Pan American Lithium Corp. - Exhibit 10.3 - Filed by newsfilecorp.com






 

 

 

SHARE OPTION AGREEMENT 

Among 

ETNA RESOURCES INC. 

And 

ESCONDIDAS INTERNACIONAL S.A. de C.V

And 

THE SHAREHOLDERS OF 
ESCONDIDAS INTERNACIONAL S.A. de
C.V.

 

 

 

 

dated December 18, 2009




SHARE OPTION AGREEMENT

THIS AGREEMENT dated for reference the 18th day of
October, 2010.

AMONG: 


  
    
      
        ETNA RESOURCES INC., a company duly incorporated
          under the laws of British Columbia, and having an office at Suite 110
          – 3040 N. Campbell Ave., Tucson, Arizona USA 85719 

        (the “Optionee”) 

      

    

  



OF THE FIRST PART

AND: 


  
    
      
        ESCONDIDAS INTERNACIONAL S.A. de C.V., a company
          duly incorporated under the laws of Mexico, and having an office at
          Avenida Ignacio Ramirez 514 – A, Col. Pro – Hogar, Mexicali,
          Baja California, Mexico 

        (the “Company”) 

      

    

  



OF THE SECOND PART 

AND: 


  
    
      
        The Shareholders of the Company listed on Schedule
          A 

        (each, an “Optionor” and collectively,
          the “Optionors”) 

      

    

  



OF THE THIRD PART

WHEREAS: 

A.                 
The Optionors are the holders of all the issued and outstanding common shares in
the capital of the Company; 

B.                 
CPI Internacional S.A. de C.V. (“CPI”), a Mexican corporation, is the sole legal
and beneficial owner of the Concessions (as defined herein); 

C.                 
The Company has entered into an agreement with CPI entitled “Contrato de Accion
Conjunta, de Coinversion y de Alianza Estrategica” dated November 12, 2009 (the
“CPI JV Agreement”), whereby CPI granted the Company certain contractual
rights relating to and arising from the Concessions as more particularly set out
in Schedule C (the “Assets”), and CPI and the Company have formed a joint
venture governing their respective rights to the Assets; and




- 2 -

D.                
Each of the Optionors seek to grant an exclusive option to the Optionee to
acquire seventy six percent (76%) of the common shares in the capital of the
Company from each of the Optionors upon the terms set out herein; 

                    NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
of the mutual covenants and agreements herein contained, the Parties hereto
agree as follows: 

1.                
 DEFINITIONS 

1.1         
   In this Agreement, including the recitals and schedules hereto,
unless there is something in the subject matter or context inconsistent
therewith, the following words and expressions shall have the following
meanings: 

	 	(a) 	
      “1933 Act” means the United States Securities
      Act of 1933, as amended, and the rules and regulations promulgated
      thereunder.

	 	 	 
	 	(b) 	
      “Affiliate” means of an entity means any Person
      directly or indirectly controlling, controlled by or under common control,
      with such entity.

	 	 	 
	 	(c) 	
      “Agreement” means this share option agreement as
      amended from time to time.

	 	 	 
	 	(d) 	
      “Applicable Securities Laws” means all applicable
      securities legislation in all jurisdictions relevant to the issuance of
      the Exchange Shares and the Exchange Warrants to the Optionors in
      connection with the Transaction.

	 	 	 
	 	(e) 	
      “Assets” has the meaning set out in Recital C of
      this Agreement.

	 	 	 
	 	(f) 	
      “Change of Control” means the acquisition,
      directly or indirectly, of beneficial ownership of voting securities that
      results in a holding of more than 20% of the issued and outstanding voting
      securities of the Company or the Optionee, as applicable, by a third
      party, other than in connection with this Agreement.

	 	 	 
	 	(g) 	
      “Charter” means, with respect to any corporation,
      such corporation’s articles of incorporation, certificate of
      incorporation, constating documents, notice of articles, by-laws or such
      other similar organizational documents as the same may be amended from
      time to time.

	 	 	 
	 	(h) 	
      “Claim” has the meaning set out in section
      32.1.

	 	 	 
	 	(i) 	
      “Closing” means the exercise of the Option,
      pursuant to the terms of this Agreement at the Closing Time.

	 	 	 
	 	(j) 	
      “Closing Date” means the date that the Optionee
      exercises the Option as provided herein, which shall be no later than
      March 31, 2010, unless extended in writing by the Parties.

	 	 	 
	 	(k) 	
      “Closing Time” means 10:00 a.m. (Vancouver time)
      on the Closing Date or such other time on the Closing Date as may be
      agreed upon by the Parties.







- 3 -

	 	(l) 	
      “Company Shares” means common shares in the
      capital of the Company.

	 	 	 
	 	(m) 	
      “Concessions” means the concessions granted under
      Mexican law to CPI including the rights to existing and residual brine
      waters and contained in salts located in evaporation ponds within such
      concessions and other mineral property interests and all other property
      rights as set out and more particularly described in Schedule B attached
      hereto, and shall include any renewals thereof and any form of substitute
      or successor title thereto.

	 	 	 
	 	(n) 	
      “CPI JV Agreement” means the agreement entitled
      “Contrato de Accion Conjunta, de Coinversion y de Alianza Estrategica”
      dated November 12, 2009 between CPI and the Company.

	 	 	 
	 	(o) 	
      “Direct Claim” has the meaning set out in section
      32.1.

	 	 	 
	 	(p) 	
      “Distribution” means: (i) the declaration or
      payment of any dividend in cash, securities or property on or in respect
      of any class of securities of the Person or its Subsidiaries; (ii) the
      purchase, redemption or other retirement of any securities of the Person
      or its Subsidiaries, directly or indirectly; or (iii) any other
      distribution on or in respect of any class of securities of the Person or
      its Subsidiaries.

	 	 	 
	 	(q) 	
      “Encumbrance” has the meaning set out in section
      2.4(aa).

	 	 	 
	 	(r) 	
      “Environmental Laws” means all applicable Laws
      relating to the protection of human health and safety, the environment or
      natural environment (as defined in all such Laws including air, surface
      water, ground water, land surface, soil, and subsurface strata), or
      hazardous or toxic substances or wastes, pollutants or
  contaminants.

	 	 	 
	 	(s) 	
      “Etna Assets” means all assets owned by the
      Optionee.

	 	 	 
	 	(t) 	
      “Etna Public Record” has the meaning set out in
      section 2.2(c).

	 	 	 
	 	(u) 	
      “Etna Shares” means the common shares in the
      capital of the Optionee.

	 	 	 
	 	(v) 	
      “Exchange” means the TSX Venture Exchange
    Inc.

	 	 	 
	 	(w) 	
      “Exchange Shares” means the Etna Shares to be
      issued to the Optionors on the Closing Date.

	 	 	 
	 	(x) 	
      “Exchange Warrants” means the share purchase
      warrants in the form set out in Schedule F attached hereto, to be issued
      by the Optionee to the Optionors on the Closing Date, each warrant of
      which will entitle the holder to acquire one Etna Share at the exercise
      price of CDN$0.50 or such higher price if required in accordance with the
      policies of the Exchange.

	 	 	 
	 	(y) 	
      “Exploitation Work” means every kind of work done
      or in respect of the Assets by or under the direction of or on behalf of
      or for the benefit of a Party, and







- 4 -

	 		
      includes assessment work, geophysical, geochemical and
      geological surveying, studies and mapping, investigating, designing,
      examining, equipping, improving, surveying, searching for, digging,
      trucking, sampling, working and procuring minerals, ores, metals and
      concentrates, surveying and reporting and all other work usually
      considered to be prospecting, exploration, development and exploitation
      work.

	 	 	 
	 	(z) 	
      “Income Tax Act” means the Income Tax Act
      (Canada), as amended from time to time.

	 	 	 
	 	(aa) 	
      “Indebtedness” means all obligations, contingent
      (to the extent required to be reflected in financial statements prepared
      in accordance with Canadian GAAP) and otherwise, which in accordance with
      Canadian GAAP should be classified on the obligor’s balance sheet as
      liabilities, including without limitation, in any event and whether or not
      so classified: (a) all debt and similar monetary obligations, whether
      direct or indirect; (b) all liabilities secured by any mortgage, pledge,
      security interest, lien, charge or other encumbrance existing on property
      owned or acquired subject thereto, whether or not the liability secured
      thereby shall have been assumed; (c) all agreements of guarantee, support,
      indemnification, assumption or endorsement and other contingent
      obligations whether direct or indirect in respect of Indebtedness or
      performance of others, including any obligation to supply funds to or in
      any manner to invest in, directly or indirectly, the debtor, to purchase
      Indebtedness, or to assure the owner of Indebtedness against loss, through
      an agreement to purchase goods, supplies or services for the purpose of
      enabling the debtor to make payment of the Indebtedness held by such owner
      or otherwise; (d) obligations to reimburse issuers of any letters of
      credit; and (e) capital leases.

	 	 	 
	 	(bb) 	
      “Indemnified Party” has the meaning set forth in
      section 32.1.

	 	 	 
	 	(cc) 	
      “Indemnifying Party” has the meaning set forth in
      section 32.1.

	 	 	 
	 	(dd) 	
      “Key Personnel” means Harold Gardner and Rene
      Ramirez, both Optionors with respect to this Agreement.

	 	 	 
	 	(ee) 	
      “Law” mean all federal, provincial, state,
      municipal or local laws, rules, regulations, statutes, by-laws,
      ordinances, policies or orders of any federal, provincial, state, regional
      or local government or any subdivision thereof or any arbitrator, court,
      administrative or regulatory agency, commission, department, board or
      bureau or body or other government or authority or instrumentality or any
      entity or Person exercising executive, legislative, judicial, regulatory
      or administrative functions of or pertaining to government.

	 	 	 
	 	(ff) 	
      “Lien” means: (a) any encumbrance, mortgage,
      pledge, hypothec, prior claim, lien, charge or other security interest of
      any kind upon any property or assets of any character, or upon the income
      or profits therefrom; (b) any acquisition of or agreement to have an
      option to acquire any property or assets upon
conditional







- 5 -

	 		
      sale or other title retention agreement, device or
      arrangement (including a capitalized lease); or (c) any sale, assignment,
      pledge or other transfer for security of any accounts, general intangibles
      or chattel paper, with or without recourse.

	 	 	 
	 	(gg) 	
      “Market Price” has the meaning set out in the
      policies of the Exchange.

	 	 	 
	 	(hh) 	
      “Material Adverse Effect” in respect of a Person
      means any change, effect, event, occurrence, condition or development that
      has or could reasonably be expected to have, individually or in the
      aggregate, a material and adverse impact on the business, operations,
      results of operations, assets, capitalization or financial condition of
      such Person, other than any change, effect, event, occurrence or state of
      facts relating to the global economy or securities markets in
    general.

	 	 	 
	 	(ii) 	
      “Option” has the meaning set out in section
      3.1.

	 	 	 
	 	(jj) 	
      “Option Period” means the period from the date of
      this Agreement to the earlier of the Closing Date or the date this
      Agreement is terminated in accordance with its terms.

	 	 	 
	 	(kk) 	
      “Party” means any one of the Company, the
      Optionors or the Optionee as the context requires, their successors and
      permitted assigns and “Parties” mean collectively the Company, the
      Optionors and the Optionee and their respective successors and permitted
      assigns.

	 	 	 
	 	(ll) 	
      “Person” means an individual, partnership,
      corporation, association, trust, joint venture, unincorporated
      organization and any government, governmental department or agency or
      political subdivision thereof.

	 	 	 
	 	(mm) 	
      “Product” means all samples, ores, metals and
      minerals exploited or extracted from the Assets or any portion thereof and
      any concentrates produced therefrom.

	 	 	 
	 	(nn) 	
      “Subsidiary” shall have the same meaning as the
      term “subsidiary” in the Securities Act (British
  Columbia).

	 	 	 
	 	(oo) 	
      “Tax” or “Taxes” means all taxes, charges,
      fees, levies, imposts and other assessments, including all income, sales,
      use, goods and services, value added, capital, capital gains, alternative
      net worth, transfer, profits, withholding, payroll, employer health,
      employer safety, workers compensation, excise, immovable property and
      moveable property taxes, and any other taxes, customs duties, fees,
      assessments or similar charges in the nature of a tax including applicable
      pension plans, social security and provincial or state pension plan
      contributions and workers compensation premiums, together with any
      interest, fines and penalties imposed by any governmental authority
      (including federal, provincial, state, municipal and foreign governmental
      authorities), and whether disputed or not.

