, any water rights related thereto, the cost thereof
and the reasons why the Acquiring Party believes that the acquisition or
proposed acquisition of the interest is in the best interests of the Parties
under this Agreement.  In addition to such notice, the Acquiring Party
shall make any and all information concerning the relevant interest available
for inspection by the non-acquiring Party.

    


    17.3           Election
to Acquire.

    


    
      	
               
      

            	
              (a)

            	
              During
      the Option Period, within 30 days after receiving the Acquiring Party’s
      notice, the non-acquiring Party may notify the Acquiring Party of its
      election to include such acquired interest in the Property and make it
      subject to the terms of this Agreement.  Upon such election such
      acquired interest shall be included in the Property thereafter for all
      purposes of this Agreement.  If the Acquiring Party is USE, then
      TCM shall reimburse it for the acquisition costs that it or its Affiliate
      has incurred.  When paid by TCM in the first instance on
      acquisition, or reimbursed by TCM when acquired by USE, the acquisition
      costs for any acquired interests will be deemed to constitute Expenditures
      to the credit of TCM hereunder.

            


    

    


    
      	
               
      

            	
              (b)

            	
              During
      the Joint Venture Period, within 30 days after receiving the Acquiring
      Party’s notice, the non-acquiring Party may notify the Acquiring Party of
      its election to accept a proportionate interest in the acquired interest
      equal to its Participating Interest. Promptly upon such notice, the
      Acquiring Party shall convey or cause its Affiliate to convey to the
      non-acquiring Party, in proportion to its respective Participating
      Interest, by special warranty deed with title held as described in Section
      8.12, all of the Acquiring Party’s (or its Affiliate’s) interest in such
      acquired interest, free and clear of all Encumbrances arising by, through
      or under the Acquiring Party (or its Affiliate) other than those to which
      both 

            


    

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -44-

      

    

     

    Parties have agreed.  The
acquired interests shall become a part of the Property for all purposes of this
Agreement immediately upon such notice.  The non-acquiring Party shall
promptly pay to the Acquiring Party its proportionate share of the latter’s
actual out-of-pocket acquisition costs.

     

    17.4           Election to Acquire Not
Exercised.  If the other Party does not give notice to the
Acquiring Party within the 30 day period set forth in Sections 17.3(a) or (b),
it shall have no interest in the acquired interests, and the acquired interests
shall not be a part of the Property or Assets or continue to be subject to this
Agreement, and the Acquiring Party shall be free to hold or deal with the
acquired interest free of the terms of this Agreement, and such acquired
interest shall be excluded from the Area of Interest.

    


    ARTICLE
XVIII

    ABANDONMENT
AND SURRENDER OF PROPERTIES

    


    18.1           Abandonment and Surrender of Property
- Option Period.  During the Option Period, other than as
provided in Section 7.5(b), the Manager may surrender or abandon any Rights
contained in the Property only with the consent of USE.  If USE agrees
with such abandonment or surrender, then the Manager may proceed with such
abandonment or surrender.  If USE does not agree with such abandonment
or surrender, then such Rights shall not be abandoned or
surrendered.

    


    18.2           Abandonment and Surrender of Property
– Joint Venture Period.  During the Joint Venture Period,
either JV Participant may request the Management Committee to authorize the
Manager to surrender or abandon part or all of the Property.  If the
Management Committee does not authorize such surrender or abandonment, or
authorizes any such surrender or abandonment over the objection of either JV
Participant, the JV Participant that desires to surrender or abandon shall
assign to the objecting JV Participant, by special warranty deed and without
cost to the objecting JV Participant, all of the abandoning JV Participant’s
interest in the Property sought to be abandoned or surrendered, free and clear
of all Encumbrances created by, through or under the abandoning JV Participant
other than those to which both JV Participants have agreed.  Upon the
assignment, such properties shall cease to be part of the
Property.  The JV Participant that desires to abandon or surrender
shall remain liable for its share (determined by its Participating Interest as
of the date of such abandonment, after first taking into account any reduction,
readjustment, and restoration of Participating Interests under Sections 8.6,
9.4, 9.5 and 10.5) of any liability with respect to such Property, including,
without limitation, Continuing Obligations, Environmental Liabilities and
Environmental Compliance, whether accruing before or after such abandonment,
arising out of activities prior to the Effective Date and out of Operations
conducted prior to the date of such abandonment, regardless of when any funds
may be expended to satisfy such liability.

    


    ARTICLE
XIX

    DISPUTES

    


    19.1           Governing Law.  This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Colorado, without regard to any conflict of laws or choice of laws
principles that would permit or require the application of the laws of any other
jurisdiction.

    
 

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -45-

      

    

     

     

    19.2           Dispute
Resolution.  All disputes arising under or in connection with
this Agreement that cannot be resolved by informal negotiation between the
Parties shall be resolved in accordance with Sections 19.3 and
19.4.

    


    19.3           Mediation.  If any
dispute has not been resolved within 30 days after the date of the Notice of a
dispute, or if the Party receiving such Notice fails or refuses to meet within
such time period, either Party may initiate mediation of the dispute by sending
the other Party a written request that the dispute be mediated.  The
Party receiving such a written request shall promptly respond to the requesting
Party so that all Parties can jointly select a neutral and impartial mediator
and schedule the mediation session.  The Parties shall mediate the
dispute before a neutral, third party mediator within 30 days after the date of
the written request for mediation.

    


    19.4           Arbitration.  If a
dispute has not been resolved within 60 days after the original Notice of a
dispute or within 30 days after the date of a request for mediation, whichever
is later, then any Party may initiate arbitration proceedings.  Any
dispute, controversy or claim, of any and every kind or type, whether based on
contract, tort, statute, regulations or otherwise, arising out of, connected
with, or relating in any way to this Agreement, the relationship of the Parties,
the obligations of the Parties or the Operations carried out under this
Agreement, including without limitation, any dispute as to the existence,
validity, construction, interpretation, negotiation, performance,
non-performance, breach, termination or enforceability of this Agreement and
establishment of fair market value, shall be settled through final and binding
arbitration, it being the intention of the Parties that this is a broad form
arbitration agreement designed to encompass all possible disputes among the
Parties relating to the Property and this Agreement.

