EXECUTION
      COPY

     

    WARRANT

     

    THE
      SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
      NO
      INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE
      TRANSFERRED UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
      SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION
      INVOLVING SAID SECURITIES, (B) THE COMPANY RECEIVES AN OPINION OF LEGAL
      COUNSEL FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE COMPANY STATING
      THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION OR (C) THE COMPANY
      OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
      REGISTRATION.

     

    
      	
              No.
                W-106

            	
              WARRANT
                TO PURCHASE

            
	
              Issued:
                April 18, 2005

            	
              $0.01
                PAR VALUE

            
	
              Original
                Issue Date: November 7, 2003

            	
              COMMON
                STOCK

            


    

    


    Western
      Goldfields, Inc.

     

    Warrant

     

    THIS
      IS
      TO CERTIFY that, for cash consideration of $100 and other value received, and
      subject to these terms and conditions, Hospah Coal Company, a Delaware
      corporation, or such other person or entity to which or whom this Warrant is
      transferred (the "Holder"),
      is
      entitled to exercise this Warrant to purchase 459,810 fully paid and
      nonassessable shares of Western Goldfields, Inc., an Idaho corporation (the
      "Company"),
      $0.01
      par value per share common stock (the "Warrant
      Stock"),
      at a
      price per share of $1.00 (the "Exercise
      Price")
      (such
      number of shares, type of security and the Exercise Price being subject to
      adjustment as provided below).

     

    1.  Method
      of Exercise.
      This
      Warrant may be exercised by the Holder, at any time during the period (the
      "Exercise
      Period")
      that
      (a) commences on the date that is the earlier of (i) the date that is
      450 days following the date of this Warrant; (ii) the effective date of any
      Reorganization (defined below); and (iii) the first anniversary of the date
      of which the registration of this Warrant, the shares of Warrant Stock issuable
      upon exercise of this Warrant, and the shares of Warrant Stock issued by the
      Company to Holder prior to and on the date of this Warrant, pursuant to a
      registration statement filed by the Company pursuant to the Registration
      Agreement dated as of the date of this Warrant between the Company and Holder,
      becomes effective, and (b) ends on the fifth anniversary of such date.
      During the Exercise Period the Holder may exercise this Warrant in whole or
      in
      part, by delivering to the Company at 981 Matley Lane, Suite 120 Reno, NV
      89502 (or such other office or agency of the Company as it may designate by
      notice in writing to the Holder at the address of the Holder appearing on the
      books of the Company) (x) this Warrant certificate, (y) a certified or
      cashiers check payable to the Company, or canceled indebtedness of the Company
      to the Holder, In the amount of the Exercise Price multiplied by the number
      of
      shares for which this Warrant is being exercised (the "Purchase Price"), and
      (z) the Notice of Cash Exercise attached as Exhibit A
      duly
      completed and executed by the Holder. Upon exercise, the Holder shall be
      entitled to receive from the Company a stock certificate in proper form
      representing the number of shares of Warrant Stock purchased.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.  Delivery
      of Stock Certificates; No Fractional Shares

     

    (a)  Within
      3
      business days after the payment of the Purchase Price following the exercise
      of
      this Warrant (in whole or in part), the Company at its expense shall issue
      in
      the name of and deliver to the Holder (i) a certificate or certificates for
      the number of fully paid and nonassessable shares of Warrant Stock to which
      the
      Holder shall be entitled upon such exercise, and (ii) a new Warrant of like
      tenor to purchase up to that number of shares of Warrant Stock, if any, as
      to
      which this Warrant has not been exercised if this Warrant has not expired.
      The
      Holder shall for all purposes be deemed to have become the holder of record
      of
      such shares of Warrant Stock on the date this Warrant was exercised (the date
      the Holder has fully complied with the requirements of Section 1),
      irrespective of the date of delivery of the certificate or certificates
      representing the Warrant Stock; provided that, if the date such exercise is
      made
      is a date when the stock transfer books of the Company are closed, such person
      shall be deemed to have become the holder of record of such shares of Warrant
      Stock at the close of business on the next succeeding date on which the stock
      transfer books are open.

