EXHIBIT
      10.2

     

     

    OPERATING
      AGREEMENT

     

    between

     

    KWAGGA
      GOLD (PROPRIETARY) LIMITED

     

    and

     

    WITS
      BASIN PRECIOUS MINERALS INCORPORATED

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      	
              1.

            	 	
              DEFINITIONS
                AND INTERPRETATIONS

            	
              1

            
	 	
              1.1

            	
              Definitions.

            	
              1

            
	 	
              1.2

            	
              Number
                and Gender

            	
              7

            
	 	
              1.3

            	
              Annexes

            	
              7

            
	
              2.

            	 	
              TITLE
                TO ASSETS

            	
              7

            
	 	
              2.1

            	
              Title

            	
              7

            
	
              3.

            	 	
              MANAGER

            	
              8

            
	 	
              3.1

            	
              Appointment
                of Manager

            	
              8

            
	 	
              3.2

            	
              Powers
                and Duties of Manager

            	
              8

            
	 	
              3.3

            	
              Manager
                Not Liable

            	
              11

            
	 	
              3.4

            	
              Conduct
                of Operations

            	
              11

            
	 	
              3.5

            	
              Termination

            	
              11

            
	 	
              3.6

            	
              Payments
                to Manager

            	
              12

            
	 	
              3.7

            	
              Transaction
                with Affiliates

            	
              12

            
	 	
              3.8

            	
              Agent

            	
              12

            
	 	
              3.9

            	
              Operation
                Contracts

            	
              12

            
	
              4.

            	 	
              WORK
                PROGRAMS AND BUDGETS

            	
              13

            
	 	
              4.1

            	
              Operations
                Pursuant to Programs

            	
              13

            
	 	
              4.2

            	
              Presentation
                of Programs and Budgets

            	
              13

            
	 	
              4.3

            	
              Feasibility
                Studies and Mine Construction Programs

            	
              13

            
	 	
              4.4

            	
              Review
                and Approval of Proposed Work Programs and Budgets

            	
              14

            
	 	
              4.5

            	
              Budget
                Overruns/Contingency Provision

            	
              15

            
	 	
              4.6

            	
              Emergency
                or Unexpected Expenditures.

            	
              15

            
	
              5.

            	 	
              ACCOUNTS
                AND SETTLEMENTS

            	
              15

            
	 	
              5.1

            	
              Monthly
                Statements

            	
              15

            
	 	
              5.2

            	
              Cash
                Calls

            	
              15

            
	 	
              5.3

            	
              Failure
                to Pay Invoices

            	
              16

            
	 	
              5.4

            	
              Audits

            	
              16

            
	 	
              5.5

            	
              Manager's
                Own Funds

            	
              16

            
	
              6.

            	 	
              OPERATING
                PLANS

            	
              16

            
	 	
              6.1

            	
              Obligation
                to Pay Operating Costs and Overruns

            	
              16

            
	 	
              6.2

            	
              Operating
                Plans

            	
              16

            
	 	
              6.3

            	
              Excess
                Operating Costs and Overruns

            	
              17

            
	 	
              6.4

            	
              No
                Agreement on Operating Plans

            	
              17

            
	 	
              6.5

            	
              Suspension
                of Mining

            	
              17

            
	 	
              6.6

            	
              Shut
                Down Plan

            	
              17

            
	 	
              6.7

            	
              Bank
                Account

            	
              18

            
	 	
              6.8

            	
              Loans

            	
              18

            
	
              7.

            	 	
              DISTRIBUTIONS
                AND MARKETING

            	
              18

            
	 	
              7.1

            	
              Distribution
                of Distributable Cash Flow

            	
              18

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	 	
              7.2

            	
              Appointment
                of Manager as Marketing Manager

            	
              19

            
	 	
              7.3

            	
              Power
                of Marketing Manager.

            	
              19

            
	
              8.

            	 	
              TERMINATION

            	
              20

            
	 	
              8.1

            	
              Termination
                by Expiration or Agreement

            	
              20

            
	 	
              8.2

            	
              Continuing
                Obligations

            	
              20

            
	 	
              8.3

            	
              Disposition
                of Assets on Termination

            	
              20

            
	 	
              8.4

            	
              Continuing
                Authority

            	
              20

            
	
              9.

            	 	
              ACQUISITION,
                ABANDONMENT AND SURRENDER OF PROPERTY

            	
              21

            
	 	
              9.1

            	
              Surrender
                or Abandonment of Property

            	
              21

            
	
              10.

            	 	
              INDEMNITIES

            	
              21

            
	 	
              10.1

            	
              Indemnification
                of Manager

            	
              21

            
	 	
              10.2

            	
              Indemnification
                of Kwagga

            	
              21

            
	 	
              10.3

            	
              Limitation
                of Liability

            	
              21

            
	
              11.

            	 	
              GENERAL
                PROVISIONS

            	
              22

            
	 	
              11.1

            	
              Notices

            	
              22

            
	 	
              11.2

            	
              Time

            	
              22

            
	 	
              11.3

            	
              Force
                Majeure

            	
              23

            
	 	
              11.4

            	
              Modification

            	
              23

            
	 	
              11.5

            	
              Waiver

            	
              23

            
	 	
              11.6

            	
              Interpretation
                and Severability

            	
              23

            
	 	
              11.7

            	
              Governing
                Law

            	
              23

            
	 	
              11.8

            	
              Further
                Assurances

            	
              24

            
	 	
              11.9

            	
              Survival
                of Terms and Conditions

            	
              24

            
	 	
              11.10

            	
              Enurement

            	
              24

            


    

    


    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    


    OPERATING
      AGREEMENT

     

    THIS
      AGREEMENT
      is made
      as of the 12th day of December, 2007

     

    BETWEEN:

     

    KWAGGA
      GOLD (PROPRIETARY) LIMITED,
      a
      company incorporated under the laws of the Republic of South Africa
      (Registration Number 98/07520/07)

     

    ("Kwagga")

     

    OF
      THE
      FIRST PART

     

    AND:

     

    WITS
      BASIN PRECIOUS MINERALS LIMITED a
      company
      incorporated under the laws of the
      United States of America

     

    ("WB")

     

    OF
      THE
      SECOND PART

     

    WHEREAS:

     

    
      	
              A.

            	
              Kwagga
                holds rights to a 100% interest in certain mineral properties in
                the
                Republic of South Africa which are more particularly hereinafter
                described;

            


    

     

    
      	
              B.

            	
              Kwagga
                wishes to appoint WB to manage the exploration and evaluation, and
                if
                feasible, the development and mining of
                gold and other metals and minerals
                within such properties;

            


    

     

    NOW,
      THEREFORE,
      this
      Agreement witnesses that for good and valuable consideration, the receipt and
      sufficiency of which each of the parties acknowledges, the parties hereto agree
      as follows:

     

    
      	1.	
              DEFINITIONS
                AND INTERPRETATIONS

            


    

     

    
      	1.1	
              Definitions.

            


    

     

    (a) "Account"
      means
      the account maintained in accordance with the Accounting Procedure showing
      the
      charges and credits accruing to Kwagga.

     

    (b) "Accounting
      Procedure"
      means
      the procedure set forth in Annex B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) "Affiliate"
      means
      any person which directly or indirectly controls, is controlled by, or is under
      common control with, a Party. For purposes of the preceding sentence, "control"
      means possession, directly or indirectly, of the power to direct or cause
      direction of management and policies through ownership of voting securities,
      contract, voting trust, or otherwise. It is understood and agreed that control
      of a company can be exercised by another company or companies if such latter
      company or companies owns shares carrying more than 50% of the votes exercisable
      at a general meeting (or its equivalent) of the first mentioned company, and
      a
      particular company is deemed to be indirectly controlled by a company or
      companies (the parent company or companies) if a series of companies can be
      identified beginning with the parent company or companies and ending with the
      particular company so related that each company of the series except the parent
      company or companies is directly controlled by one or more of the companies
      in
      the series.

