THIS AGREEMENT dated as of April 1, 2004.

B E T W E E N:

J-PACIFIC GOLD INC.

("J-Pacific")

- and -

JIPANGU INC.

("Jipangu")

WHEREAS:

A.	J-Pacific owns and/or has interests in the Property described in Schedule B and wishes to
grant Jipangu the sole and exclusive option to earn up to a 50% interest therein on the
terms and conditions herein contained.  
B.	If Jipangu earns an interest in the Property as hereinafter provided the parties will form a
Joint Venture for the purpose of exploring for and, if warranted, developing and bringing
the Property into Commercial Production.

NOW THEREFORE for value received the parties agree as follows:

SECTION 1 
INTERPRETATION
1.1 	Defined Terms.  Capitalized terms used and not otherwise defined herein have the
respective meanings ascribed thereto in Schedule A hereto and "Agreement" where used herein
means this Option and Joint Venture Agreement.

1.2 	Headings and References.  The division of this Agreement into Sections and the
insertion of headings are for convenience of reference only and do not affect the construction or
interpretation of this Agreement.  Unless otherwise specified, references to sections and
schedules are to sections of, and schedules to, this Agreement.

1.3 	Currency.  All references herein to dollar amounts are references to United States
currency.

1.4 	Schedules.  The following schedules attached hereto form part of this Agreement: 
		Schedule A - Definitions 
		Schedule B - Description of the Property 
		Schedule C - Joint Venture Terms and Conditions 
		Schedule D - Net Smelter Return Royalty

SECTION 2
GRANT AND EXERCISE OF OPTIONS
2.1 	Grant.  J-Pacific hereby grants to Jipangu the sole and exclusive working right and
option to acquire an undivided 50% right, title and interest in and to (i) the Golden Trend Claims
(the "Golden Trend Option") and (ii) the HC Claims (the "HC Option"), in accordance with and
subject to the provisions hereof.

2.2 	Payments.  In consideration for the grant of the Options, Jipangu will pay to J-Pacific on
the date hereof the sum of $150,000.  Thereafter, Jipangu will pay J-Pacific:
(a) 	on or before the first anniversary of the date hereof, the sum of $150,000;
(b) 	on or before the second anniversary of the date hereof, the sum of $200,000; and
(c) 	on or before the third anniversary of the date hereof, the sum of $200,000;
unless, on or before any such date, the Options have been exercised or terminated by Jipangu in
accordance with the provisions hereof.

2.3 	Expenditures - Golden Trend Option.  To maintain the Golden Trend Option in full
force and effect hereafter, Jipangu must incur or fund, on or before the dates indicated below,
Expenditures on or in respect of the Golden Trend Claims in the amount of:
(a) 	on or before the first anniversary of the date hereof, a minimum of $400,000;
(b) 	on or before the second anniversary of the date hereof, a minimum of $1,000,000 (on a
cumulative basis);
(c) 	on or before the third anniversary of the date hereof, a minimum of $1,800,000 (on a
cumulative basis); and
(d) 	on or before the fourth anniversary of the date hereof, a minimum of $2,750,000 (on a
cumulative basis).

2.4 	Expenditures - HC Option.  To maintain the HC Option in full force and effect
hereafter, Jipangu must incur or fund, on or before the dates indicated below, Expenditures on or
in respect of the HC Claims in the amount of:
(a) 	on or before the first anniversary of the date hereof, a minimum of $300,000;
(b) 	on or before the second anniversary of the date hereof, a minimum of $700,000 (on a
cumulative basis);
(c) 	on or before the third anniversary of the date hereof, a minimum of $1,150,000 (on a
cumulative basis); and
(d) 	on or before the fourth anniversary of the date hereof, a minimum of $1,750,000 (on a
cumulative basis).

2.5 	Idem.  For the purposes of Sections 2.3 and 2.4: (i) Expenditures made or funded in a
particular period which exceed the Expenditures required to be made or funded to maintain the
applicable Option in good standing beyond such period will be credited as Expenditures made or
funded in the next subsequent period or periods; (ii) at any time during the Option Period, in lieu
of making or funding Expenditures Jipangu may pay to J-Pacific a sum of money equivalent in
value to the Expenditures with respect to which Jipangu wishes to receive credit as having been
made or funded and, upon the making of such payment, such Expenditures will be deemed to
have been made and funded; and (iii) in calculating the amount of Expenditures made or funded,
Jipangu will be entitled to include therein amounts paid to J-Pacific on account of management
fees (such amounts not to exceed in any year during the Option Period 10% of the aggregate
Expenditures made or funded in such year pursuant to Sections 2.3 and 2.4).

2.6 	Exercise and Vesting of Golden Trend Option. If Jipangu has made the payments
referred to in Section 2.2 (to the extent provided for therein) and incurred or funded the
Expenditures referred to in Section 2.3 in accordance with the provisions hereof, Jipangu will
have exercised the Golden Trend Option and thereby have earned an undivided 50% right, title
and interest in and to the Golden Trend Claims (except to the extent any of the same have been
surrendered or lapsed in accordance with the provisions hereof).

2.7	Exercise and Vesting of HC Option.  If Jipangu has made the payments referred to in
Section 2.2 (to the extent provided for therein) and incurred or funded the Expenditures referred
to in Section 2.4 in accordance with the provisions hereof, Jipangu will have exercised the HC
Option and will thereby have earned an undivided 50% right, title and interest in and to the HC
Claims (except to the extent any of the same have been surrendered or lapsed in accordance with
the provisions hereof).

2.8 	Formation of Joint Venture.  If one or more Options is exercised hereunder, J-Pacific
and Jipangu will be deemed, on the first such exercise, to have formed a Joint Venture on the
terms and conditions contained in Schedule C for the purposes of further exploring the property
to which each such exercised Option relates and, if deemed warranted, bringing the same into
Commercial Production.  Upon the formation of such Joint Venture, each party will have an
equal 50% Participating Interest therein.

SECTION 3
REPRESENTATIONS AND WARRANTIES OF J-PACIFIC

3.1 	Representations and Warranties of J-Pacific. J-Pacific represents and warrants as set
out in this Section 3.1 and acknowledges that Jipangu has entered into this Agreement in reliance
thereon:

(a) 	Existence and Authority.  J-Pacific is duly incorporated and organized and is a subsisting
corporation under the laws of British Columbia and has the corporate power and
authority to enter into this Agreement and perform its obligations hereunder.
(b) 	Golden Trend Resources.  Golden Trend Resources is duly incorporated and organized
and is a subsisting corporation under the laws of Nevada; J-Pacific is the registered and
sole beneficial owner of all of the outstanding securities of Golden Trend Resources.
(c) 	Ownership and Title.  Record title to the Golden Trend Claims and to the HC Claims
(other than the KM Exploration Claims) is vested solely in Golden Trend Resources;
record title to the KM Exploration Claims is vested solely in KM Exploration LLC, a
Nevada limited liability company, subject to the KM Exploration Letter Agreement.
Other than this Agreement, neither J-Pacific nor Golden Trend Resources has entered
into any agreement or is party to any arrangement or understanding to option, lease,
transfer or otherwise dispose of the Property or any part thereof or interest therein.  To
the best of J-Pacific's knowledge, other than the KM Exploration Letter Agreement, KM
Exploration LLC has not entered into any agreement and is not party to any arrangement
or understanding to option, lease, transfer or otherwise dispose of the KM Exploration
Claims or any part thereof or interest therein.
(d) 	Good Standing of Claims.  The Golden Trend Claims and the HC Claims have been
validly and properly located, staked and recorded in accordance with all applicable Laws,
are in good standing and no taxes, assessments, fees, rentals or other charges are due in
respect thereof.
(e) 	Status of Material Agreements.  Each of the Rubicon Resources Deed and the KM
Exploration Letter Agreement is a legal, valid and binding obligation, enforceable in
accordance with its terms (except as enforcement thereof may be limited by events of
insolvency and the availability of equitable remedies).  Each of Golden Trend Resources
and J-Pacific has taken all actions and made all payments required to be taken or made by
it on or before the date hereof under such deed and such agreement and has otherwise
performed and complied with all of its respective covenants and obligations thereunder
and no party thereto has given any notice of termination thereunder or taken any steps to
terminate either of the same.
(f) 	Absence of Charges.  Except for the net smelter returns royalty in favour of Rubicon
Resources Inc. referred to in the Rubicon Resources Deed, J-Pacific owns the Property
(other than the KM Exploration Claims) free and clear of all security interests, liens,
charges and encumbrances and obligations and liabilities to third parties, including,
without limitation, royalties or other payments in the nature of a royalty, adverse claims,
orders or judgments.  To the best of J-Pacific's knowledge, except for the net smelter
return royalty interest in favour of KM Exploration LLC referred to in the KM
Exploration Letter Agreement, the KM Exploration Claims are not subject to any security
interest, lien, charge, encumbrance, obligation or liability to third parties, including,
without limitation, royalties or other payments in the nature of a royalty, adverse claims,
orders or judgments.
(g) 	Environmental Matters.  All operations conducted by J-Pacific and Golden Trend
Resources on the Property have been conducted in compliance with applicable laws,
regulations or orders relating to environmental matters including, without limitation,
waste disposal and storage.
(h) 	Work Orders, etc.  There are no outstanding orders or directions issued under applicable
laws, regulations or orders relating to environmental matters requiring any work, repairs,
construction or capital expenditures with respect to the Property and J-Pacific and Golden
Trend Resources have not received notice that any such orders or directions are pending.
(i) 	Claims and Proceedings.  There are no outstanding claims, actions or proceedings
(judicial, regulatory or administrative) alleging any violation by J-Pacific, Golden Trend
Resources or KM Exploration LLC of any Laws relating to the Property or which, if
successful, would or could affect the right, title and/or interests of J-Pacific, Golden
Trend Resources or KM Exploration LLC in the Property, and, to J-Pacific's knowledge,
no such claims, actions or proceedings are pending or threatened.

SECTION 4
MANAGEMENT COMMITTEE

4.1 	Management Committee.   On execution of this Agreement, the parties will establish
the Management Committee consisting of two representatives of J-Pacific and one representative
of Jipangu.  Either party may at any time change any of its representatives on the Management
Committee by written notice given to the other party.

4.2 	Mandate.  The Management Committee will be responsible for managing the exploration
work to be carried out by J-Pacific on the Property during the Option Period, considering annual
programs and budgets proposed by J-Pacific for exploration work and, if appropriate, approving
the same with such modifications as it deems fit, reviewing ongoing results of exploration work,
considering revisions or amendments to approved programs and budgets, and formulating
general policies and directions to be considered by J-Pacific in the conduct of exploration work
on the Property; provided, however, during the Option Period:

(a) 	the programs and budgets relating to Expenditures on the Golden Trend Claims will
provide for the conduct and completion of a minimum of 60,000 feet of drilling thereon;
and
(b) 	the programs and budgets relating to Expenditures on the HC Claims will provide for the
conduct and completion of a minimum of 40,000 feet of drilling thereon.

4.3 	Meetings.  The Management Committee will meet at least annually.  The Management
Committee will make its decisions by majority vote, except with respect to the abandonment or
lapse of any claims included in the Property on the date hereof, which decisions shall be
unanimous.

SECTION 5
OPTION PERIOD COVENANTS
5.1 	Covenants of Jipangu.  During the Option Period, Jipangu covenants as set out in this
Section 5.1:

(a) 	Maintenance Fees and Advanced Royalties - Golden Trend Claims.  If and to the extent
the Golden Trend Option has not been exercised or terminated by Jipangu, Jipangu will
pay to J-Pacific (or provide J-Pacific with reimbursement therefor):
(i) 	all such annual claim maintenance fees as are required under applicable law at
any time and from time to time to keep the Golden Trend Claims in good standing
(except to the extent any of the same have been surrendered or lapsed by a
unanimous decision of the Management Committee); and
(ii) 	all such amounts as are payable by J-Pacific annually by way of advanced
royalties or otherwise pursuant to the Rubicon Resources Deed.
(b) 	Maintenance Fees and Advanced Royalties - HC Claims.  If and to the extent the HC
Option has not been exercised or terminated by Jipangu, Jipangu will pay to J-Pacific (or
provide J-Pacific with reimbursement therefor):
(i)	all such annual claim maintenance fees as are required under applicable law at
any time and from time to time to keep the HC Claims in good standing (except to
the extent any of the same have been surrendered or lapsed by a unanimous
decision of the Management Committee); and
(ii) 	all such amounts as are payable by J-Pacific annually by way of advanced
royalties or otherwise pursuant to the KM Exploration Letter Agreement.