     

    (b)  No
      fractional shares shall be issued upon the exercise of this Warrant. In lieu
      of
      fractional shares, the Company shall pay the Holder a sum in cash equal to
      the
      fair market value of the fractional shares (as determined by the Company's
      Board
      of Directors) on the date of exercise such fraction multiplied by the Exercise
      Price.

     

    3.  Covenants
      as to Warrant Stock.
      The
      Company covenants that at all times during the Exercise Period there shall
      be
      reserved for issuance and delivery upon exercise of this Warrant such number
      of
      shares of Warrant Stock as is necessary for exercise in full of this Warrant.
      All shares of Warrant Stock issued pursuant to the exercise of this Warrant
      will, upon their issuance, be validly issued and outstanding, fully paid and
      nonassessable, free and clear of all liens and other encumbrances or
      restrictions on sale and free and clear of all preemptive rights, except
      restrictions arising (a) under federal and state securities laws,
      (b) not by or through the Company, or (c) by agreement between the
      Company and the Holder or its successors.

     

    4.  Adjustments;
      Termination of Warrant Upon Certain Events.

     

    4.1  Effect
      of
      Reorganization.
      Upon a
      merger, consolidation, acquisition of all or substantially all of the property
      or stock, liquidation or other reorganization of the Company (collectively,
      a
      "Reorganization")
      during
      the Exercise Period, as a result of which the shareholders of the Company
      receive cash, stock or other property in exchange for their shares of Warrant
      Stock, lawful provision shall be made so that the Holder shall thereafter be
      entitled to receive, upon exercise of this Warrant, the number of shares of
      securities of the successor corporation resulting from such Reorganization
      (and
      cash and other property), to which a holder of the Warrant Stock issuable upon
      exercise of this Warrant would have been entitled in such Reorganization if
      this
      Warrant had been exercised immediately prior to such Reorganization. If the
      per
      share consideration payable to the Holder hereof for shares in connection with
      any such transaction is in a form other than cash or marketable securities,
      then
      the value of such consideration shall be determined in good faith by the
      Company's Board of Directors. In all such events, appropriate adjustment (as
      determined in good faith by the Company's Board of Directors) shall be made
      in
      the application of the provisions of this Warrant with respect to the rights
      and
      interest of the Holder after the Reorganization to the end that the provisions
      of this Warrant (including adjustments of the Exercise Price and the number
      and
      type of securities purchasable pursuant to the terms of this Warrant) shall
      be
      applicable after that event, as near as reasonably may be, in relation to any
      shares deliverable after that event upon the exercise of this
      Warrant.

     

    4.2  Adjustments
      for Stock Splits, Dividends, Reclassification, etc.
      If the
      Company shall issue any shares of the same class as the Warrant Stock as a
      stock
      dividend or subdivide the number of outstanding shares of such class into a
      greater number of shares, then, in either such case, the Exercise Price in
      effect before such dividend or subdivision shall be proportionately reduced
      and
      the number of shares of Warrant Stock at that time issuable pursuant to the
      exercise of this Warrant shall be proportionately increased; and, conversely,
      if
      the Company shall contract the number of outstanding shares of the same class
      as
      the Warrant Stock by combining such shares into a smaller number of shares,
      then
      the Exercise Price in effect before such combination shall be proportionately
      increased and the number of shares of Warrant Stock at that time issuable
      pursuant to the exercise or conversion of this Warrant shall be proportionately
      decreased. If the Company at any time while this Warrant, or any portion
      thereof, remains outstanding and unexpired shall, by reclassification of
      securities or otherwise, change any of the securities as to which purchase
      rights under this Warrant exist into the same or a different number of
      securities of any other class or classes, this Warrant shall thereafter
      represent the right to acquire such number and kind of securities as would
      have
      been issuable as the result of such change with respect to the securities which
      were subject to the purchase rights under this Warrant immediately prior to
      such
      reclassification or other change and the Exercise Price therefor shall be
      appropriately adjusted all subject to further adjustments as provided in
      Section 4. Each adjustment in the number of shares of Warrant Stock
      issuable shall be to the nearest whole share.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.3  Adjustment
      to Exercise Price for Dilutive Issues.
      Subject
      to the exclusions contained in Section 4.6 below, in case the Company shall
      at any time or from time to time prior to or during the Exercise Period issue
      any shares of Warrant Stock (other than shares issued as a stock dividend or
      stock split as provided in Section 4.2) for a consideration per share that
      is less than the Exercise Price, then on the date of such issue the Exercise
      Price shall be reduced to a price (calculated to the nearest cent) equal to
      the
      quotient of (a) the sum of (i) the per-share consideration received by
      the Company in such issue plus (ii) the product of the number of fully
      diluted shares of equity securities of the Company outstanding immediately
      prior
      to the issuance times the Exercise Price, divided by
      (b) the number of fully diluted shares of equity securities of the Company
      outstanding immediately after the issuance. Subject to the exclusions contained
      in the case of the issuance of options to purchase or rights to subscribe for
      Warrant Stock, securities by their terms convertible into or exchangeable for
      Warrant Stock, or options to purchase or rights to subscribe for such
      convertible or exchangeable securities, the following provisions shall
      apply:

