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MINING LEASE

This Agreement made and entered into this 26tday of
April, 2001, by and between MRS. VIRGINIA KNIGHT (hereafter referred to as
LESSOR), and GOLDEN QUEEN CO., NC. a California corporation, jointly and
severally, (hereafter LESSEE).

|1. | Description of
      Property.    LESSOR is the owner of certain
      real property in Kern County, California, and more particularly described
      in Exhibit A attached hereto.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                       
|2. | Grant of Lease.                                                                                                                                                                       
|   |                                                                                                                                                                                       
|   | 2.1.                                                                                                                                                                                  
|   |                                                                                                                                                                                       
|   | 2.2.                                                                                                                                                                                  

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| | 2.3. | Term of Lease.  
      The term of this Mining Lease shall be for twenty (15) years from and
      after the date of this lease and for so long thereafter as LESSEE is in
      production on properties located within a one (1) mile radius of the
      LEASED PROPERTY. For purposes of this paragraph, production shall be
      defined as the processing of in excess of 10,000 tons of ore per year. LES
      SEE may terminate this Lease at any time by delivery to LESSOR of a
      quitclaim deed to the LEASED PROPERTY, provided that LESSEE is not then in
      default under the terms of this lease.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Royalties and Consideration.
|-- | ----------------------------
|   |                             
|   | 3.1.                        

Upon execution of this
      agreement
    
    $
    10,000.00On the last day of each
      calendar quarter beginning April 30, 2004, or when the Company secures
      production financing reasonably acceptable to the Company whichever is
      sooner.
    
    $
    2,500.00


| | 3.2. | Production Royalties. A production royalty to reflect a
      sliding scale royalty equal to Net Smelter Return (NSR) during a calendar
  quarter multiplied by Royalty Rate as defined hereafter:
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                   
| |      | 3.2.1.                                                                                                                                                                                            

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| | 3.2.2. | NSR per Ton of Ore Production (NSRPT) is defined as the
      NSR divided by the tons of Ore produced during the corresponding calendar
      quarter and adjusted for inflation. The inflation factor shall be
      determined from the U.S. Government Consumer Price Index for all urban
      consumers (all items) or, if no longer issued, a corresponding government
      issued statistic. The factor is to be applied so as to reflect the April
      1, 2001 value of the U.S. dollar:
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |        | For example, assuming that (a) in the third quarter 2002,
      the production is 500,000 tons of Ore and the NSR is $6,500,000, and (b)
      CPI in the third quarter of 2002 is 460 and on April 1, 2001 is 405, then
      the NSRPT is                                                                                                                                                                                                                                                            

| | $6,500,000           
      X           
      405     
      =             
      $1l.445/ton  of   ore
| | --------------------------------------------------------------------------------------------------------
| | 500,000
      tons                          460                                                         

| | 3.2.3. | The Royalty Rate utilized to calculate Production
      Royalties shall vary according to the Quality of the Ore (in terms of its
      recovered unit value in dollars per ton, such unit value is a function of
      metal content and price of metal). The Royalty Rate on production derived
      from Ores shall be determined as follows:
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NSR per Ton of Ore Production | Royalty Rate            
|----------------------------- | ------------------------
|(NSRPT)                     | %                       
|                              |                         
|Less than $12.00              | 3%                      
|                              |                         
|From $12.00 to $66.00         | (NSRPT - 12) +3
      12
|                              |                         
|Greater than $66.00           | 7.5%                    