5.2 	Covenants of J-Pacific.  During the Option Period, J-Pacific covenants as set out in this
Section 5.2:

(a) 	Maintenance of Claims.  J-Pacific will, and will cause Golden Trend Resources to, (i)
make all required claim maintenance payments within the time periods prescribed
therefor, (ii) file all necessary notices, reports and/or assessment work on or in respect
thereof in accordance with applicable Laws, (iii) obtain and maintain any required
exploration and/or environmental bonds, and (iv) carry out work in a manner which
maintains the Property free and clear of all security interests, liens, charges and
encumbrances which could result from its or their activities. 
(b) 	Ownership of Claims.  J-Pacific will cause Golden Trend Resources to maintain
ownership of all claims included within the Property owned by it free and clear of all
security interests, liens, charges and other encumbrances, and will not do, and will not
permit Golden Trend Resources to do or permit to be done, any act which would cause
the Property or the rights or interests of J-Pacific or Golden Trend Resources therein to
become subject to any security interest, lien, charge or other encumbrance, or to be
endangered, cancelled, terminated, forfeited, surrendered or which would cause J-Pacific
or Golden Trend Resources to be in default, or liable for any damage, claim or penalty
with respect thereto.
(c) 	Payments.  J-Pacific will promptly remit to the payees entitled thereto all payments and
other amounts received from Jipangu pursuant to Section 5.1 (a) and (b).
(d) 	Golden Trend Resources.  J-Pacific will make, or cause Golden Trend Resources to
make, all such filings and payments and to do all such other things as are required to
maintain the corporate existence in good standing of Golden Trend Resources in all
jurisdictions where such company carries on business.  J-Pacific will maintain ownership
of all outstanding securities of Golden Trend Resources and, except with the prior written
consent of Jipangu, will not enter into any agreement or understanding, or permit Golden
Trend Resources to enter into any agreement or understanding, with any party for the
transfer or other disposition of any of such securities or grant or permit to exist any
security interest, lien, charge, encumbrance therein.
(e) 	Material Agreements.  J-Pacific will cause Golden Trend Resources to perform and
observe all covenants to be performed and observed by Golden Trend Resources under
the Rubicon Resources Deed and the KM Exploration Letter Agreement and will not do,
or permit Golden Trend Resources to do, any act which would cause such deed or such
agreement or the rights of J-Pacific or Golden Trend Resources thereunder to be
endangered, cancelled, terminated, forfeited, surrendered or which would cause J-Pacific
or Golden Trend Resources to be in default, or liable for any damage, claim or penalty
thereunder.
(f) 	Definitive Mining Lease and Purchase Option Agreement.  J-Pacific will use its
reasonable best efforts to settle with KM Exploration LLC the terms and conditions of the
definitive mining lease with option to purchase agreement referred to in the KM
Exploration Letter Agreement and to have the same executed and delivered by the parties
thereto as soon as is reasonably practicable and in any event no later than September 1,
2004.
(g) 	Conduct of Mining Operations.  J-Pacific will carry out, or cause Golden Trend
Resources to carry out, work on the Property in a good and workmanlike manner in
accordance with good practice in the mining industry, in compliance with all applicable
Laws and in accordance with programs and budgets approved by the Management
Committee hereunder.
(h) 	Record-keeping.  J-Pacific will keep, or will cause Golden Trend Resources to keep,
separate records, including separate financial records, relating to all Expenditures made
or incurred on or in respect of the Property and will provide Jipangu upon request and
within a reasonable time period with an accounting thereof.
(i) 	Information and Reporting. J-Pacific will permit Jipangu and its authorized
representatives at all reasonable times on reasonable advance to have access to and to
inspect all information and data pertaining to the Property in its possession or under its
control, including all information, data, files, records, maps, charts, photographs, sample
drill logs, drill cores and related items which relate to exploration work on the Property.
Within 90 days of each year-end, J-Pacific will provide Jipangu with an annual report,
disclosing all significant results and technical data learned or obtained in connection with
exploration work on the Property during such year, as well as a breakdown of all
Expenditures and other costs incurred in connection therewith.
(j) 	Access to Property.  J-Pacific will permit Jipangu and its authorized representatives to
have access, at Jipangu's sole risk and expense, to the Property at all reasonable times on
reasonable advance notice.

5.3 	Abandonment. J-Pacific may unilaterally abandon or allow to lapse any mining claims
included within the Property on 30 days prior notice to Jipangu.  If, within 30 days of receipt of
such notice, Jipangu requests J-Pacific to transfer to it any of such claims, J-Pacific will
forthwith transfer the same to Jipangu (at Jipangu's expense) in accordance with Section 5.3.
Claims abandoned or allowed to lapse or transferred to Jipangu in accordance with the foregoing
will automatically cease to constitute part of the Property.

5.4 	Transfer of Claims.  Any mining claims transferred to Jipangu must be free and clear of
all security interests, liens, charges and encumbrances of any kind whatsoever arising from J-
Pacific's exploration work thereon.  J-Pacific will indemnify and save harmless Jipangu from
and against all suits, claims, demands, liabilities, losses and expenses which Jipangu may suffer,
incur or sustain resulting or arising from J-Pacific's exploration work thereon or in respect of
such claims.  The provisions of this Section 5.3 will survive termination of this Agreement and
the formation of any Joint Venture.

SECTION 6
DISPOSITION OF INTERESTS

6.1 	General.  Neither party may transfer or otherwise dispose of its interest in this
Agreement and the Property ("Interest") (whether directly or indirectly, including through the
sale of a subsidiary, or otherwise) except in accordance with the terms of this Agreement or with
the prior written consent of the other party, such consent not to be unreasonably withheld. A
purported transfer of any Interest in violation of this Agreement is void.

6.2 	Transfer to Wholly-Owned Subsidiaries.

(a) 	A party may assign and transfer its Interest to a wholly-owned direct or indirect
subsidiary provided that, at or prior to the time of such transfer, such party notifies the
other party of such transfer and the transferee undertakes and agrees with the parties
hereto in writing to be bound by and to observe, perform and comply with the terms of
this Agreement, including the provisions of this Section 6, and to assume all of the
liabilities and obligations of the transferor under this Agreement, whether accruing before
or becoming due after such transfer and assignment.  The transferor and transferee will
execute such agreements or documents as may be reasonably required in this regard by
the other parties hereto.
(b) 	Any subsequent transfer by a party of control over a wholly-owned subsidiary will be
void if the effect of such transfer is to avoid the application thereafter of this Section 6.

SECTION 7
TERMINATION

7.1 	Termination.  This Agreement will automatically terminate with respect to an Option if
at any time during the Option Period Jipangu fails to incur the Expenditures required to be
incurred under Sections 2.3 or 2.4 to maintain such Option in good standing or fails to make the
payments required to be made under Section 2.2, in each case on or before the last date by which
any of the same are required thereunder to be incurred; provided, however, that such termination
will not relieve Jipangu of the obligation to make the payment referred to in Section 2.2(a), make
or fund the Expenditures referred to in Sections 2.3(a) and 2.4(a) and make the payments
referred to in Sections 5.1(a) and/or (b) (to the extent the same have then accrued or become
due).

7.2  	Termination by Jipangu.  At any time after the first anniversary of this Agreement, and
provided Jipangu shall have made the payment referred to in Section 2.2(a), incurred or funded
Expenditures in the amounts referred to in Sections 2.3(a) and 2.4(a) and made the payments
referred to in Section 5.1(a) and (b) (to the extent the same have then accrued or become due),
Jipangu may, subject to Section 7.3, terminate one or more Options on 60 days' written notice of
termination delivered to J-Pacific; provided, however, that such notice will not be effective
unless it shall be accompanied by payment to J-Pacific of all amounts which are, or on or before
the expiry of such 60 day period will be, due and outstanding under Sections 2.2 and 5.1.

7.3 	Idem.  If a notice of termination of an Option is delivered at any time when a program
and budget for Expenditures relating thereto for the purposes of Section 2.3 or 2.4 has been
approved by the Management Committee in accordance with the provisions hereof but has not
yet been completed, such notice will not be effective until Jipangu has incurred such
Expenditures or made a payment to J-Pacific in an amount sufficient to enable the completion
thereof.

7.4 	Termination of Agreement. This Agreement will terminate when both Options have
been terminated in accordance with the provisions hereof.  The provisions of Sections 5.3, 7, 8.2
and 8.4 will survive termination and continue in full force and effect.

SECTION 8
GENERAL

8.1 	Force Majeure.  Time is of the essence of each provision hereof; provided, however,
that no right of a party will be affected for failure or delay of the party to meet any condition or
perform any obligation under this Agreement, where such failure or delay is caused by or arises
out of any act or failure to act not within the control of such party (other than by reason of lack
of funds) and all times provided for in this Agreement will be extended for a period
commensurate with the period of such delay.

8.2	Confidential Information.  All Confidential Information provided to or received by a
party from another party, whether before or after the date of this Agreement, is and will be
treated as confidential.  A party will not disclose Confidential Information to third parties,
whether by way of press release or otherwise, except and to the extent the disclosure is required
by law, stock exchange rules or a regulatory authority having jurisdiction or the disclosure is
consented to by the other party (the "Non-Disclosing Party"); consent of such Non-Disclosing
Party will not be unreasonably withheld or delayed in view of the parties' timely disclosure
obligations.  Without limiting the foregoing, it shall be reasonable for a Non-Disclosing Party to
withhold its consent to the issuance of a press release if it has not been provided with an advance
draft copy of such press release and an opportunity to consider and comment thereon.  Where
disclosure is required by law, stock exchange rules or a regulatory authority having jurisdiction,
a party will, if permitted by such law, stock exchange rule or regulatory authority, use its
reasonable best efforts to provide a copy of the information to be disclosed to the Non-
Disclosing Party in advance of its disclosure and make such reasonable changes thereto as may
be requested by the Non-Disclosing Party.

8.3 	Registration. A party will be entitled to register this Agreement or notice thereof against
the Property, and each party will cooperate in effecting the registration of any such notice and
execute any documentation required in connection therewith.

8.4 	Indemnification. Each of J-Pacific and Jipangu (either, an "indemnifying party") will
indemnify and save harmless the other from and against all suits, claims, demands, liabilities,
losses and expenses which the other may suffer, incur or sustain resulting or arising from an act
or thing done or omitted to be done by the indemnifying party in relation to the Property or this
Agreement, including any breach or alleged breach of Laws, any non-fulfillment of any covenant
or agreement or any misrepresentation or breach of warranty by or of the indemnifying party
contained in the Agreement.  The provisions of this Section 8.4 will survive termination of this
Agreement and the formation of any Joint Venture.

8.5 	Arbitration. Any dispute or difference between the parties concerning this Agreement
which cannot be settled by them will be submitted to a single arbitrator pursuant to the
provisions of the Commercial Arbitration Act (British Columbia) or, if the parties cannot agree
upon a single arbitrator, to three arbitrators, one appointed by each of the parties and the third
appointed by the arbitrators appointed by the parties. The place of arbitration will be Vancouver,
British Columbia or such other place as the arbitrator or arbitrators shall determine.

8.6 	Notice. Any notice or other communication under this Agreement to a party must be
given in writing and delivered personally or sent by facsimile, addressed as follows:

(i) 	if to J-Pacific, to: 
			J-Pacific Gold Inc.
			Suite 1440, 1166 Alberni Street
			Vancouver, B.C.
			Canada  V6E 3Z3
			Attention:  	President
			Facsimile: 	+604 684-6678

(ii) 	if to Jipangu, to:
			Jipangu Inc.
			3-6-9 Kita-Shinagawa
			Shinagawa-ku
			Tokyo, Japan 	140-0001
			Attention: 	President
			Facsimile: 	+813 3474-4679
		 with a copy to:
			Davis & Company
			2800 Park Place
			Vancouver, B.C.
			Canada  V6C 2Z7
			Attention: 	John M. Sibley
			Facsimile: 	+604 687-1612

or to such other address, contact person or facsimile number as a party may specify by notice
hereunder.  Any such notice or communication, if delivered, will be deemed given when
received, and if sent by facsimile, will be deemed given on the next business day following the
date of transmission.

8.7 	Miscellaneous.

(a) 	No Waiver.  No failure to exercise, and no delay in exercising, any right or remedy
hereunder will be deemed to be a waiver of that right or remedy or the right to require the
full performance thereof at any later time.  No waiver of any breach hereof will be
deemed to be a waiver of any subsequent breach thereof.
(b) 	Assignment and Enurement. This Agreement will be binding upon and enure to the
benefit of the parties' successors and permitted assigns; provided, however, that any
assignment by any party of all or any portion of its rights or obligations hereunder will
include a provision whereby the transferee agrees with the other parties to be bound by
and to observe, perform and comply with the terms of this Agreement, including the
provisions of Section 6, and to assume all of the liabilities and obligations of the
transferor under this Agreement, whether accruing before or becoming due after such
transfer and assignment.  The transferor and transferee will execute such agreements or
documents as may be reasonably required in this regard by the other parties hereto.  No
assignment will serve to release or discharge the transferor from any of the said liabilities
or obligations, unless all of the rights and obligations of the transferor have been assigned
to the transferee and the parties hereto have released the transferor.
(c) 	Severability.  If any term of this Agreement is or becomes illegal, invalid or
unenforceable, that term will not affect the legality, validity or enforceability of the
remaining terms of this Agreement.
(d) 	Entire Agreement.  This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements,
negotiations, discussions, undertakings, representations, warranties and understandings,
whether written or oral.
(e) 	Amendment.  No amendment, supplement or restatement of any provision of this
Agreement is binding unless it is in writing and signed by each person which is a party to
this Agreement at the time of such amendment, supplement or restatement.
(f) 	Further Assurances.  Each party will from time to time promptly execute and deliver all
further documents and take all further action necessary or appropriate to give effect to
and perform the provisions and intent of this Agreement and to complete the transactions
contemplated hereby.
(g) 	Counterparts. This Agreement and any amendment, supplement or restatement of any
term of this Agreement may be executed and delivered in any number of counterparts,
each of which when executed and delivered will be deemed to be an original and all of
which together will constitute one and the same instrument, and may be delivered by
facsimile.
(h) 	Governing Law.  This Agreement is governed by and is to be construed and interpreted in
accordance with the laws of British Columbia.  Each party irrevocably attorns to the non-
exclusive jurisdiction of the courts thereof.