    


    The
arbitration shall be conducted in accordance with the Arbitration Rules of the
American Arbitration Association (“AAA”) in effect on the date of
commencement of the arbitration proceeding (the “AAA Rules”).  The
arbitration panel shall apply the Federal Rules of Evidence to all evidentiary
questions arising in the course of the arbitration, and shall apply the Federal
Rules of Civil Procedure to the conduct of discovery in the course of the
arbitration.

    


    
      	
               
      

            	
              (a)

            	
              Number of
      Arbitrators.  The Parties shall appoint a sole arbitrator
      agreeable to them to resolve any dispute; provided, however, that should
      the Parties fail to agree upon a sole arbitrator within 30 days after the
      initiation of the arbitration, then there shall be 3 arbitrators. The
      claimant shall name the first arbitrator within thirty days after the
      expiration of the above-described deadline to appoint a single
      arbitrator.  The respondent shall appoint the second arbitrator
      within 30 days after the appointment of the first
      arbitrator.  The two Party-appointed arbitrators shall appoint
      the third arbitrator within thirty days after the appointment of the
      second arbitrator.  If (i) the respondent fails to appoint an
      arbitrator or (ii) the two Party-appointed arbitrators fail to appoint a
      third arbitrator within the above-described time limitations, then the AAA
      shall appoint the second and/or third arbitrator, as
      applicable.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Place of
      Arbitration.  Unless otherwise agreed in writing by all
      Parties to the arbitration, the situs of the arbitration under this
      Agreement shall be Denver, Colorado,
U.S.A.

            


    

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -46-

      

    

    
 

    
      	
               
      

            	
              (c)

            	
              Language.  The
      arbitration proceedings shall be conducted in the English
      language.

            


    

    


    
      	
               
      

            	
              (d)

            	
              Entry of
      Judgment.  Judgment on the award of the arbitral tribunal
      may be entered by any court of competent
  jurisdiction.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Qualifications and Conduct of
      the Arbitrators.  All arbitrators shall be and remain at
      all times wholly impartial and shall provide the Parties with a statement
      that they can and shall decide the case impartially.  No
      arbitrator shall have any financial interest (directly or indirectly) in
      the dispute or any financial dependence (directly or indirectly) upon any
      of the Parties.  All arbitrators shall be knowledgeable of the
      mining industry or the law applicable to such business.  The
      AAA’s Rules of Ethics shall be applicable to all
    arbitrators.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Interim
      Measures.  The arbitrators, or in an emergency the
      presiding arbitrator acting alone in the event one or more of the other
      arbitrators are unable to be involved in a timely fashion, may grant
      interim measures including injunctions, attachments and conservation
      orders in appropriate circumstances, which measures the Parties agree may
      be immediately enforced by the arbitrators or by court
      order.  Hearings on requests for interim measures may be held in
      person, by telephone or by video conference, and requests for relief,
      responses, briefs or memorials may be sent to, and orders or awards
      received from, the arbitrators by facsimile or other similar means which
      include a confirmation of delivery.  Notwithstanding the
      requirements for alternative dispute resolution procedures (such as
      negotiation and mediation), prior to the constitution of the arbitration
      tribunal and thereafter as necessary to enforce the arbitrators’ rulings
      or in the absence of the jurisdiction of the arbitrators to rule on
      interim measures in a given jurisdiction, any Party may apply to a court
      for interim measures, and the Parties agree that seeking and obtaining
      such measures shall not waive the right to
  arbitration.

            


    

    


    
      	
               
      

            	
              (g)

            	
              Costs and Attorney’s
      Fees.  The arbitral tribunal is authorized to award
      attorney’s fees or allocate them between the Parties.  The costs
      of the arbitration proceedings shall be borne in the manner determined by
      the arbitral tribunal, with the exception of the arbitrators’
      fees.  The Parties shall divide the cost of a single arbiter,
      with TCM paying 50% of the fee and the USE paying the remaining
      50%.  In the event that three arbitrators are appointed, each of
      TCM and the USE shall pay the fee of the arbitrator it appoints and 50% of
      the fee of the third arbitrator.

            


    

    


    
      	
               
      

            	
              (h)

            	
              Currency of
      Award.  The arbitral award shall be made and payable in
      Dollars free of any tax or other
deduction.

            


    

    


    
      	
               
      

            	
              (i)

            	
              Punitive
      Damages.  Penal, punitive, treble, multiple,
      consequential, incidental or similar damages may not be recovered or
      awarded.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -47-

        

      

    

    


     

    
      	
               
      

            	
              (j)

            	
              Confidentiality.  Except
      to the extent necessary to enforce the arbitration, agreement or award, to
      enforce other rights of the Parties, or as required by law, the Parties,
      their employees, officers, directors, counsel, consultants, and expert
      witnesses, shall maintain as confidential the fact of the arbitration
      proceeding, the arbitral award, contemporaneous or historical documents
      exchanged or produced during the arbitration proceeding, and memorials,
      briefs or other documents prepared for the
  arbitration.

            


    

    


    
      	
               
      

            	
              (k)

            	
              Waiver of
      Appeals.  To the extent permitted by law, right to appeal
      from or to cause a review of any arbitral award by any court is hereby
      waived by the JV Participants.

            


    

    


    
      	
               
      

            	
              (l)

            	
              Summary
      Disposition.  The arbitrators are hereby authorized, if
      they consider it appropriate, to decide any disputes by summary
      disposition on the documents and written testimony without hearing oral
      testimony.

            


    

    


    
      	
               
      

            	
              (m)

            	
              Draft of the Proposed
      Award.  Prior to rendering the final award, the arbitral
      tribunal shall submit to the Parties an unsigned draft of the proposed
      award and each Party, within 10 Business Days after receipt of such draft
      award, may serve on every other Party and file with the tribunal a written
      statement commenting upon any alleged errors of fact, law, computation, or
      otherwise.  The tribunal shall endeavor to render its final
      award within 10 Business Days after the receipt of the letter of the
      written statements of the Parties.

