<PAGE>

                                                                    EXHIBIT 10.4


                                STOCK OPTION PLAN
                                       OF
                              ATLAS MINING COMPANY

                                       I.
                                 PURPOSE OF PLAN

The Atlas Mining Company. Stock Option Plan (the "Plan") is intended to advance
the interests of Atlas Mining Company. (the "Company"), its shareholders, and
its subsidiaries by encouraging and enabling selected officers, directors, and
other key employees upon whose judgment, initiative and effort the Company is
largely dependent for the successful conduct of its business, to acquire and
retain a proprietary interest in the Company by ownership of its stock. Options
granted under the Plan are intended to be options which do not meet the
requirements of Section 422 of the Internal Revenue Code of 1986 (the "Code").

                                       II.
                                   DEFINITIONS

2.1      "Administrative Committee" means the Board of Directors or a committee
         appointed by the Board of Directors, pursuant to Article III below,
         administering the Plan.

2.2      "Affiliate" means a "parent corporation" of the Company, as described
         in Section 424(e) of the Code, or a "subsidiary corporation" of the
         Company, as described in Section 424(f) of the Code.

2.3      "Board" means the Board of Directors of the Company.

2.4      "Code" means the Internal Revenue Code of 1986.

2.5      "Common Stock" means the Company's no par value Common Stock.

2.6      "Company" means Atlas Mining Company.

2.7      "Date of Grant" means the date on which an Option is granted under the
         Plan.

2.8      "Disinterested Person" has the meaning defined in Article 3.1(c) of
         this Plan.

2.9      "Option" means an option granted under the Plan.

2.10     "Optionee" means a person to whom an Option, which has not expired, has
         been granted under the Plan.

2.11     "Plan" means this Stock Option Plan.

2.12     "Qualified Successor" means a person or persons entitled under
         Optionee's will or applicable laws of descent and distribution to
         receive Incentive Stock Options held by Optionee at the time of
         Optionee's death.

2.13     "Reorganization" and "Reorganization Agreement" have the meanings
         defined in Article VII of this Plan.

2.13     "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
         corporations of the Company as defined in Section 424 of the Code.

2.14     "Successor" means the legal representative of the estate of a deceased
         Optionee or the person or persons who acquire the right to exercise an
         Option by bequest or inheritance or by reason of the death of any
         Optionee.

<PAGE>

                                      III.
                             ADMINISTRATION OF PLAN

3.1      This Plan shall be administered by the Board of Directors of the
         Company (the "Board") unless a committee of the Board is appointed in
         accordance with Article 3.2 or 3.4(b) below. The Board, or such
         committee if appointed, will be referred to in this Plan as the
         "Administrative Committee."

3.2      The Board may at any time appoint a committee, consisting of not less
         than two of its members, to administer this Plan on behalf of the Board
         in accordance with such terms and conditions not inconsistent with this
         Plan as the Board may prescribe. After it is appointed, the committee
         shall continue to serve until otherwise directed by the Board. The
         Board may appoint additional members to the committee; remove members
         (with or without cause); fill vacancies however caused; and/or remove
         all members of the committee and thereafter directly administer this
         Plan.

3.3      A majority of the members of the Administrative Committee shall
         constitute a quorum; and subject to the limitations of this Article
         III, all actions of the Administrative Committee shall require the
         affirmative vote of members who constitute a majority of a quorum.
         Members of the Administrative Committee who are not Disinterested
         Persons (as defined in Article 3.4(c)) may vote on any matters
         affecting the administration or the grant of Stock Options under the
         Plan; provided, however, that no member shall vote on the granting of a
         Stock Option to himself or herself (but a member may be counted in
         determining the existence of a quorum at a meeting of the
         Administrative Committee during which action is taken with respect to
         the granting of such Stock Option).