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|   | For example, if NSRPT is determined to
    be $11,445, the Royalty Rate of ore production would be | (11.445 - 12) +3 = 3%
|-- | -------------------------------------------------------------------------------------------------- | ---------------------
|12

| | 3.2.4. | Rock Production Royalty. The royalty on every ton of Rock
      material produced from the Premises and sold (with Payment received by
      Lessee) shall be $0.10. For purposes of the Mining Lease, Rock material
      shall be defined as Non-Ore Minerals mined to allow for mining of Ore or
      mined separately, and material remaining after processing Ore and removing
      recoverable metals. Also for purposes of this Mining Lease, Ore shall be
      defined as Minerals owned an processed for metal content, and Minerals
      shall mean any and all minerals and rocks occurring in, on, and under the
      Premises.
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.3. | Manner of Payment.All minerals mined, removed and
      extracted from the LEASED PROPERTY shall be sold under the name of LESSEE
      and a royalty settlement sheet accounting from such transactions shall be
      furnished to LESSOR on or before the twenty-fifth (2 5th) day of the next
      succeeding calendar month for all sales made and received during the
      preceding calendar quarter. All production royalty payments, accompanied
      by a settlement sheet required by this lease shall be made to the LESSOR
      monthly at the addresses set forth in Paragraph 7 by mail or personal
      delivery. LESSEE shall receive cumulative credit against production
      royalties for all minimum royalties paid pursuant to this lease agreement
      regardless of the year in which said rental payments are paid and
      production royalties shall not be payable until the production royalty set
      forth in Paragraph 3.2 exceeds the cumulative sums paid by LESSEE pursuant
      to Paragraph 3.1. If the Leased Minerals are sold to, or processed by, a
      smelter or refinery owned, operated, affiliated with or controlled by
      LESSEE, in no event shall the royalties computed herein be less that would
have been paid had the ore been sold to or processed by a major smelter or
refinery not owned, operated affiliated with, or controlled by LESSEE.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|4. | Conduct of Mining
      Operations.
|-- | -----------------------------------

| | 4.1. | General.LESSEE
      shall conduct, and cause all mining activities to be conducted in a
      prudent, workmanlike and miner-like manner in accordance with established
      mining practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 4.2. | Commingling of Ore.LESSEE may commingle ore from the LEASED PROPERTY with ore from other
      properties, either before or after concentration or beneficiation,
      provided that the method and procedures LESSEE uses to commingle the ore
      and to determine the weight and grade of the ore removed from the LEASED
      PROPERTY and of the ore with which it is commingled shall be a method
      recognized by the mining industry and conducted in accordance with
      generally accepted accounting principles. LESSEE shall use that method to
      determine weight and grade and to allocate net returns from the commingled
      ore between the LEASED PROPERTY and the other properties from which the
      other commingled ore was removed and to assure that the share of
      production received by LESSOR is representative of the ore that was
      produced from the LEASED PROPERTY. All such weight, grade and allocation
      calculations by LESSEE shall be done in accordance with generally accepted
      accounting principles and in a manner recognized by the mining industry as
      practical and sufficient at that time. If it is impractical to determine
      which portions of any of the costs and expenses described in Paragraph
      3.2.2 above are directly attributable to ore removed from the LEASED
      PROPERTY, such costs and expenses shall be allocated on a straight-line,
      per-ton basis among all ores that give rise to those expenses, in
      accordance with generally accepted accounting standards.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 4.3. | Cross-Mining Rights. LESSEE is hereby granted the right,
      if it so desires, to mine or remove from the LEASED PROPERTY any ores,
      waste, water and other materials existing therein or
thereon or in any part thereof, through or by means of shafts, openings or pits
which may be sunk or made upon other property owned, controlled, or operated by
or for LESSEE (hereinafter Other Property). LESSEE also may stockpile any
ores, waste, or other materials and/or concentrated products of ores or
materials (collectively Products) from LEASED PROPERTY, or any part thereof,
upon stockpile grounds situated upon such Other Property. In the event LESSEE
stockpiles Products from the LEASED PROPERTY on Other Properties, LESSEE shall
execute or cause to be executed such instruments as LESSOR may reasonably
request in writing to evidence LESSORS royalty interest in
the Products so stockpiled. Any such instrument executed by LESSEE, however,
expressly shall acknowledge LESSEES right to sell the stockpiled Products.
LESSEE also, if it so desires, may use the LEASED PROPERTY and any part thereof
and any shafts, openings, pits and stockpile grounds sunk or made for the
mining, removal and/or stockpiling of any Products from the LEASED PROPERTY
and/or from the Other Property, or for any purpose or purposes connected
therewith, provided, however, that such use of the LEASED PROPERTY does not
prevent or interfere with the mining or removal of ore from the LEASED
PROPERTY.                                                       