            


    

    


    ARTICLE
XX

    CONFIDENTIALITY,
OWNERSHIP,

    USE
AND DISCLOSURE OF INFORMATION

    


    20.1           Business
Information.  Except as provided in Sections 20.3 and 20.4, or
with the prior written consent of the other Parties, each Party shall keep
confidential and not disclose to any third party or the public any portion of
the Business Information that constitutes Confidential
Information.  During the Joint Venture Period, all Business
Information shall be owned jointly by the JV Participants as their Participating
Interests are determined pursuant to this Agreement.  Both before and
after the termination of the Business, all Business Information may be used by
either any Party for any purpose, whether or not competitive with the Business,
without consulting with, or obligation to, the other Parties.  This
Section 20.1 shall survive the termination of this Agreement and continue in
full force and effect according to its terms.

    


    20.2           Party
Information.  In performing its obligations under this
Agreement, no Party shall be obligated to disclose any Party
Information.  If a Party elects to disclose Party Information in
performing its obligations under this Agreement, such Party Information,
together with all improvements, enhancements, refinements and incremental
additions to such Party Information that are developed, conceived, originated or
obtained by either any Party in performing its obligations under this Agreement
(“Enhancements”), shall
be owned exclusively by the Party that originally developed, conceived,
originated or obtained such Party Information.  Each Party may use and
enjoy the benefits of such Participant Information and Enhancements in the
conduct of the Business hereunder, but the Parties that did not originally
develop, conceive, originate or obtain such Party Information may not use such
Party Information and Enhancements for any 

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -48-

      

    

     

     

    other
purpose.  Except a provided in Section 20.4, or with the prior written
consent of the other Party, which consent may be withheld in such Party’s sole
discretion, each Party shall keep confidential and not disclose to any third
party or the public any portion of Party Information and Enhancements owned by
the other Parties that constitutes Confidential Information.

    


    20.3           Permitted Disclosure of Confidential
Business Information.  Any Party may disclose Business
Information that is Confidential Information:

    


    
      	
               
      

            	
              (a)

            	
              to
      a Party’s officers, directors, partners, members, employees, Affiliates,
      shareholders, agents, attorneys, accountants, consultants, contractors,
      subcontractors or advisors, for the sole purpose of such Party’s
      performance of its obligations under this
  Agreement;

            


    

    


    
      	
               
      

            	
              (b)

            	
              to
      any party to whom the disclosing Party contemplates a Transfer of all or
      any part of its Participating Interest, for the sole purpose of evaluating
      the proposed Transfer;

            


    

    


    
      	
               
      

            	
              (c)

            	
              to
      any actual or potential lender, underwriter or investor for the sole
      purpose of evaluating whether to make a loan to or investment in the
      disclosing Party; or

            


    

    


    
      	
               
      

            	
              (d)

            	
              to
      a third party with whom the disclosing Party contemplates any independent
      business activity or operation.

            


    

    


    The Party
disclosing Confidential Information pursuant to this Section 20.3, shall
disclose such Confidential Information only to those parties who have a bona fide need to have access
to such Confidential Information for the purpose for which disclosure to such
parties is permitted under this Section 20.3 and who have agreed in writing
supplied to, and enforceable by, the other Parties to protect the Confidential
Information from further disclosure, to use such Confidential Information solely
for such purpose and to otherwise be bound by the provisions of this ARTICLE
XX.  Such writing shall not preclude parties described in Section
20.3(b) from discussing and completing a Transfer with the other
Parties.  The Party disclosing Confidential Information shall be
responsible and liable for any use or disclosure of the Confidential Information
by such parties in violation of this Agreement and such other
writing.

    


    20.4           Disclosure Required By
Law.  Notwithstanding anything contained in this Article, a
Party may disclose any Confidential Information if, in the opinion of the
disclosing Party’s legal counsel:

    


    
      	
               
      

            	
              (a)

            	
              such
      disclosure is legally required to be made in a judicial, administrative or
      governmental proceeding pursuant to a valid subpoena or other applicable
      order;

            


    

    


    
      	
               
      

            	
              (b)

            	
              such
      disclosure is legally required to be made pursuant to the rules or
      regulations of a stock exchange or similar trading market applicable to
      the disclosing JV Participant; or

            


    

    


    
      	
               
      

            	
              (c)

            	
              such
      disclosure is legally required to be made by the rules and regulations of
      any regulatory authority.

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -49-

      

    

    
 

    Prior to
any disclosure of Confidential Information under this Section 20.4, the
disclosing Party shall give the other Party at least two Business Days prior
written notice (unless less time is permitted by such rules, regulations or
proceeding) and, in making such disclosure, the disclosing Party shall disclose
only that portion of Confidential Information required to be disclosed and shall
take all reasonable efforts to preserve the confidentiality thereof, including,
without limitation, obtaining protective orders and supporting the other Parties
in intervention in any such proceeding.

    


    20.5           Permitted
Disclosure.  In addition, notwithstanding anything contained in
this Article, a Party may disclose any Confidential Information in the following
disclosure scenarios:

    


    
      	
               
      

            	
              (a)

            	
              to
      another Party or the Manager;

            


    

    


    
      	
               
      

            	
              (b)

            	
              with
      the prior written consent of all the other
  Parties;

            


    

    


    
      	
               
      

            	
              (c)

            	
              to
      a bank or other financial institution considering the provision of or,
      which has provided financial accommodation to, a Party or an Affiliate of
      a Party or to a trustee, representative or agent or such a bank or
      financial institution;

            


    

    


    
      	
               
      

            	
              (d)

            	
              to
      a third party for a bona fide business purpose, provided that such third
      party has first agreed in writing to maintain the confidentiality of the
      Confidential Information;

            


    

    


    
      	
               
      

            	
              (e)

            	
              by
      a Party to legal, financial and other professional advisers, auditors and
      other consultants, officers and employees of a Party or a Party’s
      Affiliate, provided that such Party or Party’s Affiliate has first agreed
      in writing to maintain the confidentiality of the Confidential
      Information; and

            


    

    


    
      	
               
      

            	
              (f)

            	
              to
      the extent that the Confidential Information was publicly available at the
      Agreement Date or becomes publicly available subsequent to the Agreement
      Date without breach of this
Agreement.