     

    (d) "Agreement"
      means
      this Operating Agreement, including all amendments and modifications thereof,
      and all annexes which are attached hereto.

     

    (e) "Assets"
      means
      the following:

     

    (i) the
      Property and all plant and facilities located on the Project Area;

     

    (ii) all
      equipment used in the Operations; all inventory; all property, tangible and
      intangible, obtained or used by the Manager in connection with the conduct
      of
      Operations, including without limitation all geological, geochemical,
      geophysical, mining and metallurgical data, surveys, assays, drill cores, drill
      cuttings, samples, sample residues, analyses, Feasibility Studies and other
      data
      or information acquired in the course of Operations;

     

    (iii) the
      rights of Kwagga to and under all licences, leases, and permits relating to
      the
      Operations and/or the Project Area; and

     

    (iv) all
      Products.

     

    (f) "Bankable
      Feasibility Study"
      means a
      comprehensive description of the construction, development, mining, processing,
      and marketing plan for a Mine within the Project Area in such form and detail
      as
      is normally required by a bank
      or
      other financial institution ("the bank") engaged in mining project finance
      for
      purposes of determining whether the bank shall finance and/or participate in
      the
      development of a Mine and Mining Operations in respect of the whole or any
      part
      of the Project Area.
      The
      Bankable Feasibility Study shall include the confirmation of the estimated
      recoverable reserves of
      Minerals
      and source material the conduct of detailed drilling works, hydrological and
      geotechnical works, geological, mining, metallurgical, economic, legal,
      environmental, social and governmental studies, and metallurgical studies.
      The
      Bankable Feasibility Study shall contain estimates of both capital and operating
      costs and shall analyze how to proceed with mining operations to economically
      and commercially extract the target mineral(s), identify the optimum structure
      for the mining venture, and include reference to relevant financial
      aspects.

     

    (g) "Budget"
      means
      an estimate in reasonable detail of all Costs to be incurred with respect to
      a
      Work Program (including the Costs of Required Operations, as a line item) and
      a
      schedule of cash advances to be made in order to conduct Operations under such
      Work Program.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (h) "Budgetary
      Period"
      means
      the period during which the related Work Program will be completed.

     

    (i) "Costs"
      means
      "Allowable
      Costs"
      as
      defined in Article 2 of the Accounting Procedures.

     

    (j) "Development"
      means
      all preparation for the removal and recovery of Products, including the
      development of a Mine and construction or installation of a mill or any other
      improvements to be used for the mining, handling, milling, processing or other
      beneficiation of Products.

     

    (k) "Distributable
      Cash Flow"
      means
      the cash proceeds from the sale of Products after deducting all Costs, including
      any taxes imposed on the Operations or Kwagga and all royalties.

     

    (l) "Dollars"
      or
      "$"
      means
      United States dollars.

     

    (m) "EMPR"
      means
      the Environmental Management Program and any amendments thereto from time to
      time, as approved by the relevant authority for the Mine in accordance with
      the
      provisions of the Minerals Act and/or the MPRD Act.

     

    (n) "Encumbrances"
      means
      mortgages, pledges, liens, charges, encumbrances and security
      interests.

     

    (o) "Exploration"
      means
      all activities directed toward ascertaining the existence, location, quantity,
      quality or commercial value of deposits or Products. Exploration may include
      all
      activities undertaken through to the completion of a Bankable Feasibility Study,
      if any, but shall not include construction of milling or processing facilities
      or commencement of commercial mining operations on the Project
      Area.

     

    (p) "First
      Commercial Production"
      means
      the first day of the month in which Minerals from a Mine have been extracted
      and
      processed to yield Product for forty-five (45) consecutive days at a rate,
      averaged over such 45-day period, of not less than seventy percent (70%) of
      the
      average daily rate projected in the Bankable Feasibility Study pursuant to
      which
      such Mine is developed. The
      processing or shipping of bulk samples for testing purposes shall not be used
      for the purposes of establishing the First Commercial Production.

     

    (q) "First
      Funding Report" means
      a
      comprehensive written report prepared by the Manager at the end of the First
      Funding Phase (as defined in the Kwagga Shareholders Agreement) in respect
      of
      all Exploration conducted to date in, on or under the Project Area, together
      with all primary and derived data relating thereto and containing (without
      limitation) method statements, operational statistics, reports concerning the
      mineral and surface title, drill logs, plans and sections of drill holes, drill
      core photographs, analytical results, interpretation and discussion of results,
      conclusions and recommendations for the further Exploration, if any, to be
      conducted in respect of the Project Area and/or the Development and Mining
      of
      the Project Area and a pro forma Work Program and Budget in respect
      thereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (r) "Force
      Majeure"
      means
      any cause beyond a Party's reasonable control, whether or not foreseeable,
      including but not limited to: law, regulation, instructions, requests, actions
      or inaction of any government or governmental, civil or military entity;
      interference by aboriginals or individuals claiming ancestral rights or rights
      to mine (including artisanal miners) or by groups representing or claiming
      to
      represent such individuals; interference by environmentalists or other
      activists; judgments or orders of any court; inability to obtain on reasonably
      acceptable terms any public or private licence, permit, or other authorisation
      that may be required to conduct Operations; weather; damage to or destruction
      of
      mine, plant or facility; fire; explosion; flood; insurrection; acts of war,
      whether declared or undeclared; riot, civil strife, insurrection or rebellion;
      labour dispute; inability after diligent effort to obtain workmen or material;
      delay in transportation; and acts of God.

     

    (s) "Kwagga
      Shareholders Agreement"
      means
      the shareholders agreement between Kwagga Gold (Barbados) Limited and MCI
      Resources (Proprietary) Limited (renamed Shanduka Resources (Proprietary)
      Limited) respecting Kwagga.

     

    (t) "LIBOR"
      means
      the London Inter Bank Offered Rate for the 90 day period as quoted on the
      Reuter's Screen LIBO, rounded to the fourth decimal place.

     

    (u) "Licence"
      means,
      collectively, the "old
      order rights"
      (as
      defined in Schedule II of the MPRD) and "prospecting
      rights",
      "mining
      rights",
      "mining
      permits"
      and
      "retention
      permits"
      (as
      such terms are defined in the MPRD) held by or on behalf of Kwagga or the
      Manager, from time to time, respecting all or any part of the Project Area
      and
      in respect of the farms which are listed in Annex A attached to this Agreement,
      as amended from time to time.

     

    (v) "Manager"
      means
      WB or any successor Manager.

     

    (w) "Mine"
      means:


     

    (i) any
      shaft, drill hole, open pit, tunnel, well or opening, underground or otherwise,
      made or constructed after preparation of a Bankable Feasibility Study, and
      from
      which Minerals have been or may be removed or extracted by any method
      whatsoever, whether now known or hereafter developed, in quantities larger
      than
      those required for purposes of sampling, analysis or evaluation; 

     

    (ii) mills
      and
      other facilities for the extraction, recovery, beneficiation, treatment,
      processing and storage of Minerals and disposal of waste, including tailings;
      

     

    (iii) machinery,
      equipment, tools, buildings, facilities and improvements for mining, processing,
      handling, and transporting Minerals, waste and materials; and 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (iv) housing,
      offices, roads, airstrips, power lines, power generation facilities, evaporation
      and drying facilities, pipelines, railroads, infrastructure, and other
      facilities for any of the foregoing purposes.

     

    (x) "Mine
      Construction Program"
      means a
      Work Program and Budget for the excavation, development, construction, erection,
      installation, and expansion of a Mine and associated facilities.

     

    (y) "Minerals"
      means
      all precious stones, precious metals and base and rare metals.

     

    (z) "Minerals
      Act"
      means
      the Minerals
      Act, 1991
      (Act No.
      50 of 1991), as amended from time to time.