	 	 	 
	 	(pp) 	
      “Tax Returns” has the meaning set out in section
      2.4(k)(i).

	 	 	 
	 	(qq) 	
      “Third Party Claims” has the meaning set out in
      section 32.1.







- 6 -

	 	(rr) 	
      “Transaction” means the transactions contemplated
      by this Agreement, including the grant and exercise of the Option and the
      exchange of the Company Shares by the Optionors for the issuance of the
      Exchange Shares, the Exchange Warrants and the cash payments by the
      Optionee contained herein.

	 	 	 
	 	(ss) 	
      “U.S. Person” has the meaning set out in
      Regulation S of the 1933 Act.



1.2            
The following Schedules are attached hereto and form part of this Agreement:

	 	Schedule A 	– 	Optionors 
	 	Schedule B 	– 	Concessions 
	 	Schedule C 	– 	Assets 
	 	Schedule D 	– 	Accredited Investor Questionnaire
    
	 	Schedule E 	– 	Material Contracts – the
      Company 
	 	Schedule F 	– 	Form of Exchange Warrant 
	 	Schedule G 	– 	Personal Information 


2.             
 REPRESENTATIONS, WARRANTIES AND COVENANTS 

2.1            
Each of the Company and the Optionee represents and warrants to the other
Parties that: 

	 	(a) 	
      It is a company duly incorporated, organized and validly
      subsisting under the laws of its incorporating jurisdiction.

	 	 	 
	 	(b) 	
      It has full power and authority to carry on its business
      and to enter into this Agreement and any agreement or instrument referred
      to or contemplated by this Agreement.

	 	 	 
	 	(c) 	
      Neither the execution and delivery of this Agreement nor
      any of the Agreements referred to herein or contemplated hereby, nor the
      consummation of the transactions hereby contemplated conflict with, result
      in the breach of or accelerate the performance required by, any agreement
      to which it is a party.

	 	 	 
	 	(d) 	
      The execution and delivery of this Agreement and the
      Agreements contemplated hereby will not violate or result in the breach of
      the Laws of any jurisdiction applicable or pertaining thereto or of its
      Charter.



2.2            
The Optionee represents and warrants to the Optionors and the Company that: 

	 	(a) 	
      The authorized capital of the Optionee consists of
      100,000,000 Etna Shares of which 31,594,333 are issued and outstanding as
      at the date hereof. No shareholder of the Optionee or other party has or
      will have any preemptive right or similar right to purchase the Etna
      Shares or other stock of Etna, except as disclosed in the Etna Public
      Record or as contemplated herein.

	 	 	 
	 	(b) 	
      The Etna Shares issued and outstanding as at the date
      hereof have been, and will at the Closing Date be, duly authorized and
      validly issued and outstanding as fully







- 7 -

	 		
      paid and non-assessable shares. None of the Etna Shares
      have been issued in violation of any Laws, the policies of the Exchange,
      Etna’s Charter or any agreement to which the Optionee is a party or by
      which it is bound.

	 	 	 
	 	(c) 	
      The Optionee is a “reporting issuer” under the securities
      legislation of the provinces of British Columbia and Alberta and is not in
      default of such legislation or any regulation thereunder. No order has
      been issued ceasing or suspending trading or prohibiting the issuance of
      the Etna Shares and no such proceedings are pending or to the knowledge of
      the Optionee, threatened. The Optionee has prepared and filed all
      documents required to be filed by it with securities regulatory
      authorities in connection with its status as a “reporting issuer” as
      required to be filed by it in connection with such status (collectively
      the “ETNA Public Record”) and such documents, as of the date they
      were filed, complied with applicable Laws and did not fail to state a
      material fact required to be stated in order to make the statements
      contained therein not misleading in light of the circumstances in which
      they were made. No material adverse change has occurred in relation to the
      Optionee that is not disclosed in the Etna Public Record and the Optionee
      has not filed any confidential material change reports as part of the Etna
      Public Record that continues to be confidential. The Optionee is not aware
      of any deficiencies in the filing of any documents or reports with any
      securities regulatory authority that would cause it to be placed on the
      list of defaulting reporting issuers maintained by any securities
      regulatory authority.

	 	 	 
	 	(d) 	
      The Etna Shares are listed on the Exchange. The Optionee
      has in all respects complied with Applicable Securities Laws.

	 	 	 
	 	(e) 	
      All data and information relating to the Optionee
      provided by the Optionee, at the request of the Optionors and its agents
      and representatives, to the Optionors and their respective agents and
      representatives in connection with the Transaction was and is complete and
      true and correct in all material respects.

	 	 	 
	 	(f) 	
      The Optionee is not indebted to any director, officer,
      employee, shareholder or consultant of the Optionee.

	 	 	 
	 	(g) 	
      All Tax Returns required to be filed by or with respect
      to the Optionee have been filed within the prescribed time, with the
      appropriate tax authorities and all such Tax Returns are true, correct,
      and complete in all material respects. No Tax Return of the Optionee is
      being audited by the relevant taxing authority, and there are no
      outstanding waivers, objections, extensions, or comparable consents
      regarding the application of the statute of limitations or period of
      reassessment with respect to any Taxes or Tax Returns that have been given
      or made by the Optionee (including the time for filing of Tax Returns or
      paying Taxes) and the Optionee has no pending requests for any such
      waivers, extensions, or comparable consents. The Optionee has not received
      a ruling from any taxing authority or signed an agreement with any taxing
      authority that could reasonably be expected to have a Material Adverse
      Effect on the Optionee. The Optionee







- 8 - 

	 		
      does not owe any Taxes to the federal government, a
      provincial government, a municipal government or any other governmental
      authority.

	 	 	 
	 	(h) 	
      All material contracts, agreements, leases and
      commitments that name the Optionee are valid, binding and in full force
      and effect as to the Optionee, and the other parties thereto (to the
      Optionee’s knowledge) and the Optionee is not in breach or violation of,
      or default under, the terms of any such contract, agreement, plan, lease
      or commitment, except where such breach, violation or default would not
      have a Material Adverse Effect on the Optionee, and no event has occurred
      which constitutes or, with the lapse of time or the giving of notice, or
      both, would constitute, such a breach, violation or default by the
      Optionee or, to the Optionee’s knowledge, the other parties
  thereto.

	 	 	 
	 	(i) 	
      The Etna Assets are owned legally and beneficially by the
      Optionee with good and marketable title thereto, free and clear of all
      Liens whether contingent or absolute, except as provided for herein or in
      the Etna Public Record. The Optionee has good and marketable title to, the
      Etna Assets.

	 	 	 
	 	(j) 	
      The Optionee has all necessary and required licenses,
      permits, consents, concessions and other authorizations of governmental,
      regulatory or administrative agencies or authorities, whether foreign,
      federal, provincial, or local, required to own and lease its properties
      and assets and to conduct its business as now conducted, except where the
      failure to hold the foregoing would not have a Material Adverse Effect on
      the Optionee. The Optionee is not in default, nor has it received any
      notice of any claim or default with respect to any such license, permit,
      consent, concession or authorization. No registrations, filings,
      applications, notices, transfers, consents, approvals, audits,
      qualifications, waivers or other action of any kind is required by virtue
      of the execution and delivery of this Agreement, or of the consummation of
      the transactions contemplated hereby: (a) to avoid the loss of any
      license, permit, consent, concession or other authorization or any asset,
      property or right pursuant to the terms thereof, or the violation or
      breach of any Law applicable thereto, or (b) to enable the Optionee to
      hold and enjoy the same immediately after the Closing Date in the conduct
      of its business as conducted prior to the Closing Date.

	 	 	 
	 	(k) 	
      The Optionee is not in default under, or in violation of,
      and has not violated (and failed to cure) any Law including, without
      limitation, laws relating to the issuance or sale of securities, privacy
      and intellectual property, or any licenses, franchises, permits,
      authorizations or concessions granted by, or any judgment, decree, writ,
      injunction or order of, any governmental or regulatory authority,
      applicable to its business or any of its properties or assets, except
      where such default or violation would not have a Material Adverse Effect
      on the Optionee. The Optionee has not received any notification alleging
      any material violations of any of the foregoing with respect to which
      adequate corrective action has not been taken.

	 	 	 
	 	(l) 	
      There is no suit, claim, action, proceeding,
      investigation pending or, to the knowledge of the Optionee, threatened
      against or affecting the Optionee, or any of







- 9 -

	 		
      its assets or properties, or any officer or director
      thereof in his capacity as an officer or director thereof.

	 	 	 
	 	(m) 	
      The Optionee is in compliance with all regulatory orders,
      directives and decisions that have application to the Optionee except
      where such non-compliance would not have a Material Adverse Effect on the
      Optionee and the Optionee has not received notice from any governmental or
      regulatory authority that the Optionee is not in compliance with any such
      regulatory orders, directives or decisions.

	 	 	 
	 	(n) 	
      Except as disclosed in the Etna Public Record, the
      Optionee has not made any payment or loan to, or has borrowed any monies
      from or is otherwise indebted to, any officer, director, employee,
      shareholder or any other Person with whom the Optionee is not dealing at
      arm’s length (within the meaning of the Income Tax Act) or any Affiliate
      of any of the foregoing.

	 	 	 
	 	(o) 	
      Except as disclosed in the Etna Public Record, the
      Optionee is not a party to any contract or agreement with any officer,
      director, employee, shareholder or any other Person with whom the Optionee
      is not dealing at arm’s length (within the meaning of the Income Tax Act)
      or any Affiliate of any of the foregoing.

	 	 	 
	 	(p) 	
      The execution and delivery by the Optionee of this
      Agreement and any other agreement contemplated by this Agreement will
      result in legally binding obligations of the Optionee enforceable against
      the Optionee in accordance with the respective terms and provisions hereof
      and thereof subject, however, to limitations with respect to enforcement
      imposed by law in connection with bankruptcy or similar proceedings and to
      the extent that equitable remedies such as specific performance and
      injunction are in the discretion of the court from which they are
      sought.

	 	 	 
	 	(q) 	
      The Optionee has not incurred any liabilities or
      obligations whatever (whether direct, indirect, accrued, contingent,
      absolute, secured or unsecured or otherwise) affecting or related to its
      business, including liabilities as mortgagor, guarantor or surety or
      otherwise for debts or the obligations of others and tax liabilities due
      or to become due. There is no basis for any material claim against the
      properties or the Etna Assets, and the Optionee has no creditors or
      agreement with another third party whose prior consent might be required
      for the transactions hereunder.



2.3            
The Optionors represent and warrant to the Optionee that: 

	 	(a) 	
      At the Closing Date, each Optionor will have the capacity
      to own the Company Shares owned by him as set out in Schedule A and each
      Optionor has the capacity to enter into this Agreement and to perform his
      obligations under this Agreement.

	 	 	 
	 	(b) 	
      This Agreement and any other agreement contemplated by
      this Agreement have been duly authorized, executed and delivered by each
      Optionor and will result in legally binding obligations of such Optionor
      enforceable against such Optionor in accordance with the respective terms
      and provisions hereof and thereof subject, however, to limitations with
      respect to enforcement imposed by Law in







- 10 -

	 		
      connection with bankruptcy or similar proceedings and to
      the extent that equitable remedies such as specific performance and
      injunction are in the discretion of the court from which they are
      sought.

	 	 	 	 
	 	(c) 	
      The execution and delivery of this Agreement, the
      transfer of the Company Shares owned by him and the performance,
      observance or compliance with the terms of this Agreement by such Optionor
      will not violate, constitute a default under, conflict with, or give rise
      to any requirement for a waiver or consent under:

	 	 	 	 
	 		(i) 	
      any provision of any agreement, instrument or other
      obligation to which such Optionor is a party or by which such Optionor is
      bound; or

	 	 	 	 
	 		(ii) 	
      any Laws applicable to such Optionor.

	 	 	 	 
	 	(d) 	
      At the Closing Date, each Optionor will be the registered
      and beneficial owner of the Company Shares set out beside his name in
      Schedule A, free and clear of any Liens, except those restrictions on
      transfer arising under the Company’s Charter. Upon the completion of the
      Closing, except for the rights of the Optionee pursuant to this Agreement
      with respect to the Company Shares, there will be no outstanding options,
      calls or rights of any kind binding on any Optionor relating to or
      providing for the purchase, delivery or transfer of any of his Company
      Shares.

	 	 	 	 
	 	(e) 	
      Harold Gardner is the only Optionor who is a U.S. Person
      (as such term is defined in Regulation S of the 1933 Act) and besides
      Harold Gardner, none of the other Optionors are acquiring the Etna Shares
      for the account or benefit of, directly or indirectly, any U.S.
    Person.



