---

EXHIBIT 11.1

WINNEMUCCA PROPERTY(Humboldt
County, Nevada, USA)

AMENDED AND RESTATED OPTION AND ROYALTY AGREEMENT

Dated for Reference December 3, 2004, as amended on January
7, 2005, as further amended on February 25, 2005, as further amended on
April 21, 2005, as further amended on January 26, 2006, as further amended
on April 27, 2006, as further amended on June 16, 2006 and as further
amended and restated on July 7, 2006

Between:

GOLDEN SANDS EXPLORATION INC.

and

AHL HOLDINGS LTD.

and

EVOLVING GOLD CORPORATION

---

WINNEMUCCA PROPERTY (Humboldt County, Nevada,
USA)

AMENDED AND RESTATED OPTION AND ROYALTY AGREEMENT

Dated for Reference December 3, 2004

Between:

GOLDEN SANDS EXPLORATION INC.

and

AHL HOLDINGS LTD.

and

EVOLVING GOLD CORPORATION

|TABLE OF
      CONTENTS
|-----------------------

|    |                                                     | Page
|--- | --------------------------------------------------- | ----
|1.  | Interpretation                                      | 3   
|2.  | Representations and Warranties and Acknowledgements | 8   
|3.  | Grant and Exercise of Option                        | 10  
|4.  | Effect of Exercise of Option                        | 11  
|5.  | Transfer of Title Upon Exercise                     | 12  
|6.  | Termination of Option                               | 12  
|7.  | Acquisitions Within Area of Interest                | 13  
|8.  | Transfers                                           | 14  
|9.  | Abandonment of Claims                               | 15  
|10. | Right of Entry                                      | 15  
|11. | Covenants of the Optionor and Optionor Sub          | 16  
|12. | Covenants of the Optionee                           | 16  
|13. | NSR Royalty                                         | 18  
|14. | Registration of Agreement                           | 19  
|15. | Confidential Information                            | 19  
|16. | Further Assurances                                  | 20  
|17. | Notice                                              | 20  
|18. | Headings                                            | 21  
|19. | Default                                             | 21  
|20. | No Waiver of Breaches                               | 22  
|21. | No Partnership                                      | 22  
|22. | Currency                                            | 22  
|23. | Method of Payment                                   | 22  
|24. | Enurement                                           | 22  
|25. | Governing Law                                       | 22  
|26. | Force Majeure                                       | 23  
|27. | Entire Agreement                                    | 23  
|28. | Special Remedies                                    | 23  
|29. | Time of the Essence                                 | 23  
|30. | Execution of Agreement                              | 24  

|Schedule A1 The Original Golden Arc
      Claims
|--------------------------------------------------
|Schedule A2 The Golden Arc Claims               
|Schedule B The Initial Additional Claims        
|Schedule C Certificate of Optionor Sub          
|Schedule D Certificate of Optionor              

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AMENDED AND RESTATED OPTION AND ROYALTY
AGREEMENT(Winnemucca Property)

> DATED for reference the 3rd day of December, 2004,
>         as amended on January 7, 2005, as further amended on February 25, 2005,
>         as further amended on April 21, 2005, as further amended on January 26,
>         2006, as further amended on April 27, 2006, as further amended on June
>         16, 2006 and as further amended and restated on July 7, 2006

BETWEEN:

> GOLDEN SANDS EXPLORATION INC., a corporation duly
>         incorporated pursuant to the laws of British Columbia and having an office
>         at 210-5511 West Boulevard, Vancouver, British Columbia V6M 3W6 (the Optionor)

AND:

> AHL HOLDINGS LTD.,a corporation duly incorporated
>         pursuant to the laws of Nevada and having an office at One East Liberty
>         Street, Suite 424, Reno, Nevada 89501 (the Optionor Sub)

AND:

> EVOLVING GOLD CORPORATION, a corporation duly
>         incorporated pursuant to the laws of British Columbia and having an office
>         at Suite 1500, 885 West Georgia Street, Vancouver, BC V6C 3E8 (the "Optionee)

WHEREAS:

|A. | The Optionor is the sole owner of all of the issued
      shares in AHL Holdings Ltd., a Nevada corporation (the Optionor
      Sub);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|B. | The Optionor Sub entered into an option agreement dated
      March 22, 2004 (the Underlying Golden Arc Option Agreement) with
      Golden Arc Mining and Refining Inc. (Golden Arc) regarding the
      unpatented mining claims listed in Schedule A to the Underlying Golden
      Arc Option Agreement and also listed in Schedule A1 to this Agreement
      (the Original Golden Arc Claims) and any other unpatented mining
      claims that became subject to the option in the Underlying Golden Arc
      Option Agreement, all of which were located in the County of Humboldt,
      State of Nevada, USA;
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|C. | The Optionor, the Optionor Sub and the Optionee entered
      into an Option & Royalty Agreement dated December 3, 2004 (the
      December 3, 2004 Option Agreement) which concerned
  the                                                                                                                                                                                                                                                                                                                                                                                                                                     

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- 2 -

|   | Original Golden Arc Claims and certain other mining
      claims set out in Schedule B to the December 3, 2004 Option and Royalty
      Agreement;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                     
|D. | Subsequently, the Optionor, the Optionor Sub and the
      Optionee entered into various amending agreements;                                       
|   |                                                                                                                                                     
|E. | Also following the date of the signing of the December 3,
      2004 Option Agreement:                                                              

| | (i)   | certain matters warranting amendment were found in the
      location and the recording of Golden West Frac A (described in Schedule
      A to the December 3, 2004 Option and Royalty Agreement as the Gold West
      Frac A) and Golden West Frac B (described in Schedule A to the December
      3, 2004 Option and Royalty Agreement as the Gold West Frac B) and, as a
      result, those mining claims were amended and recorded as Amended Golden
      West Frac A and Amended Golden West Frac B;
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (ii)  | certain other mining claims, namely WM 206, WM 207 and WM
      208, were staked and recorded to cover those lands that, as a result of
      the recording of the amended mining claims, were open for the location of
      mining claims; and                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (iii) | all of the mining claims subject to the option in the
      Underlying Option Agreement and subject to the December 3, 2004 Option and
      Royalty Agreement, which prior to the Underlying Golden Arc Option
      Agreement were not registered in the name of the Optionor Sub became
      recorded in the name of the Optionor Sub;                                                                                                                                                                        

|F. | The unpatented mining claims now subject to the
      Underlying Golden Arc Option Agreement are listed in Schedule A2 and are
      herein called the Golden Arc Claims;                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|G. | Thus, as of the date of the restatement of this
      Agreement, the names of the registered owner of the Golden Arc Claims is
      as set out in Schedule A2;                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|H. | As of the date of the restatement of this Agreement, the
      beneficial owner of the Golden Arc Claims is Golden Arc;                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|I. | The Optionor Sub located on the ground by the
      construction of the monument of discovery, posting of the notices of
      location and construction of the corner monuments and, following the
      signing of the December 3, 2004 Option and Royalty Agreement, had recorded
      the certificates of location and mining claim map in the office of the
      county recorder and filed with the Bureau of Land Management, certain
      unpatented mining claims nearby the Golden Arc Claims, as set out in
      Schedule B to this Agreement (the Initial Additional
      Claims);
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|J. | Under the terms of the Underlying Golden Arc Option
      Agreement, Golden Arc has the option to have any mineral claims acquired
      by the Optionor Sub and located within one mile of the Original Golden Arc
      Claims listed in Schedule A1 (and later the Golden Arc Claims listed in
      Schedule A2) become subject to the terms of the option granted by Golden
      Arc to the Optionor Sub (the Underlying Area of Interest
      Option);                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|K. | As a result, subject to the Underlying Golden Arc Option
      Agreement the Optionor Sub is the sole registered and the Optionors are
      the sole beneficial owner of all of the Claims, other than the Golden Arc
      Claims in which case the Optionor Sub is the registered owner and Golden
      Arc is the beneficial owner, also subject to the terms of the Underlying
      Golden Arc Option Agreement;                                                                                                                                                                               

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- 3 -

|L. | The Optionor Sub has exclusive possession of and the
      right to explore for locatable minerals on and mine the Claims (subject to
      the terms of the Underlying Golden Arc Option Agreement) free and clear of
      all claims, liens or encumbrances;                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                             
|M. | The Optionee sought from the Optionors and was granted by
      the Optionors an extension until June 30, 2006 to certain terms of the
      December 3, 2004 Option Agreement as amended;                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                             
|N. | The Optionee had also requested certain changes to the
      December 3, 2004 Option Agreement, as amended; and                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                             
|O. | As a result, the parties now wish to enter into this
      Agreement in order to further amend and to restate the December 3, 2004
      Option Agreement, as amended, and to confirm the grant of an option to the
      Optionee to the Claims on the terms and conditions as hereinafter set
      forth.

THE PARTIES AGREE AS FOLLOWS:

|1.  | INTERPRETATION    
|--- | ------------------
|    |                   
|1.1 | In this Agreement:

| | (a) | Additional Property means any Mineral Rights or
      Surface Rights within the Area of Interest that become subject to the
      terms of this Agreement pursuant to Subsection 7.3;                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (b) | Abandoned Claims has that meaning set out in
      Subsection 9.1;                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (c) | Advance Royalty Payments has that meaning set
      out in Subsection 13.5 of this Agreement;                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (d) | Affiliate means any person, partnership, limited
      liability company, joint venture, corporation, or other form of enterprise
      which Controls, is Controlled by, or is under common Control with a
      Participant;                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (e) | Area of Interest means the area within a
      perimeter constituted by the outside boundaries of the Claims, plus three
      miles;                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (f) | Authorization means, with respect to any
      Participant, any order, permit, approval, waiver, licence or similar
      authorization of any governmental or public department, central bank,
      commission, board, bureau, agency or instrumentality or stock exchange
      having jurisdiction over the Participant, and includes any bond, deposit
      or other security required by any order, permit, approval, waiver, licence
      or authorization;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (g) | Business Day means any day of the year, other
      than a Saturday, Sunday or any other day on which banks are closed in
      Toronto, Ontario, Canada or in Reno, Nevada;                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (h) | Claims means the Golden Arc Claims, the Initial
      Additional Claims and Additional Property, if any;                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (i) | Commencement Date means December 3, 2004, being
      the date of the option agreement between the Optionor, the Optionor Sub
      and the Optionee;                                                                                                                                                                                                                                                                                                               