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|5. | Records and Books of Account.
|-- | -----------------------------

| | 5.1. | Books of Account.   LESSEE shall keep complete, true and
      proper books and records of account showing all minerals mined and removed
      from the LEASED PROPERTY and recording all sales, transfers, conveyances
      or other dispositions of ores, minerals or other materials taken from the
      LEASED PROPERTY in accordance with generally accepted accounting
      principles. Said books and records shall be open to examination by LESSOR
      or its duly authorized representative during regular business hours and
      shall include any and all documents necessary to establish a gross selling
      price of the ores, minerals or other materials taken from the LEASED
  PROPERTY. LESSOR is hereby granted the right at LESSORS expense to examine and make
      a copy or copies of said books or records or any portion
thereof.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | 5.2. | Inspection. LESSOR or its duly authorized agents shall
      have following advanced notice the right at reasonable times under
      reasonable circumstances to enter upon the LEASED PROPERTY for the purpose
      of inspection operations and work being performed by LESSEE pursuant to
      this lease. Such entry shall be at LESSORS risk and LESSEE shall not be
      liable for injury to LESSOR unless such injury is caused by the willful or
  grossly negligent conduct of LESSEE.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | Protecting from Liens and Taxes.
|-- | --------------------------------
|   |                                 
|   | 6.1.                            
|   |                                 
|   | 6.2.                            

|7. | Notice. Any notices required or
      permitted to be given to LESSOR or LESSEE hereunder shall be considered as
      delivered when received by the parties to whom they shall be directed.
      Notice shall be given by personal delivery or by registered mail, postage
      prepaid and return receipt requested, addressed to the persons and
      addresses given below or to such other person or address as the parties
      may designate by written notice from time to time.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | LESSEE: | Golden Queen Mining Co., Inc.
| | ------- | -----------------------------
| |         | P.O. Box 1030                
| |         | Mojave, CA 93502-1030        
| |         |                              
| | LESSOR: | Mrs. Virginia Knight         
| |         | 540 5. Arden Blvd.           
| |         | Los Angeles, CA 90020        

|   | Changes in the above names and addresses shall be
      effected by sending notice as set forth herein and said change shall be
      effective fifteen (15) days from receipt thereof.                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                       
|8. | Waste and Refuse. LESSEE agrees to dispose of waste and
      refuse from all mining activities conducted pursuant to this lease in
      accordance with good mining practice and in accordance with the provisions
  of applicable ordinances, laws and regulations.
|   |                                                                                                                                                                                                                                                                       
|9. | Insurance.LESSEE shall at its sole cost and expense
      cause to be issued and maintained during the term of this lease or any
      extension thereof the following insurance
coverage:                                                                            

| | 9.1. | Workers Compensation Insurance. LESSEE shall maintain
      workers compensation insurance coverage in accordance with the provision
  of California law.                                                                                                                                                                                                                                                   
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                               
| | 9.2. | Automobile and Comprehensive General Liability Insurance.      LESSEE shall cause to be maintained during the term of this agreement
      automobile liability and comprehensive general liability coverage with
      broad form endorsements in a amount of not less than One Million Dollars
      ($1,000,000.00) in insurance companies qualified to do insurance business
  in the State of California.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                               
| | 9.3. | Certificates of Insurance. LESSEE shall promptly furnish
      to LESSOR certificates of insurance for all types of insurance applicable
      under this lease, which certificates shall provide that the insurance
      described therein may not be canceled, restrictively modified or
      terminated except upon not less than thirty (30) days prior written notice
  delivered to LESSOR.           