2.4            
The Key Personnel and the Company represent and warrant to the Optionee that:


	 	(a) 	
      At the Closing Date, all of the Company Shares will be
      duly authorized and validly issued and outstanding as fully paid and
      non-assessable. None of the Company Shares will be issued in violation of
      any Laws, the Company’s Charter or organizational documents, or any
      agreement to which the Company will be a party or by which it will be
      bound.

	 	 	 
	 	(b) 	
      At the Closing Date, the Company Shares will have been
      duly authorized by all necessary corporate or other action on the part of
      the Company, as applicable.

	 	 	 
	 	(c) 	
      At the Closing Date, the Optionors, as listed in Schedule
      A to this Agreement, will be the only registered and beneficial holders of
      the Company Shares.

	 	 	 
	 	(d) 	
      At the Closing Date, Rene Ramirex, Harold Gardner and
      Federico Diaz will be the sole directors and officers of the
    Company.

	 	 	 
	 	(e) 	
      At the Closing Date, the Company will have no
      Subsidiaries or any other material investments in any other
  Person.







- 11 -

	 	(f) 	
      All data and information relating to the Assets provided
      by the Company and the Optionors, at the request of the Optionee and its
      agents and representatives, to the Optionee and its agents and
      representatives in connection with this Agreement will be complete and
      true and correct in all material respects.

	 	 	 
	 	(g) 	
      The Company has the capacity, right, authority and power
      to enter into this Agreement and each agreement, document and instrument
      to be executed and delivered by the Company pursuant to this Agreement and
      to carry out the Transaction and other transactions contemplated hereby or
      thereby. The execution, delivery and performance by the Company of this
      Agreement and each such other agreement, document and instrument
      contemplated herein have been duly authorized by all necessary action of
      the Company and no other action on the part of the Company is required in
      connection therewith. The execution, delivery and performance by the
      Company and the Optionors of this Agreement and each such other agreement,
      document and instrument contemplated herein does not and will not require
      the authorization, approval or consent of, or any filing with any
      governmental authority or agency or any other Person, and the execution,
      delivery and performance by the Company of this Agreement and each such
      other agreement, document and instrument contemplated herein, does not and
      will not result in (i) a breach of or conflict with the Charter or
      organizational documents of the Company; (ii) a breach of or a conflict
      with any Laws, order, judgment, injunction, license or permit applicable
      to the Company; (iii) a breach of, constitute a default under, accelerate
      any obligation under, or give rise to a right of termination of any
      indenture, agreement, contract, instrument, Lien, lease, permit,
      authorization, order, writ, judgment, injunction, decree, determination or
      arbitration award to which the Company is a party or by which the property
      of Company is bound or affected; (iv) result in the creation or imposition
      of any Lien on any equity interest in the Company; or (v) result in the
      dissolution or winding- up of the Company.

	 	 	 
	 	(h) 	
      At the Closing date, and except as contemplated herein,
      there will be no agreements, options, warrants, rights of conversion or
      other rights binding upon or which at any time in the future may become
      binding upon the Company, to issue any Company Shares or securities
      convertible or exchangeable, directly or indirectly, into any Company
      Shares.

	 	 	 
	 	(i) 	
      At the Closing Date, and except for the provisions of
      Applicable Securities Laws, to the knowledge of the Company and the Key
      Personnel, there will be no agreements or restrictions which in any way
      will limit or restrict the transfer to the Optionee of any of the Company
      Shares and, at the Closing Date, there will be no shareholders agreements,
      pooling agreements, voting trusts or other agreements or understandings
      with respect to the voting of the Company Shares or any of them.

	 	 	 
	 	(j) 	
      At the Closing Date, there will be no loans or other
      liabilities of the Company to the Optionors.

	 	 	 
	 	(k) 	
      At the Closing Date:







- 12 -

	 	(i) 	
      all returns, declarations, reports, estimates,
      statements, schedules or other information or documents with respect to
      Taxes (collectively, “Tax Returns”) required to be filed by or with
      respect to the Company will have been filed within the prescribed time,
      with the appropriate tax authorities and all such Tax Returns will be
      true, correct, and complete in all material respects;

	 	 	 
	 	(ii) 	
      no Tax Return of the Company will be in the process of
      being audited by the relevant taxing authority, and there will be no
      outstanding waivers, objections, extensions, or comparable consents
      regarding the application of the statute of limitations or period of
      reassessment with respect to any Taxes or Tax Returns that will have been
      given or made by the Company (including the time for filing of Tax Returns
      or paying Taxes);

	 	 	 
	 	(iii) 	
      the Company will have no pending requests for any such
      waivers, extensions, or comparable consents;

	 	 	 
	 	(iv) 	
      the Company will not have received a ruling from any
      taxing authority or signed an agreement with any taxing authority that
      could reasonably be expected to have a Material Adverse Effect on the
      Company; and

	 	 	 
	 	(v) 	
      the Company will not owe any Taxes to the government of
      Mexico, a state government, a municipal government or any other
      governmental authority.




	 	(l) 	
      At Closing, all material contracts, agreements, leases
      and commitments entered into by the Company are set out in Schedule
    E.

	 	 	 
	 	(m) 	
      At Closing, all contracts, agreements, leases and
      commitments set out in Schedule E will be valid, binding and in full force
      and effect, and the other parties thereto (to the knowledge of the Company
      and the Key Personnel) and the Company will not be in breach or violation
      of, or default under, the terms of any such contract, agreement, plan,
      lease or commitment, except where such breach, violation or default would
      not have a Material Adverse Effect on the Company or the Assets and no
      event will have occurred which will constitute or, with the lapse of time
      or the giving of notice, or both, would constitute, such a breach,
      violation or default by the Company or, to the knowledge of the Company or
      the Key Personnel, the other parties thereto.

	 	 	 
	 	(n) 	
      The Assets are currently owned legally and beneficially
      by the Company with good and marketable title thereto, free and clear of
      all Liens whether contingent or absolute. The Assets include all assets
      necessary for the conduct of the business of the Company as currently
      conducted and currently proposed to be conducted with respect to the
      Assets.

	 	 	 
	 	(o) 	
      The Company has all necessary, required or applicable
      licenses, permits, consents, concessions and other authorizations of
      governmental, regulatory or administrative agencies or authorities,
      whether foreign, federal, provincial, state or local, required to own the
      Assets. The Company is not in default, nor has
it







- 13 -

	 		
      received any notice of any claim of default, with respect
      to any such license, permit, consent, concession or authorization. On the
      Closing Date, no registrations, filings, applications, notices, transfers,
      consents, approvals, audits, qualifications, waivers or other action of
      any kind are required by virtue of the execution and delivery of this
      Agreement, or of the consummation of the transactions contemplated hereby:
      (i) to avoid the loss of any license, permit, consent, concession or other
      authorization or any asset, property or right pursuant to the terms
      thereof, or the violation or breach of any Law applicable thereto, or (ii)
      to enable the Company to hold and enjoy the same immediately after the
      Closing Date in the conduct of its business.

	 	 	 
	 	(p) 	
      The Company is not in default under, or in violation of,
      and has not violated (and failed to cure) any Law including, without
      limitation, laws relating to the issuance or sale of securities, the
      environment and occupational health and safety, privacy and intellectual
      property, or any licenses, franchises, permits, authorizations or
      concessions granted by, or any judgment, decree, writ, injunction or order
      of, any governmental or regulatory authority, applicable to its business
      or the Assets, except where such default or violation would not have a
      Material Adverse Effect on the Company or the Assets. The Company has not
      received any notification alleging any violations of any of the foregoing
      with respect to which adequate corrective action has not been
  taken.

	 	 	 
	 	(q) 	
      At the Closing Date, the Company will have no employees
      or independent contractors (other than professional advisors engaged by
      the Company in connection with the Transaction) and there will be no
      agreements, written or oral, between the Company and any other party
      relating to payment, remuneration or compensation for work performed or
      services provided or payment relating to a Change of Control or other
      event in respect of the Company. The Company will be in compliance with
      all applicable Laws respecting labour, employment, fair employment
      practices, work place safety and health, terms and conditions of
      employment, and wages and hours. There will be no charges of employment
      discrimination or unfair labour practices pending or threatened and, to
      the knowledge of the Company and the Key Personnel, there will exist no
      valid basis for any such claim. There will be no pending claims,
      complaints or charges that will have been filed against the Company under
      any labour or employment laws or dispute resolution procedure (including,
      but not limited to, any arbitration or similar proceedings) of which the
      Company will have received written notice. The Company will not have
      received any written notice indicating that any employment policies or
      practices referable to the Company are being audited or investigated by
      any federal, provincial, state or local government agency.

	 	 	 
	 	(r) 	
      There is no suit, claim, action, proceeding or, to the
      knowledge of the Company or the Key Personnel, investigation pending or
      threatened against or affecting the Company, relevant to the Assets, or
      against any director or officer of the Company in his capacity as director
      or officer thereof which could reasonably be expected to result in a
      material liability to the Company with respect to the Assets or which
      could result in criminal liability or any quasi-criminal or
      administrative







- 14 -

	 		
      penalty, or delay or prevent the consummation of the
      transactions contemplated hereby, at law or in equity or before any
      governmental authority or instrumentality or before any arbitrator of any
      kind.

	 	 	 
	 	(s) 	
      At the Closing Date, the Company will not have any
      employee benefit plans (or any plan which may be in any way regarded as an
      employee benefit plan).

	 	 	 
	 	(t) 	
      At the Closing Date, the Company will not have any
      inventory of any nature whatsoever.

	 	 	 
	 	(u) 	
      At the Closing Date, the Company’s head office will be
      located at the address on page one of this Agreement and, aside from their
      counsel’s office, such address is the only location where the company
      books and records are or will be located.

	 	 	 
	 	(v) 	
      At the Closing Date, the corporate records of the Company
      will contain complete and accurate records in all material respects of all
      meetings and consents in lieu of meetings of the Company directors and the
      Optionors since the formation of the Company, and of all actions,
      decisions and consents thereof. Except as reflected in such corporate
      records, there will be no material minutes of meetings or consents in lieu
      of meetings of the Company directors and the Optionors or actions,
      decisions or consents thereof. As it concerns the Assets, the corporate
      records of the Company contain complete and accurate records in all
      material respects of all meetings and consents in lieu of meetings of the
      Company directors and Optionors, and of all actions, decisions and
      consents thereof. Except as reflected in such corporate records, there are
      no material minutes of meetings or consents in lieu of meetings of the
      Company directors and Optionors or actions, decisions or consents thereof
      with respect to the Assets.

	 	 	 
	 	(w) 	
      At the Closing Date, there will not be any
      non-competition, exclusivity or other similar agreement, commitment or
      understanding in place, whether written or oral, to which the Company will
      be a party or will otherwise be bound that would now or hereafter, in any
      way, limit the business, use of assets or operations of the
  Assets.

	 	 	 
	 	(x) 	
      The Company is in compliance with all regulatory orders,
      directives and decisions that have application to the Company, except
      where such non-compliance would not have a Material Adverse Effect on the
      Company and the Company has not received notice from any governmental or
      regulatory authority that the Company is not in compliance with any such
      regulatory orders, directives or decisions.

	 	 	 
	 	(y) 	
      With respect to the Assets, the Company has not incurred
      any liability under, nor has the Company ever violated, any Environmental
      Law, except where such violation would not have a Material Adverse Effect
      on the transactions contemplated hereunder. The Company’s ownership of the
      Assets is presently in compliance with all applicable Environmental
      Laws.

	 	 	 
	 	(z) 	
      The execution and delivery by the Company of this
      Agreement and any other agreement contemplated by this Agreement will
      result in legally binding







- 15 -

	 		
      obligations of the Company enforceable against the
      Company in accordance with the respective terms and provisions hereof and
      thereof subject, however, to limitations with respect to enforcement
      imposed by Law in connection with bankruptcy or similar proceedings and to
      the extent that equitable remedies such as specific performance and
      injunction are in the discretion of the court from which they are
      sought.