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- 4 -

| | (j) | Confidential Information means all information,
      data, knowledge and know-how (including, but not limited to, formulae,
      patterns, compilations, programs, devices, methods, techniques and
      processes) that derive independent economic value, actual or potential, as
      a result of not being generally known to, or readily ascertainable by,
      third parties and which is the subject of efforts that are reasonable
      under the circumstances to maintain its secrecy, including without
      limitation all analyses, interpretations, compilations, studies and
      evaluations of such information, data, knowledge and know- how generated
      or prepared by or on behalf of either Participant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (k) | Control used as a verb means, when used with
      respect to an entity, the ability, directly or indirectly through one or
      more intermediaries, to direct or cause the direction of the management
      and policies of such entity through: (i) the legal or beneficial ownership
      of voting securities or membership interests; (ii) the right to appoint
      managers, directors or corporate management; (iii) contract; (iv) an
      operating agreement; (v) a voting trust; or (vi) otherwise; and, when used
      with respect to a person, means the actual or legal ability to control the
      actions of another, through family relationship, agency, contract or
      otherwise; and Control used as a noun means an interest which gives the
      holder the ability to exercise any of the foregoing powers;                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (l) | date of the restatement of this Agreement means
      July 7, 2006;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (m) | "Dollars ($)" means legal currency of the United
      States;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (n) | Encumbrance means any mortgage, charge, pledge,
      hypothecation, security interest, assignment, lien (statutory or
      otherwise), charge, title retention agreement or arrangement, royalty,
      restrictive covenant or other claim or encumbrance of any nature, whether
      or not capable of being registered against title;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (o) | Environmental Laws means Laws aimed at
      reclamation or restoration of the Claims; abatement of pollution;
      protection of the environment; protection of wildlife, including
      endangered species; ensuring public safety from environmental hazards;
      protection of cultural or historic resources; management, storage or
      control of hazardous materials and substances; releases or threatened
      releases of pollutants, contaminants, chemicals or industrial, toxic or
      hazardous substances as wastes into the environment, including without
      limitation, ambient air, surface water and groundwater; and all other Laws
      relating to the manufacturing, processing, distribution, use, treatment,
      storage, disposal, handling or transport of pollutants, contaminants,
      chemicals or industrial, toxic or hazardous substances or
wastes;                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (p) | Environmental Liabilities means any and all
      claims, actions, causes of action, damages, losses, liabilities,
      obligations, penalties, judgments, amounts paid in settlement,
      assessments, costs, disbursements, or expenses (including, without
      limitation, attorneys' fees and costs, experts' fees and costs, and
      consultants' fees and costs) of any kind or of any nature whatsoever that
      are asserted against either Participant, by any person or entity other
      than the other Participant, alleging liability (including, without
      limitation, liability for studies, testing or investigatory costs, cleanup
      costs, response costs, removal costs, remediation costs, containment
      costs, restoration costs, corrective action costs, closure costs,
      reclamation costs, natural resource damages, property damages, business
      losses, personal injuries, penalties or fines) arising out of, based on or
      resulting from: (i) the presence, release, threatened release, discharge
      or emission into the environment of any hazardous materials or substances
      existing or arising on, beneath or above the
Properties

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- 5 -

| |     | and/or emanating or migrating and/or threatening to
      emanate or migrate from the Properties to off-site properties; (ii)
      physical disturbance of the environment; or (iii) the violation or alleged
      violation of any Environmental Laws;                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                        
| | (q) | Exploration Expense means the exploration
      expenses spent or incurred by or on behalf of the Optionee since the
      Commencement Date (including, without limitation, those described in
      Subsection 3.2) in the conduct of exploration, development and evaluation
      activities on or in relation to the Claims including, without
      limitation:

| | (i)    | in searching title and curing title defects;                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (ii)   | in acquiring Additional Property;                                                                                                                                                                                                                                                                                                                                                                                                                
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (iii)  | in holding the Claims in good standing (including any
      monies expended as required to comply with Laws, such as for the
      completion and submission of assessment work and filings required in
      connection therewith), in defending title to the Claims;                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (iv)   | in preparing for and in the application for and
      acquisition of environmental permits and other Authorizations necessary or
      desirable to commence and complete exploration, development and evaluation
      activities on the Claims;                                                                                                                                                                                                
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (v)    | in doing geophysical and geological surveys, drilling,
      assaying and metallurgical testing, including costs of assays,
      metallurgical testing and other tests and analyses to determine the
      quantity and quality of minerals, water and other materials or
      substances;                                                                                                                                                     
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vi)   | in acquiring services or facilities or the use thereof
      and for all parts, supplies and consumables, provided that any cost or
      expense paid or incurred in connection with properties or rights therein
      in which the Optionors have an interest but which are required for the
      development of the Claims will be reasonably and in good faith allocated
      according to the benefit or potential benefit to the Claims;
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (vii)  | for salaries and wages for employees assigned to
      exploration, development and evaluation activities;                                                                                                                                                                                                                                                                                                                                       
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (viii) | the expenses of all persons engaged in work with respect
      to and for the benefit of the Claims including for their travel, food,
      lodging and other reasonable needs;                                                                                                                                                                                                                                                                  
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (ix)   | payments to contractors or consultants for work done,
      services rendered or materials supplied;                                                                                                                                                                                                                                                                                                                                             
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (x)    | all taxes or other imposts levied against or in respect
      of the Claims or activities thereon and the cost of insurance premiums and
      performance bonds or other security; and                                                                                                                                                                                                                                                          
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (xi)   | an administrative charge equal to 3% of all Exploration
      Expense (other than expenditures on capital assets). The parties agree
      that the administrative charge is intended to compensate the Optionee for
      its home office overhead and general and administrative expenses incurred
      in managing the project and is not intended                                                                                           

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- 6 -

to result in net profit to the
Optionee. The parties further agree that the administrative charge is subject to
a right of review and dispute in accordance with the arbitration provisions of
this Agreement by either the Optionors or the Optionee;

| | (r) | Exploration Expense Report means written fully
      itemized statement of Exploration Expense incurred by the Optionee during
      the relevant period of the Option, certified as being complete and
      accurate by the Optionee and without restricting the foregoing, the list
      of items set out in the definition of Exploration Expense should be
      reported separately, if reasonably possible, but in any case, the amounts
      for items (i) and (ii) in the definition of Exploration Expense must be
      reported separately and furthermore, the Exploration Expenditure Report
      must report the Exploration Expenses incurred on the Golden Arc Claims and
      the Exploration Expense incurred on the other Claims separately;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (s) | Feasibility Study means a comprehensive study of
      a mineral deposit in which all geological, engineering, legal, operating,
      economic, social, environmental and other relevant factors are considered
      in sufficient detail that it could reasonably serve as the basis for a
      final decision by a financial institution to finance the development of
      the deposit for mineral production;                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (t) | Golden Arc means Golden Arc Mining &
      Refining Inc., a Nevada company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (u) | "Golden Arc Claims" means those mineral claims set
      out in Schedule A2 of this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (v) | Initial Additional Claims has that meaning as
      set out in Recital I of this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (w) | Laws means applicable laws including all
      statutes, codes, ordinances, decrees, rules, regulations, municipal
      by-laws, judicial or arbitral or administrative or ministerial or
      departmental or regulatory judgments, orders, decisions, rulings or
      awards, policies, guidelines, and general principles of common and civil
      law and equity, binding on or affecting the Person or Claims referred to
      in the context in which the word is used;                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (x) | Mineral Rights means interests in minerals and
      rights to minerals including, without limitation, exploration licenses,
      unpatented mineral claims, patented mineral claims and other forms of
      mineral title, whether contractual, statutory or otherwise;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (y) | "Net Smelter Returns" means the proceeds received
      by the Optionee from any smelter or other purchaser from the sale of any
      ores, concentrates or minerals produced from the Claims after deducting
      from such proceeds the following charges only to the extent that they are
      not deducted by the smelter or other purchaser in computing the
      proceeds:                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (z) | Notice of Exercisehas that meaning as set out
      in Subsection 3.2(q);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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- 7 -

| | (aa) | "NSR Royalty" means a Net Smelter Returns royalty,
      to be paid by the Optionee to the Optionor pursuant to Subsection
    13.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (bb) | Optionor Sub has that meaning as set out in
      Recital A;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (cc) | Option Period means the period beginning with
      the Commencement Date and ending on the earliest of: (i) the date upon
      which the Option has been exercised pursuant to Subsection 3.2 and (ii)
      the date upon which the Option has been terminated;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (dd) | Optionors means the Optionor and the Optionor
      Sub;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ee) | Original Golden Arc Claims means those mining
      claims set out in Recital B and also means those mining claims set out in
      Underlying Golden Arc Option Agreement and also those mining claims set
      out in Schedule A1 to this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ff) | Participant the Optionor and the Optionor Sub
      together are called a Participant and the Optionee is called a Participant
      and any permitted successor or assign of Optionor, Optionor Sub or the
      Optionee under this Agreement is called a Participant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (gg) | Pre-feasibility Study means a comprehensive
      study of the viability of a mineral project that has advanced to a stage
      where the mining method, in the case of underground mining, or the pit
      configuration, in the case of an open pit, has been established, and an
      effective method of mineral processing has been determined, including a
      financial analysis based on reasonable assumptions of technical,
      engineering, operating, economic factors and the evaluation of other
      relevant factors which are sufficient for a qualified person, acting
      reasonably, to determine if all or part of the mineral resource may be
      classified as a mineral reserve and which study recommends the preparation
      and the completion of a Final Feasibility Study;
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (hh) | Proximate Property has that meaning as set out
      in Subsection 7.3;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii) | "Shares" means fully paid, non assessable
      previously unissued common shares in the capital of the
Optionee;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (jj) | Surface Rights means any interest in any real
      property, whether freehold, leasehold, license, right of way, easement or
      any other surface or other right in relation to real property, and
      includes water rights or any interest therein, but does not include any
      Mineral Rights;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (kk) | this Agreement means this agreement dated for
      reference December 3, 2004, as amended on January 7, 2005, as further
      amended on February 25, 2005, as further amended on April 21, 20005, as
      further amended on January 25, 2006, as further amended on April 27, 2006
      and as further amended on June 16, 2006 and as further amended and
      restated on July 7, 2006;                                                                                                                                                                                                                                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ll) | Transfer has that meaning set out in Subsection
      8.1;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (mm) | Underlying Area of Interest Option has that
      meaning as set out in Recital J; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (nn) | Underlying Golden Arc Option Agreement has that
      meaning set out in Recital B.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