IN WITNESS WHEREOF the parties have duly executed this Agreement.

J-PACIFIC GOLD INC.
By:   __________________________
Name:  	Nicholas T. Ferris
Title:    	President and CEO

JIPANGU INC.
By:   __________________________
Name: Tamisuke Matsufuji
Title: President

SCHEDULE A 
DEFINITIONS

Capitalized terms used but not otherwise defined in the Option and Joint Venture Agreement and
in the Schedules thereto have the following meanings:

"affiliate" has the meaning ascribed thereto in the Business Corporations Act (British
Columbia).

"Approved Program" and "Program" have the respective meanings ascribed thereto in
Section 8.1 of Schedule C to the Option and Joint Venture Agreement.

"Assets" means all tangible and intangible goods, chattels, improvements or other items
acquired or held for use in connection with Mining Operations, other than the mining claims and
other tenures comprising the Property, including, without limitation:

(a) 	all Mine and Plant and all other machinery and equipment, inventories, supplies, shelter,
infrastructure, automotive and other support and repair equipment and tools, furniture and
instruments and other tangible personal property;
(b) 	all mobile equipment and vehicles, including aircraft and telecommunications equipment;
(c) 	all business licences and all other licences and permits necessary for the use of the Assets
in the carrying out of Mining Operations;
(d) 	all contracts and agreements relating to the carrying out of Mining Operations;
(e) 	cash in banks and other financial institutions and on hand, accounts receivable, prepaid
expenses, inventory, consumable stores, mine and other supplies (including spare parts
and tools) and any other assets of a working capital nature relating to the Joint Venture;
(f) 	all patents, trademarks, copyrights or other forms of intellectual property which may be
established or obtained as a result of the conduct of Mining Operations; and
(g) 	all information, files, records, maps, charts, photographs, data, samples, drill logs and
drill cores and related items which come into being as a result of Mining Operations.

"Commercial Production" means the commercial exploitation of Mineral Product mined from
the Property; Commercial Production will be deemed to have commenced when a facility
processing ores from the Property other than for testing purposes has operated for a period of 60
consecutive production days at not less than 60% of its monthly design capacity or other rate or
quantity of production specified by the Management Committee as constituting the
commencement of Commercial Production.

"Confidential Information" means all data and other information provided to or received by a
party from another party except data and other information which a party is able to establish:

(a) 	was readily available to the public at the time such information was made available to it;
(b) 	became readily available to the public after the time such information was made available
to it other than as a result of disclosure by a party in contravention of its obligations
under the Option and Joint Venture Agreement or Schedule C thereto; or
(c) 	became readily available to a party on a non-confidential basis from a non-party provided
such non-party was not bound by confidentiality obligations relating thereto.

"development work" means all work following the approval of a Feasibility Study expedient to
develop and bring into production in accordance therewith any mineralized structure or deposit.

"Event of Force Majeure" means any act not within the control of a party, excluding lack of
funds but including, without limitation, acts of God, strikes, lock-outs or other industrial
disputes, acts of a public enemy, riots, fire, storm, flood, explosion, government restriction,
failure to obtain any approvals required from regulatory authorities, including environmental
protection agencies, unavailability of equipment, interference of persons primarily concerned
with environmental or native rights issues and any other cause, whether of the kind enumerated
herein or otherwise which is not reasonably within the control of the party.

"Expenditures" means all costs, expenses and charges, direct or indirect, of or incidental to
Mining Operations determined, subject to the provisions hereof, in accordance with Canadian
generally accepted accounting principles consistently applied, including during the Option
Period, without limitation, the payments and fees referred to in Section 2.5 of the Option and
Joint Venture Agreement and all payments, costs and charges paid or reimbursed pursuant to
Section 5.1 of the Option and Joint Venture Agreement.

"exploration work" means all prospecting, surveying, geological, geophysical and geochemical
surveys, drilling, trenching, underground development for exploration purposes, sampling,
assaying, the acquisition of any property or property right that becomes part of the Property and
all other work commonly regarded by normal mining industry standards as exploration work.

"Feasibility Study" means a report containing a description and analysis of the methods and
costs and all other relevant aspects of bringing into production and operation a Mine and Plant on
the Property, in such form and containing such information as a senior financial institution would
reasonably require for the purposes of financing development work and a Mine and Plant on the
Property, and including:

(a) 	an estimate of the recoverable reserves of minerals and the average composition and
content thereof which may be produced from the Property; 
(b) 	procedures for developing, mining and producing ore from the Property, including
tailings disposal, and the obtaining of all requisite environmental and other permits in
connection therewith;
(c) 	results of metallurgical tests, including concentrate grade and contents;
(d) 	the nature and extent of the machinery, equipment and other facilities proposed to be
acquired and installed on the Property, or otherwise utilized, for the purposes of
producing Mineral Product;
(e) 	an estimate of the total costs, including capital budget, required to implement the
recommendations of the Feasibility Study and place the Property into production,
including a schedule of the timing of the incurring of such costs;
(f) 	an economic evaluation of the proposed producing operations, taking into account all
relevant factors and including an estimate of the financial return therefrom based on
estimated market prices for the Mineral Product; and
(g)	such other matters as the Management Committee and the author of the Feasibility Study
consider appropriate.

"Golden Trend Claims" means the mining claims described in Schedule B-1 to the Option and
Joint Venture Agreement, as the same may be reduced by claims abandoned or disposed of in
accordance with Section 5.2 of such Agreement, and all mineral rights, tenures and properties
whatsoever acquired pursuant to the provisions hereof, including all mineral rights, tenures and
properties into which the same may be converted.

"Golden Trend Resources" means Golden Trend Resources Inc., a Nevada corporation.

"HC Claims" means the mining claims described in Schedule B-2 to the Option and Joint
Venture Agreement (including the KM Exploration Claims), as the same may be reduced by
claims and or leases abandoned or disposed of in accordance with Section 5.2 of such
Agreement, and all mineral rights, tenures and properties whatsoever acquired pursuant to the
provisions hereof, including all mineral rights, tenures and properties into which the same may
be converted.

"J-Pacific" means J-Pacific Gold Inc., and its successors and permitted assigns.

"Jipangu" means Jipangu Inc., and its successors and permitted assigns.

"Joint Venture" means a joint venture formed between the parties pursuant to the Option and
Joint Venture Agreement and Schedule C thereto.

"Joint Venture Property" means, after formation of the Joint Venture, the parties' right, title
and interest from time to time in and to:

(a) 	the mining claims and other mineral rights, tenures and properties which underlie the
Option or Options upon the exercise thereof in accordance with the provisions of the
Option and Joint Venture Agreement, together with the mining claims and other mineral
rights, tenures and properties which underlie such Option, if any, as may be exercised
after the Operative Date and as may by agreement of the parties be added thereto;
(b) 	all Assets acquired or held by the Joint Venture in accordance with the provisions of
Schedule C to the Option and Joint Venture Agreement; and
(c)	all ores and other material mined or otherwise derived from the Property in connection
with the operations of the Joint Venture until distributed to the parties in accordance with
the provisions of Schedule C to the Option and Joint Venture Agreement.

"KM Exploration Claims" means all right, title and interest in and to the HC 1-20 mining
claims referred to in Schedule B-2 to the Option and Joint Venture Agreement owned by KM
Exploration LLC.

"KM Exploration Letter Agreement" means the letter agreement dated May 23, 2002 between
KM Exploration LLC and J-Pacific.

"Laws" means all laws, statutes, regulations, treaties, judgements and decrees and, whether or
not having the force of law, all official directives, rules, consents, approvals, authorizations,
guidelines, orders and policies of any government or governmental authority.

"Management Committee" means at any time the management committee established by the
parties in accordance with the provisions of the Option and Joint Venture Agreement or, after the
Operative Date, Schedule C thereto.

"Mine and Plant" means any pits, openings, shafts and mine workings on the Property, all ore
extraction, milling and other facilities constructed or installed on the Property including all
buildings, plant, structures, machinery, equipment, housing, townsite, power, fuel and water
supply, storage, mill processing and tailings disposal facilities, living accommodation, waste
disposal, roads and other transportation or access facilities, loading and unloading facilities, and
all other related property, facilities and infrastructure.

"Mine Closure Plan" has the meaning ascribed thereto in Section 10.2 of Schedule C to the
Option and Joint Venture Agreement.

"Mine Maintenance Plan" has the meaning ascribed thereto in Section 10.1 of Schedule C to
the Option and Joint Venture Agreement.

"Mineral Product" means all ores and other material mined or otherwise derived from the
Property and all metals, gems, concentrates, precipitates and mill products produced or derived
therefrom or from material leached in place on the Property.

"Mining Operations" means all exploration work, development work, production and other
work or activity of any nature or kind whatsoever performed or incurred by or on behalf of a
party on or in respect of the Property or pursuant to this Agreement in connection with exploring
and developing the Property, establishing, commissioning and operating a Mine and Plant,
producing Mineral Product, decommissioning the Mine and Plant and reclaiming the Property
thereafter or otherwise.

"Operating Plan" has the meaning ascribed thereto in Section 9.2 of Schedule C to the Option
Agreement.

"Operator" means the party acting or appointed as Operator from time to time under Schedule
C to the Option and Joint Venture Agreement.

"Operative Date" means the date of formation of the Joint Venture.

"Option" means the Golden Trend Option or the HC Option (both as defined in Section 2.1 of
the Option and Joint Venture Agreement), as the case may be, and "Options" means,
collectively, the Golden Trend Option and the HC Option.

"Option and Joint Venture Agreement" means the Option and Joint Venture Agreement dated
as of April 1, 2004 between J-Pacific Gold Inc. and Jipangu Inc. to which this Schedule A is
annexed, including the recitals and schedules thereto, as amended, supplemented or restated from
time to time.

"Option Period" means the period from the date of the Option and Joint Venture Agreement
until the earlier of the formation of the Joint Venture and termination thereof.

"Participating Party" means a party with a Participating Interest of 10% or greater (or which
owns a Participating Interest after the commencement of Commercial Production).

"Participating Interest" means the undivided beneficial ownership interest of a party in and to
the Joint Venture Property determined in accordance with the provisions hereof.

"Prime Rate" means the rate per annum equal to the rate of interest quoted by Bank of Montreal
from time to time as the reference rate of interest used by it to determine rates of interest on
United States dollar demand loans to its commercial customers.

"production" or "producing operations" means the work of mining, extracting, handling,
milling, concentrating and otherwise treating or processing products and all work incidental
thereto, including reclamation and rehabilitation work.

"Production Plan" has the meaning ascribed thereto in Section 8.5 of Schedule C to the Option
and Joint Venture Agreement.

"Property" means the all right, title and interest in and to Golden Trend Claims and the HC
Claims.

"Rubicon Resources Deed" means the Deed With Reservation of Net Smelter Returns Royalty
from Rubicon Resources Inc. to Golden Trend Resources dated March 29, 2002.

"transfer" means sell, assign, transfer, convey, exchange or otherwise alienate or dispose of.



|**SCHEDULE B
          DESCRIPTION OF THE PROPERTY**
|----------------------------------------------------
|**B-1. Golden Trend Claims**                        
|**Claim**                                           
|CTZ 1-15                                            
|CTZ 18-23                                           
|GT 1-36                                             
|GT 37-66                                            
|GT 67-80                                            
|GT 81-90                                            
|**B-2. HC Claims**                                  
|**Claim**                                           
|HC 1-20                                             
|HC 21-25                                            
|HC 26-43                                            
|HC 44-50                                            

SCHEDULE C

JOINT VENTURE TERMS AND CONDITIONS

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Appendix 1 - Accounting Procedure

SECTION 1

INTERPRETATION

1.1	Definitions.  Capitalized terms used and not otherwise defined herein have the respective
meanings ascribed thereto in Schedule A to the Option and Joint Venture Agreement dated as of
April 1, 2004 between J-Pacific and Jipangu to which this Schedule C is annexed (the "Option
and Joint Venture Agreement") and "Agreement" where used herein means this Schedule C.

1.2	Interpretation.  In this Agreement,

(a) 	all references to dollar amounts are references to United States currency;

(b) 	unless otherwise specified herein, references to "Sections" and "Schedules" are
references to Sections of, and Schedules to, this Agreement;

(c)	headings have been inserted for convenience of reference only and do not affect the
construction or interpretation of this Agreement; and

(d) 	In the event of any conflict or inconsistency between this Agreement and the Option and
Joint Venture Agreement the provisions of this Agreement will prevail.

SECTION 2

JOINT VENTURE

2.1	Formation.  The terms and conditions set out herein will become effective on the
Operative Date.  On such date, the provisions of this Schedule C (including the Accounting
Procedure appended as Appendix 1 hereto) will be applied and interpreted as if contained in an
agreement duly executed and delivered by the parties pursuant to which J-Pacific and Jipangu
have agreed, on such terms and conditions, to associate and participate in a joint venture for the
purposes of further exploring the Property and, if deemed warranted, developing the Property
and bringing it into Commercial Production.

2.2	Relationship of Parties.  The relationship of the parties in the Joint Venture is one of
contractual joint venturers and is not, and is not to be construed as, a partnership, agency or
fiduciary relationship.  Except as otherwise expressly provided herein, the rights, privileges,
powers, duties and liabilities of the parties are separate and not joint or joint and several and no
party has any authority to act for or to assume any obligation or responsibility on behalf of any
other party.