3.4      Notwithstanding the foregoing provisions of this Article III, to the
         extent necessary to be exempt from the operation of Section 16(b) of
         the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
         this Plan shall from the effective date of registration until six
         months after the termination thereof, be administered as follows:

         a.       The Board shall administer the Plan directly (regardless of
                  whether a committee of the Board has been appointed under
                  Article 3.2) as long as each member of the Board is a
                  Disinterested Person, and all actions of the Board as the
                  Administrative Committee shall require the affirmative vote of
                  directors who constitute a majority of a quorum.

         b.       If at any time a member of the Board is not a Disinterested
                  Person, the Board shall appoint a committee consisting of two
                  or more of its members, each of whom is a Disinterested
                  Person, to administer this Plan on behalf of the Board. Such
                  committee shall act in accordance with terms and conditions
                  prescribed by the Board to the extent such terms and
                  conditions are not inconsistent with this Plan. Once
                  appointed, the committee shall continue to serve until
                  otherwise directed by the Board. From time to time, the Board
                  may appoint additional members to the committee; remove
                  members (with or without cause); fill vacancies however
                  caused; and/or at any time when all members of the Board are
                  Disinterested Persons, remove all members of the committee and
                  thereafter directly administer this Plan. At no time shall a
                  person who is not a Disinterested Person serve on the
                  committee appointed under this Article 3.4(b), nor shall such
                  committee at any time have fewer than two members.

         c.       The term "Disinterested Person" shall mean a director who,
                  during the one year prior to service as a member of the
                  Administrative Committee or during such service, is not
                  granted or awarded equity securities pursuant to this Plan or
                  any other plan of the Company or any of its Affiliates (as
                  defined in Article 2.2) other than grants or awards that
                  pursuant to Rule 166-3(c)(2)(i) under the Exchange Act will
                  not cause the director to cease to be a "Disinterested
                  Person," as defined in such rule.

<PAGE>

3.5      The following provisions shall apply to the Administrative Committee:

         a.       The Administrative Committee shall have the authority to (i)
                  administer this Plan in accordance with its express terms;
                  (ii) determine all questions arising in connection with the
                  administration, interpretation, and application of this Plan,
                  including all questions relating to the value of the Common
                  Stock; (iii) correct any defect, supply any information and
                  reconcile any inconsistency in such manner and to such extent
                  as shall be deemed necessary or advisable to carry out the
                  purpose of this Plan; (iv) prescribe, amend, and rescind rules
                  and regulations relating to the administration of this Plan;
                  (v) determine the duration and purposes of leaves of absence
                  which my be granted to participants without constituting a
                  termination of employment for purposes of this Plan; and (vi)
                  make all other determinations necessary or advisable for
                  administration of this Plan.

         b.       The authority of the Administrative Committee to administer
                  the Plan shall be exercised consistently with the intent that
                  (i) the Stock Options issued under this Plan qualify under
                  Section 422 of the Code (including any amendments thereof or
                  successor provision similar thereto); and (ii) the Plan be
                  administered in a manner that satisfies the conditions of Rule
                  16b-3(c)(2)(i) under the Exchange Act (including any
                  amendments thereof and any successor provision similar
                  thereto) so that the grant of Stock Options under this Plan,
                  and all other actions taken with respect to the Plan, to the
                  options granted thereunder and to the Common Stock acquired
                  upon exercise of Stock Options, shall to the extent possible
                  be exempt from the operation of Section 16(b) of the Exchange
                  Act.

         c.       All determinations made by the Administrative Committee in
                  good faith on matters referred to in this Article 3.5 shall be
                  final, conclusive, and binding upon all persons. The
                  Administrative Committee shall have all powers necessary or
                  appropriate to accomplish its duties under this Plan.

                                   ARTICLE IV.
                         COMMON STOCK SUBJECT TO OPTIONS

The aggregate number of shares of the Company's Common Stock which may be issued
upon the exercise of Options granted under this Plan and any other stock option
plan adopted by the Company shall not exceed ten percent (10%) of the then
currently issued and outstanding shares of the Company's Common Stock, subject
to adjustment under the provisions of Article VII. The aggregate number of
shares of the Company's Common Stock which may be issued to any one person shall
not exceed five percent (5%) of the then currently issued and outstanding shares
of the Company's Common Stock. The shares of Common Stock to be issued upon the
exercise of Options may be authorized but unissued shares, shares issued and
reacquired by the Company or shares bought on the market for the purposes of the
Plan. In the event any Option shall, for any reason, terminate or expire or be
surrendered without having been exercised in full, the shares subject to such
Option but not purchased thereunder shall again be available for Options to be
granted under the Plan.