- 8 -

|2.  | REPRESENTATIONS AND WARRANTIES AND
      ACKNOWLEDGEMENTS                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                         
|2.1 | The Optionee represents and warrants to the Optionors
      that, as of the date of the restatement of this
  Agreement:

| | (a) | the Optionee is a corporation duly incorporated and
      validly existing pursuant to the laws of British Columbia;                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (b) | the Optionee currently has its shares quoted for trading
      on the Canadian Trading & Quotation System, commonly known as the
      CNQ;                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (c) | the Optionee is a reporting issuer under the United
      States Securities and Exchange Act of 1934 and the shares of the Optionee
      are quoted for trading on the United States Over the Counter Bulletin
      Board, commonly known as OTCBB;                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | the Optionee has full power and absolute authority to
      carry on its business and to enter into this Agreement and any agreement
      or instrument referred to or contemplated by this Agreement and has
      received all written Authorizations or approvals required to grant the
      rights and to enter into and perform this Agreement;                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (e) | the execution and delivery of the Agreement and the
      exercise by the Optionee of the rights granted under the Agreement will
      not conflict with or be in contravention of any law, regulation or order
      of any government, government department or other competent authority or
      conflict with rights of third parties or result in a breach of or default
      under any agreement or other instrument of obligation to which the
      Optionee is a party or by which the Optionee may be bound; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (f) | the Agreement will constitute a legal, valid and binding
      obligation of the Optionee.                                                                                                                                                                                                                                                                                                                                                                                                                                   

|2.2 | The Optionors represent and warrant to the Optionee that
      as of the date of the restatement of this
Agreement:
|--- | -------------------------------------------------------------------------------------------------------------------

| | (a) | the Optionor is a corporation duly incorporated and
      validly existing pursuant to the laws of British Columbia and is in good
      standing with respect to filing of its Annual Reports;                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                              
| | (b) | the Optionor Sub is a corporation duly incorporated
      pursuant to the laws of Nevada and is in good standing with respect to
      filing of its Annual List of Directors, Officers and Resident Agent with
      the Secretary of State of Nevada;                                                                      
| |     |                                                                                                                                                                                                                                                                                                                              
| | (c) | the Underlying Golden Arc Option Agreement is in good
      standing and enforceable in accordance with its terms;                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                              
| | (d) | the Golden Arc Claims have been duly and validly located,
      staked and recorded, are accurately described in Schedule "A2", are
      presently in good standing under the laws of the jurisdiction in which
      they are located and, except as set forth herein, are free and clear of
      all Encumbrances;       
| |     |                                                                                                                                                                                                                                                                                                                              
| | (e) | the Initial Additional Claims have been duly and validly
      located, staked and recorded, are accurately described in Schedule B",
      are presently in good standing under the laws of the jurisdiction in which
      they are located and, except as set forth herein, are free and clear of
      all Encumbrances;

---

- 9 -

| | (f) | the name of the registered owner of the Golden Arc Claims
      is AHL;                                                                                                                                                                                                                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (g) | the name of the registered owner of the Initial
      Additional Claims is AHL;                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (h) | under the terms of the Underlying Golden Arc Option
      Agreement, Golden Arc has the option to have any unpatented mining claims
      acquired by the Optionor Sub and located within one mile of the Original
      Golden Arc Claims and later Golden Arc Claims become subject to the terms
      of the option granted by Golden Arc to the Optionor Sub (previously
      defined as the Underlying Area of Interest Option);
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (i) | as a result, subject to the terms of the Underlying
      Golden Arc Option Agreement, the Optionor Sub is the sole registered and
      beneficial owner of all of the Claims, except the Golden Arc Claims in
      which case the Optionor Sub is the registered owner and Golden Arc is the
      beneficial owner;                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (j) | subject to terms of the Underlying Golden Arc Option
      Agreement, the Optionors have exclusive possession of and the right to
      explore for locatable minerals on and mine the Claims free and clear of
      all Encumbrances;                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (k) | subject to the terms of the Underlying Golden Arc Option
      Agreement, the Optionors have the exclusive right to enter into this
      Agreement and all necessary authority to dispose of a 100% interest in and
      to the Claims in accordance with the terms of this Agreement;                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (l) | subject to the paramount title of the United States, no
      person has any proprietary or possessory interest in the Golden Arc Claims
      other than the Optionors and Golden Arc;                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (m) | no person is entitled to any royalty or other payment in
      the nature of rent or royalty on any locatable minerals removed from the
      Golden Arc Claims, except for the Optionor Sub and, indirectly, Golden Arc
      under the terms of the Underlying Golden Arc Option Agreement;                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (n) | subject to the paramount title of the United States, no
      person has any proprietary or possessory interest in the Initial
      Additional Claims or the Additional Property other than the
    Optionors;                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (o) | subject to the Underlying Area of Interest Option, no
      person is entitled to any royalty or other payment in the nature of rent
      or royalty on any locatable minerals removed from the Initial Additional
      Claims or the Additional Property, except for the Optionor Sub;                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (p) | neither the execution and delivery of this Agreement nor
      any of the agreements referred to herein or contemplated hereby, nor the
      consummation of the transactions hereby contemplated will conflict with,
      result in the breach of or accelerate the performance required by any
      agreement to which the Optionor or the Optionor Sub is a party or by which
      it is bound;                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (q) | the execution and delivery of this Agreement and the
      agreements contemplated hereby will not violate or result in the breach of
      the laws of any jurisdiction applicable or pertaining thereto;                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (r) | the Claims have not been surveyed;
and                                                                                                                                                                                                                                                                                                                                                                                                  

---

- 10 -

| | (s) | the Optionor Sub made reasonable efforts to reduce the
      advance royalty payments to be paid under the Underlying Golden Arc Option
      Agreement and Golden Arc did not agree to reduce those advance royalty
      payments.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.3 | The representations, warranties and acknowledgements
      hereinbefore set have been relied on by the parties in entering into this
      Agreement and will survive the acquisition of any interest in the Claims
      by the Optionee and each party will indemnify and save the other party
      harmless from all loss, damage, costs, actions and suits arising out of or
      in connection with any breach or any representation, warranty, covenant,
      agreement or condition made by the other party and contained in this
      Agreement.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.  | GRANT AND EXERCISE OF OPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.1 | The Optionors hereby grant to the Optionee the sole and
      exclusive option (the Option) in accordance with this Section 3,
      to purchase, subject to the NSR Royalty, 100% of the right, title and
      interest in and to the Claims, free and clear of all
  Encumbrances.                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3.2 | To exercise the Option, subject to the terms and
      conditions of this Agreement, the Optionee
must:                                                                                                                                                                                                                                                                                                                                                                                                                                                     

| | (a) | issue in the name of Golden Arc and deliver to the lawyer
      for the Optionor 100,000 Shares by January 7, 2005 (which was
  done);                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (b) | pay to the Optionor $30,000 by January 7, 2005, by
      delivering to the lawyer for the Optionor a certified cheque or bank draft
      made payable to the lawyer for the Optionor in Trust (which was
    done);                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (c) | issue and deliver to the Optionor 200,000 Shares by
      January 7, 2005 (which was done);                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (d) | pay to the Optionor $40,000 by May 6, 2005, by delivering
      to the lawyer for the Optionor a certified cheque or bank draft made
      payable to the lawyer for the Optionor in Trust (which was
done);                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (e) | issue and deliver to the Optionor a further 200,000
      Shares by February 25, 2005 (which was done);                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (f) | to cause the filing of an application under Rule 15c2-11
      of the United States Securities Exchange Act of 1934 and then cause the
      filing to be accepted by the National Association of Securities Dealers
      and then cause the commencement of trading of the shares of the Optionee
      on the United States Bulletin Board (which was done);                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (g) | issue and deliver to the Optionor a further 400,000
      Shares by September 5, 2005 (which was done);                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (h) | issue and deliver to the Optionor 400,000 Shares at the
      signing of this Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (i) | pay the Optionors their reasonable legal expenses
      relating to (a) the quiet title action and (b) the various breaches of
      this Agreement by the Optionee and the resulting amendments, including the
      preparation of this Agreement at the close of a private placement of
      shares and full warrants at the price of $0.30 per share caused by the
      Optionors and, the Optionee will do all such things as may be necessary to
      facilitate such private placement in an
expeditious

---

- 11 -

| |     | manner, including the making of all applications and the
      obtaining of all necessary approvals;
| | --- | ----------------------------------------------------------------------------------------------------
| |     |                                                                                                     
| | (j) | by July 31, 2006, or as soon as possible
    thereafter:                                            

| | (i)   | prepare a technical report prepared in accordance with
      National Instrument 43- 101 and it is agreed that the author of such
      report need not be independent of the Optionee;                                                                                                                                                                                                                                                                                                                                                                                                
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii)  | prepare and deliver to the Optionors an Exploration
      Expense Report for the period from December 3, 2004 to June 30, 2006;
      and                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | deliver to the Optionors all data, information and
      reports on work carried out by the Optionee during the Option Period on
      the Claims, all drill core, assay pulps, maps, drilling logs, assay
      results and other technical data compiled by the Optionee with respect to
      the Claims and copies of all books, accounts and records of operations
      conducted by or on behalf of the Optionee on the Claims and not previously
      delivered to the Optionors, all of which material is to presented in both
      electronic (if available) and hard copy;

| | (k) | prepare technical reports in accordance with Subsection
      12.1(e);                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (l) | incur cumulative Exploration Expense of not less than
      $500,000 on the Claims by December 31, 2006, including at least $200,000
      of cumulative Exploration Expense on the Golden Arc Claims (which the
      Optionee agrees and commits to incur), and it is agreed that none of such
      $200,000 of cumulative Exploration Expense includes any amounts listed in
      (i), (ii), (iii), (iv), (vi), (x) or (xi) of the definition of Exploration
      Expense;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (m) | incur cumulative Exploration Expense of not less than
      $2,000,000 on the Claims by December 31, 2007;                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (n) | issue and deliver to the Optionor 500,000 Shares by
      December 31, 2007;                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (o) | incur cumulative Exploration Expense of not less than
      $4,000,000 on the Claims by December 31, 2008;                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (p) | prepare and pay for a Pre-Feasibility Study on the Claims
      and deliver that study to the Optionors by June 30, 2009; and                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (q) | deliver by June 30, 2009 to the Optionors a written
      notice that all things sets out in Subsection 3.2 have been completed
      within the time frames set out therein and that the Optionee elects to
      exercise the Option (the Notice of
Exercise).                                                                                                                                                                                                              

|3.3 | If the shares of the Optionee are subdivided into a
      greater number of shares of the Optionee the number of shares deliverable
      hereunder will be increased proportionately as the case may be.                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                        
|4.  | EFFECT OF EXERCISE OF OPTION                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                        
|4.1 | Immediately upon the completion of those things set out
      in Subsection 3.2 the Option shall be exercised and the Optionee will,
      subject to the right of the Optionor Sub (and Golden Arc indirectly) to
      receive the NSR Royalty, own 100% of the right, title and interest in and
      to the Claims.