2.3	Independent Endeavours.  Except as otherwise expressly provided herein, each party
will have the unrestricted right independently to engage in and receive the full benefit of any
activity of any sort whatsoever not related to the Property, whether or not competitive with the
endeavours contemplated herein, without consulting with, or accounting to, or permitting the
participation therein of, any other party.  No party will be under any fiduciary or other duty to
any other party which will prevent it from engaging in or enjoying the benefit of competing
endeavours unless such party has knowledge or information relating to the Property derived from
endeavours hereunder which has not been disclosed to the other parties and utilizes such
knowledge and information for its own benefit or for the benefit of its affiliates or associates.
For greater certainty, the legal doctrines of "corporate opportunity" or "business opportunity"
sometimes applied to persons occupying a joint venture will not apply to any other endeavour of
a party.

SECTION 3

INTERESTS OF THE PARTIES

3.1	 General.  Except as otherwise expressly provided herein, the apportionment of all costs
incurred by the Operator in the conduct of operations under this agreement will be borne and
paid by the parties in proportion to their respective Participating Interests from time to time and
all Joint Venture Property will be owned or held by the parties in proportion to their respective
Participating Interests from time to time.

3.2	Initial Participating Interests.  As of the Operative Date, each party will have an equal
50% Participating Interest in the Joint Venture, and each party will be deemed conclusively for
the purposes of the Joint Venture to have incurred as of the Operative Date costs equal to the
Expenditures made or funded by Jipangu on or before such Operative Date.  The Participating
Interests of the Participating Parties will be subject to adjustment as herein provided.

3.3	Tax Deductions and Incentives.  Each party will be entitled to take advantage of any
deductions or incentives which may be available under the provisions of applicable Laws in
relation to the costs and expenses incurred by it on exploration work, development work,
producing operations or otherwise.  The parties will cooperate in the preparation, execution and
filing of all documentation and information relating to such deductions or incentives except to
the extent detrimental to any party's tax position.

3.4	Governmental Grants.  Any grant or other form of financial assistance received from
any governmental authority by a party in connection with an Approved Program or Operating
Plan as a contribution towards costs to be incurred by Participating Parties thereunder will be
distributed to and shared by the Participating Parties in proportion to their Participating Interests
at the time of receipt.

SECTION 4

JOINT VENTURE PROPERTY

4.1	Beneficial Ownership and Title.  As and from the Operative Date, the parties will
beneficially own the Joint Venture Property in proportion to their Participating Interests and the
Joint Venture Property will be held by the Operator in its name in trust for the parties in
accordance with their Participating Interests.  A party will be entitled to register or record this
Agreement or notice thereof against the Property in any public register or record and each party
will cooperate in effecting the registration thereof and execute any documentation required in
connection therewith.  A party will be entitled on request to delivery of all documents as may be
necessary to evidence or confirm its interest in the Joint Venture Property.

4.2	Surrender or Lapse of Property.

(a) 	Surrender or Lapse.  Subject to the approval of the Management Committee, the
Operator may surrender or let lapse all (but not less than all) of the right, title and interest
in any mining claim or other tenure included in the Joint Venture Property after having
first given 60 days prior written notice of its intention to do so to the non-Operator.  If
within that period the non-Operator elects to acquire such mining claim or other tenure,
the Operator will, subject to the obtaining of all required governmental and regulatory
consents and approvals, transfer the same to the non-Operator at the non-Operator's sole
cost and expense, together with all data, drill core, maps, materials and other information
in the Operator's possession directly relating to work carried out thereon, and will
execute and deliver all documentation reasonably requested by the non-Operator to
evidence and effect such transfer.

(b) 	Effect of Surrender or Lapse.  Mining claims or other tenures surrendered or allowed to
lapse in accordance with this Section will automatically cease to constitute part of the
Joint Venture Property for the purposes of this Agreement and the Joint Venture and both
parties will cease to have any right, title or interest therein; provided, however, that the
surrender or lapse of any mining claim or other tenure will not relieve the parties from
their obligation to remediate at their expense in accordance with their Participating
Interests to the extent required by applicable Laws and good mining practice all damage
to such surrendered mining claim or other tenure attributable to the operations of the Joint
Venture.

(c)	Re-acquisition.  If any mining claim or other tenure is surrendered or allowed to lapse
under the provisions of this Section, neither party nor any affiliate thereof may thereafter
acquire any right, title or interest therein, or a right to acquire any of the same, except
with the prior written consent of the other party, such consent not to be unreasonably
withheld; provided, however, if a party re-acquires any right, title or interest in any such
mining claim or other tenure in breach of this Section, the other party may elect, by
notice to the re-acquiring party within 60 days of having actual notice of such re-
acquisition, to have such mining claim or other tenure made subject to this Agreement
and, if such election is made, the re-acquired mining claim or other tenure will become
part of the Joint Venture Property and the costs of re-acquisition will be borne solely by
the re-acquiring party and not included for the purposes of calculating the parties'
respective Participating Interests.

SECTION 5

MANAGEMENT COMMITTEE

5.1 	Establishment.  The business and affairs of the Joint Venture will be subject to the
general direction, control and management of the Management Committee.  The Management
Committee will be established on or forthwith after the Operative Date and will comprise one
representative appointed by each Participating Party.  Each Participating Party may also appoint
one alternate representative who may attend all meetings and may act for a Participating Party's
representative in his absence.  A Participating Party may from time to time revoke in writing the
appointment of its member to the Management Committee and appoint in writing another in his
place.

5.2	Calling of Meetings.  The Management Committee will meet on 20 days' notice given
by either Participating Party and will meet at least four times per year.  Any notice in respect of a
meeting will include an agenda of items to be discussed at such meeting and such information as
may be reasonably required to make a reasoned decision with respect thereto.  On receipt of such
notice, a party may give notice to the other party of items to be added to the agenda; provided,
however, that unless the parties otherwise agree, an item may not be added to the agenda unless
such notice to add such item is given on or before the 10th day prior to such meeting.  Any
member of the Management Committee may waive in writing the giving of such notice before or
after such meeting.  All meetings of the Management Committee (other than telephone or video
conference call meetings) will be held in Nevada unless otherwise agreed to by all members
thereof.  Each party will bear the expenses incurred by its representative(s) in attending
Management Committee meetings.

5.3	Quorum.  A quorum for any Management Committee meeting will be constituted only if
a member (or alternate) representing each Participating Party is present.  If at any meeting a
quorum is not present within half an hour from the time appointed for the meeting, the meeting
will stand adjourned to the same place but on a date and at a time to be fixed by the chairman of
the meeting before the adjournment, which shall be not less than 14 days following the date for
which the meeting was called.  Notice of the adjourned meeting shall be given to the
representatives of all parties forthwith after the adjournment of the meeting.  If a quorum is not
present at the adjourned meeting within half an hour from the time appointed, the representative
or representatives present and entitled to attend and vote at the meeting will constitute a quorum.

5.4	Chairman and Secretary.  The representative of the Operator will be the chairman of
the Management Committee.  The Chairman will be entitled to appoint the secretary for the
meeting.  The secretary will take minutes of that meeting and circulate copies thereof to each
representative.

5.5	Voting.  Each representative on the Management Committee appointed by a Participating
Party will be entitled to cast one vote for each full 1% Participating Interest held by such party.
The Chairman will not be entitled to a casting vote or any other vote as chairman.   All decisions
of the Management Committee will be by majority vote unless the Participating Interests of the
Participating Parties are equal, in which case all decisions of the Management Committee will
not be effective or binding on the parties unless approved unanimously at a Management
Committee meeting by the affirmative votes of all members of the Management Committee.  In
the case of an equality of votes on a matter, the matter, if not resolved within 90 days, will
thereupon be submitted to arbitration hereunder.

5.6	Idem.  The Management Committee may conduct meetings by telephone conference call
and make decisions by obtaining the consent in writing of the representatives of the parties.  Any
decision so made shall be as valid as a decision made at a duly called and held meeting of the
Management Committee.

5.7	Additional Rules of Procedure. The Management Committee may by agreement of the
representatives of the parties establish such other rules of procedure not inconsistent with this
agreement as the Management Committee deems appropriate.

5.8	Mandate.  In addition to the matters specifically contemplated in this Agreement, the
Management Committee will have the exclusive right and authority to direct, control and manage
the business and affairs of the Joint Venture, including, without limitation, the exclusive right
and authority:

(a) 	to consider and approve programs for Expenditures, and for a Feasibility Study,
Production Plan, Operating Plan, Mine Maintenance Plan and Mine Closure Plan, and
any material amendments, revisions or supplements to Approved Programs;

(b) 	to review all work and approve all financial reports on the operations conducted by the
Operator hereunder;

(c) 	to review the annual ore reserve and resource estimates prepared by the Operator;

(d) 	to review and approve all material agreements between the Operator and its affiliates
with respect to the operations conducted hereunder by the Operator; and

(e) 	to formulate general policies and directions to be followed by the Operator in the conduct
of Mining Operations.

SECTION 6

OPERATOR

6.1	Operator.  J-Pacific will be the Operator as of the Operative Date.  Thereafter, the party
which together with its affiliates holds the single largest Participating Interest will be entitled to
appoint or act as Operator; provided, however, that so long as J-Pacific and Jipangu are the
Participating Parties and J-Pacific holds at least a 40% Participating Interest, J-Pacific will be
entitled to appoint or act as Operator.

6.2	Resignation of Operator.  The party or person acting as Operator may resign upon 90
days' notice in writing to the parties.  A resigning Operator will not be released from its
obligations hereunder unless a successor operator shall have been appointed pursuant to Section
6.5 and shall have agreed to assume the duties and obligations of Operator hereunder.

6.3	Replacement of Operator.   The Operator may be replaced:

(a)	by the Management Committee, on 90 days' notice in writing to such Operator; or

(b)	by a party or parties holding Participating Interests aggregating more than 50% if the
Operator fails to perform a material obligation imposed on it under this Agreement, or is
negligent in the performance of its duties hereunder and such negligence has a material
adverse effect on the Joint Venture Property or the Joint Venture, if such party or parties
has given the Operator notice in writing of the failure or negligence and a reasonable
period (not to exceed 60 days) to take appropriate remedial action.

6.4	Insolvency of Operator.  Notwithstanding any other provision hereof, the non-Operator
party or parties will have the immediate right to replace the Operator by written notice to the
Operator if the Operator admits in writing its inability to pay its debts as they become due, or
makes an assignment for the benefit of creditors, or a receiver or a receiver and manager is
appointed for all or a substantial part of its property, or files or has filed against it a valid petition
in bankruptcy which it does not contest within 15 days notice of the filing thereof, or seeks any
relief provided in the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors
Arrangement Act (Canada) or other legislation respecting bankruptcy or insolvency, or is
adjudicated a bankrupt or insolvent.  The Operator's appointment as Operator will terminate
automatically on its receipt of such written notice.

6.5 	Successor Operator.  Any successor Operator will be appointed by the Management
Committee and, if such appointment is not made on a timely basis, the non-Operator with the
largest single Participating Interest will be entitled to be Operator.  Upon the appointment of a
successor Operator, the former Operator will cooperate fully with its successor and do all things
necessary to promptly transfer to such successor all Joint Venture Property in its possession,
under its control or held in its name in accordance with the terms hereof.  The successor Operator
will assume all the powers, duties, obligations and status of the Operator hereunder, without
obligation to retain or hire any of the employees of the former Operator (except as may be
required by applicable Laws) or to indemnify the former Operator for any costs incurred as a
result of the termination of employment of any of its employees.

SECTION 7

POWERS, DUTIES AND STATUS OF OPERATOR

7.1	General.   Subject to the overall control and direction of the Management Committee,
the Operator has the power and authority to direct and control all operations conducted hereunder
and exercise custody of the Joint Venture Property and to manage, implement and carry out
Programs, Production Plans, Operating Plans, Mine Maintenance Plans and Mine Closure Plans
approved by the Management Committee.

7.2	Specific Powers and Duties.  In the conduct of operations hereunder, the Operator will:
(a)	manage and direct the operations of the Joint Venture in accordance with the provisions
of this agreement and in a prudent and business-like manner, in accordance with good
exploration, engineering, mining and environmental practices in the mining industry and
in compliance with all applicable Laws;

(b)	propose and, if approved by the Management Committee, implement and carry out
Programs, Production Plans, Operating Plans, Mine Maintenance Plans and Mine Closure
Plans;

(c)	comply with all requirements under applicable Laws to maintain the Joint Venture
Property and the rights and title of the Joint Venture thereto in good standing;

(d)	make all payments of taxes, assessments, charges, royalties, rentals and fees lawfully
levied or assessed against, or required to be paid in connection with, the Joint Venture
Property;

(e)	keep the Joint Venture Property free and clear of all liens or charges created by or arising
from operations hereunder (except such as the Operator is contesting in good faith);

(f)	pay all costs incurred in operations hereunder as and when due and payable and make
proper charges to the parties for their proportionate shares thereof;

(g)	keep at a convenient location or locations in the United States or Canada and maintain in
accordance with the Accounting Procedure and separate from the other books, accounts
and records of the Operator, true and correct books, accounts and records of operations
hereunder in accordance with accounting principles and practices generally accepted in
the mining industry and the Accounting Procedure and permit at all reasonable times the
inspection, examination and copying thereof by any Participating Party;

(h)	maintain one or more distinct bank accounts with a United States or Canadian chartered
bank to which all receipts and payments with respect to the Joint Venture will be credited
and from which all costs will be paid;

(i)	with respect to each Approved Program for exploration work, provide the Participating
Parties with:

(i) 	quarterly written progress reports indicating the status of work being conducted
on the Property, including copies of drill logs and assay results when field work is
in progress, along with an estimate of the costs incurred during such quarter, and
will report any significant results to the Participating Parties forthwith; provided,
however, that such quarterly reports will not be required during those periods in
which there is no work being conducted on the Property; and

(ii) 	within three months of each year end, an annual report disclosing all significant
results and technical data learned or obtained in connection with work in respect
of the Property, as well as a breakdown of the costs incurred in carrying out such
work;

(j) 	with respect to each Production Plan which is an Approved Program, prepare and provide
to the Participating Parties a written monthly general status report covering the overall
progress of operations thereunder, including costs incurred and variances, if any, to
budget to date, and a quarterly detailed status report on overall progress of operations to
date, including the progress of the engineering, design, procurement and construction of
the machinery and equipment for the Mine and Plant and any scheduling changes;

(k)	obtain and maintain, and to cause its contractors to obtain and maintain, for the benefit of
the parties, general liability, property damage and other insurance as the Management
Committee shall specify and furnish, upon request, evidence of such insurance coverage
to each party;

(l)	provide each Participating Party at all reasonable times and at its sole risk and expense,
access to the Property and to all available information, including all data, drill core, maps,
materials and other information relating to the results of work carried out hereunder; and

(m) 	after the commencement of Commercial Production, manage producing operations,
furnish the necessary labour and materials therefor and have the power, authority and
responsibility to do all other things necessary or appropriate for the proper conduct and/or
suspension and termination thereof.