     

    (aa) "Mining"
      means
      the mining, extracting, producing, handling, milling, beneficiation or other
      processing of Products and all operations and activities incidental
      thereto.

     

    (bb) "MPRD
      Act"
      means
      the Mineral
      and Petroleum Resources Development Act, 2002
      (Act No.
      28 of 2002), as amended from time to time.

     

    (cc) "Operating
      Costs"
      means,
      for any period, all Costs incurred or chargeable, directly or indirectly, by
      the
      Manager in connection with Operating Programs including, without duplication
      and
      without limiting the generality of the foregoing, the following:

     

    (i) all
      reasonable costs of consulting, legal, accounting, insurance and other
      services;

     

    (ii) all
      Overruns of Operating Costs permitted or agreed under Section 6.3;

     

    (iii) all
      Costs
      incurred or to be incurred relating to a temporary or permanent shut-down of
      the
      facilities on or related to the Project Area, including costs to be incurred
      after any shut-down; and

     

    (iv) all
      Costs
      incurred with respect to Mining;

     

    (v) all
      Costs
      incurred in respect of the marketing of the Products, including transportation,
      commissions and/or discounts;

     

    (vi) all
      Costs
      relating to capital expenditures relating to the Mine; and

     

    (vii) all
      Costs
      relating to environmental compliance, pollution control, reclamation and related
      matters.

     

    All
      Operating Costs shall be determined in accordance with generally accepted
      accounting principles (International Accounting Standard) applied consistently
      from year to year, provided however that such costs shall not include any amount
      in respect of amortization, depletion or depreciation of capital
      costs.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (dd) "Operating
      Program"
      means a
      Work and Budget Plan for an Operating Year including, inter
      alia,
      the
      following information:

     

    (i) a
      written
      plan of the proposed Mining Operations for the Operating Year, including any
      plans for Exploration or for expansion of the facilities;

     

    (ii) a
      detailed estimate of all Operating Costs plus a reasonable allowance (not exceed
      ten per cent (10%)) for contingencies, on a monthly basis, including any
      proposed cash calls;

     

    (iii) an
      estimate of the quantity and quality of the ore to be mined and of the quality
      of Products to be produced on a monthly basis; 

     

    (iv) a
      Rolling
      Budget; and

     

    (v) such
      other facts as may be reasonably necessary to present the results proposed
      to be
      achieved during the Operating Year.

     

    (ee) "Operating
      Year"
      means
      the 12 month period commencing on [1
      March]
      of each
      year.

     

    (ff) "Operations"
      includes any and every kind work directed toward ascertaining the existence,
      location, quantity, and grade of Minerals and the development thereof carried
      out under this Agreement on or in respect of the Project Area or the Products
      derived therefrom, including, without limitation, Exploration, Development
      and
      Mining.

     

    (gg) "Party"
      or
      "Parties"
      means
      Kwagga and/or WB, or their successors in interest.

     

    (hh) "person"
      means
      any individual, partnership, limited partnership, corporation, limited liability
      company, unincorporated organization or association, trust (including the
      trustees thereof, in their capacity as such), government (or agency or political
      subdivision thereof) or other entity.

     

    (ii) "Production
      Decision"
      has the
      meaning assigned to it in Section 4.3(c).

     

    (jj) "Products"
      means
      all ores, Minerals and mineral resources in any form produced from the Project
      Area under this Agreement (including without limitation all ore, concentrates
      and semi-processed and processed forms thereof).

     

    (kk) "Program
      Report"
      means a
      comprehensive written report prepared by the Manager on completion of any
      particular phase (including, for the avoidance of doubt, the First and Second
      Funding Phases (as defined in the Kwagga Shareholders Agreement)) of
      Exploration, Development and/or Mining, as the case may be, containing such
      information relating to and/or in connection with the Project Area and the
      conduct of Operations as may be required by Kwagga and including (but not
      limited to) the information required to be contained in the First Funding
      Report.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (ll) "Project
      Area"
      means
      the farms listed and attached as Annex A to this Agreement.

     

    (mm) "Property"
      means
      all interests, rights, and privileges (whether absolute or conditional, whether
      existing or future) in real property, mineral rights, and/or surface lands
      falling within the Project Area, including, without limitation, all prospecting
      and mining authorisations, licences (including the Licence), permits, leases,
      and other entitlements, which are acquired and held subject to this Agreement
      whether pursuant to the Licence or otherwise.

     

    (nn) "Required
      Operations"
      means
      all Operations and Costs of any kind required to be carried out and incurred
      to
      maintain and keep the Assets in good standing and free of default under any
      governmental or regulatory laws, rules or regulations and shall include, without
      limitation, any financial assurances required to be posted for environmental
      clean up purposes by statute or regulation.

     

    (oo) "Rolling
      Budget"
      means
      the detailed budgeted Costs to be incurred in respect of Development and/or
      Mining Operations forecast over a three (3) Operating Year period, adjusted
      annually in arrears to take account of actual Costs incurred and progress made
      during the preceding Operating Year.

     

    (pp) "Work
      Program"
      means a
      description in reasonable detail of proposed Operations to be conducted and
      objectives to be accomplished by the Manager within the Project Area for a
      year
      or any longer period, including the preparation of a Bankable Feasibility
      Study.

     

    
      	1.2	
              Number
                and Gender

            


    

     

    Words
      importing the singular number only shall include the plural and vice versa,
      words importing the neuter gender shall include the feminine and masculine
      genders and vice versa.

     

    
      	1.3	
              Annexes

            


    

     

    Attached
      hereto and forming part of this Agreement are the following
      Annexes:

     

    Annex
      A – Licence and Project Area

     

    Annex
      B – Accounting Procedure

     

    
      	2.	
              TITLE
                TO ASSETS

            


    

     

    
      	2.1	
              Title

            


    

     

    Title
      to
      the Assets shall be held in the name of Kwagga or such other person as Kwagga
      and the Manager may designate from time to time. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	3.	
              MANAGER

            


    

     

    
      	3.1	
              Appointment
                of Manager

            


    

     

    WB
      is
      hereby appointed as the Manager to manage and carry out Operations on behalf
      of
      Kwagga. WB hereby agrees to serve as Manager.

     

    
      	3.2	
              Powers
                and Duties of Manager

            


    

     

    Subject
      to and in accordance with the terms and provisions of this Agreement and the
      direction and control of Kwagga (and its board of directors), the Manager shall
      manage, supervise and conduct all administrative, financial, technical and
      consultative services and other activity for and on behalf of Kwagga in respect
      of all Operations and, without limiting the generality of the foregoing, the
      Manager shall have the following rights, duties, obligations and
      responsibilities:

     

    (a) The
      Manager shall manage, direct and control all Operations in accordance with
      Work
      Programs and Budgets prepared by it and approved by Kwagga.

     

    (b) The
      Manager shall promptly advise Kwagga if it lacks sufficient funds to carry
      out
      its responsibilities under this Agreement and of details of all material events
      relating to the Operations and/or the Project Area (including material
      results).

     

    (c) The
      Manager shall: 

     

    (i) purchase
      or otherwise acquire all material, supplies, equipment, water, utility and
      transportation services required for Operations, such purchases and acquisitions
      to be made on the best terms available, taking into account all of the
      circumstances; 

     

    (ii) obtain
      such customary warranties and guarantees as are available in connection with
      such purchases and acquisitions; and 

     

    (iii) keep
      the
      Assets free and clear of all Encumbrances, except for those existing at the
      time
      of, or created concurrent with, the acquisition of such Assets, or liens which
      shall be released or discharged in a diligent manner, or Encumbrances
      specifically approved by Kwagga or permitted hereby.

     

    (d) The
      Manager shall take such action and incur such expenditures as are required
      to
      examine, cure, and maintain the title and interests of Kwagga in and to the
      Assets (including keeping the Licence in good standing), whether or not such
      expenditures are the subject of an approved Work Program and
      Budget.