---

- 12 -

|5.  | TRANSFER OF TITLE UPON EXERCISE                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|5.1 | Upon the exercise of the Option, as provided in
      Subsection 4.1, the Optionor Sub will deliver to the Optionee a duly
      executed deed in recordable form of 100% of the Optionors right, title
      and interest in and to the Claims in favour of the Optionee, subject to
      the NSR Royalty, which the Optionee will be entitled to immediately record
      against title to such Claims.
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|6.  | TERMINATION OF OPTION                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|6.1 | The Option will terminate if:                                                                                                                                                                                                                                                                                                                                                                              

| | (a) | the Optionee does not comply with the requirements of
      Subsection 3.2 within the time periods set out therein; or                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                           
| | (b) | at any time, during the term of the Agreement, the
      Optionee delivers notice to the Optionors that it wishes to terminate the
      Option, whereupon the Option will terminate 60 days
  thereafter.

|6.2 | Upon termination of the Option pursuant to Subsection 6.1
      the Optionee will have no further right to acquire any interests in the
      Claims and no further obligations hereunder, except the
  following:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                   
|    | (a)                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                   
|    | (b)                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                   
|    | (c)                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                   
|    | (d)                                                                                                                                                                                                               

---

- 13 -

| | (e) | together with the Optionors, perform any other covenants
      under this Agreement required to be performed upon termination and observe
      and perform their confidentiality and other obligations pursuant to
      Section 15.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7.  | ACQUISITIONS WITHIN AREA OF INTEREST                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.1 | In this Section 7, the Optionors will be construed as a
      party and the Optionee will be construed as a party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.2 | No party may acquire, nor will it permit any Affiliate to
      acquire, any Mineral Rights or Surface Rights located wholly or in part
      within the Area of Interest or any Mineral Rights adjacent thereto unless
      the acquisition is made subject to the terms of this Agreement and the
      acquiring party, or the party whose Affiliate made the acquisition,
      complies with the provisions of this Section 7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.3 | Subject to Subsections 7.4 and 7.5, the parties agree
      that any Mineral Rights or Surface Rights acquired by a party or their
      Affiliates during the currency of this Agreement which are located wholly
      or partially within the Area of Interest (the Proximate Property)
      shall, at the option of the other party, form part of the Claims and be
      subject to the terms of the Option (the Additional Property)
      provided that if the such Mineral Rights or Surface Rights in the Area of
      Interest is acquired by the Optionors, then the Optionee will first be
      required to reimburse the Optionors for their acquisition costs.                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.4 | If the acquiring party is the Optionors or an Affiliate
      of the Optionors, then Optionors will give written notice thereof to the
      Optionee setting out the location of the Mineral Rights or Surface Rights,
      including all information known to the Optionors or the acquiring party
      about the same, the costs of acquisition and all other pertinent details
      relating thereto, and upon receipt of such notice, the Optionee will have
      a period of 15 days to decide whether the Mineral Rights or Surface Rights
      in question or any portion thereof will become subject to the Option and
      make full payment for their cost. If the Optionee does elect to have such
      Mineral Rights or Surface Rights become subject to the Option and does
      make full payment for their cost, the Optionors will have recorded into
      the name of the Optionor Sub a 100% interest in the Mineral Rights or
      Surface Rights.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.5 | If the acquiring party is the Optionee or an Affiliate of
      the Optionee, the Optionee will give written notice thereof to the
      Optionors setting out the location of the Mineral Rights or Surface
      Rights, including all information known to the Optionee or the acquiring
      party about the same, the costs of acquisition and all other pertinent
      details relating thereto, and upon receipt of such notice, the Optionors
      will have a period of 15 days to decide whether the Mineral Rights or
      Surface Rights in question or any portion thereof will become subject to
      the Option. In the event that the Optionors elect to have the Mineral
      Rights or Surface Rights become subject to the Option, then the Optionee
      will have recorded into the name of the Optionor Sub a 100% interest in
      the Mineral Rights or Surface Rights.                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|7.6 | If, within the 15-day period referred to in Subsection
      7.4, the Optionee does not notify the Optionors that Mineral Rights or
      Surface Rights are to become subject to the Option, then the Optionee will
      be deemed to have elected that the acquisition by the acquiring party of
      the Mineral Rights or Surface Rights is not to form part of the Option and
      the same may thereafter be held or dealt with by the acquiring party and
      the Optionors free of the terms and conditions of this Agreement. The
      terms of this Section 7 will continue to apply with respect to any future
      acquisitions of Mineral Rights or Surface Rights within the Area of
      Interest until all obligations                                                                                                                                                                                                                                   

---

- 14 -

|     | of the Optionee under this Agreement have been fulfilled
      and the Option has been exercised or terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7.7  | If, within the 15-day period referred to in Subsection
      7.5, the Optionors do not notify the Optionee that Mineral Rights or
      Surface Rights are to become subject to the Option, then the Optionors
      will be deemed to have elected that such Mineral Rights or Surface Rights
      become subject to the Option and the acquiring party and the Optionee will
      record such Mineral Rights or Surface Rights in the name of the Optionor
      Sub. The terms of this Section 7 will continue to apply with respect to
      any future acquisitions of Mineral Rights or Surface Rights within the
      Area of Interest until all obligations of the Optionee under this
      Agreement have been fulfilled and the Option has been exercised or
      terminated.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7.8  | Each of the parties hereto will execute and deliver or
      cause to be executed and delivered such further documents and instruments
      and give such further assurances as the other may reasonably require to
      evidence and give effect to any acquisition and/or transfer of a mineral
      interest as provided in this Section 7.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7.9  | Non-compliance with the provisions of this Article by any
      acquiring party which is an Affiliate of a Participant will constitute a
      default under this Agreement by such Participant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7.10 | This Agreement and the rights and obligations of the
      parties hereunder are strictly limited to the Claims, including any
      Additional Property. Each party will have the free and unrestricted right
      to enter into, conduct and benefit from business ventures of any kind
      whatsoever, whether or not competitive with the activities undertaken
      pursuant hereto, without disclosing such activities to the other party or
      inviting or allowing the other to participate.                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.   | TRANSFERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.1  | Unless permitted under and in accordance with this
      Agreement the Optionee will not transfer, convey, assign, mortgage or
      grant an option in respect of or grant a right to purchase or in any
      manner transfer, alienate or otherwise dispose of (whether as a noun or
      verb and in any form, Transfer) its interest, in whole or in
      part, in any of the Property, or transfer or assign any of its rights
      under this Agreement.                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.2  | The Optionee is prohibited from transferring its
      interest, in whole or in part, in any of the Claims or any of its rights
      under this Agreement, unless such Transfer occurs when it is not in
      default of any of its covenants and agreements herein contained and it has
      received the consent of the Optionors to such Transfer, which consent may
      be withheld in their sole discretion.                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.3  | Notwithstanding any other provision of this Section 8,
      the Optionors may Transfer any of their interest under this Agreement
      prior to the exercise of the Option without the consent of the
      Optionee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8.4  | Notwithstanding Subsections 8.2 and 8.3 of this Agreement
      and notwithstanding that the Optionors have not reviewed either the
      confidentiality agreement, the letter agreement or the formal agreement
      between the Optionee and Meridian Minerals Corp., if the Optionee enters
      into an earn-in agreement with Meridian Minerals Corp., the entering into
      of that agreement will not be a breach of Subsections 8.1 or
  8.2.                                                                                                                                                                                                                                                                                                                                  

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|9.   | ABANDONMENT OF CLAIMS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|9.1  | Should the Optionee, in its sole discretion, determine
      that some but not all of the Claims no longer warrant further exploration
      and development, then the Optionee may abandon such Claims (the
      Abandoned Claims) without affecting its rights or obligations
      under this Agreement, so long as the Optionee provides the Optionor with
      30 days notice of its intention to do so and (a) provides the Optionors
      with a copy of all information and data upon which the Optionee made its
      determination, and (b) receives the written consent of the Optionors and
      (c) upon the written request of the Optionors returns such abandoned
      Claims to the Optionors and the Optionee will:
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.  | RIGHT OF ENTRY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.1 | During the currency of the Option, the Optionee, its
      employees, agents and independent contractors, will have the sole and
      exclusive right to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

- 16 -

| | (d) | bring and erect upon the Claims such facilities as the
      Optionee may consider advisable.
| | --- | ---------------------------------------------------------------------------------------------

|11.  | COVENANTS OF THE OPTIONOR AND THE OPTIONOR
    SUB                                                                                                                                                                                                                                                                                                                                     
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.1 | During the currency of this Agreement the Optionor and
      the Optionor Sub will not do any act or thing which would or might in any
      way adversely affect the rights of the Optionee hereunder.                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.2 | The Optionors, will from time to time, cooperate with and
      assist the Optionee in obtaining any required Authorization.                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.3 | During the currency of this Agreement the Optionors will
      make available to the Optionee and its representatives all records and
      files in the possession of the Optionors relating to the Claims and permit
      the Optionee and its representatives, at its own expense, to take
      abstracts therefrom and make copies thereof.                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.4 | During the term of the Option, the Optionors will
      promptly provide the Optionee with any and all notices and correspondence
      received by the Optionors from government agencies in respect of the
      Claims.                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.5 | At the signing of this Agreement, the Optionor Sub will
      sign and deliver to the Optionee a Certificate in the form as set out in
      Schedule C.                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.6 | At the signing of this Agreement, the Optionor will sign
      and deliver to the Optionee a Certificate in the form as set out in
      Schedule D.                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.7 | Upon reasonable request by the Optionee but conditional
      upon the Optionee not being in breach of any term of this Agreement and
      this Agreement being in good standing, the Optionors will sign a
      certificate, from time to time, indicating that the Optionee is not in
      breach of any term of this Agreement and that this Agreement is in good
      standing.
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|11.8 | The expenses associated with the Optionors performing its
      obligations under Section 11 will be paid by the Optionee.                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|12.  | COVENANTS OF THE OPTIONEE                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|12.1 | During the currency of this Agreement, the
    Optionee:                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                        
|     | (c)                                                                                                                                                                                                                                                                                                                                                                                    