     

    (a)  the
      aggregate maximum number of shares of Warrant Stock deliverable upon exercise
      of
      such options to purchase or rights to subscribe for Warrant Stock shall be
      deemed to have been issued at the time such options or rights were issued for
      a
      consideration equal to the consideration received by this corporation upon
      the
      issuance of such options or rights plus the minimum purchase price provided
      in
      such options or rights for the Warrant Stock covered thereby, but no further
      adjustment to the Exercise Price shall be made for the actual issuance of
      Warrant Stock upon the exercise of such options or rights in accordance with
      their terms;

     

    (b)  the
      aggregate maximum number of shares of Warrant Stock deliverable upon conversion
      of or in exchange for any such convertible or exchangeable securities or upon
      the exercise of options to purchase or rights to subscribe for such convertible
      or exchangeable securities and subsequent conversion or exchange thereof shall
      be deemed to have been issued at the time such securities were issued or such
      options or rights were issued for a consideration equal to the consideration
      received by this corporation for any such securities and related options or
      rights, plus the additional consideration, if any, to be received by this
      corporation upon the conversion or exchange of such securities or the exercise
      of any related options or rights, but no further adjustment to the Exercise
      Price shall be made for the actual issuance of Warrant Stock upon the conversion
      or exchange of such securities in accordance with their terms;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)  if
      such
      options, rights or convertible or exchangeable securities by their terms
      provide, with the passage of time or otherwise, for any increase in the
      consideration payable to this corporation, or decrease in the number of shares
      of Warrant Stock issuable, upon the exercise, conversion or exchange thereof,
      the Exercise Price computed upon the original issue thereof, and any subsequent
      adjustments based thereon, shall, upon such increase or decrease becoming
      effective, be recomputed to reflect such increase or decrease with respect
      to
      such options, rights and securities not already exercised, converted or
      exchanged prior to such increase or decrease becoming effective, but no further
      adjustment to the Warrant Price shall be made for the actual issuance of Warrant
      Stock upon the exercise of any such options or rights or the conversion or
      exchange of such securities in accordance with their terms; and

     

    (d)  upon
      the
      expiration of any such options or rights, the termination of any such rights
      to
      convert or exchange or the expiration of any options or rights related to such
      convertible or exchangeable securities, the Exercise Price shall promptly be
      readjusted to such Exercise Price as would have been obtained had the adjustment
      which was made upon the issuance of such options, rights or securities or
      options or rights related to such securities been made upon the basis of the
      issuance of only the number of shares, of Warrant Stock actually issued upon
      the
      exercise of such options or rights, upon the conversion or exchange of such
      securities or upon the exercise of the options or rights related to such
      securities.

     

    4.4  Calculation
      of Consideration.
      In the
      case of an issue of additional shares of Warrant Stock for cash, the
      consideration received by the Company shall be deemed to be the net cash
      proceeds received for such shares. In the case of an issue of additional shares
      of Warrant Stock for noncash consideration, the Company's Board of Directors
      shall determine the value of such consideration and such determination, unless
      shown by the Holder to have been made other than in good faith, shall be
      conclusive.