                                   ARTICLE V.
                                  PARTICIPANTS

Options may be granted under the Plan to any person who is or who agrees to
become an officer, director, or employee (including officers and employees who
are also directors) of the Company or any of its subsidiaries.

                                   ARTICLE VI.
                         TERMS AND CONDITIONS OF OPTIONS

Any Option granted under the Plan shall be evidenced by an agreement executed by
the Company and the applicable officer or employee and shall contain such terms
and be in such form as the Administrative Committee may from time to time
approve, subject to the following limitations and conditions:

6.1      OPTION PRICE. The Option price per share with respect to each Option
         may be the lowest price allowable under applicable laws and
         regulations.

6.2      PERIOD OF OPTION. The expiration date of each Option shall be fixed by
         the Administrative Committee; but notwithstanding any provision of the
         Plan to the contrary, such expiration date shall not be more than five
         (5) years from the Date of Grant.

<PAGE>

6.3      VESTING OF SHAREHOLDER RIGHTS. Neither an Optionee nor his successor
         shall have any of the rights of a shareholder of the Company until the
         Option has been exercised and the certificates evidencing the shares
         purchased are properly delivered to such Optionee or his successor.

6.4      EXERCISE OF OPTION. Each Option shall be exercisable from time to time
         over a period commencing on the Date of Grant and ending upon the
         expiration or termination of the Option; provided, however, the
         Administrative Committee may by the provisions of any Option agreement
         limit the number of shares purchasable thereunder in any period or
         periods of time during which the Option is exercisable. An Option shall
         not be exercisable in whole or in part prior to the date of shareholder
         approval of the Plan.

6.5      NON-TRANSFERABILITY OF OPTION. No Option shall be transferable or
         assignable by an Optionee, otherwise than by will or the laws of
         descent and distribution and each Option shall be exercisable, during
         the Optionee's lifetime, only by him. No Option shall be pledged or
         hypothecated in any way and no Option shall be subject to execution,
         attachment, or similar process except with the express consent of the
         Administrative Committee.

6.6      TERMINATION OF EMPLOYMENT. Upon termination of an Optionee's employment
         with the Company or with any of its subsidiaries, his Option privileges
         shall be limited to the shares which were immediately purchasable by
         him at the date of such termination and such Option privileges shall
         expire unless exercised by him within 30 days after the date of such
         termination. In the event of termination of an Optionee's employment
         "for cause," his Option privileges shall immediately terminate. The
         granting of an Option to an eligible person does not alter in any way
         the Company's or the relevant subsidiary's existing rights to terminate
         such person's employment at any time for any reason or for no reason,
         nor does it confer upon such person any rights or privileges except as
         specifically provided for in the Plan.

6.7      DEATH OF OPTIONEE. If an Optionee dies while a member of the Board or
         in the employ of the Company or any subsidiary, the Option privileges
         of the estate shall be limited to the shares which were immediately
         purchasable by the Optionee at the date of death and such Option
         privileges shall expire unless exercised by the Optionee's successor
         within one year after the date of death.

                                  ARTICLE VII.
                                   ADJUSTMENTS

7.1      In the event that the outstanding shares of Common Stock of the Company
         are hereafter increased or decreased or changed into or exchanged for a
         different number or kind of shares or other securities of the Company
         or of another corporation, by reason of a recapitalization,
         reclassification, stock split-up, combination of shares, or dividend or
         other distribution payable in capital stock, appropriate adjustment
         shall be made by the Administrative Committee in the number and kind of
         shares for the purchase of which Options may be granted under the Plan.
         In addition, the Administrative Committee shall make appropriate
         adjustment in the number and kind of shares as to which outstanding
         Options, or portions thereof then unexercised, shall be exercisable, to
         the end that the proportionate interest of the holder of the Option
         shall, to the extend practicable, be maintained as before the
         occurrence of such event. Such adjustment in outstanding Options shall
         be made without change in the total price applicable to the unexercised
         portion of the Option but with a corresponding adjustment in the Option
         price per share.