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- 17 -

| | (d) | will not do any act or thing or fail to do any act or
      thing which would be or result in a breach of the terms of the Underlying
      Golden Arc Option Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (e) | will permit the Optionor or the Optionor Sub, or their
      representatives duly authorized by it in writing, at their own risk and
      expense, access at all reasonable times, but subject to reasonable notice,
      to the Claims and to all records prepared by the Optionee in connection
      with work done on or with respect to the Claims, provided that if such
      disclosure would otherwise be a breach of any securities Laws pertaining
      to the disclosure of material information, then the Optionors will prior
      to such disclosure sign a confidentiality agreement in a form reasonably
      acceptable to the Optionors;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (f) | will have prepared technical reports in accordance with
      National Instrument 43-101 by a qualified person independent of the
      Optionors and the Optionee on the Claims and deliver those technical
      reports, in electronic form to the Optionors within 90 days of December
      31, 2006 and each subsequent December 31 of the term of this Agreement
      and, in the event that the Optionee terminates this Agreement, within 90
      days of such termination;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (g) | within 90 days of December 31, 2006 and within each
      subsequent December 31 of the term of the Option of this Agreement will
      prepare and deliver to the Optionors an Exploration Expense Report
      relating to Exploration Expense on the Claims during the Option Period not
      subject to a previous Exploration Expense Report and, in the event that
      the Optionee terminates this Agreement or exercises the Option, within 90
      days of such termination or exercise, with the Exploration Expense Report
      for the period ended December 31, 2006 reporting on the Exploration
      Expense on the Golden Arc Claims and the Exploration Expense on the Claims
      other than the Golden Arc Claims separately;                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (h) | shall make available for review by the Optionors during
      normal business hours, for a period of one month after the delivery to the
      Optionors of each Exploration Expense Report, backup invoices, statements
      and the like verifying such Exploration Expense promptly upon the
      Optionors written request. Each Exploration Expense Report will be deemed
      complete and accurate if such calculations in such report are not disputed
      in writing by the Optionors within 60 days following receipt by the
      Optionors of such Exploration Expense Report. In the event that Optionors
      dispute any amount (the Disputed Amount) set out in the
      Exploration Expense Report, all such costs incurred by the Optionees in
      respect of that dispute including, the cost of any audit or other review
      will be paid by the Optionors to the Optionees, unless such audit or other
      review discloses that the reported Disputed Amount is an amount exceeding
      5% of the amount determined by such audit or review in which case, the
      Optionee will bear the full expenses of the Optionee and the
    Optionors;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (i) | will conduct all work on or with respect to the Claims in
      a careful and minerlike manner and in compliance with all applicable
      Laws;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (j) | will defend, indemnify and save the Optionors harmless
      from any and all claims, suits, actions made or brought against it as a
      result of work done by the Optionee, its employees, agents or contractors
      on or with respect to the Claims;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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- 18 -

| | (k) | will make all filings and disclosures as required and
      within the time periods specified under all applicable securities
      legislation with respect to the allotment and issuance of the Shares
      pursuant to this Agreement; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                               
| | (l) | will, prior to commencing of any work on the Claims,
      obtain general liability insurance in an amount not less than
      $2,000,000.                                                                                                    

|13.  | NSR ROYALTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13.1 | The Optionee will pay to the Optionor Sub a royalty equal
      to a two percent (2.0%) in aggregate NSR Royalty (as defined in Subsection
      1.1), subject to Subsection 13.4. The NSR Royalty will be payable for so
      long as the Optionee and/or its successors and assigns hold any interest
      in the Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13.2 | Payment of the NSR Royalty will be made quarterly within
      30 days after the end of each yearly quarter based upon a year commencing
      on the 1st day of January and expiring on the 31st day of December in any
      year in which ore is produced or removed from the Claims. Within 60 days
      after the end of each year for which the NSR Royalty is payable, the
      records relating to the calculation of the NSR Royalty on the Golden Arc
      Claims and on the other Claims (which must be reported separately) for
      such year will be audited by the Optionee and any adjustments in the
      payment of the NSR Royalty will be made forthwith after completion of the
      audit. All payments of the NSR Royalty for a year will be deemed final and
      in full satisfaction of all obligations of the Optionee in respect thereof
      if such payments or calculations thereof are not disputed by the Optionor
      within one year after receipt by the Optionor Sub of the said audit
      statement. The Optionee will maintain accurate records relevant to the
      determination of the NSR Royalty on the Golden Arc Claims and on the other
      Claims (which must be reported separately) and the Optionor Sub, or its
      authorized agent, shall be permitted the right to examine such records at
      all reasonable times.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13.3 | The determination of the NSR Royalty hereunder is based
      on the premise that production will be developed solely on the Claims
      except that the Optionee will have the right to commingle ore mined from
      the Claims with ore mined and produced from other properties provided the
      Optionee will adopt and employ reasonable practices and procedures for
      weighing, sampling and assaying, in order to determine the amounts of
      products derived from, or attributable to ore mined and produced from the
      Claims. The Optionee will deliver to the Optionors a description of
      Optionees commingling plan not less than 30 days before commencement of
      commingling. The Optionee will maintain accurate records of the results of
      such sampling, weighing and analysis with respect to any ore mined and
      produced from the Golden Arc Claims and the other Claims (which must be
      recorded and reported separately). The Optionor Sub or its authorized
      agents will be permitted the right to examine at all reasonable times such
      records pertaining to commingling of ore or to the calculation of NSR
      Royalty.                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|13.4 | The Optionee shall have the right at any time to purchase
      up to 100% of the NSR Royalty on the Golden Arc Claims by paying to the
      Optionor Sub the sum of $1,000,000 for each one of the two percentage
      points of the NSR Royalty on the Golden Arc
Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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- 19 -

|13.5 | The Optionee shall pay advance royalty payments (the
      Advance Royalty Payments) as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.6 | All Advance Royalty Payments will be deducted from the
      NSR Royalty payments otherwise needed to be made under this
    Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.7 | It is acknowledged that the Optionor Sub is responsible
      for paying a royalty to Golden Arc under the Underlying Golden Arc Option
      Agreement relating to the Golden Arc Claims. Each of the Optionor, the
      Optionor Sub and the Optionee will use their best efforts to make
      reasonable arrangements between them from time to time to ensure that
      payments of royalty under this Agreement to the Optionor Sub, will in turn
      be paid by the Optionor Sub to Golden Arc to the extent necessary to
      ensure that the royalty payments of the Optionor Sub to Golden Arc are
      keep in good standing.                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|13.8 | In the event that the Optionor Sub transfers to a third
      party its right or part of its right to obtain the NSR Royalty, then
      Optionor Sub will first provide written notice to the Optionee of such
      transfer and until receipt of notice of such transfer, then Optionee may
      make payment of the NSR                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | Royalty to the Optionor Sub.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|14.  | REGISTRATION OF AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|14.1 | Notwithstanding any term of this Agreement, each of the
      Optionee and the Optionor Sub will have the right at any time to register
      this Agreement or a Memorandum thereof against title to the
  Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15.  | CONFIDENTIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15.1 | Except as specifically otherwise provided for herein, all
      information obtained hereunder will be confidential and notwithstanding
      any termination of this Agreement, neither of the parties will disclose or
      permit the disclosure of such information or the terms of this Agreement,
      or use or permit the use of such information other than for the activities
      contemplated hereunder, as required by any Laws or by the rules and
      regulations of any regulatory authority or stock exchange having
      jurisdiction, or with the written consent of the other party, such consent
      not to be unreasonably withheld.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15.2 | The provisions of this Section 15 do not apply to
      information that is in or becomes part of the public domain other than
      through a breach of the terms hereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|15.3 | Where a request is made for permission to disclose
      confidential information hereunder, a reply thereto will be made within
      three Business Days after receipt of such request, failing which the party
      requesting will be entitled as if consent had been given to disclose such
      information in the limited circumstances specified in such
  request.                                                                                                                                                                                                                                                                                     

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- 20 -

|15.4 | During the term of the Option, the Optionee will provide
      the Optionor drafts of all proposed news releases relating to the Claims
      not less than 24 hours prior to the intended release of such news release
      relating to the Claims and within 24 hours the Optionor will provide
      comments on the proposed news release and the parties will use their best
      efforts to agree on the final text of the proposed news release. If the
      Optionor fails to provide comments within such 24 hour period, then the
      Optionee may proceed to issue the proposed news release.                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|15.5 | Notwithstanding Subsection 15.4, the parties acknowledge
      that the Optionee is a reporting issuer in the Province of British
      Columbia, pursuant to the Securities Act(British Columbia) and in
      the United States of America and that the securities laws of each
      jurisdiction requires that the Optionee comply with continuous disclosure
      requirements, including the immediate release of news releases upon any
      and all material changes. In the event that the Optionee provides a copy
      of any of its proposed news releases to either of the Optionor or the
      Optionor Sub for review, the Optionors will keep such information
      confidential until such information has been released by the Optionee and
      the Optionee may issue such news release at any time as required by
      applicable securities legislation, despite the delay or failure of either
      of the Optionor or the Optionor Sub to provide their comments to such news
      release.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|16.  | FURTHER ASSURANCES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|16.1 | The parties hereto agree that they and each of them will
      execute all documents and do all acts and things within their respective
      powers to carry out and implement the provisions or intent of this
      Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|17.  | NOTICE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|17.1 | Each notice, demand or other communication required or
      permitted to be given under this Agreement will be in writing and will be
      delivered or sent by facsimile transfer or some other similar form of
      telecommunication addressed as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

If to the Optionors at:

Golden Sands Exploration Inc. &
AHL Holdings Ltd.One East Liberty Street Suite 424 Reno, Nevada
89501

with a copy to:

Alan H. FinlaysonBarrister
& SolicitorP.O. Box 11122, Royal Centre 1880  1055 West Georgia
Street Vancouver, British Columbia V6E 3P3
Fax:          (604) 687-6650
Attention:        Alan H.
Finlayson

---

- 21 -

If to Evolving at:

Evolving Gold
CorporationSuite 1500, 885 West Georgia Street Vancouver, BC V6C
3E82

with a copy to:

Lang Michener LLPBarristers
& Solicitors P.O. Box 11117, Royal Centre 1500  1055 West Georgia
Street Vancouver, British Columbia V6E 4N7
Fax:      (604) 685-7084
Attention:Desmond
Balakrishnan

|     | The date of receipt of such notice, demand or other
      communication will be the date of delivery thereof if delivered and, if
      given by facsimile transfer or some other form of electronic
      communication, will be deemed to have been given and received on the day
      on which it was sent, unless it was sent after 5:00 p.m. local time of the
      recipient, in which case it will be deemed given and received on the next
      business day.                                                                                                                                                                                                                                                                                                  
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|17.2 | Either party may at any time and from time to time notify
      the other party in writing in accordance with this Section of a change of
      address for the purposes of this Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|18.  | HEADINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|18.1 | The headings to the respective sections herein will not
      be deemed part of this Agreement but will be regarded as having been used
      for convenience only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|19.  | DEFAULT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|19.1 | If any party (a "Defaulting Party") is in default
      of any requirement herein set forth (except for Subsections 3.2), the
      party affected by such default will give written notice to the defaulting
      Party specifying the default and the Defaulting Party will not lose any
      rights under this Agreement, unless within 30 days after the giving of
      notice of default by the affected party the Defaulting Party has not cured
      or diligently commenced to cure the default by the appropriate performance
      and if the Defaulting Party fails within such period to cure or diligently
      commenced to cure any such default, the affected party will be entitled to
      seek any remedy it may have on account of such default.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|19.2 | The Defaulting Party will pay all expenses relating to
      the Notice of Default, including, but not restricted to, all legal
      expenses relating to the Notice of the Default. The Defaulting Party will
      pay such expenses within 10 days of the written demand for the payment of
      such expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

- 22 -

|20.  | NO WAIVER OF BREACHES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|20.1 | No consent or waiver expressed or implied by either party
      in respect of any breach or default by the other in the performance by
      such other of its obligations hereunder will be deemed or construed to be
      a consent to or a waiver of any other breach or default.                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|21.  | NO PARTNERSHIP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|21.1 | Nothing herein will constitute or be taken to constitute
      the parties as partners or create any fiduciary relationship between
      them.                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|22.  | CURRENCY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|22.1 | All references to monies hereunder will be in United
      States funds except where otherwise designated.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23.  | METHOD OF PAYMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23.1 | Cash payments to be made to any party hereunder may be
      made by certified cheque or bank draft delivered to such party at its
      address for notice purposes as provided herein, or by electronic transfer
      of funds for the account of such party at such bank or banks in Canada or
      the United States as such party may designate from time to time by written
      notice. Such bank or banks will be deemed the agent of the designating
      party for the purposes of receiving, collecting and receipting such
      payment.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|24.  | ENUREMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|24.1 | This Agreement will enure to the benefit of and be
      binding upon the parties hereto and their respective successors and
      permitted assigns.                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|25.  | GOVERNING LAW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|25.1 | This Agreement will be construed in accordance with and
      governed by the laws in force in British Columbia.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|25.2 | The courts of British Columbia will have exclusive
      jurisdiction to hear and determine all disputes arising hereunder. This
      Section 25 will not be construed:                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

- 23 -

|26.  | FORCE MAJEURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|26.1 | No party will be liable for its failure to perform any of
      its obligations under this Agreement due to a cause beyond its control
      (except those caused by its own lack of funds) including, but not limited
      to acts of God, fire, flood, explosion, strikes, lockouts or other
      industrial disturbances, laws, rules and regulations or orders of any duly
      constituted governmental authority or non- availability of materials or
      transportation (each an "Intervening Event").                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|26.2 | All time limits imposed by this Agreement will be
      extended by a period equivalent to the period of delay resulting from an
      Intervening Event described in Subsection 26.1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|26.3 | A party relying on the provisions of Subsection 26.1 will
      take all reasonable steps to eliminate an Intervening Event and, if
      possible, will perform its obligations under this Agreement as far as
      practical, but nothing herein will require such party to settle or adjust
      any labour dispute or to question or to test the validity of any law,
      rule, regulation or order of any duly constituted governmental authority
      or to complete its obligations under this Agreement if an Intervening
      Event renders completion impossible.                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|27.  | ENTIRE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|27.1 | This Agreement, including the Schedules hereto,
      constitutes the entire agreement between the parties and replaces and
      supersedes the December 3, 2004 Option Agreement and all previous
      amendments thereto and any other agreement or arrangement, whether oral or
      written, express or implied, statutory or otherwise heretofore existing
      between the parties in respect of the subject matter of this
    Agreement.                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|28.  | SPECIAL REMEDIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|28.1 | Each of the parties agree that its failure to comply with
      the covenants and restrictions set out in any of Sections 7, 8 or 15 would
      constitute an injury and damage to the other party impossible to measure
      monetarily and, in the event of any such failure, the other party will, in
      addition and without prejudice to any other rights and remedies at law or
      in equity, be entitled to injunctive relief restraining, enjoining or
      specifically enforcing the provisions of Sections 7, 8 or 15 as the case
      may be, and any party intending to breach the provisions of Sections 7, 8
      or 15 hereby waives any defence it may have in law to such injunctive or
      equitable relief.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|29.  | TIME OF ESSENCE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|29.1 | Time will be of the essence in this
  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

---

- 24 -

|30.  | EXECUTION OF AGREEMENT                                       
|---- | -------------------------------------------------------------
|     |                                                              
|30.1 | This Agreement may be signed in counterpart and by
      fax.

|GOLDEN SANDS EXPLORATION INC.    | ) | 
|-------------------------------- | - | 
|                                 | ) | 
|                                 | ) | 
|Per: */s/ Alexander Harry Lenec* | ) | 
|                                 | ) | 
|Alexander Harry Lenec, President | ) | 
|                                 |   | 
|AHL HOLDINGS LTD.                | ) | 
|                                 | ) | 
|                                 | ) | 
|Per:*/s/ Alexander Harry Lenec*  | ) | 
|                                 | ) | 
|Alexander Harry Lenec, President | ) | 
|                                 |   | 
|                                 |   | 
|EVOLVING GOLD CORPORATION        | ) | 
|                                 | ) | 
|                                 | ) | 
|Per: */s/ Lawrence Dick*         | ) | 
|                                 | ) | 
|Lawrence Dick, President and CEO | ) | 

---

25

Schedule A1

> This is Schedule "A1" to the Amended and Restated Option
>       and Royalty Agreement dated for reference December 3, 2004 between Golden
>       Sands Exploration Inc., as optionor, AHL Holdings Ltd., as optionor sub
>       and Evolving Gold Corporation, as optionee, as amended on January 7, 2005,
>       as further amended on February 25, 2005, as further amended on April 21,
>       2005, as further amended on January 26, 2006, as further amended on April
>       27, 2006, as further amended on June 16, 2006 and as further amended and
>       restated on July 7, 2006

The Original Golden Arc Claims:

Claim Name
    BLM Serial No.
    Registered Owner
      (1)
    Location Date
    Status
    Expiry DateWM #1
    733156
    Optionor Sub
    01/04/1996
    Active
    September 1, 2005WM #2
    405978
    Arctic
    04/11/1987
    Active
    September 1, 2005WM #3
    733157
    Optionor Sub
    01/04/1996
    Active
    September 1, 2005WM #4
    405980
    Arctic
    04/11/1987
    Active
    September 1, 2005WM #5
    733158
    Optionor Sub
    01/04/1996
    Active
    September 1, 2005WM #6
    405982
    Arctic
    04/11/1987
    Active
    September 1, 2005WM #8
    405983
    Arctic
    04/11/1987
    Active
    September 1, 2005WM #10
    405984
    Arctic
    04/11/1987
    Active
    September 1, 2005Golden West #6
    733140
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #7
    733141
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #8
    733142
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #9
    733143
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #10
    733144
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #11
    733145
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #12
    733146
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #13
    733147
    Optionor Sub
    01/02/1996
    Active
    September 1, 2005Golden West #14
    733148
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Golden West #15
    733149
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Golden West #16
    733150
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Golden West #17
    733151
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Golden West #18
    733152
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Golden West #19
    733153
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Gold West Frac A
    733154
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005Gold West Frac B
    733155
    Optionor Sub
    01/03/1996
    Active
    September 1, 2005T&C #1
    479032
    Optionor Sub
    05/08/1988
    Active
    September 1, 2005T&C #2
    479033
    Optionor Sub
    05/08/1998
    Active
    September 1, 2005T&C #3
    479034
    Optionor Sub
    05/08/1998
    Active
    September 1, 2005TJ #12
    155540
    Optionor Sub
    04/02/1980
    Active
    September 1, 2005TJ #14
    733159
    Optionor Sub
    01/04/1996
    Active
    September 1, 2005TJ #15
    733160
    Optionor Sub
    01/04/1996
    Active
    September 1, 2005TJ #16
    155544
    Optionor Sub
    04/04/1980
    Active
    September 1, 2005TJ #17
    155545
    Optionor Sub
    04/04/1980
    Active
    September 1, 2005TJ #18
    155546
    Optionor Sub
    04/04/1980
    Active
    September 1, 2005TJ #19
    155547
    Optionor Sub
    04/02/1980
    Active
    September 1, 2005TJ #29
    155557
    Optionor Sub
    04/04/1980
    Active
    September 1, 2005TJ #30
    155558
    Optionor Sub
    04/17/1980
    Active
    September 1, 2005TJ #34
    155562
    Optionor Sub
    04/17/1980
    Active
    September 1, 2005


---

26

Schedule A2

> This is Schedule "A2" to the Amended and Restated Option
>       and Royalty Agreement dated for reference December 3, 2004 between Golden
>       Sands Exploration Inc., as optionor, AHL Holdings Ltd., as optionor sub
>       and Evolving Gold Corporation, as optionee, as amended on January 7, 2005,
>       as further amended on February 25, 2005, as further amended on April 21,
>       2005, as further amended on January 26, 2006, as further amended on April
>       27, 2006, as further amended on June 16, 2006 and as further amended and
>       restated on July 7, 2006