            


    

    


    20.6           Public
Announcements.  Prior to making or issuing any press release or
other public announcement or disclosure of Business Information that is not
Confidential Information, a JV Participant shall first consult with the other JV
Participant as to the content and timing of such announcement or
disclosure.  If the other Party from whom such approval is requested
has not approved or has not reasonably refused such request within 3 days of
receiving such request, such other Party shall be deemed to have approved the
press release or public statement forming the subject matter of such
request.

    


    ARTICLE
XXI

    GENERAL
PROVISIONS

    


    21.1           Notices.  All
notices, payments and other required or permitted communications (“Notices”) to the Parties shall
be in writing, and shall be addressed respectively as follows:

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -50-

        

      

    

    
 

    
      
        	
                If
      to the USE:

              
	
                U.S.
      Energy Corp.

              	 
      
	
                877
      North 8th
      West,

              	 
      
	
                Riverton,
      WY 82501

              	 
      
	
                Attention:

              	
                Mark
      J. Larsen, President

              
	
                 
      

              	
                Steve
      Youngbauer, General Counsel

              
	
                Telephone:

              	
                (307)
      856-9721

              
	
                Facsimile:

              	
                (307)
      856-3050

              
	
                E-Mail:

              	
                mark@usnrg.com;
      youngbauer@usnrg.com

              
	 
      	 
      
	
                Davis,
      Graham & Stubbs LLP

              	 
      
	
                1550
      Seventeenth St.

              	 
      
	
                Suite
      500

              	 
      
	
                Denver,
      CO 80206

              	 
      
	
                Attention:

              	
                Scot
      Anderson, Esq.

              
	
                Telephone:

              	
                (303)
      892-7383

              
	
                Facsimile:

              	
                (303)
      893-1379

              
	
                E-Mail:

              	
                scot.anderson@dgslaw.com

              
	
                 
      

              	 
      
	
                If
      to Thompson Creek Metals Company USA:

              
	
                945
      West Kenyon Avenue, Unit B

              	 
      
	
                Englewood,
      Colorado  80110

              	 
      
	
                Attention:

              	
                Kevin
      Loughrey, Chief Executive Officer

              
	
                Dale
      Huffman, Vice President

              	 
      
	
                Telephone:

              	
                (303)
      761-8801

              
	
                Facsimile:

              	
                (303)
      761-7420

              
	
                E-Mail:

              	
                kevinl@tcrk.com;
      dale@tcrk.com

              
	 
      	 
      
	
                With
      a Copy to:

              
	
                Fognani
      & Faught, PLLC

              	 
      
	
                1700
      Lincoln Street, Suite 2222

              	 
      
	
                Denver,
      Colorado  80203

              	 
      
	
                Attention:

              	
                John
      D. Fognani, Esq.

              
	
                Telephone:

              	
                (303)
      382-6200

              
	
                Facsimile:

              	
                (303)
      382-6210

              
	
                E-Mail:

              	
                jfognani@fognanilaw.com

              


      

    

     

     

    All
Notices shall be given (a) by personal delivery to the Party, or (b) by
electronic communication, capable of producing a printed transmission, (c) by
registered or certified mail return receipt requested; or (d) by overnight or
other express courier service.  All Notices shall be effective and
shall be deemed given on the date of receipt at the principal address if
received during normal business hours, and, if not received during normal
business hours, on the next Business Day following receipt, or if by electronic
communication, on the date of such communication if such communication is
received during normal business hours, and, if not received during normal
business hours, on the next Business Day following receipt.  Any Party
may change its address by Notice to the other Parties.

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -51-

      

    

    
 

    21.2           Currency.  All
references to “dollars”
or “$” herein shall mean
lawful currency of the United States of America.

    


    21.3           Headings.  The
subject headings of the Parts, Articles and Sections of this Agreement and the
Paragraphs and Subparagraphs of the Exhibits to this Agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.

    


    21.4           Waiver.  The failure
of any Party to insist on the strict performance of any provision of this
Agreement or to exercise any right, power or remedy upon a breach hereof shall
not constitute a waiver of any provision of this Agreement or limit such Party’s
right thereafter to enforce any provision or exercise any right.

    


    21.5           Modification.  No
modification of this Agreement shall be valid unless made in writing and duly
executed by all Parties.

    


    21.6           Force Majeure.

    


    
      	
               
      

            	
              (a)

            	
              Except
      for TCM’s obligation to make option payments under Section 5.1(b), the
      obligations of a Party under this Agreement, including TCM’s obligation to
      incur Expenditures under 6.1(a), shall be suspended to the extent and for
      the period that performance is prevented by any cause, whether foreseeable
      or unforeseeable, beyond its reasonable control, including, without
      limitation, labor disputes (however arising and whether or not employee
      demands are reasonable or within the power of the Party to grant); acts of
      God; Laws of any government or governmental entity; ****; acts of war or
      conditions arising out of or attributable to war, whether declared or
      undeclared; riots, protests, civil strife, insurrection or rebellion;
      fire, explosion, earthquake, storm, flood, sink holes, drought or other
      adverse weather condition; accidents; or any other cause whether similar
      or dissimilar to the foregoing.  The affected Party shall
      promptly give notice to the other Party of the suspension of performance,
      stating therein the nature of the suspension, the reasons therefore, and
      the expected duration thereof.  The affected Party shall resume
      performance as soon as reasonably possible.  During a period of
      suspension during the Joint Venture Period, the obligations of both JV
      Participants to advance funds pursuant to Section 10.2 shall be reduced to
      levels consistent with then current Operations.  For the
      avoidance of doubt, this Section 21.6 does not relieve the Manager of its
      obligation to keep the Property in good
  standing.