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|10. | Compliance with Laws.  
      LESSEE shall conduct and cause to be conducted all mining activities in
      full compliance with the applicable laws of the State of California and
      the United States of America.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                        
|11. | Title.                                                                                                                                                                                                                 

| | 11.1. | LESSOR warrants the LESSOR is the owner of an undivided
      full interest to the LEASED PROPERTY and that there are no defects in its
      title to said percentage which would affect LESSORS right to possession
      and use pursuant to the terms of this lease. LESSOR warrants and
      represents that title to the LEASED PROPERTY is vested in LESSOR as to an
      undivided full interest as indicated in Exhibit A.                                                                                                                                                                                                                                                                                                                                                                                    
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 11.2. | In the event that any defect in LESSORS title is
      determined to exist, LESSOR shall, at its sole cost and expense, take such
      steps as may be required, including, but not limited to, the commencement
      of litigation, the location of additional claims and the amendment or
      relocation of existing claims held by LESSOR. In the event LESSOR fails or
      refuses to take or complete appropriate steps to correct any defect in
      LESSORS title, LESSEE may elect to correct such defect and deduct the
      cost of such correction, including attorneys fees, from the payment
      obligations contained in this lease. LESSEE also may make such deductions
      for costs or corrections to title to the LEASED PROPERTY incurred by
      LESSEE prior to the date of this Lease.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 11.3. | In the event it is determined that LESSOR owns a different percentage
      of the LEASED PROPERTY than indicated in this paragraph, then LESSORS
      rights under this Agreement and the percentage indicated shall be adjusted
      upward or downward so as to reflect the actual interest owned. It is the
      intention of the parties that the full ownership of LESSOR be included in
      this Mining Lease.                                                                                                                                                                                                                                                                                                                                                                                                 

|12. | Default and
    Termination.
|--- | ----------------------------

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| | 12.1. | Default.  The
      occurrence of any of the following events shall constitute an event of
      default on the part of LESSEE:
| | ----- | -------------------------------------------------------------------------------------------------------------------------------

| | 12.1.1. | Breach of Covenants.  
      Failure (i) to perform any of LESSEES covenants hereunder, and (ii) to
      commence to remedy such failure within sixty (60) days after written
      demand is made therefore.                                                                                   
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                   
| | 12.1.2. | Assignments.   The making
      of a general assignment by LESSEE for the benefit of creditors.                                                                                                                                                                                                   
| |         |                                                                                                                                                                                                                                                                                                   
| | 12.1.3. | Bankruptcy.    The filing of
      any form of voluntary petition in bankruptcy by LESSEE, or the filing of
      an involuntary petition by LESSEES creditors, if such petition remains
      undischarged for a period of thirty (30) days.                                                    
| |         |                                                                                                                                                                                                                                                                                                   
| | 12.1.4. | Receivership.   The
      appointment of a receiver to take possession of substantially all of
      LESSEES assets or of the interest held by LESSEE under this lease, if
      such receivership remains undissolved for a period of thirty (30)
    days.                                     
| |         |                                                                                                                                                                                                                                                                                                   
| | 12.1.5. | Attachment.    The
      attachment or other judicial seizure of substantially all of LESSEES
      assets or of the interest held under this lease, if such attachment or
      other seizure remains undismissed or undischarged for a period of thirty
      (30) days after the levy thereof.

| | 12.2. | Remedies.
| | ----- | ---------

| | 12.2.1. | Termination.   In the event
      of the occurrence of any event of default mentioned in Paragraph 12.1
      hereof, LESSOR, shall have the right, so long as default continues, to
      immediately terminate this lease by giving LESSEE written notice of such
      termination.                                                                                                                                                                                                                                                       
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 12.2.2. | Eviction.   In the event of
      any such termination of this lease, LESSOR may then or at any time
      thereafter, re-enter the LEASED PROPERTY, or any part thereof, and expel or remove therefrom LESSEE
      and any other person occupying the same, using such force as may be
      necessary so to do, and again repossess and enjoy the LEASED PROPERTY,
      without prejudice to any other remedies that LESSOR may have under this
      lease, or at law or equity, by reason of LESSEES default or of such
  termination.