The Golden Arc Claims:

Claim Name
    BLM Serial No.
    Registered Owner
      (1)
    Location Date
    Status
    Expiry DateWM #1
    733156
    Optionor Sub
    01/04/1996
    Active
    September 1, 2006WM #2
    405978
    Optionor Sub
    04/11/1987
    Active
    September 1, 2006WM #3
    733157
    Optionor Sub
    01/04/1996
    Active
    September 1, 2006WM #4
    405980
    Optionor Sub
    04/11/1987
    Active
    September 1, 2006WM #5
    733158
    Optionor Sub
    01/04/1996
    Active
    September 1, 2006WM #6
    405982
    Optionor Sub
    04/11/1987
    Active
    September 1, 2006WM #8
    405983
    Optionor Sub
    04/11/1987
    Active
    September 1, 2006WM #10
    405984
    Optionor Sub
    04/11/1987
    Active
    September 1, 2006Golden West #6
    733140
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #7
    733141
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #8
    733142
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #9
    733143
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #10
    733144
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #11
    733145
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #12
    733146
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #13
    733147
    Optionor Sub
    01/02/1996
    Active
    September 1, 2006Golden West #14
    733148
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Golden West #15
    733149
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Golden West #16
    733150
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Golden West #17
    733151
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Golden West #18
    733152
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Golden West #19
    733153
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Amended Golden West Frac A
    733154
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006Amended Golden West Frac B
    733155
    Optionor Sub
    01/03/1996
    Active
    September 1, 2006WM 206
    917492
    Optionor Sub
    11/19/2005
    Active
    September 1, 2006WM 207
    917493
    Optionor Sub
    11/19/2005
    Active
    September 1, 2006WM 208
    917494
    Optionor Sub
    11/19/2005
    Active
    September 1, 2006T&C #1
    479032
    Optionor Sub
    05/08/1988
    Active
    September 1, 2006T&C #2
    479033
    Optionor Sub
    05/08/1998
    Active
    September 1, 2006T&C #3
    479034
    Optionor Sub
    05/08/1998
    Active
    September 1, 2006TJ #12
    155540
    Optionor Sub
    04/02/1980
    Active
    September 1, 2006TJ #14
    733159
    Optionor Sub
    01/04/1996
    Active
    September 1, 2006TJ #15
    733160
    Optionor Sub
    01/04/1996
    Active
    September 1, 2006TJ #16
    155544
    Optionor Sub
    04/04/1980
    Active
    September 1, 2006TJ #17
    155545
    Optionor Sub
    04/04/1980
    Active
    September 1, 2006


---

27

TJ #18
    155546
    Optionor Sub
    04/04/1980
    Active
    September 1, 2006TJ #19
    155547
    Optionor Sub
    04/02/1980
    Active
    September 1, 2006TJ #29
    155557
    Optionor Sub
    04/04/1980
    Active
    September 1, 2006TJ #30
    155558
    Optionor Sub
    04/17/1980
    Active
    September 1, 2006TJ #34
    155562
    Optionor Sub
    04/17/1980
    Active
    September 1, 2006


---

-28-

Schedule B

> This is Schedule "B" to the Amended and Restated Option
>       and Royalty Agreement dated for reference December 3, 2004 between Golden
>       Sands Exploration Inc., as optionor, AHL Holdings Ltd. as optionor sub and
>       Evolving Gold Corporation, as optionee, as amended on January 7, 2005, as
>       further amended on February 25, 2005, as further amended on April 21, 2005,
>       as further amended on January 26, 2006, as further amended on April 27,
>       2006, as further amended on June 16, 2006 and as further amended and restated
>       on July 7, 2006

The Initial Additional Claims:

Claim Name
    BLM Serial No.
    Registered Owner
    Location Date
    Status
    Expiry DateWM 101
    NMC887954
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 102
    NMC887955
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 103
    NMC887956
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 104
    NMC887957
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 105
    NMC887958
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 106
    NMC887959
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 107
    NMC887960
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 108
    NMC887961
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 109
    NMC887962
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 110
    NMC887963
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 111
    NMC887964
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 112
    NMC887965
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 113
    NMC887966
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 114
    NMC887967
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 115
    NMC887968
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 116
    NMC887969
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 117
    NMC887970
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 118
    NMC887971
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 119
    NMC887972
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 120
    NMC887973
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 121
    NMC887974
    Optionor Sub
    11/13/2004
    Active
    September 1, 2006WM 122
    NMC887975
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 123
    NMC887976
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 124
    NMC887977
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 125
    NMC887978
    Optionor Sub
    11/10/2004
    Active
    September 1, 2006WM 126
    NMC887979
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 127
    NMC887980
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 128
    NMC887981
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 129
    NMC887982
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 130
    NMC887983
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 131
    NMC887984
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 132
    NMC887985
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 133
    NMC887986
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 134
    NMC887987
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006WM 135
    NMC887988
    Optionor Sub
    12/10/2004
    Active
    September 1, 2006


---

-29-

Claim Name
    BLM Serial No.
    Registered
      Owner
    Location Date
    Status
    Expiry DateWM 136
    NMC894073
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 137
    NMC894074
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 138
    NMC894075
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 139
    NMC894076
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 140
    NMC894077
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 141
    NMC894078
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 142
    NMC894079
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 143
    NMC894080
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 144
    NMC894081
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 145
    NMC894082
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 146
    NMC894083
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 147
    NMC894084
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 148
    NMC894085
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 149
    NMC894086
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 150
    NMC894087
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 151
    NMC894088
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 152
    NMC894089
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 153
    NMC894090
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 154
    NMC894091
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 155
    NMC894092
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 156
    NMC894093
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 157
    NMC894094
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 158
    NMC894095
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 159
    NMC894096
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 160
    NMC894097
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 161
    NMC894098
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 162
    NMC894099
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 163
    NMC894100
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 164
    NMC894101
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 165
    NMC894102
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 166
    NMC894103
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 167
    NMC894104
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 168
    NMC894105
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 169
    NMC894106
    Optionor Sub
    2/2/2005
    Active
    September 1, 2006WM 170
    NMC894107
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 171
    NMC894108
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 172
    NMC894109
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 173
    NMC894110
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 174
    NMC894111
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 175
    NMC894112
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 176
    NMC894113
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 177
    NMC894114
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 178
    NMC894115
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 179
    NMC894116
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 180
    NMC894117
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 181
    NMC894118
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 182
    NMC894119
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006


---

-30-

Claim Name
    BLM Serial No.
    Registered
      Owner
    Location Date
    Status
    Expiry DateWM 183
    NMC894120
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 184
    NMC894121
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 185
    NMC894122
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 186
    NMC894123
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 187
    NMC894124
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 188
    NMC894125
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 189
    NMC894126
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 190
    NMC894127
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 191
    NMC894128
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 192
    NMC894129
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 193
    NMC894130
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 194
    NMC894131
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 195
    NMC894132
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 196
    NMC894133
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 197
    NMC894134
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 198
    NMC894135
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 199
    NMC894136
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 200
    NMC894137
    Optionor Sub
    2/3/2005
    Active
    September 1, 2006WM 201
    NMC894138
    Optionor Sub
    2/4/2005
    Active
    September 1, 2006WM 202
    NMC894139
    Optionor Sub
    2/4/2005
    Active
    September 1, 2006WM 203
    NMC894140
    Optionor Sub
    2/4/2005
    Active
    September 1, 2006WM 204
    NMC894141
    Optionor Sub
    2/4/2005
    Active
    September 1, 2006WM 221
    NMC908914
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 222
    NMC908915
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 223
    NMC908916
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 224
    NMC908917
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 230
    NMC908923
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 231
    NMC908924
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 232
    NMC908925
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 233
    NMC908926
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 234
    NMC908927
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 235
    NMC908928
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 236
    NMC908929
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 237
    NMC908930
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 238
    NMC908931
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 239
    NMC908932
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 240
    NMC908933
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 241
    NMC908934
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 242
    NMC908935
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 243
    NMC908936
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 244
    NMC908937
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 245
    NMC908938
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 246
    NMC908939
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 247
    NMC908940
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 248
    NMC908941
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 249
    NMC908942
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 250
    NMC908943
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006


---

-31-

Claim Name
    BLM Serial No.
    Registered
      Owner
    Location Date
    Status
    Expiry DateWM 251
    NMC908944
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 252
    NMC908945
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 253
    NMC908946
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 254
    NMC908947
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 255
    NMC908948
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 256
    NMC908949
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 257
    NMC908950
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 258
    NMC908951
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 259
    NMC908952
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 260
    NMC908953
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 261
    NMC908954
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 262
    NMC908955
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 263
    NMC908956
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 264
    NMC908957
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 265
    NMC908958
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 266
    NMC908959
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 267
    NMC908960
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 268
    NMC908961
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 269
    NMC908962
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 270
    NMC908963
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 271
    NMC908964
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 272
    NMC908965
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 273
    NMC908966
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 274
    NMC908967
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 275
    NMC908968
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 276
    NMC908969
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 277
    NMC908970
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 278
    NMC908971
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 279
    NMC908972
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 280
    NMC908973
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 281
    NMC908974
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 282
    NMC908975
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 283
    NMC908976
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 284
    NMC908977
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 285
    NMC908978
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 286
    NMC908979
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 287
    NMC908980
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 288
    NMC908981
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 289
    NMC908982
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 290
    NMC908983
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 291
    NMC908984
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 292
    NMC908985
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 293
    NMC908986
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 294
    NMC908987
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 295
    NMC908988
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 296
    NMC908989
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 297
    NMC908990
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006