            


    

    


    
      	
               
      

            	
              (b)

            	
              If
      during the Option Period ****.

            


    

    


    
      	
               
      

            	
              (c)

            	
              ****.

            


    

    


    
      	
               
      

            	
              (d)

            	
              ****.

            


    

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -52-

        

      

    

    


     

    21.7           Rule Against
Perpetuities.  The Parties do not intend that there shall be
any violation of the rule against perpetuities, the rule Against unreasonable
restraints on the alienation of property, or any similar
rule.  Accordingly, if any right or option to acquire any interest in
the Property, in a Participating Interest, in the Assets, or in any real
property exists under this Agreement, such right or option must be exercised, if
at all, so as to vest such interest within time periods permitted by applicable
rules and law.  If, however, any such violation should inadvertently
occur, the Parties hereby agree that a court shall reform that provision in such
a way as to approximate most closely the intent of the Parties within the limits
permissible under such rules.

    


    21.8           Further
Assurances.  Each of the Parties shall take, from time to time
and without additional consideration, such further actions and execute such
additional instruments as may be reasonably necessary or convenient to implement
and carry out the intent and purpose of this Agreement or as may be reasonably
required by lenders in connection with Project Financing.

    


    21.9           Entire Agreement; Successors and
Assigns.  This Agreement contains the entire understanding of
the Parties and supersedes all prior agreements and understandings between the
Parties relating to the subject matter hereof, provided, however, that the last
full paragraph on page 3 and the following paragraph beginning on page 3 and
ending on page 4 of the Confidentiality Agreement between the Parties dated
April 24, 2008, concerning the two-year period during which neither Party will
purchase the other Party’s securities or assets, shall survive the execution of
this Agreement, and shall remain in full force and effect.  This
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the Parties.

    


    21.10                      Memorandum.  At the
request of any Party, a Memorandum or short form of this Agreement, or a
Financing Statement(s) (to which copies of the Memorandum or short form of this
Agreement shall be attached) shall be prepared by the Manager, executed and
acknowledged by the Parties, and delivered to the Manager for recording and
filing in those appropriate recording districts and Uniform Commercial Code
filing offices as may be necessary to provide constructive notice of this
Agreement and the rights and obligations of the Parties
hereunder.  The Manager shall record and file in the proper recording
districts, county recording offices and Uniform Commercial Code filing offices,
all such documents delivered to it by the Parties.  Unless the Parties
agree, this Agreement shall not be recorded.

    


    21.11                      Counterparts.  This
Agreement may be executed in any number of counterparts, and it shall not be
necessary that the signatures of all the Parties be contained on any
counterpart.  Each counterpart shall be deemed an original, but all
counterparts together shall constitute one and the same instrument.

    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -53-

        

      

    

    


    IN WITNESS WHEREOF, the Parties hereto
have executed this Agreement as of the Agreement Date.

    


    
      	
              U.S.
      ENERGY CORP.

            
	 
      	 
      
	
              Per:

            	
                /s/
      Keith G. Larsen

            
	 
      	
              President

            


    

    


    


    
      	
              THOMPSON
      CREEK METALS COMPANY USA

            
	 
      	 
      
	
              Per:

            	
                /s/
      Kevin Loughrey

            
	 
      	
              President

            


    

    


    


    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


        

      

    

    


     

    EXHIBIT
D

    


    Definitions
and Interpretation

    


    For the
purposes of this Agreement, the following terms shall have the following
meanings assigned to them, and references to “Sections” are references to
section numbers in the Agreement.

    


    “AAA” has the meaning as set
out in Section 19.4.

    


    “AAA Rules” has the meaning as
set out in Section 19.4.

    


    “Acquiring Party” has the
meaning as set out in Section 17.1.

    


    “Administrative Charges” has
the meaning set out in Section 15.4.

    


    “Advance Payments” has the
meaning set out in Section 6.1(b).

    


    “Affiliate” or “Affiliates” means any person,
partnership, joint venture, corporation, or other form of enterprise which
directly or indirectly controls, is controlled by, or is under common control
with, a Participant.  As used herein, “control” means direct or
indirect possession of the power to direct or cause the direction of the
management or policies of a legal entity, whether through ownership of voting
securities, by contract, or otherwise, and the terms “controlled” and
“controlling” have meanings correlative to the foregoing. It is understood and
agreed that control of a company can be exercised without direct or indirect
ownership of 50% or more of the votes exercisable at a general meeting (or its
equivalent).

    


    “Agreement” means this
agreement between TCM and the USE, including all amendments and modifications
thereof, and all Exhibits, which are
incorporated herein by this reference.

    


    “Agreement Date” means the
date of this Agreement first written above.

    


    “Approved Alternatives” means
a Development and Mining alternative selected by the Management Committee from
various Development and Mining alternatives analyzed in the pre-feasibility
studies or feasibility studies.

    


    “Area of Interest” means that
area described in Exhibit H, as modified by Section
17.4, constituting any Rights within **** of the outermost
boundary of the Property, as the Property is defined on the Agreement
Date.

    


    “Assets” means the Property,
Products, Business Information and all other real and personal property,
tangible and intangible, including but not limited to existing or after-acquired
properties, contract rights, permits, cash and equipment and machinery, owned or
acquired by the Manager in connection with the Property and, if and when TCM has
acquired an interest in the Property under Section 6.2, the Facility or acquired
by the Joint Venture in connection with operating the Property and the
Facility.

    
 

    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -2-

        

      

    

    


     

    “Budget” means a detailed
estimate of all costs to be incurred and a schedule of cash advances to be made
with respect to a Program.

    


    “Business” means the (i)
activities conducted during the Option Period, (ii) the Joint Venture and/or
(iii) the entity operated by the Parties during the Joint Venture
Period.

    


    “Business Account” means the
account maintained by the Manager for the Business in accordance with Exhibit B.