	 	 	 	 
	 	(aa) 	
      To the knowledge of the Company and the Key
    Personnel:

	 	 	 	 
	 		(i) 	
      except for the rights held by the Company pursuant to the
      CPI JV Agreement, CPI is the sole legal and beneficial owner of all
      interests in the Concessions, and the Assets are free and clear of, and
      from, all liens, security interests, charges and encumbrances (each, an
      “Encumbrance”) and are not subject to any judgment, order or decree
      in any lawsuit or proceeding;

	 	 	 	 
	 		(ii) 	
      CPI holds all permits, licences, consents and authorities
      issued by any government or governmental authority which are necessary in
      connection with the ownership of the Concessions;

	 	 	 	 
	 		(iii) 	
      CPI has good marketable title to the Concessions, which
      have been properly constituted and applied for, all of which are recorded
      in accordance with applicable laws and regulations of the State of Baja
      California and applicable federal laws thereto, and such Concessions are
      in good standing;

	 	 	 	 
	 		(iv) 	
      all required work commitments on the Concessions required
      under applicable laws and regulations have been satisfied by
CPI;

	 	 	 	 
	 		(v) 	
      there is no adverse claim or challenge against or to
      CPI’s ownership of the Concessions nor is there any basis therefor, and
      there are no outstanding agreements or options to acquire or purchase the
      Concessions or any portion thereof and no person or company other than the
      CPI has any proprietary or possessory interest in the Concessions or any
      right whatsoever capable of becoming any of the foregoing;

	 	 	 	 
	 		(vi) 	
      CPI’s ownership of the Concessions is in compliance with,
      is not in default or violation in any material respect under, and CPI has
      not been charged with or received any notice at any time of any material
      violation of any statute, law, ordinance, regulation, rule, decree or
      other applicable regulation in connection with the CPI’s ownership of the
      Concessions;

	 	 	 	 
	 		(vii) 	
      CPI has duly filed all reports and returns required to be
      filed with governmental authorities and has obtained all governmental
      permits and other governmental consents, except as may be required after
      the execution of this Agreement and all of such permits and consents are
      in full force and effect, and no proceedings for the suspension or
      cancellation of any of them, and no investigation relating to any of them,
      is pending or







- 16 -

	 		
      threatened, and none of them will be adversely affected
      by the entry into this Agreement or the consummation of the
      Transaction;

	 	 	 
	 	(viii) 	
      CPI has held the Concessions in material compliance with
      all laws, rules, statutes, ordinances, orders and regulations and CPI has
      not received any notice of any violation thereof, nor is CPI aware of any
      valid basis therefore;

	 	 	 
	 	(ix) 	
      there is no adverse claim or challenge against or to the
      ownership of or title to any part of the Concessions, and there is no
      basis for such adverse claim or challenge which may affect the
      Concessions; and

	 	 	 
	 	(x) 	
      the Concessions are not subject to any mining or other
      royalties or similar charges or levies, including those imposed by any
      federal, state, municipal or local authority.




	 	(bb) 	
      There are no outstanding orders or directions relating to
      environmental matters requiring any work, repairs, construction or
      expenditures with respect to the Concessions and the conduct of operations
      related thereto, the Company has not received any notice of the same and
      the Company and the Key Personnel are not aware of any basis on which any
      such orders or directions could be made.

	 	 	 
	 	(cc) 	
      The Company acknowledges that all Exploration Data in its
      possession concerning the Assets and the Concessions has been, or will, by
      the Closing Date, be conveyed to the Optionee.

	 	 	 
	 	(dd) 	
      There are no mine workings or waste dumps or mine
      tailings on the Concessions.



2.5            
The representations, warranties and covenants hereinbefore set out are
conditions on which the Parties have relied in entering into this Agreement and
shall survive the closing of the Transaction for a period of two (2) years from
the Closing Date. 

3.              
OPTION 

3.1            
Subject to receipt of conditional approval from the Exchange, the Optionors
hereby grant to the Optionee the sole and exclusive right and option to acquire
seventy six percent (76%) of the Company Shares held by each of the Optionors as
set out in Column II of Schedule A for the Option Period, in accordance with the
terms of this Agreement (the “Option”). 

3.2            
Prior to the Closing Date, this Agreement is an option only and, except as
specifically provided otherwise, nothing herein contained shall be construed as
obligating the Optionee to do any acts or make any payments hereunder, and any
act or acts or payment or payments as shall be made hereunder shall not be
construed as obligating the Optionee to do any further act or make any further
payment. 




- 17 -

4.              
RIGHT OF ENTRY 

4.1            
Throughout the Option Period, the directors and officers of the Optionee and its
servants, agents and independent contractors, shall have the sole and exclusive
right in respect of the Assets to: 

	 	(a) 	
      enter upon the Concessions;

	 	 	 
	 	(b) 	
      do such exploration, development or other Exploitation
      Work on the Concessions and thereunder as the Optionee in its sole
      discretion may consider advisable; and

	 	 	 
	 	(c) 	
      remove from the Concessions and sell or otherwise dispose
      of Products, but limited only for the purposes of testing and due
      diligence.



5.             
 OBLIGATIONS OF THE COMPANY DURING OPTION PERIOD


5.1            
During the Option Period, the Company shall: 

	 	(a) 	
      maintain the Concessions in good standing by the payment
      of taxes and rentals, and the performance of all other actions which may
      be necessary in that regard and in order to keep such Concessions free and
      clear of all liens and other charges arising from the Company’s activities
      thereon except those at the time contested in good faith by the
      Company;

	 	 	 
	 	(b) 	
      duly record all exploration or other work carried out on
      the Concessions by the Company;

	 	 	 
	 	(c) 	
      permit the Optionee, or their representatives duly
      authorized in writing, to visit and inspect the Concessions at all
      reasonable times and intervals, and data obtained by the Company as a
      result of its operations thereon, provided always that the Optionee or its
      representatives shall abide by the rules and regulations laid down by the
      Company relating to matters of safety and efficiency in its operations
      and, notwithstanding, the Company shall be under no liability to the
      Optionee or its representatives for any personal injury, including death,
      or any damage to property other than such as might be occasioned by or
      through any negligence on the part of the Company, its servants or
      agents;

	 	 	 
	 	(d) 	
      do all work on the Concessions in a good and workmanlike
      fashion and in accordance with all applicable laws, regulations, orders
      and ordinances of any governmental authority;

	 	 	 
	 	(e) 	
      indemnify and save the Optionee harmless in respect of
      any and all costs, claims, liabilities and expenses arising out of the
      Company’s activities on the Concessions;

	 	 	 
	 	(f) 	
      permit the Optionee, at its own expense, reasonable
      access to the results of the work done on the Concessions;
  and







- 18 - 

	 	(g) 	
      deliver to the Optionee, forthwith upon receipt thereof,
      copies of all reports, maps, assay results and other technical data
      compiled by or prepared at the direction of the Company with respect to
      the Concessions.



6.              
EXERCISE OF OPTION 

6.1            
The Option shall be exercised by the Optionee on the Closing Date: 

	 	(a) 	
      by paying the Optionors the amounts set out in Column V
      of Schedule A on the Closing Date;

	 	 	 
	 	(b) 	
      by issuing the Optionors the number of Exchange Shares
      set out in Column III of Schedule A on the Closing Date;

	 	 	 
	 	(c) 	
      by issuing the Optionors the number of Exchange Warrants
      set out in Column IV of Schedule A on the Closing Date; and

	 	 	 
	 	(d) 	
      by satisfying the closing conditions set out in sections
      19, 20 and 21 herein.



6.2            
Once the payments have been made, the Exchange Shares and Exchange Warrants have
been issued and the closing conditions have been satisfied, the Optionee shall
have immediately acquired the irrevocable right to receive seventy six percent
(76%) of the Company Shares held by the Optionors, free and clear of all
charges, encumbrances and claims. 

7.              
EXCHANGE OF SECURITIES 

7.1            
Subject to all of the terms and conditions hereof and in reliance on the
representations and warranties set forth or referred to herein, at the Closing
Date each of the Optionors severally agrees to exchange, transfer and assign all
the Company Shares he will own at the Closing Date, being the number set out
opposite his name in the attached Schedule A, to the Optionee in consideration
of the Optionee’s issuance to such Optionor of that number of Exchange Shares
and Exchange Warrants set out opposite his name in Schedule A. 

7.2            
The Optionors agree to abide by all applicable resale restrictions and hold
periods imposed by Applicable Securities Laws and the Exchange. 

7.3            
The Optionors acknowledge that the Optionee has advised such Optionors and that
the Optionee is relying on an exemption from the prospectus and registration
requirements of the Applicable Securities Laws, and, as a consequence, the
Optionors will not be entitled to certain protections, rights and remedies
available under Applicable Securities Laws, including statutory rights of
rescission or damages, and the Optionors will not receive information that would
otherwise be required to be provided to the Optionors pursuant to Applicable
Securities Laws. 

7.4            
The Optionors who are U.S. Persons acknowledge and agree that the Exchange
Shares and Exchange Warrants will be issued pursuant to a safe harbour from the
prospectus and registration requirements of the 1933 Act. All certificates
representing the Exchange Shares and Exchange Warrants issued on Closing to U.S.
Persons will be endorsed with restricted legends in 




- 19 -

the same form as the following legend pursuant to the 1933 Act
in order to reflect the fact that the Exchange Shares and Exchange Warrants are
restricted securities and will be issued to the Optionors who are U.S. Persons
pursuant to a safe harbour from the registration requirements of the 1933 Act:



  
    
      “NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED
        WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
        STATE, AND WERE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT
        BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
        THE 1933 ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
        SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN ACCORDANCE WITH
        APPLICABLE STATE SECURITIES LAWS.” 

    

  



7.5            
Each Optionor who is a U.S. Person agrees to complete and execute the Accredited
Investor Questionnaire set out on Schedule D attached hereto. Each Optionor
agrees that the representations set out in Schedule D as executed by the
Optionor will be true and complete on the Closing Date. 

7.6            
The Closing shall take place at the offices of Clark Wilson LLP, Vancouver,
British Columbia at the Closing Time on the Closing Date, or as the Parties may
otherwise agree in writing. 

7.7            
Subject to the satisfaction of the conditions to the obligation to close the
transactions contemplated herein set forth in sections 19, 20 and 21: 

	 	(a) 	
      each Optionor shall cause the delivery to the Optionee at
      the Closing Time of instruments evidencing the transfer to the Optionee of
      the Company Shares set out opposite his name in the attached Schedule A
      through instruments of conveyance duly executed and notarized before a
      Mexican Notary Public in accordance with Mexican law; and

	 	 	 
	 	(b) 	
      each Optionor agrees to deliver to the Optionee at the
      Closing Time such reports, undertakings and other documents with respect
      to the Transaction as may be required pursuant to Applicable Securities
      Laws, policy or order of any securities commission, stock exchange or
      other regulatory authority, if any.



7.8            
Subject to compliance with Section 7.7, the Optionee shall deliver to the
Optionors at the Closing Time certificates representing the number of Exchange
Shares and the Exchange Warrants set out opposite their respective names in the
attached Schedule A, provided however that share certificates evidencing
Exchange Shares required to be escrowed by the Exchange, if applicable, may be
delivered to Computershare Trust Co. of Canada as escrow agent in accordance
with the requirements of the Exchange. 




- 20 -

8.             
 NECESSARY CONSENTS 

8.1            
The Company shall use its reasonable efforts to obtain from the Company’s
directors, shareholders and all appropriate federal, state, municipal or other
governmental or administrative bodies such approvals or consents as are required
(if any) to complete the Transaction contemplated herein. 

9.              
ADDITONAL AGREEMENTS 

9.1            
Each of the parties hereto agrees to use its commercially reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement and to
cooperate with each other in connection with the foregoing, including using
commercially reasonable efforts to: 

	 	(a) 	
      obtain all necessary waivers, consents and approvals from
      other parties to material agreements, and other contracts or
      agreements;

	 	 	 
	 	(b) 	
      obtain all necessary consents, approvals, and
      authorizations as are required to be obtained under any federal,
      provincial or foreign law or regulations;

	 	 	 
	 	(c) 	
      defend all lawsuits or other legal proceedings
      challenging this Agreement or the consummation of the transactions
      contemplated hereby;

	 	 	 
	 	(d) 	
      cause to be lifted or rescinded any injunction or
      restraining order or other remedy adversely affecting the ability of the
      parties to consummate the transactions contemplated hereby;

	 	 	 
	 	(e) 	
      effect all necessary registrations and other filings and
      submissions of information requested by governmental
authorities;

	 	 	 
	 	(f) 	
      comply with all provisions of this Agreement;
  and

	 	 	 
	 	(g) 	
      provide such officers’ certificates as may be reasonably
      requested by the other parties hereto in respect of the representations,
      warranties and covenants of a party hereto.