     

    (e) The
      Manager shall: 

     

    (i) make
      or
      arrange for all payments required by leases, licences, permits, contracts and
      other agreements related to the Assets; 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (ii) pay
      all
      taxes, assessments and like charges on Operations and Assets when due, except
      taxes determined or measured by Kwagga's (sales revenue or) net income. The
      Manager shall have the right to contest in the courts or otherwise, the validity
      or amount of any taxes, assessments or charges if the Manager deems them to
      be
      unlawful, unjust, unequal or excessive, or to undertake such other steps or
      proceedings as the Manager may deem reasonably necessary to secure a
      cancellation, reduction, readjustment or equalization thereof before the Manager
      shall be required to pay them, but in no event shall the Manager permit or
      allow
      title to the Assets to be lost as the result of the non-payment of any taxes,
      assessments or like charges; and 

     

    (iii) do
      all
      other acts reasonably necessary to maintain the Assets.

     

    (f) The
      Manager shall: 

     

    (i) apply
      for
      and obtain for Kwagga all permits, rights, authorisations, licences and
      approvals necessary or appropriate for the Operations (including temporary
      and
      permanent Mining rights); 

     

    (ii) comply
      (and require the compliance by all other persons providing services to it in
      respect of the Operations to comply) with all applicable laws and regulations
      (including the Minerals Act and the MPRD Act, as applicable); 

     

    (iii) notify
      promptly Kwagga of any allegations of substantial violation thereof;


     

    (iv) prepare
      and file all reports or notices required to be filed by or on behalf of Kwagga
      in respect of the Operations; and

     

    (v) as
      soon
      as reasonably possible after the Production Decision shall have been made,
      prepare and procure the approval of an EMPR respecting the Mining
      Operations.

     

    The
      Manager shall not be in breach of this provision if a violation has occurred
      in
      spite of the Manager's good faith efforts to comply, and the Manager has timely
      cured or disposed of such violation through performance, or payment of fines
      and
      penalties.

     

    (g) The
      Manager shall prosecute and defend, but shall not initiate without approval
      of
      Kwagga, all litigation or administrative proceedings arising out of
      Operations.

     

    (h) The
      Manager shall obtain and maintain appropriate insurance for the benefit of
      Kwagga and itself with respect to Operations being managed by it.

     

    (i) The
      Manager shall have the right to carry out its responsibilities hereunder through
      agents, Affiliates, consultants, sub-contractors or independent contractors.
      If
      the Manager engages an Affiliate to provide services hereunder, it shall do
      so
      on terms no less favourable than would be the case with unrelated persons in
      arm's-length transactions.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (j) The
      Manager shall perform or cause to be performed during the term of this Agreement
      all work and make all payments required by all laws and regulations in order
      to
      maintain the Project Area and the Licence in good standing.

     

    (k) The
      Manager shall keep and maintain full, complete and accurate accounting and
      financial records in accordance with Annex B and in accordance with customary
      cost accounting practices in the mining industry.

     

    (l) The
      Manager shall keep Kwagga advised of all Operations by submitting in writing
      to
      Kwagga: 

     

    (i) quarterly
      progress reports which include statements of expenditures and an update on
      Operations and the results thereof; 

     

    (ii) a
      detailed final Program Report within ninety (90) days after completion of each
      Work Program and Budget, which shall include comparisons between actual and
      budgeted expenditures and the results of the Work Program; 

     

    (iii) the
      First
      Funding Report not later than the earlier of:

     

    (1) the
      end
      of the calendar month occurring at least 120 days before the Existing Funding
      (as defined in the Kwagga Shareholders Agreement) is anticipated to be fully
      expended; or

     

    (2) the
      Repayment Date (as defined in the Kwagga Shareholders Agreement);
      and

     

    (iv) such
      other reports as Kwagga and/or Kwagga Gold (Barbados) Limited may reasonably
      request. 

     

    At
      the
      request of Kwagga Gold (Barbados) Limited, the Manager shall deliver all or
      any
      of the foregoing reports to Wits Basin Precious Minerals Inc.

     

    (m) At
      all
      reasonable times the Manager shall provide representatives of Kwagga access
      to,
      and the right to inspect and copy all maps, drill logs, core tests, reports,
      surveys, assays, analyses, technical, accounting and financial records, and
      other information acquired in Operations.

     

    (n) The
      Manager shall allow any representative of Kwagga, at such representative's
      sole
      risk and expense, and subject to reasonable safety and security regulations,
      to
      inspect the Assets and Operations at all reasonable times, so long as the
      representative does not unreasonably interfere with Operations.

     

    (o) The
      Manager shall notify Kwagga of any material information affecting its interest
      in the Project Area promptly upon the Manager having learned of such
      information.

     

    (p) The
      Manager shall perform all Required Operations.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (q) The
      Manager shall arrange the financing for the funding of the Mine Construction
      Program and shall, in its sole discretion, determine in agreement with financial
      institutions, the ratio of debt to equity of the project financing for the
      completion of the Mine Construction Program.

     

    (r) The
      Manager shall procure from third parties professional or technical services
      as
      may be required for the Operations.

     

    (s) The
      Manager shall provide all administrative, financial, technical and consultative
      services required to conduct Operations.

     

    (t) The
      Manager shall open and maintain local and, where permitted by law, off-shore
      bank accounts, in local or, where permitted by law, United States dollar
      currencies in the name of Kwagga as approved by Kwagga, invest surplus funds,
      arrange for overdraft facilities as are necessary to fund temporary short falls
      in cash resources, arrange short-term, medium-term and long-term financing
      arrangements and distribute Distributable Cash Flow to Kwagga.

     

    (u) The
      Manager shall market, sell and arrange for the refining of the Products.
      and

     

    (v) The
      Manager may undertake all other activities reasonably necessary to fulfil the
      foregoing.

     

    
      	3.3	
              Manager
                Not Liable

            


    

     

    The
      Manager shall not be in default of any duty under Section 3.2
      if its
      failure to perform results from the failure of Kwagga to fund Operations in
      a
      timely manner.

     

    
      	3.4	
              Conduct
                of Operations

            


    

     

    The
      Manager shall conduct all Operations in accordance with the requirements of
      the
      Minerals Act and the MPRD Act, as applicable, and in a good, workmanlike and
      efficient manner, in accordance with sound Exploration, Development, Mining
      and
      other applicable southern African industry standards and practices. The Manager
      shall not be liable to Kwagga for any act or omission resulting in damages
      or
      loss, except to the extent caused by or attributable to the Manager's wilful
      misconduct or gross negligence.

     

    
      	3.5	
              Termination

            


    

     

    The
      Manager may terminate this Agreement upon three (3) months' prior notice to
      Kwagga.

     

    This
      Agreement shall terminate if:

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      	3.6	
              Payments
                to Manager

            


    

     

    Kwagga
      will compensate the Manager for its services and reimburse the Manager for
      its
      Costs hereunder in accordance with the Accounting Procedure.

     

    
      	3.7	
              Transaction
                with Affiliates

            


    

     

    The
      Manager may engage Affiliates to provide services, supplies, equipment or
      machinery hereunder, provided that it shall do so on terms no less favourable
      than would be the case with unrelated persons in arm's length
      transactions.

     

    
      	3.8	
              Agent

            


    

     

    The
      Manager shall be the agent of Kwagga for the carrying out of services to be
      rendered by it in accordance with this Agreement. Kwagga shall give the Manager
      such evidence of authority as may be necessary or desirable, in the opinion
      of
      the Manager, to perform its obligations hereunder. The Manager shall maintain
      complete control over its employees and all of its subcontractors with respect
      to performance of the Operations. Nothing contained in this Agreement or any
      subcontract awarded by the Manager shall create any contractual relationship
      between any subcontractor and Kwagga.