7.2      In the event of the dissolution or liquidation of the Company, any
         Option granted under the Plan shall terminate as of a date to be fixed
         by the Administrative Committee, provided that not less than 30 days
         written notice of the date so fixed shall be given to each Optionee and
         each such Optionee shall have the right during such period to exercise
         his Option as to all or any part of the shares covered thereby
         including shares as to which such Option would not otherwise be
         exercisable by reason of an insufficient lapse of time.

7.3      In the event of a Reorganization (as hereinafter defined) in which the
         Company is not the surviving or acquiring company, or in which the
         Company is or becomes a wholly-owned subsidiary of another company
         after the effective date of the Reorganization, then

<PAGE>

         a.       If there is no plan or agreement respecting the Reorganization
                  ("Reorganization Agreement") or if the Reorganization
                  Agreement does not specifically provide for the change,
                  conversion, or exchange of the shares under outstanding and
                  unexercised stock Options for securities of another
                  corporation, then the Administrative Committee shall take such
                  action, and the Options shall terminate, as provided in
                  Article 7.2; or

         b.       If there is a Reorganization Agreement and if the
                  Reorganization Agreement specifically provides for the change,
                  conversion, or exchange of the shares under outstanding and
                  unexercised stock Options for securities of another
                  corporation, then the Administrative Committee shall adjust
                  the shares under such outstanding and unexercised stock
                  Options (and shall adjust the shares remaining under the Plan
                  which are then available to the Optionee under the Plan, if
                  the Reorganization Agreement makes specific provision
                  therefor) in a manner not inconsistent with the provisions of
                  the Reorganization Agreement for the adjustment, change,
                  conversion, or exchange of such stock and such Options.

         The term "Reorganization" as used in this Article VII shall mean any
         statutory merger; statutory consolidation; sale of all or substantially
         all of the assets of the Company; or pursuant to an agreement with the
         Company, the sale of securities of the Company pursuant to which the
         Company is or becomes a wholly-owned subsidiary of another company
         after the effective date of the Reorganization.

7.4      Adjustments and determinations under this Article VII shall be made by
         the Administrative Committee, whose decisions as to what adjustments or
         determinations shall be made, and the extent thereof, shall be final,
         binding, and conclusive.

                                  ARTICLE VIII.
                         RESTRICTIONS ON ISSUING SHARES

The exercise of each Option shall be subject to the condition that if at any
time the Company shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any state or federal law, or that
the consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of shares pursuant thereto, then in any such event, such exercise shall not be
effective unless such withholding, listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any conditions
not acceptable to the Company.

<PAGE>

                                   ARTICLE IX.
                                 USE OF PROCEEDS

The proceeds received by the Company from the sale of Common Stock pursuant to
the exercise of Options granted under the Plan shall be added to the Company's
general funds and used for general corporate purposes.

                                   ARTICLE X.
                  AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN

The Board may at any time suspend or terminate the Plan or may amend it from
time to time in such respects as the Board may deem advisable in order that the
Options granted thereunder may conform to any changes in the law or in any other
respect which the Board may deem to be in the best interest of the Company;
provided, however, that without approval by the shareholders of the Company
representing a majority of the voting power, no such amendment shall (i) except
as specified in Article VII, increase the maximum number of shares for which
Options may be granted under the Plan; (ii) change the provisions of Article
6.01 relating to the establishment of the Option price; (iii) change the
provisions of Article 6.2 relating to the expiration date of each Option; or
(iv) change the provisions of the second sentence of this Article X relating to
the term of this Plan. Unless the Plan shall theretofore have been terminated by
the Board or as provided in Article XI, the Plan shall terminate ten years after
the effective date of the Plan. No Option may be granted during any suspension
or after the termination of the Plan. Except as provided in Article XI, no
amendment, suspension, or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.