10.            
ACCESS TO INFORMATION 

	 	(a) 	
      Upon reasonable notice, the Company shall afford to the
      Optionee’s directors, officers, counsel, accountants and other authorized
      representatives and advisers complete access (or, where necessary, the
      provision of the information requested), during normal business hours and
      at such other time or times as the parties may reasonably request, from
      the date hereof and until the earlier of the Closing Date and the
      termination of this Agreement, to its properties, books, contracts and
      records as well as to management personnel of the Company as the Optionee
      may require or may reasonably request.







- 21 -

	 	(b) 	
      Upon reasonable notice, the Optionee shall afford to the
      Company’s directors, officers, counsel, accountants and other authorized
      representatives and advisers complete access (or, where necessary, the
      provision of the information requested), during normal business hours and
      at such other time or times as the parties may reasonably request, from
      the date hereof and until the earlier of the Closing Date and the
      termination of this Agreement, to its properties, books, contracts and
      records as well as to management personnel of the Optionee as the Company
      may require or may reasonably request.



11.            
CONDUCT OF BUSINESS OF THE COMPANY 

11.1           The
Company covenants and agrees that, until the earlier of the Closing Date or the
date that this Agreement is terminated, unless the Optionee otherwise consents
in writing (such consent not to be unreasonably withheld or delayed), except as
required by Law or as otherwise expressly permitted or specifically contemplated
by this Agreement: 

	 	(a) 	
      the business of the Company shall be conducted in the
      ordinary course of business and consistent with past practice and the
      Company shall use all commercially reasonable efforts to maintain and
      preserve its business, assets and business relationships;

	 	 	 	 
	 	(b) 	
      the Company shall notify the Optionee of any Material
      Adverse Effect on its business; and

	 	 	 	 
	 	(c) 	
      Except as contemplated herein, the Company shall not
      directly or indirectly:

	 	 	 	 
	 		(i) 	
      issue, sell, pledge, hypothecate, lease, dispose of or
      encumber any Company Shares or other securities or any right, option or
      warrant with respect thereto;

	 	 	 	 
	 		(ii) 	
      amend or propose to amend its Charter;

	 	 	 	 
	 		(iii) 	
      split, combine or reclassify any of its securities or
      declare or make any Distribution or distribute any of its properties or
      assets to any Person;

	 	 	 	 
	 		(iv) 	
      other than in the ordinary course of business, enter into
      or amend any employment contracts with any officer or senior management
      employee, create or amend any employee benefit plan, make any increases in
      the base compensation, bonuses, paid vacation time allowed or fringe
      benefits for its directors, officers, employees or consultants;

	 	 	 	 
	 		(v) 	
      make any capital expenditures, additions or improvements
      or commitments for the same, except in the ordinary course of
    business;

	 	 	 	 
	 		(vi) 	
      enter into any contract, commitment or agreement under
      which it would incur indebtedness for borrowed money or for the deferred
      purchase price of property (other than such property acquired in the
      ordinary course of







- 22 -

	 		
      business), or would have the right or obligation to incur
      any such indebtedness or obligation, or make any loan or advance to any
      Person;

	 	 	 
	 	(vii) 	
      acquire or agree to acquire (by tender offer, exchange
      offer, merger, amalgamation, acquisition of shares or assets or otherwise)
      any Person, partnership, joint venture or other business organization or
      division or acquire or agree to acquire any material assets, except in the
      ordinary course of business;

	 	 	 
	 	(viii) 	
      enter into any contracts, other than in the ordinary
      course of business;

	 	 	 
	 	(ix) 	
      create any option or bonus plan, pay any bonuses,
      deferred or otherwise, or defer any compensation to any of its officers or
      employees;

	 	 	 
	 	(x) 	
      make any material change in accounting procedures or
      practices;

	 	 	 
	 	(xi) 	
      mortgage, pledge, hypothecate or encumber any of the
      Assets or subject them to any Lien;

	 	 	 
	 	(xii) 	
      enter into any agreement or arrangement granting any
      rights to purchase or lease any of the Assets, or requiring the consent of
      any Person to the transfer, assignment or lease of any of the
    Assets;

	 	 	 
	 	(xiii) 	
      engage in any business or other activity that is outside
      of the ordinary course of business that is being currently conducted,
      whether as a partner, joint venture participant or otherwise;

	 	 	 
	 	(xiv) 	
      sell, lease, sublease, assign or transfer (by tender
      offer, exchange offer, merger, amalgamation, sale of shares or assets or
      otherwise) any of the Assets, or cancel, waive or compromise any debts or
      claims, including accounts payable to and receivable from
    Affiliates;

	 	 	 
	 	(xv) 	
      enter into any other material transaction or any
      amendment of any contract, lease, agreement, license or sublicense which
      is material to its business;

	 	 	 
	 	(xvi) 	
      except in the ordinary course of business, settle any
      material outstanding claim, dispute, litigation matter, or tax
    dispute;

	 	 	 
	 	(xvii) 	
      transfer any assets to the Optionors or any of their
      Subsidiaries or Affiliates or assume any Indebtedness from the Optionors
      or any of their Subsidiaries or Affiliates or enter into any other related
      party transactions;

	 	 	 
	 	(xviii) 	
      redeem, purchase or offer to purchase any Company Share
      or other securities;

	 	 	 
	 	(xix) 	
      except in the ordinary course of business, acquire any
      material assets, including but not limited to securities of other
      companies; or







- 23 - 

	 	(xx) 	
      enter into any agreement or understanding to do any of
      the foregoing.



12.            
PAYMENTS TO THE COMPANY 

12.1           The
parties acknowledge and agree that, prior to and immediately following the
execution of this Agreement, the Company will incur certain expenses in
furtherance of the transactions contemplated hereby. In this context, and upon
receipt by the Optionee of a duly executed, notarized and/or recorded copy of
the CPI JV Agreement and the Concessions, the Optionee will: 

	 	(a) 	
      pay a non-refundable sum of US$150,000 to the Company
      upon execution of this Agreement in accordance with wiring instructions to
      be provided by the Company to the Optionee for the repayment of
      outstanding indebtedness owed by the Company;

	 	 	 
	 	(b) 	
      pay a non-refundable sum of US$50,000 to the Company upon
      the Closing Date in accordance with wiring instructions to be provided by
      the Company to the Optionee for the repayment of outstanding indebtedness
      owed by the Company; and

	 	 	 
	 	(c) 	
      pay a non-refundable sum of US$50,000 to the Company upon
      execution of this Agreement and US$25,000 monthly thereafter until the
      earlier of the Closing Date or the date this Agreement is terminated, in
      accordance with wiring instructions to be provided by the Company to the
      Optionee to cover costs relating to outstanding expenses, due diligence,
      legal fees, and other general and administrative expenses of the
      Company.



13.           
 ADDITIONAL PAYMENTS TO THE OPTIONORS 

13.1          
In addition to the consideration required to exercise the Option set out in
section 6 herein, the Optionee will pay the additional sums to the Optionors
following the Closing Date as set out in columns VI, VII and VIII of Schedule A.


14.           
 CONSULTING AGREEMENTS 

14.1           On
the Closing Date, the Company will enter into a consulting agreement with Rene
Ramirez or other person duly appointed by the board of directors of the Company
to act as General Manager of the Company following the Closing Date on terms to
be decided by the Company and the Optionee. 

15.           
 CHANGE OF COMPANY DIRECTORS 

15.1          
On or prior to the Closing Date, the Optionors and the Company will effect the
resignation of two current directors of the Company and will appoint two new
directors on the Closing Date as solely determined and communicated in writing
by the Optionee, which removals and appointments will be effected in accordance
with Mexican law. 




- 24 -

16.           
 PUBLIC ANNOUNCEMENT 

16.1          
Immediately after the execution of this Agreement, the Optionee will issue a
public announcement, announcing the entry into this Agreement, which
announcement shall address all matters required by the Exchange policies and
shall be in form and substance acceptable to the Company, acting in a
commercially reasonable manner. No Party shall issue any news release or public
statements inconsistent with such public announcement. 

17.           
 AMENDMENT TO COMPANY’S CHARTER 

17.1          
On or prior to the Closing Date, the Company will either amend its Charter or
enter into an agreement with the Optionors and the Optionee in accordance with
the laws of Mexico, which amendment or agreement, as applicable, will be
effective upon the Closing Date and will prohibit the issuance of additional
securities in the capital of the Company following the Closing Date, unless such
issuance is approved by ninety percent (90%) of the votes cast by
shareholders of the Company at a duly called shareholders’ meeting or pursuant
to a consent resolution duly signed by all shareholders of the Company. 

18.           
 COMPANY FINANCIAL STATEMENTS 

18.1          
Following the execution of this Agreement, the Company will use its reasonable
commercial efforts to commence preparing financial statements of the Company
prepared in accordance with Canadian GAAP and required by Applicable Securities
Laws which will include: 

	 	(a) 	
      audited annual financial statements for its most recently
      completed financial year end;

	 	 	 
	 	(b) 	
      unaudited annual financial statements for the preceding
      year set out in (a) above;

	 	 	 
	 	(c) 	
      unaudited interim financial statements for any interim
      period completed more than 60 days prior to the Closing Date;
and

	 	 	 
	 	(d) 	
      unaudited pro forma financial statements as at and for
      the periods ended in (a), (b) and (c) above.



18.2           The
parties recognize that Etna will be required to file a Business Acquisition
Report in accordance with Applicable Securities Laws within 75 days of the
Closing Date, which report will include the financial statements of the Company
set out above. 

19.            
MUTUAL CONDITIONS PRECEDENT 

19.1           The
exercise of the Option by the Optionee on the Closing Date shall be subject to
the prior completion of the following mutual conditions: 

	 	(a) 	
      the Exchange will have conditionally accepted the
      Transaction;







- 25 -

	 	(b) 	
      the Exchange Shares to be issued upon the Closing Date,
      and the Etna Shares to be issued upon the due exercise of the Exchange
      Warrants, will have been conditionally accepted for listing by the
      Exchange;

	 	 	 
	 	(c) 	
      there will not be in force any order or decree
      restraining or enjoining the exercise of the Option; and

	 	 	 
	 	(d) 	
      all consents, orders and approvals required, necessary or
      desirable for the completion of the transactions provided for in this
      Agreement shall have been obtained or received from the persons,
      authorities or bodies having jurisdiction in the circumstances, all on
      terms satisfactory to each of the Parties hereto, acting
  reasonably.



19.2           The
Closing of the Transaction will be deemed to mean a waiver of all conditions to
Closing. These conditions precedent may be waived by the Parties hereto. 

20.            
OPTIONORS’ CONDITIONS PRECEDENT 

20.1           The
right of the Optionee to exercise the Option on the Closing Date shall be
subject to the prior completion of the following conditions: 

	 	(a) 	
      the representations and warranties of the Optionee
      contained in this Agreement will have been true and correct as of the date
      of this Agreement and shall be true and correct as of the Closing Date
      with the same force and effect as if such representations and warranties
      had been made on and as of such Closing Date, save and except in any case
      which would not have a Material Adverse Effect on the Optionee;

	 	 	 
	 	(b) 	
      the Optionee will have performed, fulfilled or complied
      with, in all material respects, all of its obligations, covenants and
      agreements contained in this Agreement to be fulfilled or complied with by
      the Optionee at or prior to the Closing Date;

	 	 	 
	 	(c) 	
      the Optionee will deliver or cause to be delivered to the
      Optionors the closing documents as set forth in section 24.1 in a form
      satisfactory to the Optionors acting reasonably;

	 	 	 
	 	(d) 	
      all proceedings to be taken in connection with the
      transactions contemplated in this Agreement will be satisfactory in form
      and substance to the Optionors, acting reasonably, and the Optionors will
      have received copies of all instruments and other evidence as it may
      reasonably request in order to establish the consummation or closing of
      such transactions and the taking of all necessary proceedings in
      connection therewith;

	 	 	 
	 	(e) 	
      this Agreement and all other documents necessary or
      reasonably required to close the Transaction, all in form and substance
      reasonably satisfactory to the Optionors, will have been executed and
      delivered to the Optionors; and







- 26 -

	 	(f) 	
      the Company will have amended its Charter or entered into
      an agreement with the Optionors and the Optionee as contemplated in
      section 17 hereof.



20.2          
The Closing of the Transaction will be deemed to mean a waiver of all conditions
to Closing. These conditions precedent are for the sole benefit of the Optionors
and the Company and may be waived by the Optionors and the Company in their sole
discretion. 