     

    4.5  Certificate
      as to Adjustments.
      In the
      case of any adjustment in the Exercise Price or number and type of securities
      issuable upon exercise of this Warrant, the Company will promptly give written
      notice to the Holder in the form of a certificate, certified and confirmed
      by an
      officer of the Company, setting forth the adjustment in reasonable
      detail.

     

    4.6  Exclusions.
      Anything herein to the contrary notwithstanding, the Company shall not be
      required to make any adjustment of the Exercise Price in the case of
      (a) the issuance or sale of options, or the shares of stock issuable upon
      exercise of such options, to purchase shares of the Warrant Stock to directors,
      officers, employees or consultants of the Company pursuant to stock options
      or
      stock purchase plans or agreements in existence on the date hereof, whether
      "qualified" for tax purposes or not, pursuant to plans or arrangements approved
      by the Board of Directors or stockholders of the Company or (b) the
      issuance of Warrant Stock pursuant to warrants outstanding as of the date
      hereof. The issuances or sales described in the preceding clauses (a) and
      (b) shall be ignored for purposes of calculating any adjustment to the
      Exercise Price.

     

    4.7  Nominal
      Adjustment.
      The
      Company shall not be required to make an adjustment in the Exercise Price under
      this Warrant if such adjustment is less that $0.01. However, the Company shall
      be required to carry forward on its books all adjustments that would have been
      made but for this Section 4.7 and shall take such adjustment into account
      when making subsequent adjustments under this Article 4. All calculations
      under this Article 4 shall be made to the nearest cent.

     

    5.  Securities
      Laws Restrictions; Legend on Warrant Stock

     

    (a)  This
      Warrant and the securities issuable upon exercise have not been registered
      under
      the Securities Act of 1933, as amended (the "Securities
      Act"),
      or
      applicable state securities laws, and no interest may be sold, distributed,
      assigned, offered, pledged or otherwise transferred unless (i) there is an
      effective registration statement under such Act and applicable state securities
      laws covering any such transaction involving said securities, (ii) the
      Company receives an opinion of legal counsel for the holder of the securities
      satisfactory to the Company stating that such transaction is exempt from
      registration, or (iii) the Company otherwise satisfies itself that such
      transaction is exempt from registration. Notwithstanding the foregoing, the
      Company will not require the Holder to provide a legal opinion for transfers
      of
      this Warrant or the securities issuable upon exercise hereof if such transfer
      is
      made in full compliance with Rule 144 of the Securities Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  A
      legend
      setting forth or referring to the above restrictions shall be placed on this
      Warrant, any replacement and any certificate representing the Warrant Stock,
      and
      a stop transfer order shall be placed on the books of the Company and with
      any
      transfer agent until such securities may be legally sold or otherwise
      transferred.

     

    6.  Exchange
      of Warrant; Lost or Damaged Warrant Certificate.
      This
      Warrant is exchangeable upon its surrender by the Holder at the office of the
      Company. Upon receipt by the Company of satisfactory evidence of the loss,
      theft, destruction or damage of this Warrant and either (in the case of loss,
      theft or destruction) delivery of an indemnity agreement reasonably satisfactory
      in form and substance to the Company or (in the case of damage) the surrender
      of
      this Warrant for cancellation, the Company will execute and deliver to the
      Holder, without charge, a new Warrant of like denomination.

     

    7.  Notices
      of Record Date, etc.

     

    In
      the
      event of:

     

    (a)  any
      taking by the Company of a record of the holders of Warrant Stock for the
      purpose of determining the holders who are entitled to receive any dividend
      or
      other distribution, or any right to subscribe for, purchase or otherwise acquire
      any shares of stock of any class or any other securities or property, or to
      receive any other right;

     

    (b)  any
      Reorganization of the Company, or any reclassification or recapitalization
      of
      the capital stock of the Company;

     

    (c)  any
      voluntary or involuntary dissolution, liquidation or winding-up of the
      Company;

     

    (d)  any
      proposed issue or grant by the Company to the holders of Warrant Stock of any
      shares of stock of any class or any other securities, or any right or warrant
      to
      subscribe for, purchase or otherwise acquire any shares of stock of any class
      or
      any other securities; or

     