7.3 	Emergencies.  Regardless of whether an Approved Program is then being conducted, the
Operator may, without the consent of the Management Committee or any other parties, take such
actions and make such expenditures as are necessary to safeguard life and property, to protect or
keep the Property in good standing, to prevent waste or to comply with a contractual obligation
or with applicable Laws.  The Operator will promptly report the emergency and the amounts
expended or proposed to be expended to the other Participating Parties who will be liable for
their proportionate share thereof and will pay the same on receipt of invoices therefor.

7.4	 Financial Statements.  The Operator will provide to the Management Committee
annual financial statements prepared on a calendar year basis within 60 days of each fiscal year
end.  For each operating year of the Joint Venture following the approval by the Management
Committee of a Production Plan, such statements will be audited by an auditor appointed by the
Management Committee.

7.5	Operator's Fee.  From and after the formation of the Joint Venture, in the conduct of
exploration work, development work and producing operations hereunder, the Operator will be
paid a fee for its services as Operator as set out in section 3.2 of Appendix 1.

7.6 	Status of Operator and Employees.  The Operator's status is that of an independent
contractor.  All  employees hired by the Operator in connection with the operations of the Joint
Venture are and will for all purposes be the employees of the Operator and not of the non-
Operator.

7.7	Dealings with Affiliates.  Any work contracted by the Operator from an affiliate thereof,
and any Joint Venture Property acquired, leased, sold or disposed of by the Operator from or to
an affiliate thereof, shall be obtained, acquired, leased, sold or disposed of, as the case may be, at
fair market value.  The Operator may not enter into any contract or agreement relating to the
Joint Venture with any affiliate or other party or person with which it does not deal at arm's
length without the prior written consent of the non-Operator, such consent not to be
unreasonably withheld.

7.8	Sale and Insurance Proceeds.  The proceeds of any sale or disposition of any Joint
Venture Property will be paid to and divided between the Participating Parties in proportion to
their Participating Interests.  Any insurance monies received in respect of any loss or damage to
any Joint Venture Property will, to the extent determined by the Operator, be applied to the
repair or replacement thereof, and, to the extent not so applied, will be paid to and divided
among the Participating Parties in proportion to their Participating Interests.
7.9	Commingling.  The Operator will have the right to commingle Mineral Product with
metallurgically consistent mineral product mined or removed from other properties owned by the
Operator or in which the Operator has an interest, either before or after concentration or
beneficiation and before or after commercial production, and to process such mineral product at
a common processing plant, whether located on or off the Property, provided that all such
Mineral Product is weighed, sampled and assayed prior to commingling in accordance with
methods recognized at the time of commingling as good practice in the mining industry.

7.10	Indemnity for Operator.   Each Participating Party will indemnify and save harmless
the Operator from and against any loss, liability, claim, demand, damage and expense in
connection with loss of life, personal injury or damage to property, including legal fees, resulting
or arising out of any acts or omissions of the Operator or its directors, officers, employee, agents,
contractors, licensees and invitees, in proportion to such party's Participating Interest as at the
date such loss, injury or damage occurred, except to the extent that any of the same resulted from
the negligence or wilful misconduct of the Operator or that of its directors, officers, employees
or agents.  Any act or omission of the Operator done or omitted to be done at the direction, or
within the scope of the direction, or with the concurrence, of all representatives on the
Management Committee or in good faith by the Operator to protect life or property will be
deemed not to be negligence or wilful misconduct for the purposes of this agreement.

SECTION 8

PROGRAMS AND PRODUCTION PLANS

8.1	Programs.  Within 90 days of end of each calendar year commencing with the year in
which the Joint Venture is formed, the Operator will propose and submit to the Management
Committee for its consideration a program and budget (a "Program") for:

(a)	the conduct of exploration work on the Property for the next subsequent year (or other
shorter period as the Operator considers appropriate or as the Management Committee
requests); or

(b)	the preparation of a Feasibility Study by an independent firm of qualified consulting
mining engineers.

The Management Committee will review each Program and, if appropriate, approve the same,
with such modifications as it deems fit (whereupon such Program will become an "Approved
Program" for the purposes hereof).

8.2	Idem.  If in any period of 12 consecutive months the Operator fails to propose a Program,
or proposes a Program entailing less than $50,000 in Expenditures, then any other party holding
a Participating Interest may propose a Program involving the expenditure of not less than
$50,000.  If such Program is accepted by parties who are willing to advance the full amount of
the costs proposed thereunder, such Program will be treated as an Approved Program for the
purposes of this Agreement.  For the purposes of such Approved Program, the Operator will be
entitled to act as Operator if it holds a Participating Interest and has agreed to advance its
proportionate shares of the costs thereof; otherwise the parties participating therein may select
the Operator for such Approved Program.

8.3	Amendments to Approved Programs.  If any change occurs which would materially
affect an Approved Program, the Operator will, as soon as practicable thereafter, prepare and
submit for Management Committee consideration and approval appropriate amendments,
revisions or supplements.  Pending such approval, the Operator will have the authority to
implement reasonable variations in the Approved Program as may be appropriate in the
circumstances.

8.4	Feasibility Study.  The Operator will deliver a copy of the Feasibility Study to all other
parties forthwith after its receipt.

8.5	Production Plan.  Within six months of completion of a Feasibility Study which
recommends that all or part of the Property be brought into Commercial Production, the Operator
will propose and submit to the Management Committee a detailed program and budget (a
"Production Plan") for implementing the Feasibility Study and bringing the Property into
Commercial Production. The Management Committee will review the Production Plan and, if
appropriate, approve the same, with such modifications as it deems fit (whereupon such
Production Plan will become an "Approved Program" for the purposes hereof).

8.6	Idem.  If the Operator fails to propose a Production Plan within such period of six
months, then any other Participating Party will be entitled to propose a Production Plan.  In such
event, such Participating Party will be entitled to proceed with such Plan and, unless the
Operator shall hold a Participating Interest and has agreed to advance its proportionate share of
the costs thereunder, to act as Operator.

8.7	Participation in Approved Programs.  Subject to Section 8.8, within 30 days after the
determination of an Approved Program, each Participating Party will elect in writing whether or
not it will participate therein in accordance with its Participating Interest; provided, however,
that the Operator, if holding a Participating Interest, will be deemed to have elected to participate
in such Approved Program unless it elects otherwise.  Upon its election or deemed election to
participate in an Approved Program, a party will become liable for a percentage share of the
costs thereof equal to its percentage Participating Interest.

8.8 	Feasibility Study Funding Election by Jipangu.  At all times when Jipangu has a 50%
Participating Interest, it shall have the right to sole-fund any Approved Program for the
preparation of a Feasibility Study.  Jipangu may exercise such right by delivering written notice
of such exercise to the Operator within 21 days after the determination by the Management
Committee of such Approved Program.  If Jipangu exercises such right, and if thereafter to the
reasonable satisfaction of the Management Committee Jipangu provides or secures the financing
required to bring the Property (or portion thereof) referred to in the Feasibility Study into
Commercial Production, then, notwithstanding any other provision of this Agreement, Jipangu
will be deemed to have acquired an additional 15% Participating Interest, and J-Pacific's
Participating Interest in the Joint Venture will be correspondingly reduced.

8.9	Cost Over-runs.  If the Operator incurs costs under an Approved Program in excess of
those budgeted therefor, 10% of such excess over the budgeted costs will be deemed costs
incurred thereunder and properly payable by the Participating Parties in accordance with their
Participating Interests.  Unless all such parties otherwise agree, the remainder of such excess
over the budgeted costs, if any, will be the responsibility of the Operator and not included in
costs for the purposes of Section 8.10.

8.10 	Non-Participation in Approved Programs.  Subject to Section 8.11 and subject to any
adjustment in Participating Interests pursuant to Section 8.8:

(a) 	if and whenever a Participating Party does not participate in an Approved Program, its
Participating Interest will be reduced so that its Participating Interest will be equal to the
proportion, expressed as a percentage, which the aggregate of the Joint Venture costs
borne by it is of the aggregate of the Joint Venture costs borne by all parties (including,
for greater certainty, all costs which the parties are deemed to have incurred hereunder);
and

(b) 	if a Participating Party fails to participate in an Approved Program, the other
Participating Party who has agreed to participate therein will be entitled to pay the costs
which such non-Participating Party would have borne had it participated therein; in such
event, the Participating Interests of such parties will be rateably increased to the extent
the non-Participating Party's Participating Interest is reduced pursuant to Section 8.10(a).

8.11	Back-in Right.  Except in the circumstances described in Section 8.8, if the actual costs
incurred in carrying out an Approved Program are less than 80% of the costs budgeted therefor,
the Operator will notify those parties who were Participating Parties at the time of approval of
the Approved Program and who elected not to participate therein of such fact and provide such
parties with a period of 30 days in which to re-elect and to pay their proportionate share of the
costs actually incurred under the Approved Program, plus interest thereon at the Prime Rate.  If
within such period such costs and interest are paid, the paying Participating Party(s) will be
deemed to have participated in the Approved Program and the provisions of Section 8.10 will not
apply.

8.12	Advances.  The Operator will have the right from time to time to demand and receive
from each Participating Party payment in advance for such party's share of the estimated amount
of budgeted costs to be incurred under any Approved Program (net of prior advances not yet
expended) by submitting to each Participating Party an expenditure projection for such estimated
budgeted costs, together with an invoice for its share thereof.  Each Participating Party (including
the Operator, if applicable) will pay the Operator such invoiced amount within 30 days of receipt
of such invoice.

8.13	Invoices.  The Operator will on a monthly basis deliver to each Participating Party a
statement of all costs incurred by the Operator in the conduct of operations on Approved
Programs including relevant charges and credits.  If at any time a Participating Party's share (or
estimated share) of the costs incurred exceeds amounts advanced by it, it shall pay an amount
equal to such excess within 5 business days of receiving the Operator's invoice therefor.  If, on
the completion or termination of an Approved Program, a Participating Party's share of the costs
incurred is less than the amounts advanced by it, the Operator will as soon as practicable refund
to or credit such party with an amount equal to the difference.

8.14	Royalty Interest.

(a) 	If the Participating Interest of a party (the "Assigning Party") decreases to below 10%,
the Assigning Party's Participating Interest will be automatically conveyed to the other
party in consideration for the granting of a net smelter return royalty interest from the
sale of Mineral Product from the Property calculated in accordance with the provisions of
Schedule D to the Option and Joint Venture Agreement in an amount equal to 2.0%.  The
conversion to a net smelter return royalty interest will not relieve the Assigning Party of
its pro rata share of any obligation or liability, whether accrued before or after such
conversion, arising out of Mining Operations conducted hereunder while the party was a
Participating Party, including any environmental, reclamation and rehabilitation
obligations and liabilities.  No transfer or transfers of a Participating Interest directly or
indirectly will entitle the transferor and the transferee(s) thereof to receive in the
aggregate a net smelter return royalty interest which exceeds 2.0%.

(b) 	Each party acknowledges that exploration, development and operation of the Property
involves significant financial risks and that the forfeiture by assignment and conveyance
of an Assigning Party's Participating Interest as herein contemplated does not constitute a
penalty but is rather based on a genuine assessment of the increased financial risks
associated with the other party's increased contribution to Expenditures incurred to
reduce the Assigning Party's Participating Interest to less than 10%.

(c) 	Each Assigning Party and the other party will use its reasonable best efforts to apply for
and to obtain any required governmental or regulatory consent or approval required under
applicable Laws, and any required third party consent or approval, to the transfer to such
other party of the Assigning Party's Participating Interest and, subject to the obtaining of
such consents and approvals, such other party may proceed to register or record such
transfer against the Property in any public register or record and make all such other
registrations and take all such other actions as are necessary or desirable to record and
reflect the ownership interest of such other party therein.

SECTION 9

PRODUCING OPERATIONS

9.1	Operating Year. On and after the commencement of Commercial Production, all
producing operations will be planned and conducted, and all estimates, reports and statements
will be prepared and made, on the basis of an operating year.