    


    “Business Day” means any day
other than a Saturday, Sunday or a public holiday in Denver,
Colorado.

    


    “Business Information” means
the terms of this Agreement and any other agreement relating to the Business,
the Existing Data, all maps, drill logs and other drilling data, core, pulps,
reports, surveys, assays, analyses, production reports, Operations, technical,
accounting and financial records, or other data or records related to the
Property or operations on the Property, and all information, data, knowledge and
know-how, in whatever form and however communicated (including, without
limitation, Confidential Information), developed, conceived, originated or
obtained by either Party in performing its obligations under this
Agreement.  The term “Business Information” shall not include any
improvements, enhancements, refinements or incremental additions to Party
Information that are developed, conceived, originated or obtained by either
Party in performing its obligations under this Agreement.

    


    “Capital Account” means the
account maintained for each JV Participant.

    


    “Chargee” means the holder of
an Encumbrance.

    


    “Confidential Information”
means all information, data, knowledge and know-how (including, but not limited
to, formulas, patterns, compilations, programs, devices, methods, techniques and
processes) that derives independent economic value, actual or potential, as a
result of not being generally known to, or readily ascertainable by, third
parties and which is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy, including without limitation all
analyses, interpretations, compilations, studies and evaluations of such
information, data, knowledge and know-how generated or prepared by or on behalf
of any Party.

    


    “Continuing Obligations” means
any debt, duty, or requirement which continues beyond termination, dilution, or
the withdrawal of a Participant.

    


    “Cover Payment” has the
meaning set out in Section 10.4.

    


    “Defaulting JV Participant's Entire
Interest” has the meaning as set out in Section 10.5(c).

    


    “Development” means all
activities related to evaluating the feasibility of developing a mine to be
located within the Property, including without limitation engineering studies,
environmental studies, concept studies, pre-feasibility studies, feasibility
studies and acquisition programs (whether such programs are within or outside
the Property), and for purposes of developing a mine and related infrastructure
and actual driving of development drifts and infrastructure.

     

    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -3-

        

      

    

    


     

    “Dollars” means lawful
currency of the United States of America.

    


    “Encumbrance” or "Encumbrances" means mortgages,
deeds of trust, security interests, pledges, liens, net profits interests,
royalties or overriding royalty interests, other payments out of production, or
other burdens of any nature, but excluding ****.

    


    “Enhancements” has the meaning
as set out in Section 20.2.

    


    “Environmental Compliance”
means actions performed during or after Operations to comply with the
requirements of all Environmental Laws or contractual commitments related to
reclamation of the Property or other compliance with Environmental Laws,
including without limitation compliance, as it relates to the Property, with any
federal, state, or local Environmental Laws related to the identification,
evaluation or mitigation of impacts to the natural environment on the Property,
or related to public notification concerning such impacts or related to the
preservation of environmental resources including plants, wildlife, water, soil,
air or minerals, or related to the remediation or clean up of such
resources.

    


    “Environmental Compliance
Fund” means the fund established and maintained to pay for Environmental
Compliance costs, as further detailed in Exhibit B.

    


    “Environmental Damage” means
any damage or injury to environmental resources including without limitation
plants, wildlife, water, soil, air, minerals or public health and
safety.

    


    “Environmental Laws” means
Laws aimed at reclamation or restoration of the Property; abatement of
pollution; protection of the environment; protection of wildlife, including
endangered species; ensuring public safety from environmental hazards;
protection of cultural or historic resources; management, storage or control of
hazardous materials and substances; releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
as wastes into the environment, including without limitation, ambient air,
surface water and groundwater; and all other Laws relating to the manufacturing,
processing, distribution, use, treatment, storage, disposal, handling or
transport of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes.

    


    “Environmental Liabilities”
means any and all claims, actions, causes of action, damages, losses,
liabilities, obligations, penalties, judgments, amounts paid in settlement,
assessments, costs, disbursements, or expenses (including, without limitation,
attorneys’ fees and costs, experts’ fees and costs, and consultants’ fees and
costs) of any kind or of any nature whatsoever that are asserted against any
Party, by any person or entity other than another Party, alleging liability
(including, without limitation, liability for studies, testing or investigatory
costs, cleanup costs, response costs, removal costs, remediation costs,
containment costs, restoration costs, corrective action costs, closure costs,
reclamation costs, natural resource damages, property damages, business losses,
personal injuries, penalties or fines) arising out of, based on or resulting
from (i) the presence, release, threatened release, discharge or emission into
the environment of any hazardous materials or substances existing or arising on,
beneath or above the Property and/or emanating or migrating and/or threatening
to emanate or migrate from the Property to off-site properties; (ii) physical
disturbance of the environment; or (iii) the violation or alleged violation of
any Environmental Laws.

     

    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

           


        

        
           


          
            

          

        

        
           


          -4-

        

      

    

    


     

    “Equity Account” means the
account credited with the value of a JV Participant’s contributions to the Joint
Venture and charged the cash and fair market value of the Assets distributed to
the JV Participant.

    


    “Existing Data” means any
Business Information currently maintained by the Manager.

    


    “Expansion” or “Modification” means (i) a
material change in mining or production capacity; (ii) a material change in the
recovery process; or (iii) a material change in waste or tailings disposal
methods.  An increase or change shall be deemed “material” if it is
anticipated to cost more than 10% of original capital costs attributable to the
Development of the mining or production capacity, recovery process or waste or
tailings disposal facility to be expanded or modified.