     

    
      	3.9	
              Operation
                Contracts

            


    

     

    So
      far as
      practicable, all Operations shall be performed by the Manager using its staff.
      Operations to be conducted by others shall, if possible, be conducted on a
      competitive contract basis. The Manager, if it so desires, may employ its own
      machinery, tools and equipment in conducting such Operations, and the charges
      therefor shall be determined pursuant to the provisions of the Accounting
      Procedure. The Manager shall employ its reasonable efforts to provide in each
      contract entered into by it that the Parties shall have a right to audit the
      books of the other contracting party or parties insofar as they relate to the
      subject matter of such contract.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	4.	
              WORK
                PROGRAMS AND BUDGETS

            


    

     

    
      	4.1	
              Operations
                Pursuant to Programs

            


    

     

    Except
      as
      otherwise provided in this Article 4,
      Operations shall be conducted, Costs shall be incurred and Assets shall be
      acquired only pursuant to approved Work Programs and Budgets approved by Kwagga.
      Each Work Program shall describe in reasonable detail the full scope, direction
      and nature of the proposed Operations, including, where appropriate, but not
      limited to: geologic research and reconnaissance to be undertaken; property
      and
      mineral interest acquisition proposals; proposed engineering studies and mining
      and construction plans; a long-range plan for the mining of all mineable
      reserves which logically would be mined under good mining practices; the kind
      and capacity of any plant or milling facilities to be acquired or constructed;
      a
      plan for delivery of Product; and the estimated period of time required to
      complete the proposed Operations. Each Budget shall include all anticipated
      Costs and expenses including, but not limited to: operation and maintenance
      expenditures, capital expenditures, a statement of expected cash calls and
      the
      rentals, filing fees, or other payments required to maintain the Project Area
      and the Licence in good standing during the Budgetary Period. Each request
      for
      funds to acquire capital items shall be delivered in accordance with Section
      5.2
      and
      shall include a description of such items in reasonable detail. Each Work
      Program shall be deemed to permit all expenditures required to permit the
      Manager to perform its duties hereunder and the incurring and payment of all
      Costs in relation thereto.

     

    
      	4.2	
              Presentation
                of Programs and Budgets

            


    

     

    Except
      as
      otherwise provided for herein, proposed Work Programs and Budgets shall be
      prepared by the Manager for a period of twelve (12) months or any other
      reasonable longer or shorter period determined by the Manager. The first Work
      Program and Budget shall be prepared by the Manager at such time as it considers
      appropriate. At least sixty (60) days prior to the expiry of each Work Program
      (based on its Budgetary Period), a proposed Work Program and Budget for the
      succeeding Budgetary Period shall be prepared by the Manager and submitted
      to
      Kwagga. In the event that, during a Budgetary Period, the Manager determines
      that, based upon the results of the current Work Program, it is desirable to
      revise such Work Program and the related Budget, the Manager shall have the
      right to prepare a revision thereto and submit the same to Kwagga for approval.
      In the event that Kwagga does not approve a proposed revision to a Work Program
      and Budget, the current Work Program and Budget shall be carried out, without
      change.

     

    
      	4.3	
              Feasibility
                Studies and Mine Construction
                Programs

            


    

     

    (a) If
      the
      Manager is of the opinion that it is justified to prepare a Bankable Feasibility
      Study, it may propose that a Work Program and Budget for a Bankable Feasibility
      Study be prepared. Such proposal shall be made in writing to Kwagga and shall
      include the data upon which the Manager has based its opinion. Kwagga shall
      review the proposal. If such proposal is approved, the Manager shall submit
      a
      Work Program and Budget for a Bankable Feasibility Study to Kwagga within sixty
      (60) days of the approval, which Work Program and Budget shall be reviewed
      in
      accordance with Section 4.4.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (b) Upon
      approval by Kwagga, the Manager shall prepare a Bankable Feasibility Study
      in
      accordance with the approved Work Program and Budget therefor. Upon completion
      of the Bankable Feasibility Study, the Manager shall submit the Bankable
      Feasibility Study to Kwagga for review in accordance with Section 4.4,
      at which
      time Kwagga shall decide whether further work is required to complete the
      Bankable Feasibility Study or the Bankable Feasibility Study is
      complete.
      In the
      event that the Bankable Feasibility Study recommends the construction of a
      Mine,
      the Manager shall submit (along with such Bankable Feasibility Study) a Mine
      Construction Program to Kwagga for review and approval in accordance with
      Section 4.4.
      In
      the
      event that the Bankable Feasibility Study does not recommend the construction
      of
      a Mine, the Manager shall prepare and submit a proposed Work Program and Budget
      for the succeeding Budgetary Period in accordance with Section 4.2.
      

     

    (c) If
      Kwagga
      determines that the Bankable Feasibility Study is complete, it shall then decide
      whether development of a mine is warranted. If Kwagga makes a positive decision
      (a "Production
      Decision"),
      it
      shall then instruct the Manager to prepare an overall Work Program and Budget
      consistent with the Bankable Feasibility Study for all Operations through to
      the
      end of Development. Until Operations have then been completed through to the
      end
      of Development, each Work Program and Budget approved pursuant to this Article
      4
      (it
      being contemplated that the overall Work Program and Budget will be implemented
      through incremental Work Programs and Budgets approved pursuant to this Article
      4)
      shall
      be consistent with the overall Work Programs and Budget.

     

    
      	4.4	
              Review
                and Approval of Proposed Work Programs and Budgets. 

            


    

     

    Within
      thirty
      (30) days
      after
      submission of a proposed Work Program and Budget, or within ninety
      (90)
      days
      after submission of a proposed Mine Construction Program, Kwagga
      shall:

     

    (a) approve
      the proposed Work Program and Budget;

     

    (b) propose
      modifications to the proposed Work Program and Budget;

     

    (c) reject
      the proposed Work Program and Budget and
      require a new submission from the Manager;

     

    Kwagga
      shall provide written notice of its decision to the Manager forthwith after
      making the same. In the event that Kwagga approves a Work Program and Budget,
      it
      shall have irrevocably committed to pay all of the Costs thereof and the Manager
      shall not be required to carry out any Operations in any month unless and until
      it shall have been paid in full the amount of the applicable invoice submitted
      to Kwagga pursuant to Section 5.2.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	4.5	
              Budget
                Overruns/Contingency
                Provision

            


    

     

    The
      Manager shall immediately notify Kwagga as soon as practicable prior to any
      material departure from an approved Work Program and Budget. If the Manager
      exceeds the Budget, then the excess up to 10% of the amount of the Budget shall
      be for the account of Kwagga unless the overrun is due to the gross negligence
      or wilful default of the Manager. The excess to the extent that it is greater
      than 10% of the Budget shall also be for the account of Kwagga if the overrun
      is
      approved by it, which approval may be given retroactively.

     

    
      	4.6	
              Emergency
                or Unexpected
                Expenditures.

            


    

     

    In
      case
      of emergency, the Manager may take any reasonable action it deems necessary
      to
      protect life, limb or property, to protect the Assets or to comply with law
      or
      government regulation. The Manager may also make reasonable expenditures for
      unexpected events which are beyond its reasonable control and which do not
      result from a breach by it of its obligations under Section 3.4.
      The
      Manager shall promptly notify Kwagga of the emergency or unexpected expenditure,
      and the Manager shall be reimbursed for all resulting costs by
      Kwagga.

     

    
      	5.	
              ACCOUNTS
                AND SETTLEMENTS

            


    

     

    
      	5.1	
              Monthly
                Statements

            


    

     

    The
      Manager shall promptly submit to Kwagga monthly statements of account reflecting
      in reasonable detail the charges and credits to the Account during the preceding
      month under this Agreement.