21.           
 OPTIONEE’S CONDITIONS PRECEDENT 

21.1          
The right of the Optionee to exercise the Option on the Closing Date shall be
subject to the prior completion of the following conditions: 

	 	(a) 	
      the representations and warranties of the Optionors, the
      Company and the Key Personnel contained in this Agreement will have been
      true and correct as of the date of this Agreement and shall be true and
      correct as of the Closing Date with the same force and effect as if such
      representations and warranties had been made on and as of such Closing
      Date, save and except in any case which would not have a Material Adverse
      Effect on the Company or the Assets;

	 	 	 
	 	(b) 	
      the Optionors, the Company and the Key Personnel will
      have performed, fulfilled or complied with, in all material respects, all
      of its obligations, covenants and agreements contained in this Agreement
      to be fulfilled or complied with by the Optionors, the Company and the Key
      Personnel at or prior to the Closing Date;

	 	 	 
	 	(c) 	
      the Optionors and the Company will deliver or cause to be
      delivered to the Optionee the closing documents as set forth in section
      23.1 in a form satisfactory to the Optionee acting reasonably;

	 	 	 
	 	(d) 	
      all proceedings to be taken in connection with the
      transactions contemplated in this Agreement will be satisfactory in form
      and substance to the Optionee, acting reasonably, and the Optionee will
      have received copies of all instruments and other evidence as it may
      reasonably request in order to establish the consummation or closing of
      such transactions and the taking of all necessary proceedings in
      connection therewith;

	 	 	 
	 	(e) 	
      this Agreement and all other documents necessary or
      reasonably required to close the Transaction, all in form and substance
      reasonably satisfactory to the Optionee, will have been executed and
      delivered to the Optionee; and

	 	 	 
	 	(f) 	
      the Optionee completing and being reasonably satisfied
      with its due diligence on the Assets and the
Company.



21.2           The
Closing of the Transaction will be deemed to mean a waiver of all conditions to
Closing. These conditions precedent are for the sole benefit of the Optionee and
may be waived by the Optionee in its sole discretion. 




- 27 -

22.           
 CLOSING 

22.1           The
Closing will take place on the Closing Date at the offices of the lawyers for
the Optionee or at such other location as agreed to by the Parties.
Notwithstanding the location of the Closing, each Party agrees that the Closing
may be completed by the exchange of undertakings between the respective legal
counsel for the Parties, provided such undertakings are satisfactory to each
Party’s respective legal counsel. 

23.            
CLOSING DELIVERIES OF THE OPTIONORS 

23.1          
At Closing, the Optionors and the Company will deliver or cause to be delivered
the following, duly executed and in the form and substance reasonably
satisfactory to the Optionee: 

	 	(a) 	
      share certificates evidencing the Company Shares together
      with instruments of conveyance duly executed and notarized before a
      Mexican Notary Public, or as required under Mexican law;

	 	 	 	 
	 	(b) 	
      an opinion of counsel for the Company, dated as at the
      Closing Date and addressed to the Optionee and the Optionee’s counsel, in
      the form and substance satisfactory to the Optionee’s counsel, acting
      reasonably;

	 	 	 	 
	 	(c) 	
      all other information in the possession or control of the
      Optionors or the Company with respect to the Assets and the Company, which
      has not been previously delivered to the Optionee;

	 	 	 	 
	 	(d) 	
      duly executed Questionnaires from all U.S. Persons in the
      form set out in Schedule D;

	 	 	 	 
	 	(e) 	
      duly executed documents evidencing the resignation of two
      current directors of the Company and the appointment of two new directors
      to fill such vacancies as solely determined by the Optionee, in accordance
      with Mexican law;

	 	 	 	 
	 	(f) 	
      a certified copy of the resolutions of the directors of
      the Company approving and authorizing the entry into this Agreement and
      the transactions contemplated herein;

	 	 	 	 
	 	(g) 	
      a certificate of a senior officer of the Company
      attesting that:

	 	 	 	 
	 		(i) 	
      the representations and warranties of the Company are
      true and correct at the Closing Date as if made at that time,

	 	 	 	 
	 		(ii) 	
      all agreements, covenants and conditions required by this
      Agreement to be complied with or performed by the Company on or before the
      Closing Date have been complied with or performed, and

	 	 	 	 
	 		(iii) 	
      all conditions precedent to the obligations of the
      Company contained in this Agreement have been satisfied or
  waived;







- 28 -

	 	(h) 	
      the Company will have entered into the Consulting
      Agreement set out in section 14 herein; and

	 	 	 
	 	(i) 	
      such other closing documents as may be required by the
      Optionee, acting reasonably.



24.           
 CLOSING DELIVERIES OF THE OPTIONEE 

24.1           At
Closing, the Optionee will deliver or cause to be delivered the following, duly
executed and in the form and substance reasonably satisfactory to the Optionors
and the Company: 

	 	(a) 	
      share certificates registered in the name of the
      Optionors representing the Exchange Shares in the amounts set out in
      Schedule A;

	 	 	 	 
	 	(b) 	
      warrant certificates registered in the name of the
      Optionors representing the Exchange Warrants in the amounts set out in
      Schedule A;

	 	 	 	 
	 	(c) 	
      payment of funds to the Optionors in accordance with the
      amounts set out in Schedule A;

	 	 	 	 
	 	(d) 	
      evidence of payment of funds to the Company in accordance
      with section 6;

	 	 	 	 
	 	(e) 	
      evidence of conditional Exchange approval with respect to
      the Transaction;

	 	 	 	 
	 	(f) 	
      a certified copy of the resolutions of the directors of
      the Optionee approving and authorizing the entry into this Agreement and
      the transactions contemplated herein;

	 	 	 	 
	 	(g) 	
      a certificate of a senior officer of the Optionee
      attesting that:

	 	 	 	 
	 		(i) 	
      the representations and warranties of the Optionee are
      true and correct at the Closing Date as if made at that time,

	 	 	 	 
	 		(ii) 	
      all agreements, covenants and conditions required by this
      Agreement to be complied with or performed by the Optionee on or before
      the Closing Date have been complied with or performed, and

	 	 	 	 
	 		(iii) 	
      all conditions precedent to the obligations of the
      Optionee contained in this Agreement have been satisfied or waived;
    and

	 	 	 	 
	 	(h) 	
      such other closing documents as may be required by the
      Optionor, acting reasonably.



25.           
 OBLIGATIONS AND RIGHTS OF THE OPTIONEE DURING OPTION PERIOD


25.1          
During the Option Period, the Company will: 




- 29 -

	 	(a) 	
      maintain, or cause to be maintained, the Concessions in
      good standing by the payment of taxes and rentals, and the performance of
      all other actions which may be necessary in that regard and in order to
      keep such Concessions free and clear of all liens and other charges
      arising from the Company’s activities thereon;

	 	 	 
	 	(b) 	
      permit the Optionee, or its representative duly
      authorized in writing, to visit and inspect the Concessions at all
      reasonable times and intervals, and data obtained by the Company as a
      result of its operations thereon, provided always that the Optionee or its
      representative shall abide by the rules and regulations laid down by the
      Company relating to matters of safety and efficiency in its operations
      and, notwithstanding, the Company shall be under no liability to the
      Optionee or its representative for any personal injury, including death,
      or any damage to property other than such as might be occasioned by or
      through any negligence on the part of the Company, its servants or
      agents;

	 	 	 
	 	(c) 	
      do all work (and will ensure that all work performed by
      the Optionor’s contractors on the Concessions is done) in a good and
      workmanlike fashion and in accordance with all applicable laws,
      regulations, orders and ordinances of any governmental
authority;

	 	 	 
	 	(d) 	
      indemnify and save the Optionee harmless in respect of
      any and all costs, claims, liabilities and expenses arising out of the
      Company’s activities on the Concessions, but the Company shall incur no
      obligation hereunder in respect of claims arising or damages suffered
      after termination of the Option if upon termination of the Option any
      workings on or improvements to the Concessions made by the Company are
      left in a safe condition;

	 	 	 
	 	(e) 	
      permit the Optionee, at its own expense, reasonable
      access to the results of the work done on the Concessions during the last
      completed calendar year; and

	 	 	 
	 	(f) 	
      deliver to the Optionee, forthwith upon receipt thereof,
      copies of all reports, maps, assay results and other technical data
      compiled by or prepared at the direction of the Company with respect to
      the Concessions, as well as regular reports as to the amount of
      expenditures made by the Company.



26.            
COLLECTION OF PERSONAL INFORMATION 

26.1           The
Optionors acknowledge and consent to the fact that the Optionee is collecting
the Optionors’ Personal Information as defined in Schedule G which may be
disclosed by the Optionee to: 

	 	(a) 	
      the Exchange or other securities regulatory
      authorities;

	 	 	 
	 	(b) 	
      the Optionee’s registrar and transfer agent;
and

	 	 	 
	 	(c) 	
      authorities pursuant to the Proceeds of Crime (Money
      Laundering) and Terrorist Financing Act
(Canada).







- 30 -

26.2          
By executing this Agreement, the Optionors are deemed to be consenting to the
foregoing collection, use and disclosure of the Optionors’ personal information
and to the retention of such personal information for as long as permitted or
required by law or business practice. 

26.3          
By executing this Agreement, the Optionors hereby consent to the foregoing
collection, use and disclosure of the Optionors’ personal information. The
Optionors also consent to the filing of copies or originals of any of the
Optionors’ documents described herein as may be required to be filed with the
Exchange or any securities regulatory authority in connection with the
transactions contemplated hereby. An officer of the Optionee is available to
answer questions about the collection of personal information by the Optionee.


27.           
 TERMINATION OF OPTION AND AGREEMENT 

27.1           This
Agreement and the Option may be terminated by mutual written agreement of the
Parties. Unless otherwise agreed in writing by the Parties, this Agreement shall
terminate without further notice or agreement in the event that: 

	 	(a) 	
      by the Optionee giving fifteen (15) days notice of such
      termination to the Optionors and the Company;

	 	 	 
	 	(b) 	
      subject to section 28 hereof, upon the Optionee failing
      to remedy a default as provided herein;

	 	 	 
	 	(c) 	
      the Transaction is rejected by the Exchange and all
      recourse or rights of appeal have been exhausted;

	 	 	 
	 	(d) 	
      upon the Optionee failing to make the payments, issue the
      Exchange Shares and the Exchange Warrants and satisfy the closing
      conditions prior to March 31, 2010, or such later date as may be approved
      in writing by the Parties; or

	 	 	 
	 	(e) 	
      the Closing Date has not occurred prior to March 31,
      2010, or such later date as may be approved in writing by the
    Parties.



28.           
 DEFAULT 

28.1           If
at any time during the Option Period, the Optionee is in default of any material
provision in this Agreement, the Optionors and the Company may terminate this
Agreement, but only if: 

	 	(a) 	
      it shall have first given to the Optionee a notice of
      default containing particulars of the obligation which the Optionee has
      not performed, or the warranty breached; and

	 	 	 
	 	(b) 	
      the Optionee has not, within 30 calendar days following
      delivery of such notice of default, cured such default or commenced
      proceedings to cure such default by appropriate payment or performance,
      the Optionee hereby agreeing that should it







- 31 -

so commence to cure any default it will undertake same to
completion without undue delay. 

28.2          
Should the Optionee fail to comply with the provision of section 28.1, the
Optionors and the Company may thereafter terminate this Agreement by giving
written notice thereof to the Optionee. 

29.            
RESTRICTIVE COVENANTS 

29.1           Until
the earlier of the exercise of the Option or the termination of this Agreement,
neither the Company nor the Optionors will, without the prior written consent of
the Optionee, allow the Concessions to become subject to any Encumbrance of any
nature or kind whatsoever or enter into any agreement (whether written or
verbal) that may result in the creation of any such Encumbrance or otherwise
restrict in any manner whatsoever the exercise of the Option by the Optionee as
contemplated by this Agreement. 

30.           
 NOTIFICATION 

30.1           Between
the date of this Agreement and the exercise of the Option, each of the Parties
to this Agreement will promptly notify the other Party in writing if it becomes
aware of any fact or condition that causes or constitutes a material breach of
any of its representations and warranties as of the date of this Agreement, if
it becomes aware of the occurrence after the date of this Agreement of any fact
or condition that would cause or constitute a material breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period, each Party will promptly notify the other Parties of the occurrence of
any material breach of any of its covenants in this Agreement or of the
occurrence of any event that may make the satisfaction of such conditions
impossible or unlikely. 

31.           
 INDEMNITY 

31.1           The
Key Personnel and the Company covenants and agrees with the Optionee (which
covenant and agreement will survive the execution, delivery and termination of
this Agreement for a period of two years from the Closing Date) to indemnify and
save harmless the Optionee against all liabilities, claims, demands, actions,
causes of action, damages, losses, costs, expenses or legal fees suffered or
incurred by the Optionee, directly or indirectly, by reason of or arising out of
any warranties or representations on the part of the Company or the Key
Personnel herein being untrue. 