    


    “Expenditure” or “Expenditures” means all costs
and expenses of whatever kind or nature spent or incurred by or on behalf of the
Parties in the conducting of Operations, including, without
limitation:

    


    
      	
               
      

            	
              (a)

            	
              in
      holding the Property in good standing (including land maintenance costs
      and any monies expended as required to comply with applicable laws and
      regulations, such as for the completion and submission of assessment work
      and filings required in connection therewith), in curing title defects and
      in acquiring and maintaining surface and other ancillary
      rights;

            


    

    


    
      	
               
      

            	
              (b)

            	
              in
      preparing for and in the application for and acquisition of environmental
      and other permits, licenses and approvals necessary or desirable to
      commence and complete exploration and development activities, including
      ancillary costs and expenses such as contributions to local public works
      initiatives, community programs and the
like;

            


    

    


    
      	
               
      

            	
              (c)

            	
              in
      doing geophysical and geological surveys, drilling, assaying and
      metallurgical testing, including costs of assays, metallurgical testing
      and other tests and analyses to determine the quantity and quality of
      Minerals, water and other materials or
  substances;

            


    

    


    
      	
               
      

            	
              (d)

            	
              in
      the preparation of work programs and the presentation and reporting of
      data and other the results thereof including any program for the
      preparation of a feasibility study or other evaluation of the
      Properties;

            


    

    


    
      	
               
      

            	
              (e)

            	
              for
      environmental remediation and
rehabilitation;

            


    

    


    
      	
               
      

            	
              (f)

            	
              in
      acquiring facilities, equipment or machinery, or the use thereof, and for
      all parts, supplies and
consumables;

            


    

    


    
      	
               
      

            	
              (g)

            	
              for
      salaries and wages, including actual labor overhead expenses, work or
      performance bonuses for employees assigned to Exploration, Development and
      Mining activities;

            


    

     

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        
        

        -5-

      

    

    
 

    
      	
               
      

            	
              (h)

            	
              traveling
      expenses and fringe benefits (whether or not required by law) of all
      persons engaged in work with respect to and for the benefit of the
      Property, including for their food, lodging and other reasonable
      needs;

            


    

    


    
      	
               
      

            	
              (i)

            	
              payments
      to contractors or consultants, including without limitation USE as a
      contractor under the Services Agreement, for work done, services rendered
      or materials supplied;

            


    

    


    
      	
               
      

            	
              (j)

            	
              the
      cost of insurance premiums and performance bonds or other
      security;

            


    

    


    
      	
               
      

            	
              (k)

            	
              all
      taxes levied against or in respect of the Property, or activities
      thereon;

            


    

    


    
      	
               
      

            	
              (l)

            	
              acquisition
      costs of Rights acquired under ARTICLE
XVII;

            


    

    


    
      	
               
      

            	
              (m)

            	
              operating
      costs of the Facility under Section 8.15, including any capital costs
      associated with operation and maintenance of the Facility;
    and

            


    

    


    
      	
               
      

            	
              (n)

            	
              the
      Administrative Charges.

            


    

    


    “Exploration” means all
activities related to searching, for the purpose of determining the existence,
quality and quantity, for Minerals on the Property.  Such activities
may include, without limitation, the right to take any action required to obtain
permitting from governmental authorities, the right to prospect, test or in any
manner investigate and evaluate the Property for purposes of developing and
exploiting Minerals; the right to take and retain samples; the right to use
different methods of studies (geological, geochemical and geophysical), some of
which may be by airborne techniques; the right to conduct excavation, trenching,
boring, drilling, analysis, and examination of the economic feasibility of
developing and mining a mineral deposit; the right to take reasonable bulk
samples; the right to drill and to conduct surveys and other exploratory
activities in such manner and to such extent as TCM may deem advisable for the
purpose of obtaining information as to the occurrence of Minerals and as to the
feasibility of mining, removing, treating and marketing of Minerals from or in
connection with the Property.

    


    “Facility” has the meaning as
set out in Section 3.2(g)(v).

    


    “GAAP” means the Generally
Accepted Accounting Principles of the United States.

    


    “Good Mining Title” means that
title which will allow the miner to explore, develop, mine or utilize and
transfer, all as allowed by federal law, the unpatented lode and millsite claims
which are part of the Property with the reasonable expectation of being able to
do so without interference by others claiming an interest in the
Property.

    


    “Governmental Fees” means all
location fees, mining claim rental fees, mining claim maintenance payments and
similar payments required by Law to locate and hold mining claims and
millsites.

    


    “Joint Venture” means the
contractual joint venture between the JV Participants, established under this
Agreement.

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        -6-

      

    

     

    
 

    “Joint Venture Period” means
the period after the formation of the Joint Venture and ending on the
termination of the Agreement.

    


    “JV Participant” means the
Parties having a Participating Interest in the Joint Venture, and their
respective heirs, successors and assigns.

    


    “Law” or “Laws” means any applicable
governmental law, rule, statute, regulation, ordinance, permit, policy, guidance
or order.

    


    “Management Committee” has the
meaning set out in Section 7.2 and as further described in ARTICLE
XIV.

    


    “Manager” means that Party
acting as the manager of the Operations from time to time as appointed under
Sections 7.1 and 8.2.

    


    “Material Breach” means a
failure to perform the essential obligations of this Agreement which deprives
the non-breaching Party of an expected substantial or material benefit of the
Agreement.

    


    “MC Participant” has the
meaning as set out in Section 14.1(a).

    


    “Minerals” means all oil, gas,
coal, coalbed methane and other hydrocarbons and all ores, and concentrates or
metals derived therefrom, of precious, base and industrial minerals (including
without limitation diamonds and uranium) and which are found in, on or under the
Property and may lawfully be explored for, mined and sold pursuant to the
mineral rights comprising the Property.

    


    “Mining” means the mining,
extracting, producing, beneficiating, handling, milling or other processing of
Products.

    


    “Net Profits” means certain
amounts calculated as provided in Paragraph 2 of Exhibit I.

    


    “Net Profits Interest” means a
share of the proceeds from the production and sale of Minerals or other sale of
the Assets as further set out in Exhibit I.

    


    “Notice” and “Notices” has the meaning as
set out in Section 21.1.

    


    “Operations” means to conduct
Exploration within the Property, to evaluate the possible Development and Mining
of the Property, and, if justified, to engage in Development and Mining, to
engage in marketing Products, to complete and satisfy all Environmental
Compliance obligations affecting the Property, all activities carried out in
connection with the construction of a mine and its infrastructure, including
without limitation, extraction, treatment, storage, processing and
transportation of products, distribution and sale of products, and to perform
any other activity necessary, appropriate, or incidental to any of the
foregoing.