     

    
      	5.2	
              Cash
                Calls

            


    

     

    Prior
      to
      the last day of each month the Manager shall submit to Kwagga an invoice for
      the
      estimated Costs for the next month, together with a reconciliation of the Costs
      actually incurred during the preceding month against the estimated Costs
      contained in the invoice delivered in respect of such preceding month. Within
      ten (10) days after receipt of each invoice, Kwagga shall advance to the Manager
      such estimated amount, as reconciled. Time is of the essence of payment of
      such
      invoices. If the amount billed for the estimated Costs was less than the actual
      Costs incurred or charged during that month, the Manager may bill Kwagga for
      the
      difference at any time, which Kwagga will pay within ten (10) days following
      receipt of the applicable invoice. With the concurrence of Kwagga, the Manager
      may establish more frequent billing cycles to minimize account balances. Each
      monthly invoice will be accompanied by the Manager's forecast of Costs over
      the
      succeeding three (3) months, provided that the Manager shall not be bound
      thereby.

     

    In
      the
      event that the Manager, acting reasonably, determines that Kwagga is required
      to
      incur Costs which are not part of an approved Work Program and Budget and which
      are required to be incurred in respect of Required Operations, the Manager
      shall
      be entitled to include such costs in the invoice delivered to Kwagga pursuant
      to
      the preceding paragraph of this Section 5.2,
      (as if
      such amount was required to be incurred in respect of an approved Work Program
      and Budget) or, if Manager is not delivering such an invoice, it shall be
      entitled to deliver to Kwagga a separate invoice in respect of such
      Costs.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	5.3	
              Failure
                to Pay Invoices

            


    

     

    Any
      payments not made when due under Section 5.2
      shall
      bear interest from the date due at an annual rate equal to LIBOR plus
      2%.

     

    
      	5.4	
              Audits

            


    

     

    The
      Manager shall order an annual audit of the accounting and financial records
      maintained by it in accordance with the Accounting Procedure and will use
      reasonable commercial efforts to cause the audit report to be provided within
      one hundred and twenty (120) days of the Kwagga's fiscal year-end and will
      promptly provide a copy thereof to Kwagga. All written exceptions to and claims
      upon the Manager for discrepancies disclosed by such audit shall be made not
      more than three (3) months after receipt of the audit report. Failure to make
      any such exception or claim within the three (3) month period shall mean the
      audit is correct and binding upon Kwagga. The audits shall be conducted by
      one
      of PricewaterhouseCoopers, Deloitte Touche Tohmatsu International, KPMG
      International or Ernst & Young as selected by the Manager, from time to
      time, and the costs thereof shall be for the Account.

     

    
      	5.5	
              Manager's
                Own Funds

            


    

     

    Nothing
      in this Agreement obliges the Manager to utilize its own funds in any Work
      Program and it may suspend or cease any Work Program upon the failure or
      apprehended failure of Kwagga to make timely payment of any amount for which
      it
      is liable hereunder without liability to Kwagga.

     

    
      	6.	
              OPERATING
                PLANS

            


    

     

    
      	6.1	
              Obligation
                to Pay Operating Costs and
                Overruns

            


    

     

    Kwagga
      shall be liable to pay all Operating Costs incurred under Operating Plans,
      including (notwithstanding Section 4.5)
      Operating Cost Overruns up to but not exceeding ten per cent (10%) of the Costs
      budgeted in the Operating Plan. It is acknowledged and agreed that Operating
      Cost Overruns shall be determined based upon the Operating Costs incurred during
      each Operating Year and upon all budgeted items.

     

    
      	6.2	
              Operating
                Plans

            


    

     

    At
      least
      ninety (90) days prior to the date the Manager anticipates that First Commercial
      Production will occur, the Manager will propose and deliver to Kwagga an
      Operating Plan for the first Operating Year. Subsequently, at least ninety
      (90)
      days before the commencement of each Operating Year, the Manager shall propose
      an Operating Plan for that Operating Year by delivery thereof to Kwagga. Within
      not less than thirty (30) days and not more than forty five (45) days after
      delivery of a proposed Operating Plan hereunder, the Manager shall convene
      a
      meeting of Kwagga to review the same. The proposed plan, as the same may be
      amended following Management Council review, shall be the Operating Plan for
      the
      ensuing Operating Year.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	6.3	
              Excess
                Operating Costs and
                Overruns

            


    

     

    Except
      as
      herein provided, the Manager shall have the power and authority to deviate
      from
      or make modifications to Operating Plans from time to time, in accordance with
      good engineering and mining practices provided that Manager shall not be
      entitled to make material deviations or modifications to Operating Plans without
      the prior approval of Kwagga. If it appears to the Manager that Operating Costs
      will exceed those estimated under an Operating Plan, the Manager shall
      immediately give written notice to Kwagga outlining the nature and extent of
      the
      additional Costs ("Operating
      Cost Overruns")
      and
      the reasons therefor. If Operating Cost Overruns are estimated to exceed by
      ten
      per cent (10%) the Operating Costs estimated under the Operating Plan, the
      notice of the Manager shall contain a notice of a meeting of Kwagga, to be
      held
      no sooner than ten (10) days after the date of delivery of the notice, together
      with a proposed amendment to the Operating Plan. The meeting of Kwagga shall
      be
      convened to review, amend (if deemed appropriate) and approve same. If Kwagga
      fails to approve the amended Operating Plan, the Manager shall curtail
      Operations until submission of the Operating Plan for the ensuing Operating
      Year.

     

    
      	6.4	
              No
                Agreement on Operating
                Plans

            


    

     

    If
      a
      proposed Operating Plan is not approved by Kwagga, then the most recently
approved Operating Plan shall be extended as applicable and implemented by
      the
      Manager.

     

    
      	6.5	
              Suspension
                of Mining

            


    

     

    At
      any
      time subsequent to the date of First Commercial Production, the Manager, may,
      on
      at least 45 days notice to Kwagga recommend that Mining Operations be suspended.
      The Manager's recommendations will include a shut-down plan for the mine and
      a
      Budget therefor, in reasonable detail, of the Operations to be performed to
      maintain the Assets during the period of suspension and the Costs estimated
      to
      be incurred, as well as details with respect to the activities required to
      recommence Operations and the estimated time and Costs to accomplish the same.
      Such plan shall be implemented within 90 days after it is approved, with or
      without variation, by Kwagga. Kwagga may direct the Manager to recommence Mining
      Operations at any time thereafter.

     

    
      	6.6	
              Shut
                Down Plan

            


    

     

    If
      for
      three (3) successive Operating Years or for such shorter period as Kwagga may
      determine, the Operating Plan reflects only the payment of Required Operations
      on the Project Area, the Manager shall prepare a shut-down plan for the Mine
      and
      a Budget therefor which shall be implemented within ninety (90) days after
      it is
      approved, with or without variation, by Kwagga. Kwagga shall pay or to the
      satisfaction of the Manager provide security for the entire Cost of the
      shut-down Budget.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    If
      no
      Management Council approval is obtained within one hundred and twenty (120)
      days
      after submission to it of the Manager's proposed shut-down plan, the Manager
      shall cause a reputable firm of public accountants (the "Selling
      Agent")
      to
      conduct an offer of sale of the Assets on an all cash, sealed bid basis, and
      requiring any bidder to assume, and indemnify the Manager and Kwagga against,
      all reclamation and environmental liabilities related to the Project Area and
      the Operations. If no offer in accordance with the terms hereof is received
      by
      the Selling Agent within the time stipulated by it, the Manager shall, unless
      otherwise directed by Kwagga, prepare and implement a shut-down plan and Kwagga
      shall pay the costs of implementation thereof.

     

    
      	6.7	
              Bank
                Account

            


    

     

    Kwagga
      agrees that prior to the scheduled date of First Commercial Production, it
      shall
      deposit in a separate interest bearing bank account in its name the amount
      of
      the working capital requirements for the initial four (4) months of Mine
      Operations or such longer period as may be set out in the applicable Bankable
      Feasibility Study. All revenues from the Mine's Operations shall be deposited
      in
      such bank account. All cheques and other withdrawals from such bank account
      shall require the signature of an officer of Kwagga.