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| | 12.2.3. | Damages.    In the
      event of any such termination of this lease, LESSOR shall have all of the
      rights and remedies of a landlord provided by Section 1951.2 of the Civil
      Code of the State of California.                           
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                     
| | 12.2.4. | Remedies Under CC 1951.4.  
      In the event LESSEE breaches this lease and abandons the LEASED PROPERTY,
      LESSOR shall have all of the remedies of a landlord provided by Section
      1951.4 of the Civil Code of the State of California.
| |         |                                                                                                                                                                                                                                                     
| | 12.2.5. | Default by Landlord.  In
      the event of default by LESSOR, LESSEE shall have all of the remedies of a
      tenant provided by the laws of the State of
California.                                                                             

| | 12.3. | Termination by LESSEE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | This agreement may be terminated by LESSEE at any time by
      the giving of three (3) months written notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 12.4. | Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |       | Upon termination of this Agreement LESSEE shall provide
      LESSOR with copies of all Information as defined below. As used in this
      Agreement, Information shall mean all geological, geophysical and
      geochemical data, all laboratory testing results maps and reports, whether
      acquired, generated or compiled by or for LESSEE. LESSEE warrants that all
      Information supplied to LESSOR pursuant to the terms of this provision
      shall be true and accurate copies of the Information acquired, generated
      or compiled by or for LESSEE; provided, however,
that LESSEE does not warrant that the data contained therein is an
accurate interpretation of the geology described therein.

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| | 12.4.1. | Upon execution of this Agreement, LESSOR shall provide
      LESSEE access to all geological, geophysical and geochemical data
      concerning the LEASED PROPERTY which has been acquired, generated, or
      compiled by LESSOR.
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                     
| | 12.4.2. | Any and all data, information, reports and samples
      provided by LESSEE to LESSOR under terms of this agreement shall be
      treated and held confidential for the term of this
  Agreement.                                  

|13. | Force Majeure.    The
      failure to perform or comply with any of the covenants or conditions
      hereof on the part of LESSEE (including, but not limited to, production
      requirements set forth in Paragraph 3 above) will not be grounds for
      cancellation, penalty, termination or forfeiture hereof during such time
      as failure to perform is caused or compliance is prevented by severe
      weather, explosion, unusual mining casualty, mill shutdowns, damage to or
      destruction of mill or mill plant facility, fire, flood, civil or military
      authority, insurrection, strikes, riots, inability after diligent effort
      to obtain competent workmen or material or necessary permits, fuel
      shortages, inadequate or shortages of transportation facilities not due to
      the negligence or lack of diligence by LESSEE, governmental actions or
      policies which substantially restrict the legality or profitability of
      extracting and selling any of the valuable minerals produced under the
      Mining Lease, acts of God, or any circumstances or conditions beyond the
      control of LESSEE, and in such an event, LESSEE shall be excused from, and
      not held liable for, such failure to perform or comply. No event of force
      majeure shall affect LESSEES obligation to make the payments required
      under Paragraph 3.1 above.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|14. | Inurement.   This
      lease shall inure to the benefit of and be binding upon their respective
      heirs, trustees, conservators, successors and assigns of the
    parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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|15. | Recordation.    This
      agreement is not to. be recorded. LESSEE may, however, prepare and submit
      to LESSOR for signature, a memorandum of this agreement for
      recordation.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                          
|16. | Assignment.                                                                                                                                                                              