    


    “Option” has the meaning set
out in Section 6.1.

    


    “Option Period” means that
period of time beginning on the Agreement Date and ending on the first to occur
of when a Joint Venture is formed or this Agreement terminates.

    


     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        -7-

      

    

     

     

    “Participating Interest” means
the proportion of ownership interest in the Joint Venture possessed by a JV
Participant.

    


    “Party” means a party to this
Agreement.

    


    “Party Information” means all
information, data, knowledge and know-how, in whatever form and however
communicated (including, without limitation, Confidential Information but
excluding the Existing Data), which, as shown by written records, was developed,
conceived, originated or obtained by a Party:  (a) prior to entering
into this Agreement, or (b) independent of its performance under the terms of
this Agreement.

    


    “Payout” means the date on
which the Equity Account balance of each of the JV Participants has become zero
or a negative number, regardless of whether the Equity Account balance of either
or both JV Participants subsequently becomes a positive number.  If
one JV Participant's Equity Account balance becomes zero or a negative number
before the other JV Participant, Payout shall not occur until the date that the
other JV Participant's Equity Account balance first becomes zero or a negative
number.

    


    “PD/MEMCO” has the meaning set
out in Section 3.2(f).

    


    “Permitted Encumbrance” means:
(i) Encumbrances for Taxes and other governmental charges and assessments that
are not yet due and payable or which are being contested in good faith by
appropriate proceedings (provided required payments have been made in connection
with any such contest), (ii) Encumbrances of carriers, warehousemen, mechanics
and materialmen and other like Encumbrances arising in the ordinary course of
business, (iii) survey exceptions, easements, rights of way and restrictions,
and zoning ordinances affecting the real property, (iv) statutory Encumbrances
in favor of lessors arising in connection with any property leased to the
Company, (v) reservations in federal patents, (vi) liens of pledges or deposits
under workers’ compensation laws or similar legislation, unemployment insurance
or other types of social security, (vii) rights reserved to or vested in any
governmental entity to control or regulate any interest in the real property as
imposed by applicable law, (viii) Encumbrances of record as of the Agreement
Date; ****.

    


    “Permitting” means securing
any and all necessary and appropriate permits, licenses and other approvals for
any Exploration, Development, Mining and other Operations on the
Property.

    


    “Prime Rate” means the prime
rate of interest published under “Money Rates” by The Wall Street
Journal.

    


    “Products” means Minerals,
their by-products or processed materials derived from or including Minerals or
associated materials produced from the Property.

    


    “Program” means a description
in reasonable detail of Operations to be conducted and objectives to be
accomplished by the Manager for a period determined by the Management
Committee.

    


    “Program Period” means the
time period covered by an adopted Program and Budget.

    


     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        -8-

      

    

     

     

    “Project Financing” means any
loan, letter of credit, debt obligation, or other agreement obtained to provide
financing for Development, Exploration, Mining or Operations on the
Property.

    


    “Property” has the meaning as
set out in Recital A, and as modified by Section 17.3.

    


    “Reduced Participant” has the
meaning set out in Section 8.6(a).

    


    ****.

    


    “Right of First Refusal” has
the meaning set out in Section 13.2(b).

    


    “Rights” has the meaning set
out in Section 17.1.

    


    “Senior Executives” means the
Chairman of any company, and if there is no Chairman, the President of any
company.

    


    “Services Agreement” means
that agreement contained in Exhibit G.

    


    “Shortfall Payments” has the
meaning set out in Section 6.1(c).

    


    “Supplemental Business” has
the meaning as set out in Section 12.1.

    


    “Supplemental Business
Agreement” has the meaning as set out in Section 12.1.

    


    “Taxes” means all taxes,
assessments and like charges on Operations and Assets or the production and sale
of Products which have been paid by the Manager for the benefit of the JV
Participants.

    


    “TCM” means Thompson Creek
Metals Company USA

    


    “Third Party” means a legal
entity other than TCM and its Affiliates and the USE and its
Affiliates.

    


    “Title Opinion” means the
opinion of Davis, Graham, & Stubbs LLP dated March 23, 2007 concerning title
to the Lucky Jack Molybdenum Property, updated May 10, 2007.

    


    “Transfer” means conveyance of
title or any interest from one person or entity to another.

    


    “USE” means U.S. Energy
Corp.

    


    Interpretation:

    


    The
Parties shall employ the following rules of interpreting this
Agreement:

    


    
      	
               
      

            	
              (a)

            	
              Terms
      denoting the singular only shall include the plural, and vice
      versa.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Unless
      otherwise stated, a reference to a Recital, Part, Article, Section or
      Exhibit is a
      reference to a Recital, Part, Article, Section or Exhibit of this
      Agreement.

            


    

     

     

    
      
        ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.

        
        

      

      
        
        

        
          

        

      

      
        -9-

      

    

     

     

    
      	
               
      

            	
               (c)

            	
              Section
      numbers and headings are for convenience of reference only, and shall not
      affect the interpretation of this
Agreement.

            


    

    


    
      	
               
      

            	
              (d)

            	
              Reference
      to any gender includes the other.

            


    

    


    
      	
               
      

            	
              (e)

            	
              Reference
      to “including” means including, but not by way of
    limitation.

            


    

    


    
      	
               
      

            	
              (f)

            	
              Unless
      otherwise expressly provided in this Agreement, reference to an Agreement
      (including this Agreement), document, or instrument is the same as
      amended, modified, novated or replaced from time to
  time.

            


    

    


    
      	
               
      

            	
              (g)

            	
              Reference
      to a statute or other legislative act, by law, rule, regulation, or order
      is to the same as amended, modified or replaced from time to time and to
      any rule, regulation or order promulgated pursuant to such
      law.

            


    

    


    
      
        
          ****
The confidential portions of this Agreement have been omitted and filed
separately with the Securities and Exchange Commission.