9.2	Operating Plan.  At least six months prior to the commencement of each operating year,
the Operator will propose and submit to the Management Committee for its approval an
operating plan ("Operating Plan") for such operating year containing:

(a)	a plan of the proposed producing operations, including a comprehensive mining plan and
any proposed exploration work and development work;

(b)	a detailed estimate of all costs of producing operations, including any further or
additional construction or capital costs and a reasonable allowance for contingencies;

(c)	an estimate of the quantity and quality of the ore to be mined and the concentrates or
metal to be produced; and

(d)	such other facts as may be necessary to reasonably illustrate the results intended to be
achieved by the Operating Plan.

The Management Committee will review each Operating Plan and approve the same, with such
modifications as it deems fit, and the Operator will implement the Operating Plan as approved by
the Management Committee.

9.3	Amendments to Approved Operating Plans.  If any change occurs which would
materially affect an approved Operating Plan, the Operator will as soon as practicable prepare
and submit for Management Committee consideration and approval appropriate amendments,
revisions or supplements.  Pending such approval, the Operator will have the authority to
implement reasonable variations in the approved Operating Plan as may be appropriate in the
circumstances.

9.4	Production, Technical and Financial Information.  After the commencement of
Commercial Production the Operator will provide to each Participating Party within 30 days
after the end of each calendar month:

(a)	a production statement setting forth the production statistics for such month, including
actual costs as compared with previously estimated costs and any material changes to
estimated costs for the balance of the operating year;

(b)	a technical report of activities for such month, together with such other technical and
operational information as the Management Committee shall have required from the
Operator; and

(c)	a financial report for such month, consisting of a balance sheet, a statement of operating
costs and a statement of concentrates produced and of mineral and concentrate inventory.
9.5	Monthly Accounting.  After the commencement of Commercial Production, the
Operator will provide to each Participating Party on a monthly basis a statement showing the
cash disbursements estimated by the Operator to be incurred in the next calendar month, the
amounts by which the contributions of the Participating Parties have exceeded or fallen short of
the Operator's estimated costs for the immediately preceding calendar month and an amount
equal to the aggregate of the cash amount (after taking into account any such excess or shortfall)
which the Participating Parties are required to pay to the Operator on account of such estimated
cash disbursements and any additional sum which the Operator may reasonably require for
ongoing working capital.  The Participating Parties will be liable for their proportionate share of
such aggregate amount and will pay the same within 5 business days of receipt of such
statement.

9.6	Working Fund.  The Operator will account separately for all payments and establish and
maintain at all times a cash working fund from which all costs relating to the Program may be
paid by the Operator directly or from which the Operator may be reimbursed for such
reimbursable costs expended by it and from which it may draw its fees and distribute surplus
cash to the Participants in accordance with their Participating Interests.  All monies received by
the Operator from the Participating Parties pursuant to Section 9.5 or in payment of the
Operator's invoices for costs or otherwise will be deposited to such fund.

9.7 	Contingency Fund.  The Operator may establish and administer a contingency fund to
be applied by the Operator to satisfy all obligations of the Participating Parties under applicable
Laws in connection with a Mine Maintenance Plan or Mine Closure Plan and including, without
limitation, obligations for severance pay, pensions for employees and rehabilitation and
reclamation work.  Each Participating Party will contribute its proportionate share of such fund
in accordance with its Participating Interest.  Pending the application of the fund, the Operator
will invest the fund in securities issued or guaranteed by any United States or Canadian federal,
provincial or other governmental entity or agency, chartered bank, federal or provincial loan or
trust company or such other securities as the Management Committee may authorize.

9.8	Taking in Kind.  Unless otherwise agreed by all Participating Parties, each Participating
Party will take delivery in kind (F.O.B. minesite or concentrator) as product is produced and will
separately dispose of its proportionate share of all products produced from the Property.  Each
Participating Party will have sole ownership of and title to its proportionate share of products
from the time of delivery and will be entitled to use, dispose of and deal with such share as it
sees fit.  All costs incurred by reason of a Participating Party taking product in kind and making
separate dispositions therefor will be the responsibility of, and will be paid by, such party.

SECTION 10

SUSPENSION AND TERMINATION OF PRODUCTION

10.1 	Suspension.  At any time after the commencement of Commercial Production, the
Operator or any Participating Party may at any time propose that producing operations be
suspended and submit to the Management Committee for its consideration a detailed plan and
budget (a "Mine Maintenance Plan") of the activities to be performed to maintain the Joint
Venture Property during the period of suspension and the costs to be incurred in connection
therewith.  The Management Committee will review the Mine Maintenance Plan and, if
appropriate, approve the same, with such modifications as it deems fit.  If a Mine Maintenance
Plan is so approved, the Operator will suspend producing operations in accordance therewith and
the Participating Parties will be liable for their proportionate share of the costs thereof and will
pay the same on receipt of invoices therefor.  The Management Committee may cause producing
operations to be resumed at any time.

10.2	Termination of Producing Operations. At any time after the commencement of
Commercial Production, the Operator or any Participating Party may at any time propose that
producing operations be terminated and submit to the Management Committee for its
consideration a detailed plan and budget (a "Mine Closure Plan") of the activities to be
performed to close the mine and rehabilitate and reclaim the Property and the costs to be incurred
in connection therewith.  The Management Committee will review the Mine Closure Plan and, if
appropriate, approve the same, with such modifications as it deems fit.  If a Mine Closure Plan is
so approved, the Operator will terminate producing operations in accordance therewith and the
Participating Parties will be liable for their proportionate share of the costs thereof and will pay
the same on receipt of invoices therefor.

SECTION 11

DEFAULT AND OPERATOR'S LIEN

11.1	Default.

(a) 	If any Participating Party fails to pay its share of costs hereunder as and when such
payment is due, such party will be in default unless it pays the same within 10 business
days after receipt of notice from the Operator (or a non-defaulting Participating Party, if
the defaulting Participating Party is also the Operator) specifying the failure to pay.  If
such party fails to make payment forthwith upon the receipt of such notice, it will be in
default for the purposes of this Section.

(b)	If such default occurs before approval of a Production Plan, the defaulting party will lose
its rights to attend and vote at meetings of the Management Committee with respect to
the Approved Program under which its default has occurred and the non-defaulting
Participating Party may elect to have the defaulting party become subject to mandatory
dilution as specified in Section 8.10 or in the alternative may elect to exercise any other
rights and remedies available at law or in equity (including the right to sue for payment
and/or foreclosure).

(c)	If such default occurs before the approval of a Production Plan, the defaulting party may
regain its rights to attend and vote at meetings of the Management Committee with
respect to the Approved Program under which its default has occurred if, on or before the
date when the next Program is submitted for Management Committee approval:

(i) 	the defaulting Participating Party has cured its default by paying all amounts
owed hereunder; or

(ii) 	the non-defaulting Participating Party has elected to have the defaulting
Participating Party become subject to mandatory dilution as specified in Section
8.10 or has otherwise recovered all amounts owed to it hereunder

(d) 	If such default occurs after the approval of a Production Plan, the defaulting party will
lose its rights to attend and vote at meetings of the Management Committee and to elect
to participate in current and any future Approved Programs and will have no right to
regain the same, and the Operator (or the non-defaulting Participating Party if the
defaulting Participating Party is also the Operator) will be entitled, but not obligated, to
sell Mineral Product owned by the defaulting party on such terms as it may determine
and apply the net proceeds to the total monies owing, plus interest, by the defaulting
party.

If there is no Mineral Product to sell or there remains a deficiency in the total amount
owing, the non-defaulting Participating Party may require the defaulting party to sell its
entire Participating Interest to it at fair market value as determined by the parties to such
sale or, if such parties cannot agree on such value within 60 days of the date of default, as
determined by arbitration hereunder.  If the non-defaulting Participating Party does not
elect to purchase the Participating Interest of the defaulting party within 30 days of the
determination of the fair market value thereof, the Operator may sell such interest in
whole or in part, by public auction or private tender, on such terms as the Operator may
determine provided the sale has been publicly advertised and the defaulting party has
been given 14 days notice of the time and place of the sale.   The defaulting party will
perform all acts and execute all documents required to transfer its Participating Interest to
the purchaser(s) thereof.

(e)	If any deficiency remains after payment of the costs of sale and the total monies, plus
interest, owing by the defaulting party, the deficiency will be a debt owing by the
defaulting party to the non-defaulting Participating Party, the non-defaulting Participating
Party will be obligated to reimburse the Operator for the amount of the deficiency and the
amount when so paid will be deemed to be costs incurred for the purposes hereof.

(f)	In lieu of exercising its rights under Section 11.1(c), the non-defaulting Participating
Parties may elect to forgive the amounts in default and to have the defaulting party
become subject to mandatory dilution as specified in Section 8.10 or, in the alternative,
may elect to exercise any other rights and remedies available at law or in equity
(including the right to sue for payment and/or foreclosure).

(g)	No delay or omission by any non-defaulting Participating Party (or the Operator) in
exercising its rights and remedies hereunder will operate as a waiver thereof or of any
other right or remedy and no single or partial exercise thereof will preclude any other
future exercise thereof or exercise of any other right or remedy.

11.2	Operator's Lien.  As security for the payment of all sums due to the Operator from a
party hereunder, the Operator is hereby given a lien and charge on the Mineral Products and the
Participating Interest (or net smelter return royalty interest) of such party.

11.3	Interest.  Any sum payable under this agreement to the Operator by a party which is not
paid at or within the time specified herein for payment will bear interest at the Prime Rate plus
2% from and after the time at or by which such sum was payable until the same is paid.

SECTION 12

AREA OF INTEREST

12.1	Area of Interest.

(a) 	If after the Operative Date a party or any affiliate thereof acquires any right, title or
interest in or to any mining claim or other tenure or mineral rights, titles and interests
within one mile of the mining claims and other tenures included within the Property, such
party will give notice to the Operator and to the other party within 30 days of such
acquisition, disclosing the identity of the vendor or transferor, the material terms of the
acquisition and all information as to such property known to it.

(b)	If within 30 days of receipt of such notice the other party delivers notice to the acquiring
party accepting the acquired property as constituting part of the Joint Venture Property,
together with funds equal to its proportionate share of the acquiring party's acquisition
costs, the acquiring party will convey such property to the Operator to be held in trust for
the parties in accordance with their Participating Interests pursuant to Section 4.1 and the
net costs incurred by each party in acquiring such property will be included for the
purposes of calculating the parties' respective Participating Interests.  If the other party
fails to give such notice and to make such payment, it will have no right, title or interest
whatsoever in or to such property.

(c)	If a party acquires any right, title or interest in any property in breach of this Section, the
other party may elect, by notice to such acquiring party within 60 days after having actual
notice of such acquisition, to have such property made subject to this Agreement and, if
such election is made, the acquired property will become part of the Joint Venture
Property and the costs of acquisition will be borne solely by the acquiring party and not
included for the purposes of calculating the parties' respective Participating Interests.
SECTION 13

DISPOSITION OF INTERESTS

13.1	General Restriction.  Notwithstanding any other provisions of this Agreement, no party
may transfer or otherwise dispose of ("Sell") its Participating Interest (whether directly or
indirectly, including through the sale of a subsidiary) except in accordance with the terms of this
Agreement and no party may Sell less than all of its Participating Interest.  A purported transfer
of any Participating Interest in violation of this Agreement is void.
13.2	Transfer to Wholly-Owned Subsidiaries.

(a)	A party may assign and transfer its Participating Interest to a wholly-owned direct or
indirect subsidiary provided that, at or prior to the time of such transfer, the transferor
notifies the other party of such transfer and the transferee undertakes and agrees with the
other party hereto in writing to be bound by and to observe, perform and comply with the
terms of this Agreement, including the provisions of this Section 13, and to assume all of
the liabilities and obligations of the transferor under this Agreement, whether accruing
before or becoming due after such transfer and assignment.  The transferor and transferee
will execute such agreements or documents as may be reasonably required in this regard
by the other parties hereto.

(b)	Any subsequent transfer by a party of control over a wholly-owned subsidiary will be
void if the effect of such transfer is to avoid the application thereafter of Section 13.3.
13.3	Right of First Refusal.

(a)	If a party (the "Seller") wishes to Sell all (but not less than all) of its Participating
Interest, or if the Seller receives a bona fide offer from a third party for all of its
Participating Interest which it wishes to accept, the Seller, prior to offering the same for
sale or accepting such third party offer, will give notice in writing (the "Offer Notice") to
the other party (the "Purchaser") of the price and terms of sale of such Participating
Interest (the "Offered Interest"), together, if the Seller has received a third party offer,
with a copy thereof.

(b)	An Offer Notice will be deemed to constitute an offer (the "Offer") by the Seller to the
Purchaser to Sell the Offered Interest on the terms and conditions set out in the Offer
Notice and will be open for acceptance by the Purchaser for a period of 60 days from the
date of its receipt by the Purchaser.  In the case of a third party offer, the Offer Notice
will identify the person or persons making the Offer and include such information as is
known by the Seller about such person or persons.

(c)	If the Purchaser gives notice to the Seller electing to accept the Offer within the 60 day
period, such acceptance will constitute a binding agreement of purchase and sale between
the Seller and the Purchaser in respect of the Offered Interest on the terms and conditions
set out in the Offer Notice.