    (e)  any
      other
      event as to which the Company is required to give notice to any holders of
      Warrant Stock,

     

    then
      and
      in each such event the Company will mail to the Holder a notice specifying
      (i) the date on which any such record is to be taken, (ii) the date on
      which any such Reorganization, reclassification, recapitalization, dissolution,
      liquidation or winding-up is to take place, and the time, if any is to be fixed,
      as to which the holders of record of Warrant Stock or securities into which
      the
      Warrant Stock is convertible shall be entitled to exchange their shares for
      securities or other property deliverable on such Reorganization,
      reclassification, recapitalization, dissolution, liquidation or winding-up,
      (iii) the amount and character of any stock or other securities, or rights
      or warrants, proposed to be issued or granted, the date of such proposed issue
      or grant and the persons or class of persons to whom such proposed issue or
      grant is to be offered or made, and (iv) in reasonable detail, the facts,
      including the proposed date, concerning any other such event. Such notice shall
      be delivered to the Holder at least ten days prior to the date on which a record
      date shall be selected, and in the case of any such Reorganization,
      reclassification, recapitalization, dissolution, liquidation or winding-up,
      at
      least thirty days' prior written notice of the date where the same shall take
      place.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.  Miscellaneous.

     

    8.1  Holder
      as Owner.
      The
      Company may deem and treat the holder of record of this Warrant as the absolute
      owner for all purposes regardless of any notice to the contrary.

     

    8.2  No
      Shareholder Rights.
      This
      Warrant shall not entitle the Holder to any voting rights or any other rights
      as
      a shareholder of the Company or to any other rights except the rights stated
      herein; and no dividend or interest shall be payable or shall accrue in respect
      of this Warrant or the Warrant Stock, until this Warrant is
      exercised.

     

    8.3  Notices.
      Unless
      otherwise provided, any notice under this Warrant shall be given in writing
      and
      shall be deemed effectively given (a) upon personal delivery to the party
      to be notified, (b) upon confirmation of receipt by fax by the party to be
      notified, (c) one business day after deposit with a reputable overnight
      courier, prepaid for overnight delivery and addressed as set forth in (d),
      or
      (d) three days after deposit with the United States Post Office, postage
      prepaid, registered or certified with return receipt requested and addressed
      to
      the party to be notified at the address indicated below, or at such other
      address as such party may designate by twenty days' advance written notice
      to
      the other party given in the foregoing manner.

     

    
      	 	
              If
                to the Holder:

            
	 	
              To
                the address last furnished 

            
	 	
              in
                writing to the Company by 

            
	 	
              the
                Holder

            
	 	
              If
                to the Company:

            
	 	
              Western
                Goldfields, Inc. 

            
	 	
              961
                Matley Lane 

            
	 	
              Suite
                120

            
	 	
              Reno,
                NV 89502

            
	 	
              (775) 337-9433

            
	 	
              (775) 337-9441

            


    

    


    8.4  Amendments
      and Waivers.
      Any
      term of this Warrant may be amended and the observance of any term may be waived
      (either generally or in a particular instance and either retroactively or
      prospectively) only with the written consent of the Company and the Holder.
      Any
      amendment or waiver effected in accordance with this Section 10.4 shall be
      binding on each future Holder and the Company.

     

    8.5  Governing
      Law; Jurisdiction; Venue.
      This
      Warrant shall be governed by and construed under the laws of the State of
      Delaware without regard to principles of conflict of laws. The parties
      irrevocably consent to the exclusive jurisdiction and venue of the state and
      federal courts located in the City and County of Denver, Colorado, in connection
      with any action relating to this Warrant.

     

    8.6  Successors
      and Assigns.
      The
      terms and conditions of this Warrant shall inure to the benefit of and be
      binding on the respective successors and assigns of the parties.

     

    [SIGNATURE
      PAGE FOLLOWS.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    



    EXECUTION
      COPY

     

    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above.

     

    
      	 	 	 
	 	Western
              Goldfields, Inc.
	 
 	 
 	 
 
	 	By:  	/s/ Thomas
              K.
              Mancuso
	 	
              
Name:
              Thomas K. Mancuso
	 	Title:
              President