     

    
      	6.8	
              Loans

            


    

     

    Subject
      to the approval of Kwagga, the Manager may obtain and operate a line of credit
      and/or obtain other debt financing with recognized banks or other financial
      institutions for the purposes of funding Operations (including the Mine
      Construction Program); provided that in the event that any such bank or
      financial institution requires any guarantees or other financial assurances
      from:

     

    (a) any
      of
      the direct or indirect shareholders of Kwagga, such operating line or financing
      shall not be established unless the affected person consents thereto;
      or

     

    (b) Kwagga,
      it shall provide the same.

     

    For
      the
      purposes of securing of such indebtedness, the Manager shall have the right
      to
      grant, as agent on behalf of Kwagga, and Kwagga hereby agrees to grant, to
      any
      lender providing funding to Kwagga pursuant to Sections 3.2(r)
      and/or
6.8,
      an
      Encumbrance over all or part of the Assets and its interests in this
      Agreement.

     

    
      	7.	
              DISTRIBUTIONS
                AND MARKETING

            


    

     

    
      	7.1	
              Distribution
                of Distributable Cash Flow

            


    

     

    After
      the
      date of First Commercial Production, all Distributable Cash Flow shall be
      distributed to Kwagga on a monthly basis within thirty (30) days following
      the
      end of each month.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	7.2	
              Appointment
                of Manager as Marketing
                Manager

            


    

     

    The
      Manager shall act as Kwagga's marketing manager with respect to the marketing
      and sale of all Products. In that capacity, the Manager shall have the following
      powers and duties:

     

    (a) enter
      into, manage and administer smelting, refining and sales contracts;

     

    (b) ensure
      that the smelting, refining, marketing, sale, and transportation of Products
      comply with applicable laws;

     

    (c) perform
      or cause to be performed, for the account of Kwagga, all of its obligations
      pursuant to smelting, refining, and sales contracts and similar agreements
      relating to the sale and marketing of Products;

     

    (d) keep
      good
      relations with customers, including providing them with information and
      notifications related to Products and, upon request, by delivering certificates
      of origin;

     

    (e) keep
      and
      maintain, in accordance with generally accepted accounting principles
      (International Accounting Standard), books of accounts and such other records
      pertaining to the smelting, refining and other sales and marketing activities;
      and

     

    (f) retain
      services of experts and consultants as the Manager may deem advisable or
      necessary to perform its duties under this Section 7.2.

     

    
      	7.3	
              Power
                of Marketing Manager.

            


    

     

    In
      performing its duties under Section 7.2,
      the
      Manager shall have full authority over all marketing activities. Notwithstanding
      any provision hereof to the contrary, the Manager shall not be entitled to
      engage in forward sales, future trading or commodity options trading or other
      price hedging, price protection or other speculative arrangements respecting
      any
      of the Products, without the prior approval of Kwagga.

     

    
      	7.4	
              Final
                Structure of Marketing
                Arrangements

            


    

     

    Notwithstanding
      the provisions of Sections 7.2
      and
7.3,
      it is
      acknowledged and agreed that at the time when a Production Decision is made,
      Kwagga and the Manager shall determine the most effective structure for
      marketing and selling the Products, with a view to minimizing taxes and
      complying with all then applicable laws and regulations; provided that, in
      any
      event, the Manager shall have the exclusive right to act as Kwagga's marketing
      manager with respect to the marketing and sale of all Products and shall be
      compensated for such services regardless of the structure agreed upon as
      contemplated in this Section 7.4.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	8.	
              TERMINATION

            


    

     

    
      	8.1	
              Termination
                by Expiration or Agreement

            


    

     

    This
      Agreement shall terminate as expressly provided in this Agreement, unless
      earlier terminated by written agreement.

     

    
      	8.2	
              Continuing
                Obligations

            


    

     

    On
      termination of this Agreement under Section 3.5
      or
8.1,
      Kwagga
      shall remain liable for continuing obligations hereunder (including contingent
      obligations) until final settlement of all accounts and for any liability,
      whether it accrues before or after termination, if it arises out of Operations
      during the term of the Agreement.

     

    
      	8.3	
              Disposition
                of Assets on Termination

            


    

     

    Promptly
      after termination under Section 3.5
      or
8.1, the
      Manager shall take all action necessary to wind up Operations, and all costs
      and
      expenses incurred in connection with the termination of Operations shall be
      expenses chargeable to Kwagga. The Assets shall first be paid, applied, or
      distributed in satisfaction of all liabilities of Kwagga to third parties.
      Before distributing any funds or Assets to Kwagga, the Manager shall have the
      right to segregate amounts which, in the Manager's reasonable judgment, are
      necessary to discharge continuing obligations (including contingent obligations
      and Required Operations, including decommissioning and long-term monitoring
      and
      care) or to purchase for the account of Kwagga, bonds or other securities for
      the performance of such obligations. Thereafter, any remaining cash and all
      other Assets shall be distributed to Kwagga unless otherwise provided herein
      or
      otherwise agreed.

     

    
      	8.4	
              Continuing
                Authority

            


    

     

    On
      termination of this Agreement under Section 3.5
      or
8.1,
      the
      Manager shall have the power and authority to do all things on behalf of Kwagga
      which are reasonably necessary or convenient to:

     

    (a) wind-up
      Operations;

     

    (b) complete
      any transaction and satisfy any obligation, unfinished, unsatisfied or
      contingent, at the time of such termination or withdrawal; and

     

    (c) undertake
      all Required Operations

     

    if
      the
      transaction or obligation arises out of Operations prior to such termination
      or
      withdrawal. The Manager shall have the power and authority, to grant or receive
      extensions of time or change the method of payment of an already existing
      liability or obligation, prosecute and defend actions on behalf of Kwagga,
      mortgage Assets, and take any other reasonable action.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	9.	
              ACQUISITION,
                ABANDONMENT AND SURRENDER OF
                PROPERTY

            


    

     

    In
      the
      event that the Manager determines that it is necessary or desirable to acquire
      public or private land, usage rights and/or mineral interests or rights within
      the Area of Interest, it shall acquire the same on behalf of Kwagga, whereupon
      the same shall become part of the Licence and the Project Area and Annex A
      shall
      be amended accordingly. The costs of identifying, negotiating the acquisition
      of
      and acquiring such lands, interest and rights shall be treated as Allowable
      Costs.

     

    
      	9.1	
              Surrender
                or Abandonment of Property

            


    

     

    Kwagga
      may authorize the Manager to surrender or abandon part or all of the Property,
      in a manner consistent with any agreement under which such Property was acquired
      and to terminate all or part of the Licence or the Project Area.

     

    
      	10.	
              INDEMNITIES

            


    

     

    
      	10.1	
              Indemnification
                of Manager

            


    

     

    Kwagga
      shall indemnify and hold harmless the Manager and its directors, officers,
      employees, agents and representatives from and against all claims, debts,
      demands, suits, actions and causes of action whatsoever, and all losses,
      damages, fines, penalties, liabilities including without limitation
      environmental liabilities, costs and expenses (including legal expenses)
      whatsoever, which may be brought, made against, suffered or incurred by any
      of
      them arising out of or in connection with any act or omission after the date
      hereof of Kwagga or of the Manager or any of its subcontractors or the employees
      or agents of Kwagga, the Manager or any of its subcontractors, unless such
      act
      or omission constitutes gross negligence or wilful misconduct on the part of
      the
      Manager.

     

    
      	10.2	
              Indemnification
                of Kwagga

            


    

     

    The
      Manager shall indemnify and hold harmless Kwagga and its directors, officers,
      employees, agents and representatives from and against all claims, debts,
      demands, suits, actions and causes of action whatsoever, and all losses,
      damages, costs and expenses (including legal expenses) whatsoever, which may
      be
      brought, made against, suffered or incurred by any of them arising directly
      from
      any act or omission after the date hereof of the Manager which constitutes
      gross
      negligence or wilful misconduct on the part of the Manager.