---

-32-

Claim Name
    BLM Serial No.
    Registered
      Owner
    Location Date
    Status
    Expiry DateWM 298
    NMC908991
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 299
    NMC908992
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 300
    NMC908993
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 301
    NMC908994
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 302
    NMC908995
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 303
    NMC908996
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 304
    NMC908997
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 305
    NMC908998
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 306
    NMC908999
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 307
    NMC909000
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 308
    NMC909001
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 309
    NMC909002
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 310
    NMC909003
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 311
    NMC909004
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 312
    NMC909005
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 313
    NMC909006
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 314
    NMC909007
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 315
    NMC909008
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 316
    NMC909009
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 317
    NMC909010
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 318
    NMC909011
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 319
    NMC909012
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 320
    NMC909013
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 321
    NMC909014
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 322
    NMC909015
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 323
    NMC909016
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 324
    NMC909017
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 325
    NMC909018
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 326
    NMC909019
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 327
    NMC909020
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 328
    NMC909021
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 329
    NMC909022
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 330
    NMC909023
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 331
    NMC909024
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 332
    NMC909025
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 333
    NMC909026
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 334
    NMC909027
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 335
    NMC909028
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 336
    NMC909029
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 337
    NMC909030
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 338
    NMC909031
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 339
    NMC909032
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 340
    NMC909033
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 341
    NMC909034
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 342
    NMC909035
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 343
    NMC909036
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 344
    NMC909037
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006


---

-33-

Claim Name
    BLM Serial No.
    Registered
      Owner
    Location Date
    Status
    Expiry DateWM 345
    NMC909038
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 346
    NMC909039
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006WM 347
    NMC909040
    Optionor Sub
    9/1/2005
    Active
    September 1, 2006


---

-34-

Schedule C

> This is Schedule "C" to the Amended and Restated Option
>           and Royalty Agreement dated for reference December 3, 2004 between Golden
>           Sands Exploration Inc., as optionor, AHL Holdings Ltd., as optionor
>           sub and Evolving Gold Corporation, as optionee, as amended on January
>           7, 2005, as further amended on February 25, 2005, as further amended
>           on April 21, 2005, as further amended on January 26, 2006, as further
>           amended on April 27, 2006, as further amended on June 16, 2006 and as
>           further amended and restated on July 7, 2006

CERTIFICATE OF OPTIONOR SUB(follows this page)

---

-35-

CERTIFICATE

|TO:     | EVOLVING GOLD CORPORATION        
|------- | ---------------------------------
|AND TO: | LANG MICHENER LLP                
|AND TO: | MERIDIAN MINERALS CORP.          
|AND TO: | FRASER MILNER CASGRAIN
      LLP.

AHL Holdings Ltd. (AHL) understands that Evolving Gold
Corporation (Evolving) and Meridian Mineral Corp. (Meridian)
are negotiating an agreement (the Meridian Option Agreement) regarding
the possible acquisition by Meridian of a portion of the option granted by AHL
and Golden Sands Exploration Inc. (Golden Sands) to Evolving under an
option agreement dated December 3, 2004, as amended on January 7, 2005, as
further amended on February 25, 2005, as further amended on April 21, 2005, as
further amended on January 26, 2006, as further amended on April 27, 2006, as
further amended on June 16, 2006 and as further amended and restated on July 7,
2006 (the Amended and Restated Evolving Option Agreement).

This certificate is provided to the addressees to provide
certain comfort to the addressees.

AHL hereby certifies that:

|(a) | Subject to the terms of the option agreement dated March
      22, 2004 between AHL and Golden Arc Mining & Refining Inc. (the
      Underlying Golden Arc Option Agreement), AHL is the sole
      registered owner and AHL and Golden Sands are the sole beneficial owners
      of all of the Claims, as defined in the Amended and Restated Evolving
      Option Agreement excepting the Golden Arc Claims (as defined in the
      Amended and Restated Evolving Option Agreement) in which case AHL is the
      sole registered owner and Golden Arc has represented to AHL that it is the
      sole beneficial owner, and AHL and Golden Sands have all necessary
      authority to convey to Evolving a 100% interest in the Claims in
      accordance with the terms of the Amended and Restated Evolving Option
      Agreement.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(b) | AHL and its Affiliates (as defined in the Amended and
      Restated Evolving Option Agreement) have not created, suffered or allowed
      to exist in respect of the Claims any mortgages, pledges, liens, embargoes
      and clouds on title, including any lease, license or litigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(c) | AHL and its Affiliates have not sold, transferred,
      assigned or granted to any third party any right, title or interest in, or
      any right to acquire any such interest in, all or any of the Claims.
      Without limiting the generality of the foregoing, AHL or its Affiliates
      have not entered into and there are                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

---

-36-

|    | not any agreements or options to grant or convey any
      interest in the Claims or to pay any royalties with respect to the Claims
      except for Evolvings obligation to pay royalties to AHL in accordance
      with the terms of the Amended and Restated Evolving Option Agreement and
      AHLs obligations to pay royalties to Golden Arc in accordance with the
      Underlying Golden Arc Option Agreement.                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(d) | AHL hereby acknowledges that Evolving is negotiating the
      Meridian Option Agreement and although AHL has not reviewed the Meridian
      Option Agreement, AHL confirms that the entering into of the Meridian
      Option Agreement will not be a breach of the restrictions found in
      Subsections 8.1 and 8.2 of the Amended and Restated Option Agreement. AHL
      has not participated in the negotiations between Evolving and Meridian and
      Evolving acknowledges that AHL has no obligation or responsibility to
      negotiate with Meridian.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(e) | AHL has entered into the Amended and Restated Evolving
      Option Agreement and confirms that all of the representations and
      warranties contained in the Amended and Restated Evolving Option Agreement
      relating to AHL are true and correct in all material respects on the date
      hereof, except to the extent that such representations and warranties
      speak as of an earlier date, in which event such representations and
      warranties are true and correct as of such earlier date.                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(f) | AHL confirms that the Option (as defined in the Amended
      and Restated Evolving Option Agreement) is in good standing.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(g) | AHL confirms that the option granted to AHL in the
      Underlying Golden Arc Option Agreement is in good standing and in full
      force and effect.                                                                                                                                                                                                                                                                                                                                                                                                                 

DATED as of the 7thday of July, 2006.

AHL HOLDINGS LTD.By:

____________________________________Alec Lenec, President

---

-37-

Schedule D

> This is Schedule "D" to the Amended and Restated Option
>           and Royalty Agreement dated for reference December 3, 2004 between Golden
>           Sands Exploration Inc., as optionor, AHL Holdings Ltd., as optionor
>           sub and Evolving Gold Corporation, as optionee, as amended on January
>           7, 2005, as further amended on February 25, 2005, as further amended
>           on April 21, 2005, as further amended on January 26, 2006, as further
>           amended on April 27, 2006, as further amended on June 16, 2006 and as
>           further amended and restated on July 7, 2006

CERTIFICATE OF OPTIONOR(follows this page)

---

-38-

CERTIFICATE

|TO:     | EVOLVING GOLD CORPORATION        
|------- | ---------------------------------
|AND TO: | LANG MICHENER LLP                
|AND TO: | MERIDIAN MINERALS CORP.          
|AND TO: | FRASER MILNER CASGRAIN
      LLP.

Golden Sands Exploration Inc.. (Golden Sands)
understands that Evolving Gold Corporation (Evolving) and Meridian
Mineral Corp. (Meridian) are negotiating an agreement (the Meridian
Option Agreement) regarding the possible acquisition by Meridian of a
portion of the option granted by AHL and Golden Sands to Evolving under an
option agreement dated December 3, 2004, as amended on January 7, 2005, as
further amended on February 25, 2005, as further amended on April 21, 2005, as
further amended on January 26, 2006, as further amended on April 27, 2006, as
further amended on June 16, 2006 and as further amended and restated on July 7,
2006 (the Amended and Restated Evolving Option Agreement).

This certificate is provided to the addressees to provide
certain comfort to the addressees.

Golden Sands hereby certifies that:

|(a) | Subject to the terms of the option agreement dated March
      22, 2004 between AHL Holdings Ltd. (AHL) and Golden Arc Mining
      & Refining Inc. (Golden Arc) (the Underlying Golden Arc
      Option Agreement), AHL is the sole registered owner and AHL and
      Golden Sands are the sole beneficial owners of all of the Claims, as
      defined in the Amended and Restated Evolving Option Agreement excepting
      the Golden Arc Claims (as defined in the Amended and Restated Evolving
      Option Agreement) in which case AHL is the sole registered owner and
      Golden Arc has represented to AHL that it is the sole beneficial owner,
      and AHL and Golden Sands have all necessary authority to convey to
      Evolving a 100% interest in the Claims.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(b) | Golden Sands and its Affiliates (as defined in the
      Amended and Restated Evolving Option Agreement) have not created, suffered
      or allowed to exist in respect of the Claims any mortgages, pledges,
      liens, embargoes and clouds on title, including any lease, license or
      litigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(c) | Golden Sands and its Affiliates have not sold,
      transferred, assigned or granted to any third party any right, title or
      interest in, or any right to acquire any such interest in, all or any of
      the Claims.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Without limiting the generality of the foregoing, Golden
      Sands or its Affiliates have not entered into and there are not any
      agreements or options to grant or convey any interest in the Claims
    or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

---

-39-

|    | to pay any royalties with respect to the Claims except
      for Evolvings obligation to pay royalties to AHL in accordance with the
      terms of the Amended and Restated Evolving Option Agreement and AHLs
      obligations to pay royalties to Golden Arc in accordance with the
      Underlying Golden Arc Option Agreement.                                                                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(d) | Golden Sands hereby acknowledges that Evolving is
      negotiating the Meridian Option Agreement and although Golden Sands has
      not reviewed the Meridian Option Agreement, AHL confirms that the entering
      into of the Meridian Option Agreement will not be a breach of the
      restrictions found in Subsections 8.1 and 8.2 of the Amended and Restated
      Option Agreement. Golden Sands has not participated in the negotiations
      between Evolving and Meridian and Evolving acknowledges that Golden Sands
      has no obligation or responsibility to negotiate with Meridian.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(e) | Golden Sands has entered into the Amended and Restated
      Evolving Option Agreement and confirms that all of the representations and
      warranties contained in the Amended and Restated Evolving Option Agreement
      relating to AHL and Golden Sands are true and correct in all material
      respects on the date hereof, except to the extent that such
      representations and warranties speak as of an earlier date, in which event
      such representations and warranties are true and correct as of such
      earlier date.                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(f) | Golden Sands confirms that the Option (as defined in the
      Amended and Restated Evolving Option Agreement) is in good
  standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(g) | Golden Sands confirms that the option granted to AHL in
      the Underlying Golden Arc Option Agreement is in good standing and in full
      force and effect.                                                                                                                                                                                                                                                                                                                                                                                                                                            

DATED as of the 7th day of July, 2006.

GOLDEN SANDS EXPLORATION INC.

By:

_______________________________Alec Lenec, President

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