31.2           The
Optionee covenants and agrees with the Optionors (which covenant and agreement
will survive the execution, delivery and termination of this Agreement for a
period of two years from the Closing Date) to indemnify and save harmless the
Optionors against all liabilities, claims, demands, actions, causes of action,
damages, losses, costs, expenses or legal fees suffered or incurred by reason of
or arising out of any warranties or representations on the part of the Optionee
herein being untrue. 

31.3           Each
Optionor (which covenant and agreement will survive the execution, delivery and
termination of this Agreement for a period of two years from the Closing Date)
to




- 32 -

severally indemnify and save harmless the Optionee against all
liabilities, claims, demands, actions, causes of action, damages, losses, costs,
expenses or legal fees suffered or incurred by the Optionee, directly or
indirectly, by reason of or arising out of or in connection with: 

	 	(a) 	
      any material breach by such Optionor of or any material
      inaccuracy of any representation or warranty of the Optionor contained in
      Section 2.3 of this Agreement; and

	 	 	 
	 	(b) 	
      any failure of such Optionor to transfer good title of
      its respective Company Shares to the Optionee, free and clear of all Liens
      and Encumbrances.



31.4           Each
Optionor’s and Key Personnel’s aggregate liability to the Optionee for any and
all Losses in respect of any and all causes of action, event, or other
circumstances arising out of this Agreement shall not exceed the following: 

	 	(a) 	
      the aggregate value of the Exchange Shares then held by
      such Optionor (being the Market Price of the Etna Shares) at the time the
      subject Claim is payable (which for greater certainty is after final
      adjudication or settlement) and which were issued to the Optionor pursuant
      to this Agreement (the “Optionor’s Shareholder Exchange Derived
      Securities”); plus

	 	 	 
	 	(b) 	
      with respect to the Optionor’s Shareholder Exchange
      Derived Securities sold by an Optionor to an arm’s length Person through
      normal market transactions, the net proceeds from such sale; or

	 	 	 
	 	(c) 	
      with respect to the Optionor’s Shareholder Exchange
      Derived Securities sold by an Optionor in circumstances other than those
      contemplated in clause (b) of this subsection, the Market Price of such
      Optionor’s Exchange Derived Securities at the time of sale by such
      Optionor.



31.5          
Any liability of the Optionor pursuant to section 31.3 may be settled, at each
Optionor’s option, by the delivery of Exchange Shares duly executed and endorsed
in blank for transfer or accompanied by a duly executed power of attorney duly
endorsed in blank for transfer, and if applicable, with all stock transfer and
any other required documentary stamps affixed (valued in accordance with section
31.4) or the payment of cash. 

31.6           In
no event shall any Optionor have any liability to the Optionee (or the
Optionee’s Affiliates or representatives) hereunder for any consequential,
special or nominal damages or lost profits. 

31.7           Notwithstanding
the forgoing, no Optionor or Key Personnel will be required to indemnify the
Optionee in the event such amount is determined to be less than $5,000 per
Optionor or Key Personnel in accordance with the arbitration procedures set out
in this Agreement and all recourse or rights of appeal have been exhausted. 




- 33 -

32.            
NOTICE OF CLAIM 

32.1           In
the event that a party (the “Indemnified Party”) shall become aware of
any claim, proceeding or other matter (a “Claim”) in respect of which
another party (the “Indemnifying Party”) agreed to indemnify the
Indemnified Party pursuant to this Agreement, the Indemnified Party shall
promptly give written notice thereof to the Indemnifying Party. Such notice
shall specify whether the Claim arises as a result of a claim by a person
against the Indemnified Party (a “Third Party Claim”) or whether the
Claim does not so arise (a “Direct Claim”), and shall also specify with
reasonably particularity (to the extent that the information in available) the
factual basis for the Claim and the amount of the Claim, if known. 

32.2          
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to contest effectively the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses incurred by the Indemnifying Party resulting from the
Indemnified Party’s failure to give such notice on a timely basis. 

33.            
DIRECT CLAIMS 

33.1           With
respect to any Direct Claim during the period from the date of this Agreement to
the date that is two years from the Closing Date, following receipt of notice
from the Indemnified Party of the Claim, the Indemnifying Party shall have 60
days to make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or prior to the expiration of such 60-day period (or any mutually
agreed upon written extension thereof) to the validity and amount of such Claim,
the Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim, failing which the matter shall be referred to
binding arbitration in accordance with the terms of this Agreement. 

34.            
THIRD PARTY CLAIMS 

34.1           With
respect to any Third Party Claim during the period from the date of this
Agreement to the date that is two years from the Closing Date, the Indemnifying
Party shall have the right, at its expense, to participate in or assume control
of the negotiation, settlement or defence of the Claim and, in such event, the
Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified
Party’s out-of-pocket expenses as a result of such participation or assumption.
If the Indemnifying Party elects to assume such control, the Indemnified Party
shall have the right to participate in the negotiation, settlement or defence of
such Third Party Claim and to retain counsel to act on its behalf, provided that
the fees and disbursements of such counsel shall be paid by the Indemnified
Party unless the Indemnifying Party consents to the retention of such counsel or
unless the named parties to any action or proceeding include both the
Indemnifying Party and the Indemnified Party and the representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to the actual or potential differing interests between them
(such as the availability of different




- 34 -

defences), in which case the Indemnifying Party shall pay the
reasonable fees and expenses of one such counsel. If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the Third
Party Claim within a reasonable time, the Indemnified Party shall be entitled to
assume such control, in which case the Indemnifying Party shall pay the
reasonable fees and expenses of one such counsel, and the Indemnifying Party
shall be bound by the results obtained by the Indemnified Party with respect to
such Third Party Claim. If any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable Law or the order of any court,
tribunal or regulatory body having jurisdiction to make a payment to any Person
(a “Third Party”) with respect to the Third Party Claim before the
completion of settlement negotiations or related legal proceedings, as the case
may be, the Indemnified Party may make such payment and the Indemnifying Party
shall, forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for such payment. If the amount of any liability of the
Indemnified Party under the Third Party Claim in respect to of which such
payment was made, as finally determined, is less than the amount which was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party. If such a payment, by resulting in
settlement of the Third Party Claim, precludes a final determination of the
merits of the Third Party Claim and the Indemnified Party and the Indemnifying
Party are unable to agree whether such payment was reasonable in the
circumstances having regard to the amount and merits of the Third Party Claim,
such dispute shall be submitted to arbitration in accordance with the rules of
the American Arbitration Association at its Phoenix, Arizona regional
office, unless such other office is agreed to by the parties. 

35.            
SETTLEMENT OF THIRD PARTY CLAIMS 

35.1           If
the Indemnifying Party fails to assume control of the defence of any Third Party
Claim, the Indemnified Party shall have the exclusive right to contest, settle
or pay the amount claimed. Whether or not the Indemnifying Party assumes control
of the negotiation, settlement or defence of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that the liability of the Indemnifying
Party shall be limited to the proposed settlement amount if any such consent is
not obtained for any reason. 

36.            
CO-OPERATION 

36.1           The
Indemnified Party and the Indemnifying Party shall co-operate fully with each
other with respect to Third Party Claims, and shall keep each other fully
advised with respect thereto (including supplying copies of all relevant
documentation promptly as it become available). 

37.            
EXCLUSIVITY 

37.1           The
provisions of sections 32-37 shall apply to any Claim for breach of any
covenant, representation, warranty or other provision of this Agreement or any
agreement, certificate or other document delivered pursuant hereto (other than a
claim for specific performance or injunctive relief) with the intent that all
such Claims shall be subject to the limitations and other provisions contained
in sections 32-37. 




- 35 -

38.            
CONFIDENTIALITY 

38.1           All
information of the Company as to its business, properties, title, assets and
affairs, including information delivered in oral, electronic or written format,
which (1) has not become generally available to the public, (2) was not
available to the Optionee or its representatives on a non-confidential basis
before the date of this Agreement or (3) does not become available to the
Optionee or its representatives on a non-confidential basis from a person who is
not otherwise bound by confidentiality obligations to the Company with respect
to such information and not otherwise prohibited from transmitting such
information, shall be kept strictly confidential by the Optionee and its
representatives (the “Company Confidential Information”). No Company
Confidential Information may be released to third parties without the consent of
the Company, except that the Company agrees that it will not unreasonably
withhold such consent to the extent that such Company Confidential Information
is compelled to be released by legal process or is required to be released to
regulatory bodies, including, but not limited to, the Exchange, and/or included
in public documents to satisfy the disclosure requirements in order to
consummate the transactions contemplated herein or otherwise. 

38.2          
Similarly, all information of the Optionee as to its business, properties,
title, assets and affairs, including information delivered in oral, electronic
or written format, which (1) has not become generally available to the public,
(2) was not available to the Optionors, the Company or its representatives on a
non-confidential basis before the date of this Agreement or (3) does not become
available to the Optionors, the Company or its representatives on a
non-confidential basis from a person who is not otherwise bound by
confidentiality obligations to the Optionee with respect to such information and
not otherwise prohibited from transmitting such information, shall be kept
strictly confidential by the Optionors, the Company and its representatives (the
“Optionee Confidential Information”). No Optionee Confidential
Information may be released to third parties without the consent of the
Optionee, except that the Optionors and the Company, as applicable, hereto
agrees that it will not unreasonably withhold such consent to the extent that
such Optionee Confidential Information is compelled to be released by legal
process or is required to be released to regulatory bodies, including, but not
limited to, the Exchange, and/or included in public documents to satisfy the
disclosure requirements in order to consummate the transactions contemplated
herein or otherwise.

39.            
NOTICES 

39.1           Any
notice or other communication in connection with this Agreement shall be deemed
to be delivered if in writing (or in the form of a fax) addressed as provided
below: (a) when actually delivered or faxed to said address, or (b) in the case
of a letter, three Business Days shall have elapsed after the same shall have
been deposited in the Canadian mails, postage prepaid and registered or
certified: 

If to the Optionors and the Company, then to the following
address: 

                    Avenida
Ignacio Ramirez 

If to the Optionee then to the following address: 




- 36 -

Etna Resources Inc. 
Suite 110 –
3040 N. Campbell Ave.
Tucson, Arizona USA 85719 
Facsimile: (520) 623-3326


  Attention: Andrew Brodkey 

With a copy (which does not constitute notice) to:

Clark Wilson LLP 
800 – 885 West
Georgia Street
Vancouver, British Columbia 
V6C 3H1 
Fax: (604)
687-6314 

  Attention: Cam McTavish 

or at such other address as the Parties shall have specified by
notice actually received by the addressor. 

40.            
AMENDMENTS AND WAIVERS 

40.1           Except
as otherwise expressly provided herein, any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
if, but only if, such amendment or waiver is in writing and is signed, in the
case of an amendment, by each of the Company, the Optionors and the Optionee, or
in the case of a waiver, by the party against whom the waiver is to be
effective. Any amendment or waiver effected in accordance with this section 40
shall be binding upon the Company, the Optionors and the Optionee pursuant to
this Agreement. 

41.            
CONSENT TO JURISDICTION 

41.1           For
disputes under this Agreement, each of the Company, the Optionors and the
Optionee hereby agrees to exclusively resolve such disputes in accordance with
the dispute resolution services of the American Arbitration Association
at its regional office in Phoenix, Arizona unless such other office is
approved in writing by all parties. 

42.           
 GOVERNING LAW 

42.1           This
Agreement shall be exclusively governed by and construed in accordance with the
laws of the State of Arizona without giving effect to any choice or conflict of
law provision or rule that would cause the application of the domestic
substantive laws of any other jurisdiction, and shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns. 

43.            
FURTHER ASSURANCES 

43.1          
The Company, the Optionors and the Optionee, upon the request of any other party
hereto, whether before or after the Closing, shall do, execute, acknowledge and
deliver or 




- 37 -

cause to be done, executed, acknowledged or delivered all such
further acts, deeds, documents, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably necessary or desirable to effect
complete consummation of the Transaction. 

44.            
TIME 

44.1          
Time is of the essence of this Agreement. 

45.            
ASSIGNMENT 

45.1           This
Agreement may not be assigned by any of the parties hereto. 

46.           
 INDEPENDENT LEGAL ADVICE 

46.1           The
Company and each of the Optionors acknowledges that he or it has obtained
independent legal advice regarding the execution of this Agreement, or has been
advised of his or its respective right to obtain independent legal advice, and
if he or it has not in fact obtained independent legal advice, such party
acknowledges herewith that he or it understands the contents of this Agreement
and that he or it is executing the same voluntarily and without pressure from
the other parties or anyone on their behalf. 