                                   ARTICLE XI
                     Option Agreement and Legend Requirement

Each Stock Option granted hereunder shall be evidenced by a written agreement
executed by the Company and the Optionee. Such agreement shall contain the terms
of the Stock Option specified by Article VI, together with other terms,
conditions, and provisions that the Administrative Committee deems advisable and
that are not inconsistent with the terms and conditions of this Plan. Such
agreement shall also provide that, by accepting a Stock Option granted under
this Plan, the Optionee, for himself or herself, for his or her Qualified
Successor, and for his or her heirs, successors and assigns:

         (i)      Recognizes, agrees and acknowledges that no registration
                  statement under the Securities Act of 1933, as amended (the
                  "1933 Act"), or under any state securities laws, will have
                  been filed as to either the Stock Option or any shares of
                  Common Stock that may be acquired upon exercise of such Stock
                  Option;

         (ii)     Warrants and represents that the Stock Option and any shares
                  of Common Stock of the Company acquired upon exercise of the
                  Stock Option will be acquired and held by the Optionee for the
                  Optionee's own account, for investment purposes only, and not
                  with a view towards the distribution or public offering
                  thereof nor with any present intention of reselling or
                  distributing the same at any particular future time;

         (iii)    Acknowledges and consents to the appearance of a printed
                  legend on the back of each stock certificate representing
                  shares of Common Stock issued upon exercise of the Stock
                  Option, which legend shall read as follows:

                         NOTICE: RESTRICTION ON TRANSFER

                  The securities represented hereby have not been registered
                  under the Securities Act of 1933 or any state securities laws,
                  and may not be offered, sold, transferred, encumbered or
                  otherwise disposed of except upon satisfaction of certain
                  conditions set forth in the Atlas Mining Company Stock Option
                  Plan. Information concerning these restrictions may be
                  obtained from the corporation or its legal counsel. Any offer
                  or disposition of these securities without satisfaction of
                  such conditions will be wrongful and will not entitle the
                  transferee to register ownership of the securities with the
                  corporation. These securities may also be subject to
                  repurchase by the corporation upon certain terms and
                  conditions set forth in said documents.

         (iv)     Agrees not to sell, transfer or otherwise dispose of any
                  shares of Common Stock that may be acquired upon exercise of
                  the Stock Option unless (i) there is an effective registration
                  statement under the 1933 Act covering the proposed disposition
                  and compliance with governing state securities laws, (ii) the
                  Optionee delivers to the Company, at the Optionee's expense, a
                  "no-action" letter or similar interpretative opinion,
                  satisfactory in form and substance to the Company, from the
                  staff of each appropriate securities agency, to the effect
                  that such shares may be disposed of by the Optionee in the
                  manner proposed, or (iii) the Optionee delivers to the
                  Company, at the Optionee's expense, a legal opinion,
                  satisfactory in form and substance to the Company, of legal
                  counsel designated by the Optionee and satisfactory to the
                  Company, to the effect that the proposed disposition is exempt
                  from registration under the 1933 Act and governing state
                  securities laws; and

         (v)      Agrees to indemnify the Company and hold it harmless from and
                  against any loss, claim or liability, including attorney's
                  fees or other legal expenses incurred in the defense thereof,
                  incurred by the Company as a result of any breach by the
                  Optionee of, or any inaccuracy in, any representation,
                  warranty, covenant or other provision contained in such
                  agreement.

If a registration statement under the 1933 Act is hereafter filed with respect
to Stock Options granted or to be granted hereunder and the shares of Common
Stock that may be acquired upon exercise of such Stock Options, then, following
the effectiveness of such registration statement, the provisions in agreements
representing Stock Options that would otherwise be required by this Article XI
may, in the discretion of the Administrative Committee, be modified or
eliminated.

<PAGE>

                                  ARTICLE XII.
                 EFFECTIVE DATE OF PLAN AND SHAREHOLDER APPROVAL

The effective date of the Plan is January 13, 1997, the date of its approval by
the Board; provided, however, if the Plan is not approved by the shareholders of
the Company representing a majority of the voting power at the next
shareholders' meeting or if the Plan is not approved by such shareholders before
January 12, 1998, the Plan shall terminate and any Options granted thereunder
shall be void and have no force or effect.

This Plan is adopted this 19th day of November, 1998.

ATLAS MINING COMPANY



BY: /s/ William T. Jacobson                    BY: /s/ Marqueta Martinez
   -----------------------------------            ------------------------------
   William T. Jacobson, President                 Marqueta Martinez, Secretary