     

    
      	10.3	
              Limitation
                of Liability

            


    

     

    Notwithstanding
      anything to the contrary in this Agreement, no Party shall be liable to another
      in contract, tort or otherwise for special or consequential damages including,
      without limiting the generality of the foregoing, loss of profits.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	11.	
              GENERAL
                PROVISIONS

            


    

     

    
      	11.1	
              Notices

            


    

     

    All
      notices, payments, and other required communications ("Notices")
      to the
      Parties shall be in writing, and shall be addressed respectively as
      follows:

     

    If
      to WB:


     

    Wits
      Basin Precious Minerals Inc.

    900
      IDS
      Center, 80 South 8th Street

    Minneapolis,
      MN 55402-8773

    Attn:
      Mark D. Dacko

    Telecopier:
      +1 (612).395-5276

     

    If
      to
      Kwagga: 

     

    C/O
      Lonmin Platinum

    Northdowns
      Office Park
17
      Georgian Crescent
Bryanston
      East
Johannesburg
South
      Africa

Attn:
      Peter McElligott

Telecopier:
      +27 516 1442

     

    All
      Notices shall be given (1) by personal delivery to the addressee, or (2) by
      electronic communication, with a confirmation sent by registered or certified
      mail return receipt requested, or (3) by registered or certified mail or
      commercial carrier return receipt requested. All Notices shall be effective
      and
      shall be deemed delivered (1) if by personal delivery on the date of delivery
      if
      delivered during normal business hours and, if not delivered during normal
      business hours, on the next business day following delivery, (2) if by
      electronic communication on the next business day following receipt of the
      electronic communication, and (3) if solely by mail or commercial carrier on
      the
      next business day after actual receipt. A Party may change its address by Notice
      to the other Parties.

     

    
      	11.2	
              Time

            


    

     

    Time
      is
      of the essence of this Agreement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	11.3	
              Force
                Majeure

            


    

     

    Except
      for the obligation to make payments when due hereunder, the obligations of
      a
      Party shall be suspended to the extent and for the period that performance
      is
      prevented by any Force Majeure. The affected Party shall promptly give notice
      to
      the other Party of the suspension of performance, stating therein the nature
      of
      the suspension, the reasons therefor, and the expected duration thereof. The
      affected Party shall resume performance as soon as reasonably
      possible.

     

    
      	11.4	
              Assignment

            


    

     

    Neither
      party may assign its rights and obligations under this Agreement without the
      prior written consent of the other party; provided that, either party may assign
      its rights and obligations under this Agreement to a controlled subsidiary
      of
      such party without the prior written consent of the other party. For purposes
      of
      this Section 11.4, the term “controlled subsidiary” of a party shall include any
      entity of which (i) such party possesses, directly or indirectly, fifty percent
      (50%) or more of the beneficial ownership or voting power, (ii) such party
      possesses, directly or indirectly, twenty-five percent (25%) or more of the
      beneficial ownership or voting power and has the ability to control the
      composition of the board of directors or other governing body of the entity
      or
      (iii) such party otherwise has the capacity to dominate the decision-making
      in
      relation to the financial and operating policies of the entity so that the
      entity operates with such party to achieve collective objectives..

     

    
      	11.5	
              Modification

            


    

     

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

     

    
      	11.6	
              Waiver

            


    

     

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

     

    
      	11.7	
              Interpretation
                and Severability.

            


    

     

    In
      the
      event that any condition, covenant or other provision of this Agreement is
      held
      to be invalid or void by any court of competent jurisdiction, the same shall
      be
      deemed severable from the remainder of this Agreement and shall in no way affect
      any other condition, covenant or other provision of this Agreement. If such
      condition, covenant or other provision shall be deemed invalid due to its scope
      or breadth, such condition, covenant or other provision shall be deemed valid
      to
      the extent of the scope or breadth permitted by law.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	11.8	
              Confidentiality

            


    

     

    With
      the
      exception of disclosures to parent companies or as required by law, both Parties
      agree to keep confidential the terms and conditions of this Agreement and any
      other information regarding each other’s business which they may learn as a
      result of carrying out this contract.

     

    
      	11.9	
              Publicity

            


    

     

    No
      announcements of any nature whatsoever will be made by or on behalf of a Party
      relating to this Agreement without the prior written consent of the other Party,
      save for any announcement or other statement required to be made in terms of
      the
      provisions of any law (or by the rules of any securities exchange on which
      the
      shares of either of the Parties may be listed, where applicable), in which
      event
      the Party obliged to make such statement will first consult with the other
      Party
      in order to enable them in good faith to attempt to agree the content of such
      announcement, which (unless agreed) must go no further than is required in
      terms
      of such law or rules. This will not apply to a Party wishing to respond to
      the
      other Party which has made an announcement of some nature in breach of this
      clause.

     

    This
      Section 11.9 shall not apply to any disclosure made by a Party to its
      professional advisors or consultants, provided that they have agreed to the
      same
      confidentiality undertakings, or to any judicial or arbitral tribunal or
      officer, in connection with any matter relating to this Agreement or arising
      out
      of it.

     

    
      	11.10	
              Breach

            


    

     

    If
      a
      Party ("Defaulting Party") commits any breach of this Agreement and fails to
      remedy such breach within 10 (ten) business days of written notice requiring
      the
      breach to be remedied, then the Party giving the notice ("Aggrieved Party")
      will
      be entitled, at its option –

     

    (a) to
      claim
      immediate specific performance of any of the Defaulting Party's obligations
      under this Agreement, with or without claiming damages, whether or not such
      obligation has fallen due for performance; or

     

    (b) to
      cancel
      this Agreement, with or without claiming damages, in which case written notice
      of the cancellation shall be given to the Defaulting Party, and the cancellation
      shall take effect on the giving of the notice. 

     

    (c) The
      Aggrieved Party's remedies in terms of this clause 11.10 are without prejudice
      to any other remedies to which the Aggrieved Party may be entitled in
      law.

     

    
      	11.11	
              Dispute
                Resolution

            


    

     

    In
      the
      event of there being any dispute or difference between the Parties arising
      out
      of this Agreement, the said dispute or difference shall on written demand by
      either Party be submitted to arbitration in Johannesburg in accordance with
      the
      AFSA rules, which arbitration shall be administered by AFSA.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	11.12	
              Governing
                Law

            


    

     

    This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
South
      Africa.

     

    
      	11.13	
              Further
                Assurances.

            


    

     

    Each
      of
      the Parties agrees that it shall take from time to time such actions and execute
      such additional instruments as may be reasonably necessary or convenient to
      implement and carry out the intent and purpose of this Agreement.

     

    
      	11.14	
              Survival
                of Terms and Conditions

            


    

     

    The
      following sections shall survive the termination of this Agreement, to the
      full
      extent necessary for their enforcement and the protection of the Party in whose
      favour they run: Sections 3.3,
      3.4,
      3.6,
      3.8,
      5.3,
      6.6,
      8.3,
      8.4,
      10.1,
      10.2,
      10.3
      and
11.8.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	11.15	
              Enurement

            


    

     

    This
      Agreement shall be binding upon and inure to the benefit of the Parties and
      their respective successors.

     

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

     

    
      	
              Wits
                Basin Precious Minerals Incorporated

            
	 	 
	
              Per:

            	
              /s/
                H. Vance White

            
	 	
              Name:
                H. Vance White

            
	 	
              Title:
                Chairman

            
	 	 
	 	 
	
              Per:

            	 
	 	
              Name:

            
	 	
              Title:

            
	 
	 
	
              Kwagga
                Gold (Proprietary) Limited

            
	 	 
	
              Per:

            	
              /s/
                Christopher John Davies

            
	 	
              Name:
                Christopher John Davies

            
	 	
              Title:
                Vice President

            
	 	 
	 	 
	
              Per:

            	 
	 	
              Name:

            
	 	
              Title:

            


    

    


    
      
        
        

      

      
        26