| | 16.1. | Assignment by LESSOR.  
      LESSOR agrees that it shall give notice to LESSEE of its intention to sell
      or otherwise assign the Lease or LEASED PROPERTY. Upon receipt of a bona
      fide offer to purchase the Lease or LEASED PROPERTY, the LESSOR shall
      forthwith give notice, to be accompanied by a true copy of such offer to
      purchase attached thereto, to LESSEE and LESSEE shall have sixty (60) days
      in which to present to LESSOR a written counter offer, such counter offer
      to be for greater consideration than the offer, expressed in cash or
      marketable securities. Upon receipt of such counter offer, LESSOR will
      have thirty (30) days to sell to LESSEE or to give notice to LESSEE of
      receipt of a further counter offer for greater consideration than LESSEES
      counter offer. In the event of a further counter offer being presented,
      LESSEE will have seven (7) days from receipt of notice to raise its offer
      and the offers and counter offers shall thereafter be limited to response
      time of seven (7) days from receipt.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 16.2. | Assignment of LESSEE.
| | ----- | ---------------------
| |       |                      
| |       | 16.2.1.              

|17. | Removal of Equipment.   At
      the termination of the lease, LESSEE may remove any and all equipment it
      placed on the property during the term of this lease, or any extension
      thereof, provided, said removal is completed within one (1) year of the
      termination date.                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|18. | Arbitration.   Any dispute
      arising out of this Lease herein must be raised and settled in binding
      arbitration proceeding in accordance with the rules of the American
      Arbitration Association. The process for selecting arbitrators shall
      be as follows: Each party shall select an arbitrator and the two (2)
      selected arbitrators shall select the third arbitrator. Such selections
      must be made within fifteen (15) days after the party commencing the
      arbitration process gives notice to the other party of its intention to
      arbitrate a dispute or difference. Any arbitration award may include the
  reasonable attorney fees and costs of the prevailing party.

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|19. | Counterparts.  This
      agreement may be signed in counterparts and shall be deemed effective when
      both parties have executed this agreement or any counterpart
    thereof.                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                    
|20. | Complete Agreement.  This
      writing and all terms and convenience contained herein are deemed to be
      the complete and unequivocal written agreement of the parties and no other
      agreements, either written or oral, are contemplated with respect to said
      property.                                           
|    |                                                                                                                                                                                                                                                                                                                                    
|21. | California Law.    This
      lease shall be governed by and construed and interpreted under the
      internal laws of the State of California.                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                    
|22. | Severability.    If any
      term, covenant, condition or provision of this agreement is held by a
      court of competent jurisdiction to be invalid, void, or unenforceable, the
      remainder of the provisions hereof shall remain in full force and effect
      and shall in no way be affected, impaired or invalidated.
|    |                                                                                                                                                                                                                                                                                                                                    
|23. | Title Headings.   The
      headings of the respective paragraphs of this Agreement are inserted for
      convenience only and shall not be deemed to be a part of this Agreement
      and considered in construing this Agreement.                                                                                              

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EXHIBIT A

Unpatented Lode Mining Claims
and Placer Claims and Mill Sites 
Portion of Section 6, T10N, R12W,
SBB&M
Portion of 32, T11N, R12W, SBB&M
Portion of 7, T10N, R12W,
SBB&M
Mojave Mining DistrictKern County, California

CLAIM
    CLAIM TYPE
    BLM SERIAL No.B&H
    LODE
    041701BOBTAIL
    LODE
    218374CAROLYN
    LODE
    041691CHARITY
    LODE
    041697ELEPHANT
    LODE
    041696ELEPHANT EXTENSION
    LODE
    041695EXCELSIOR
    LODE
    041693FAITH 1
    LODE
    218369FAITH 2
    LODE
    218370FAITH 3
    LODE
    218371FAITH 4
    LODE
    218372FAITH 5
    LODE
    218373HERMAN
    LODE
    041694HOPE
    LODE
    041699MARILYN
    LODE
    041692MOUNTAIN VIEW
    LODE
    041698CAROLYN
    MILL SITE
    041689MARILYN
    MILL
      SITE
    041690DOLLY X
    PLACER
    189836


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