(d)	If the Purchaser does not accept the Offer within the 60 day period, the Seller, if it has not
received a third party offer, will be free to offer and Sell the Offered Interest to another
purchaser on terms and conditions not more favourable to such purchaser than those set
out in the Offer Notice, or, if it has received such a third party offer, may complete a sale
of the Offered Interest to the person or persons making the Offer on the terms and
conditions set out in the Offer Notice, subject, in either case, to the execution and
delivery by the purchasing party of a written undertaking to be bound by and to observe,
perform and comply with the provisions of this Agreement as though such purchasing
party had been an original party hereto and to the completion of such sale within 100
days after the expiration of such 60 day period, failing which the Seller must again
comply with the provisions of this Section 13.3 in respect of a sale and purchase of the
Offered Interest.

(e) 	No party may make or accept any offer to or from a third party for its Participating
Interest if the effect of such an offer would be to avoid the application of the provisions
of Section 13.3.

13.4	Mortgage of Interest.  A Participating Party may not mortgage and charge its
Participating Interest except for the purpose of providing bona fide security to a lender for a loan
solely to meet its contribution requirements with respect to a Production Plan, provided such
security and any realization thereof is by its terms expressly subject to the provisions of this
Agreement.

SECTION 14

ARBITRATION

14.1	Arbitration.

(a) 	The parties agree that any dispute or difference between them concerning this
Agreement, other than a dispute or difference with respect to the approval of a proposed
Feasibility Study, Production Plan, Operating Plan, Mine Maintenance Plan or Mine
Closure Plan or any material amendments, revisions or supplements to any of the
foregoing, which cannot be resolved by them will be settled by arbitration in accordance
with the provisions hereof.

(b)	The parties agree that it is a condition precedent to arbitration hereunder that the dispute
or difference shall first be defined in detail and submitted in writing to their respective
chief executive officers for resolution.  Either party wishing to submit a dispute to the
chief executive officers shall prepare such a written summary of the matter in dispute and
deliver or mail it to the chief executive officers of each party at their addresses for service
of notices hereunder.  If, after a period of 10 business days following receipt of any such
submission, the chief executive officers of the parties have not resolved any disputed
matter, then either party may proceed to refer the dispute to arbitration as herein
provided.

(c)	Any arbitration to be carried out hereunder shall be subject to the following provisions,
namely:

(i)	The party desiring arbitration shall nominate one arbitrator and shall notify the
other party of such nomination.  Such notice shall set forth a brief description of
the matter submitted for arbitration and the Section of this Agreement pursuant to
which such matter is so submitted.

(ii)	Such other party shall, within thirty calendar days after receiving such notice,
nominate an arbitrator and the two arbitrators so nominated shall select an umpire
independent of both parties to act jointly with them.  If the arbitrators nominated
by the parties are unable to agree on such independent umpire, a suitably qualified
person independent of the parties will be designated by the President, a Vice-
President or other elected senior officer of the Canadian Institute of Mining &
Metallurgy to act as umpire.

(iii)	The umpire shall fix the time and place for the purpose of hearing such evidence
and representations as the parties may present and, subject to the provisions of
this Section 14, the decision of the arbitrators and umpire or any two of them in
writing shall be binding upon the parties.

(iv)	The arbitrators and umpire shall, after hearing any evidence and representations
that the parties may submit, make their decision and reduce the same to writing
and deliver one copy thereof to each of the parties. The majority of the umpire
and arbitrators may determine any matters of procedure for the arbitration not
specified herein.

(v)	If the party receiving the notice of the nomination of an arbitrator by the party
desiring arbitration fails within such thirty calendar days to nominate an
arbitrator, then the arbitrator nominated by the party desiring arbitration may
proceed alone to determine the dispute in such manner and at such time as he or
she shall think fit and his or her decision shall, subject to the provisions hereof, be
binding upon the parties hereto.

(d) 	Notwithstanding the foregoing, any arbitration may be carried out by a single arbitrator or
expert referee if the parties hereto so agree, in which event the foregoing provisions of
this Section 14 shall apply mutatis mutandis.  Each arbitrator and umpire shall have
appropriate training and experience in respect of the disputed matter.

(e)	All determinations made under the provisions of this Section 14 shall be binding on the
parties hereto and constitute the final determination of the matter.  The cost of the
arbitration and the remuneration of the arbitrators and the umpire shall be borne by the
parties in proportion to their Interests unless otherwise provided in the determination.
SECTION 15

TERM AND TERMINATION

15.1	Termination.  This Agreement will remain in force and effect until:

(a)	there is only one Participating Party; or

(b)	all rehabilitation, closure and reclamation work required by or pursuant to applicable
Laws and good mining practice in respect of the Joint Venture Property has been
completed or sufficiently provided for under such Laws and practice and the Joint
Venture Property has been disposed of and is no longer owned by the Participating
Parties and a final accounting thereof acceptable to such parties, acting reasonably, has
been rendered to them.

15.2	Other Termination.

(a) 	Either Participating Party may elect to terminate this Agreement by written notice to the
Operator and the other Participating Party if such other Participating Party (the "Insolvent
Party") admits in writing its inability to pay its debts as they become due, or makes an
assignment for the benefit of creditors, or a receiver or a receiver and manager is
appointed for all or a substantial part of its property, or files or has filed against it a valid
petition in bankruptcy which it does not contest within 15 days notice of the filing
thereof, or seeks any relief provided in applicable legislation respecting bankruptcy or
insolvency, or is adjudicated a bankrupt or insolvent.

(b)	If a Participating Party elects to terminate this Agreement pursuant to Section 15.2(a),
such Participating Party will thereupon acquire an irrevocable option to purchase the
Participating Interest of the Insolvent Party from its receiver or other legal representative
for a purchase price equal to the fair market value thereof, payable in cash.   If such
Participating Party and such receiver or other legal representative are not able to agree on
such fair market value, the determination of such value may at the option of either be
decided by arbitration conducted in accordance with the provisions of subsections (c)
through (e) of Section 14.1.

15.3	Effect of Termination.  The termination of all or any part of this Agreement will not
relieve the parties hereto from obligations or liabilities accrued or accruing to them under this
Agreement or by reason of operations performed pursuant to or arising out of this Agreement
whether before or after such termination and will not affect the provisions of this Agreement
relating to the indemnification of the Operator or any party or to any net smelter return royalty
interest acquired by a party hereunder, which provisions will survive termination.

SECTION 16

GENERAL PROVISIONS

16.1	Confidential Information.  All Confidential Information provided to or received by a
party from another party, whether before or after the date of this Agreement, is and will be
treated as confidential.  A party will not disclose Confidential Information to third parties,
whether by way of press release or otherwise, except and to the extent the disclosure is required
by law, stock exchange rules or a regulatory authority having jurisdiction or the disclosure is
consented to by the other party (the "Non-Disclosing Party"); consent of such Non-Disclosing
Party will not be unreasonably withheld or delayed in view of the parties' timely disclosure
obligations.  Without limiting the foregoing, it shall be reasonable for a Non-Disclosing Party to
withhold its consent to the issuance of a press release if it has not been provided with an advance
draft copy of such press release and an opportunity to consider and comment thereon.  Where
disclosure is required by law, stock exchange rules or a regulatory authority having jurisdiction,
a party will, if permitted by such law, stock exchange rule or regulatory authority, use its
reasonable best efforts to provide a copy of the information to be disclosed to the Non-
Disclosing Party in advance of its disclosure and make such reasonable changes thereto as may
be requested by the Non-Disclosing Party.

16.2	Other Cooperation.  If, pursuant to the provisions hereof, a party is entitled to legal title
and ownership of all or any part of the Property and a governmental or regulatory consent or
other approval required to be obtained under applicable Laws in connection with the transfer of
such title to such party has been refused or denied by any relevant governmental or regulatory
authority, the Operator and the parties will use their best reasonable commercial efforts to
cooperate in any arrangement which the entitled party may reasonably request to secure for it, to
the extent permitted by law, the economic and other benefits and detriments it would have had if
such consent or other approval had been obtained.

16.3	Geological Interpretations.  No party will be liable to another party in respect of any
opinions, findings, conclusions or other non-factual information in any report or other document
provided to such other party, whether included by negligence or otherwise.

16.4	Time.   Time is of the essence of this Agreement and each provision hereof.

16.5	Force Majeure.

(a) 	No party hereto will be liable under this Agreement to another party for any failure to
perform any of its obligations caused by or arising out of any Event of Force Majeure.

(b)	No right of a party will be affected, and no party will be found in default, under this
Agreement by the failure of such party to meet any term or condition of this Agreement
where such failure is caused by an Event of Force Majeure and, in such event, all times
specified or provided for in this Agreement will be extended by a period commensurate
with the period during which the Event of Force Majeure causes such failure.

(c)	A party affected by an Event of Force Majeure will take all reasonable steps within its
control to remedy the failure caused by such event; provided, however, that nothing
contained in this Section 16.5 will require any party to settle any labour or industrial
dispute or to test the constitutionality or validity of any applicable law or regulation
enacted by any legislative body in any jurisdiction.

(d)	Any party relying on the provisions of this Section 16.5 will forthwith give notice to the
other party of the commencement of an Event of Force Majeure and of its end.
16.6	Indemnification.  Each party (either, an "indemnifying party") will indemnify and save
harmless the other from and against all suits, claims, demands, liabilities, losses and expenses
which the other may suffer, incur or sustain resulting or arising from an act or thing done or
omitted to be done by the indemnifying party in relation to the Property or this Agreement,
including any breach or alleged breach of Laws, any non-fulfilment of any covenant or
agreement or any misrepresentation or breach of warranty by or of the indemnifying party
contained in the Agreement.  The provisions of this Section 16.6 will survive termination of this
Agreement and the Joint Venture.

16.7 	Notice.  Any notice or other communication under this Agreement to a party must be
given in writing and delivered personally or sent by facsimile, addressed as follows:

(i) 	if to J-Pacific, to: 				
			J-Pacific Gold Inc. 
			Suite 1440, 1166 Alberni Street  		
			Vancouver, B.C.   		 
			Canada  V6E 3Z3 			
			Attention:  	President 			  
			Facsimile: 	+604 684-6678

(ii) 	if to Jipangu, to: 
			Jipangu Inc. 
			3-6-9 Kita-Shinagawa
			Shinagawa-ku 
			Tokyo, Japan 	140-0001
			Attention: 	President 
			Facsimile: 	+813 3474-4679
		 with a copy to: 
			Davis & Company 
			2800 Park Place 
			Vancouver, B.C. 
			Canada  V6C 2Z7
			Attention: 	John M. Sibley 
			Facsimile: 	+604 687-1612

or to such other address, contact person or facsimile number as a party may specify by notice
hereunder.  Any such notice or communication, if delivered, will be deemed given when
received, and if sent by facsimile, will be deemed given on the next business day following the
date of transmission. 	Any Notice given hereunder to the Management Committee will be in
writing and will be delivered, mailed or sent in accordance with this Section 16.7.

16.8	Successors and Assigns.  This Agreement will be binding upon and enure to the benefit
of the parties' successors and permitted assignees; provided, however, that any assignment by
any party of all or any portion of its rights or obligations hereunder will include a provision
whereby the transferee agrees with the other parties to be bound by and to observe, perform and
comply with the terms of this Agreement, including the provisions of Section 13, and to assume
all of the liabilities and obligations of the transferor under this Agreement, whether accruing
before or becoming due after such transfer and assignment.  The transferor and transferee will
execute such agreements or documents as may be reasonably required in this regard by the other
parties hereto. No assignment will serve to release or discharge the transferor from any of the
said liabilities or obligations, unless all of the rights and obligations of the transferor have been
assigned to the transferee and the parties hereto have released the transferor.

16.9	Governing Law.  This Agreement will be interpreted and governed according to the laws
of Ontario and the laws of Canada applicable therein and each party hereby attorns to the non-
exclusive jurisdiction of the courts thereof.

16.10	Waiver of Partition.  Each party waives the benefit of all provisions of law now in effect
or as enacted in future relating to actions for partition of real and personal property and agrees
that it will not resort to any action at law or in equity to partition the real or personal property
subject to this Agreement.

16.11	Whole Agreement and Further Assurances.

(a) 	This Agreement constitutes the whole of this Agreement and encompasses the entire
agreement between J-Pacific and Jipangu pertaining to the subject matter hereof.  This
Agreement supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, between the parties, and there are no warranties, representations
or other agreements between the parties pertaining to the subject matter hereof except as
specifically set forth herein.

(b)	The parties agree to execute and cause to be executed such other documents, and take and
cause to be taken such other actions, as are reasonably necessary:

(i) 	to secure and give effect to the rights and obligations granted and assumed
hereunder; and

(ii)	except as the parties may otherwise agree in accordance with the provisions
hereof, to maintain the Property in good standing.

SCHEDULE D

NET SMELTER RETURN ROYALTY

1.	The NSR (as defined herein) which may be payable by to a party (the "Payee") by a party
(the "Payor") will be calculated and paid to the Payee in accordance with the terms of this
Schedule.

2.	The NSR will be calculated on a calendar quarterly basis.

3.	For the purposes of this Schedule:

(a)	"Gross Revenue" means the aggregate of the following amounts received in each
quarterly period:

(i)	all revenue received by the Payor in such quarter from arm's length
purchasers of mineral products from the Property; or

(ii)	the fair market value of all mineral products from the Property sold by the
Payor in such quarter to persons not dealing at arm's length with the
Payor; and

(iii)	any proceeds of insurance received in such quarter due to loss or damage
in respect of mineral products from the Property.