47.            
PUBLIC ANNOUNCEMENT; DISCLOSURE 

47.1           The
Company and the Optionors shall not make any public announcement concerning this
Agreement or the matters contemplated herein, their discussions or any other
memoranda, letters or agreements between the parties relating to the matters
contemplated herein without the prior consent of the Optionee, which consent
shall not be unreasonably withheld, and the Optionee shall not make any public
announcement concerning this Agreement or the matters contemplated herein, its
discussions or any other memoranda, letters or agreements between the parties
relating to the matters contemplated herein without the prior consent of the
Company, which consent shall not be unreasonably withheld, provided that no
party shall be prevented from making any disclosure which is required to be made
by law, the Canadian securities regulatory authorities, or any rules of a stock
exchange or similar organization to which it is bound. 

48.           
 ENTIRE AGREEMENT, COUNTERPARTS, SECTION HEADINGS


48.1           This
Agreement, and the Schedules hereto, sets forth the entire understanding of the
parties hereto with respect to the transactions contemplated hereby and
supersedes any prior written or oral understandings with respect thereto. This
Agreement may be executed by facsimile and in one or more counterparts thereof,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. The headings in this Agreement are for
convenience of reference only and shall not alter or otherwise affect the
meaning hereof. If any provision of this Agreement is or will become illegal,
unenforceable or invalid for any reason whatsoever, such illegal, unenforceable
or invalid provisions will be severable from the remainder of this Agreement and
will not affect the legality, enforceability or validity of the remaining
provisions of this Agreement. 




- 38 - 

49.           
 REGULATORY APPROVAL 

49.1           This
Agreement is subject to regulatory approval, including, without limitation, that
of the Exchange. 

50.           
 CURRENCY 

50.1          
All monetary amounts set out herein are set out in United States currency. 

51.           
 COUNTERPARTS 

51.1          
This Agreement may be executed in any number of counterparts with the same
effect as if all Parties hereto had signed the same document. All counterparts
will be construed together and constitute one and the same agreement. 

52.           
 FAX EXECUTION 

52.1           This
Agreement may be executed by delivery of executed signature pages by fax or
other means of electronic transmission and such execution will be effective for
all purposes. 

[the remainder of the page left intentionally blank]




IN WITNESS WHEREOF the Parties hereto have executed this
Agreement as of the date first written above. 

ETNA RESOURCES INC.


	Per: 	/s/ Andrew Brodkey 	 
	  	Authorized Signatory 	 


 

ESCONDIDAS INTERNACIONAL S.A. de C.V.



	Per: 	/s/ Authorized Signatory 	 
	  	Authorized Signatory 	 



 

	EXECUTED by HAROLD GARDNER in 	) 	  
	the presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Harold Gardner 
	Print Name 	) 	HAROLD GARDNER 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  






- 2 - 

	EXECUTED by FEDERICO DIAZ in the 	) 	  
	presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Federico Diaz 
	Print Name 	) 	FEDERICO DIAZ 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	EXECUTED by CARLOS COTA in the 	) 	  
	presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Carlos Cota 
	Print Name 	) 	CARLOS COTA 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	EXECUTED by RENE RAMIREZ in the 	) 	  
	presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Rene Ramirez 
	Print Name 	) 	RENE RAMIREZ 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  






- 3 -


	EXECUTED by JAIME IBARRA in the 	) 	  
	presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Jaime Ibarra 
	Print Name 	) 	JAIME IBARRA 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  
	  	  	  
	  	  	  
	  	  	  
	  	  	  
	EXECUTED by LUIS CARLOS 	) 	  
	DUARTE in the presence of: 	) 	  
	  	) 	  
	  	) 	  
	Signature 	) 	  
	  	) 	/s/
      Luis Carlos Duarte 
	Print Name 	) 	LUIS CARLOS DUARTE 
	  	) 	  
	Address 	) 	  
	  	) 	  
	  	) 	  
	  	) 	  
	Occupation 	) 	  






SCHEDULE A 

OPTIONORS


	I 
Name and Country of 
Residence
      of 
Optionor 




	II 
Number of 
Company
      Shares 
held on date of 
Agreement
    



	III 
Number of
      
Exchange Shares 
to be received on 
the Closing
      Date 



	IV 
Number of
      
Exchange 
Warrants to be 
received on the
      
Closing Date 


	V 
Cash to be
      
received on 
the Closing 
Date
      



	VI 
Cash to be
      
received on 
the date 
that is 6
      
months 
from the 
Closing 
Date
    	VII 
Cash to be
      
received on 
the date 
that is 12
      
months 
from the 
Closing 
Date
    	VIII 
Cash to be
      
received on 
the date 
that is 18
      
months 
from the 
Closing 
Date
    
	Harold Gardner 
United States 	106 
	2,729,500 
	1,987,500 
	$33,125 
	$132,500 
	$132,500 
	$198,750 

	Federico Diaz 
Mexico 	96 
	2,472,000 
	1,800,000 
	$30,000 
	$120,000 
	$120,000 
	$180,000 

	Carlos Cota 
Mexico 	80 
	2,060,000 
	1,500,000 
	$25,000 
	$100,000 
	$100,000 
	$150,000 

	Rene Ramirez 
Mexico 	106 
	2,729,500 
	1,987,500 
	$33,125 
	$132,500 
	$132,500 
	$198,750 

	Jaime Ibarra 
Mexico 	6 
	154,500 
	112,500 
	$1,875 
	$7,500 
	$7,500 
	$11,250 

	Luis Carlos Duarte 
Mexico 	6 
	154,500 
	112,500 
	$1,875 
	$7,500 
	$7,500 
	$11,250 

	TOTAL 	400 	10,300,000 	7,500,000 	$125,000 	$500,000 	$500,000 	$750,000








SCHEDULE B 

CONCESSIONS




SCHEDULE C

ASSETS 




SCHEDULE D 

ACCREDITED INVESTOR QUESTIONNAIRE 

The Optionor, who is a U.S. Person, covenants, represents and
warrants to the Optionee that it satisfies one or more of the categories of
“Accredited Investors”, as defined by Regulation D promulgated under the 1933
Act, as indicated below: (Please initial in the space provide those categories,
if any, of an “Accredited Investor” which the Optionor satisfies, if
applicable) 

		______ 	Category 1 	
      An organization described in Section 501(c)(3) of the
      United States Internal Revenue Code, a corporation, a Massachusetts or
      similar business trust or partnership, not formed for the specific purpose
      of acquiring the Shares, with total assets in excess of US $5,000,000;
    

	 	 	  	
       

		______ 	Category 2 	
      A natural person whose individual net worth, or joint net
      worth with that person's spouse, on the date of purchase exceeds US
      $1,000,000; 

	 	 	  	
       

		______ 	Category 3 	
      A natural person who had an individual income in excess
      of US $200,000 in each of the two most recent years or joint income with
      that person's spouse in excess of US $300,000 in each of those years and
      has a reasonable expectation of reaching the same income level in the
      current year; 

	 	 	  	
       

		______ 	Category 4 	
      A "bank" as defined under Section (3)(a)(2) of the 1933
      Act or savings and loan association or other institution as defined in
      Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary
      capacity; a broker dealer registered pursuant to Section 15 of the
      Securities Exchange Act of 1934 (United States); an insurance
      company as defined in Section 2(13) of the 1933 Act; an investment company
      registered under the Investment Company Act of 1940 (United States)
      or a business development company as defined in Section 2(a)(48) of such
      Act; a Small Business Investment Company licensed by the U.S. Small
      Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958 (United States); a plan with total
      assets in excess of $5,000,000 established and maintained by a state, a
      political subdivision thereof, or an agency or instrumentality of a state
      or a political subdivision thereof, for the benefit of its employees; an
      employee benefit plan within the meaning of the Employee Retirement
      Income Security Act of 1974 (United States) whose investment
      decisions are made by a plan fiduciary, as defined in Section 3(21) of
      such Act, which is either a bank, savings and loan association, insurance
      company or registered investment adviser, or if the employee benefit plan
      has total assets in excess of $5,000,000, or, if a self- directed plan,
      whose investment decisions are made solely by persons that are accredited
      investors; 

	 	 	  	
       

		______ 	Category 5 	
      A private business development company as defined in
      Section 202(a)(22) of the Investment Advisers Act of 1940 (United
      States); 

	 	 	  	
       

	 	______	Category 6 	
      A director or executive officer of Etna;
  







- 2 - 

	 	______	Category 7 	
      A trust with total assets in excess of $5,000,000, not
      formed for the specific purpose of acquiring the Shares, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2)(ii)
      under the 1933 Act; or 

	 	 	  	
      

	 	______	Category 8 	
      An entity in which all of the equity owners satisfy the
      requirements of one or more of the foregoing categories.




Note that Optionors claiming to satisfy one of the above
categories of Accredited Investor may be required to supply the Optionee with a
balance sheet, prior years’ federal income tax returns or other appropriate
documentation to verify and substantiate the Optionor’s status as an Accredited
Investor. 

If the Optionor is an entity which initialled Category 8 in
reliance upon the Accredited Investor categories above, state the name, address,
total personal income from all sources for the previous calendar year, and the
net worth (exclusive of home, home furnishings and personal automobiles) for
each equity owner of the said entity:

________________________________________________________________________


The Optionor hereby certifies that the information contained in
this Certificate is complete and accurate and the Optionor will notify the
Optionee promptly of any change in any such information. If this Certificate is
being completed on behalf of a corporation, partnership, trust or estate, the
person executing on behalf of the Optionor represents that it has the authority
to execute and deliver this Certificate on behalf of such entity. 

All undefined terms herein shall have the meanings set out in
the Agreement. 

IN WITNESS WHEREOF, the undersigned Optionor has executed this
Certificate as of the ______day of ________________, 200__. 

	If a Corporation, Partnership or Other Entity: 	 	If an Individual: 
	 	 	 
	 	 	 
	Print or Type Name of Entity 	 	Signature 
	 	 	 
	 	 	 
	Signature of Authorized Signatory 	 	Print or Type Name 
	 	 	 
	 	 	 
	Type of Entity 	 	Social Security/Tax I.D. Number 
	 	 	 
	 	 	 
	Address 	 	Address 
	 	 	 
	 	 	 
	 	 	 






SCHEDULE E

MATERIAL CONTRACTS – COMPANY




SCHEDULE F


FORM OF EXCHANGE WARRANT




SCHEDULE G 

PERSONAL INFORMATION 

 

APPENDIX 6A 
ACKNOWLEDGEMENT – PERSONAL INFORMATION 

TSX Venture Exchange Inc. and its affiliates, authorized
agents, subsidiaries and divisions, including the TSX Venture Exchange
(collectively referred to as “the Exchange”) collect Personal Information in
certain Forms that are submitted by the individual and/or by an Issuer or
Applicant and use it for the following purposes: 

	
  to conduct background checks, 

  
	
  to verify the Personal Information that has been provided about each
  individual, 

  
	
  to consider the suitability of the individual to act as an officer,
  director, insider, promoter, investor relations provider or, as applicable, an
  employee or consultant, of the Issuer or Applicant, 

  
	
  to consider the eligibility of the Issuer or Applicant to list on the
  Exchange, 

  
	
  to provide disclosure to market participants as to the security holdings of
  directors, officers, other insiders and promoters of the Issuer, or its
  associates or affiliates, 

  
	
  to conduct enforcement proceedings, and 

  
	
  to perform other investigations as required by and to ensure compliance
  with all applicable rules, policies, rulings and regulations of the Exchange,
  securities legislation and other legal and regulatory requirements governing
  the conduct and protection of the public markets in Canada. 



As part of this process, the Exchange also collects additional
Personal Information from other sources, including but not limited to,
securities regulatory authorities in Canada or elsewhere, investigative, law
enforcement or self-regulatory organizations, regulations services providers and
each of their subsidiaries, affiliates, regulators and authorized agents, to
ensure that the purposes set out above can be accomplished.

The Personal Information the Exchange collects may also be
disclosed: 

	(a) 	
      to the agencies and organizations in the preceding
      paragraph, or as otherwise permitted or required by law, and they may use
      it in their own investigations for the purposes described above;
  and

	 	 
	(b) 	
      on the Exchange’s website or through printed materials
      published by or pursuant to the directions of the
  Exchange.



The Exchange may from time to time use third parties to process
information and/or provide other administrative 
services. In this regard,
the Exchange may share the information with such third party service
providers.