(b) 	"Permissible Deductions" means the aggregate of the following charges (to the
extent not previously deducted or accrued in computing Gross Revenue) that are
paid in each quarterly period:

(i)	sales charges levied by any sales agent in respect of the sale of mineral
products from the Property;

(ii)	transportation and insurance costs incurred in respect of the transportation
of mineral products from the Property to the place of beneficiation,
processing, refining or treatment and, if applicable, to the place of delivery
thereafter, including shipping, freight, handling and forwarding expenses
and export and import taxes;

(iii)	all costs, expenses and charges of any nature whatsoever which are either
paid or incurred by the Payor in connection with the refinement or
beneficiation of mineral products from the Property after leaving the
Property, including all weighing, sampling, assaying and representation
costs, metal losses, umpire charges and any penalties charged by the
processor, refinery or smelter;

(iv)	all other insurance costs paid by the Payor in respect of mineral products
from the Property; and

(v)	all amounts in the nature of a royalty in respect of production from the
Property paid by the Payor pursuant to the provisions of any agreement or
applicable legislation or regulation;

provided, however, that where a cost or expense otherwise constituting a
Permissible Deduction is incurred by the Payor in a transaction with a party with
whom it is not dealing at arm's length, such cost or expense may be deducted for
the purposes hereof only as to the lesser of the actual cost incurred by the Payor
and the fair market value thereof in light of all relevant circumstances at the time.

(c)	"Property" has the meaning ascribed thereto in the agreement pursuant to which
the NSR is paid at the time the NSR first becomes payable thereunder.

(d)	"Net Smelter Return" means Gross Revenue less Permissible Deductions.

(e)	"NSR" means the percentage of Net Smelter Return payable pursuant to the
agreement under which the NSR becomes payable.

4.	The NSR will be calculated and paid within 30 days after the end of each calendar quarter
ending on the last day of March, June, September and December of each year.  Smelter
settlement sheets, if any, and a statement (the "Statement") setting forth calculations in
sufficient detail to show how the payment was derived will be submitted with each
payment.

5.	If final amounts are required for the calculation of the NSR are not available within the
time period referred to in paragraph 4 of this Schedule, then provisional amounts will be
established, the NSR will paid on the basis of such provisional amounts and positive or
negative adjustments will be made to the payment in the next succeeding quarter, as
necessary.

6.	All NSR payments will be considered final and in full satisfaction of all obligations of the
Payor with respect thereto unless the Payee delivers to the Payor a written notice (an
"Objection Notice") describing and setting forth a specific objection to the calculation
thereof within 60 days after receipt by the Payee of the Statement.  If the Payee objects to
a particular Statement as provided, the Payee will, for a period of 60 days after the
Payor's receipt of the Objection Notice, have the right, upon reasonable notice and at a
reasonable time, to have the Payor's accounts and records relating to the calculation of
the NSR in question audited by the auditors of the Payor.  If such audit determines that
there has been a deficiency or an excess in the payment made to the Payee, such
deficiency will be resolved by adjusting the next monthly NSR payment due hereunder.
The Payee will pay all costs and expenses of such audit unless a deficiency of 2.5% or
more of the amount due is determined to exist.  Failure on the part of the Payee to deliver
an Objection Notice to the Payor within 60 days after receipt of a Statement will
conclusively establish the correctness and sufficiency of the Statement and related NSR
payment.

7.	All books and records used and kept by the Payor to calculate the NSR due hereunder
will be kept in accordance with Canadian generally accepted accounting principles
consistently applied.

8.	All profits and losses resulting from the Payor engaging in any commodity futures
trading, options trading, metals trading, gold loans or any combination thereof and any
other hedging transactions with respect to mineral products from the Property are
specifically excluded from calculations of NSR payments due hereunder; provided,
however, that nothing herein restricts the ability of either the Payor or the Payee to
engage in speculative hedging trading activities for its own account.

9.	Fair market value for gold, silver, copper, zinc and lead will be determined as follows:
(a) 	for gold, by using the quarterly average price of gold, calculated by dividing the
sum of the daily afternoon gold fix price quoted by the London Bullion Market
Association on each day in the calendar quarter in question on which such prices
were quoted by the number of days for which such prices were quoted;

(b)	for silver, copper, zinc and lead, by using the quarterly average price thereof,
calculated by dividing the sum of the daily closing price thereof quoted by the
New York Commodity Exchange on each day in the calendar quarter in question
on which such prices were quoted by the number of days for which such prices
were quoted.

10. 	The Payor will have the right at any time to require the Payee to transfer and assign to it
one-half of the NSR upon delivering notice of transfer in writing to the Payee, together
with the sum of $US 1 million in cash, whereupon, notwithstanding any provision of the
agreement pursuant to which the NSR shall first have become payable, the percentage of
Net Smelter Return payable thereafter hereunder will be reduced to 1% effective upon
receipt by the Payee of all payments on account of NSR due and payable at the end of the
next calendar quarter hereunder (and under such agreement).   Each of the Payor and the
Payee will use its reasonable best efforts to apply for and to obtain any required
governmental or regulatory consent or approval required under applicable Laws, and any
required third party consent or approval, to any transfer of NSR interest in accordance
with the provisions hereof and, subject to the obtaining of such consents and approvals,
the Payor may proceed to register or record such transfer against the Property in any
public register or record and make all such other registrations and take all such other
actions as are necessary or desirable to record and reflect the same.

APPENDIX 1
ACCOUNTING PROCEDURE

1.	Interpretation

1.1	Definitions.  In this Appendix capitalized terms used but not defined herein have the
respective meanings ascribed thereto in Schedule A to the Agreement and:

(a)	"Agreement" means the option and joint venture agreement dated as of April 1, 2004
between J-Pacific Gold Inc. and Jipangu Inc., including the Schedules thereto and the
provisions hereof.

(b)	"Count" means a physical inventory count.

(c)	"Employees" means those employees of the Operator assigned to and directly engaged in
the conduct of Mining Operations.

(d)	"Employee Benefits" means the Operator's cost of holiday, vacation, sickness, disability
benefits, field bonuses and any other customary allowances or payments, and the
Operator's cost of established plans for group life insurance, hospitalization, pension,
retirement and other customary plans maintained for the benefit of Employees and
Personnel, which costs may be charged as a percentage assessment on the salaries and
wages of Employees and Personnel on a basis consistent with the Operator's cost
experience.

(e)	"Field Offices" means the necessary sub-office(s), camps, warehouses and other facilities
in each place where an Approved Program or producing operations are being conducted.

(f)	"Government Contributions" means the costs or contributions made by the Operator
pursuant to assessments imposed by any governmental authority which are applicable to
the salaries and wages of Employees or Personnel.

(g)	"Joint Account" means the books of account maintained by the Operator to record all
costs, expenses, credits and other transactions arising out of or incurred in connection
with Mining Operations.

(h)	"Material" means the personal property, equipment and supplies acquired or held for use
in Mining Operations.

(i) 	"Personnel" means those management, supervisory, administrative, clerical and other
personnel of the Operator normally associated with the Supervision Offices and whose
salaries and wages are charged directly to the Supervision Office in question.

(j)	"Reasonable Expenses" means the reasonable expenses directly related to the Joint
Venture of Employees or Personnel for which those Employees or Personnel may be
reimbursed under the Operator's usual expense account practice.

(k)	"Supervision Offices" means the Operator's offices or departments within the Operator's
offices from which the Joint Venture is generally supervised.

2.	General

2.1	Joint Account. The Operator will maintain the Joint Account in accordance with the
provisions of Schedule C to the Agreement and this Appendix.

2.2	Invoices.  The Operator will by invoice charge each Participating Party with its
proportionate share of costs as contemplated by Schedule C to the Agreement, net of any
advances paid, and will deliver with each invoice a statement indicating all charges and credits to
the Joint Account, including a reconciliation of advances made to costs incurred prior thereto.

3. 	Charges to Joint Account

3.1	Direct and Indirect Charges.  The Operator will charge the Joint Account with the
following items:

(a)	Contractor's charges.  All proper costs relative to Mining Operations incurred under
contracts entered into by the Operator with third parties.

(b)	Labour charges.  The salaries and wages of Employees in an amount calculated by taking
the full salary or wage of each Employee multiplied by that fraction which has as its
numerator the total time for the month that the Employee was directly engaged in the
conduct of the Program and as its denominator the total normal working time for the
month of the Employee, the Reasonable Expenses of the Employees and Employee
Benefits and Government Contributions in respect of the Employees in an amount
proportionate to the charge made to the Joint Account in respect of their salaries and
wages.

(c)	Office maintenance.  (i) The expenses of maintaining and operating Field Offices (less
any revenue therefrom); and (ii) that portion of the expenses of maintaining and operating
Supervision Offices (if any) equal to the total of such expenses multiplied by a fraction
the numerator of which is the actual total staff man days spent on Mining Operations by
Personnel directly chargeable to such office and the denominator of which is the total
staff man days for Personnel directly chargeable to such office whether in connection
with Mining Operations or otherwise.

(d)	Material.  The cost of Material purchased or furnished by the Operator for use in respect
of Mining Operations.

(e) 	Transportation charges. The cost of transporting Employees and Material necessary for
Mining Operations.

(f)	Service charges.  The cost of services and utilities procured from outside sources and the
use and service of equipment and facilities furnished by the Operator in accordance with
Section 4.2 hereof.

(g)	Damage to Joint Venture Property.  All costs or expenses incurred to repair or replace
Joint Venture Property as a result of any damage or loss incurred by fire, flood, storm,
theft, accident or any other cause, net of the proceeds of policies of insurance in respect
thereof.

(h) 	Legal expenses.  All costs of handling, investigating and settling any litigation or claims
arising by reason of Mining Operations or necessary to protect or recover Joint Venture
Property including legal fees, court costs, expenses of procuring evidence and amounts
paid in settlement or satisfaction of any such litigation or claims (excluding disputes
between the Operator and any Participating Party).

(i)	Taxes.  All taxes, duties, rates, fees, royalties or assessments of whatever nature (except
income taxes) assessed, imposed or levied upon or in connection with the Joint Venture
Property, the Mining Operations or in respect of or measured by the products thereof
which have been paid by the Operator to any governmental authority for the benefit of
the parties.

(j)	Insurance.  Net premiums paid for such policies of insurance on or in connection with
Mining Operations as may be required to be carried by law and as the Operator may carry
for the protection of the parties, together with deductibles applicable in the event of
insured losses thereunder.

(k)	Rentals. Fees, rentals and other similar charges required to be paid for acquiring,
recording and maintaining permits, mineral claims and mining leases and rentals and
royalties which are paid as a consequence of Mining Operations.

(l) 	Permits.  Permit costs, fees and other similar charges which are assessed by various
governmental agencies.

(m)	Other expenditures. Such other costs and expenses as are incurred with the approval of
the Management Committee for the necessary and proper conduct of Mining Operations
or as may be contemplated by the Agreement.

3.2	General Administration and Overhead.  The Operator may charge the Joint Account
with a charge on account of general administration and overhead expenses equal to:

(a)	10% of the costs of conducting exploration work;

(b)	5% of the costs of conducting development work excluding:

(i)	the cost of capital equipment with unit costs in excess of $50,000; and

(ii)	the cost of work contracted to third parties for the construction of any
underground facilities, surface facilities and infrastructure where such contract
has a cost in excess of $250,000;

in respect of which costs the Operator may charge 1.5% thereof;  and

(c)	3.5% of the costs of conducting producing operations.

4.	Material, Services, Equipment and Facilities

4.1	Materials and Services.  Subject to Section 4.2 hereof, the Operator will procure all
Materials and services used in connection with the Joint Venture and the costs thereof may be
charged to the Joint Account at the price paid by the Operator after deduction of any discounts
actually received.

4.2	Equipment and Facilities.  The Operator will be entitled to supply for use in connection
with Mining Operations equipment and facilities owned by the Operator and to charge the Joint
Account with reasonable costs commensurate with the ownership and use thereof (but not
exceeding competitive rates therefor).

5.	Material and Counts

5.1	Material.  The Operator will maintain records of Material in reasonable detail.

5.2	Counts.  Following the commencement of producing operations, the Operator will
perform Counts from time to time at reasonable intervals and shall at least once in every 12
month period reconcile each item of the inventory with the Joint Account and provide each
Participating Party with a statement listing the overages and shortages.  The Operator may not be
held accountable for any shortages of inventory except such shortages as may have arisen due to
lack of reasonable diligence on the part of the Operator.

5.3	Entitlement of Participating Party.  Each Participating Party will be entitled at such
party's cost and during normal business hours to perform a Count on giving at least 10 business
days advance notice thereof to the Operator.  A Participating Party who has not requested and
taken a Count within 60 days of the fiscal year end of the Operator will be deemed to have
approved the inventory as determined by the Operator as at such year end.

6.	Adjustments and Audits

6.1	Invoices and Statements. Payment of any invoice will not prejudice the right of a
Participating Party to protest the correctness of the invoice or the statement supporting the same.
All invoices and statements presented by the Operator to a Participating Party will conclusively
be deemed to be true and correct on the expiry of 12 months following the end of the fiscal year
to which such invoice or statement relates, unless within such 12 month period the Operator
gives the Participating Party notice claiming an adjustment to the invoice or statement.

6.2	Adjustments in Favour of Operator.  The Operator may not adjust any invoice or
statement in its favour after the expiry of 12 months following the end of the fiscal year to which
the invoice or statement relates.

6.3	Audits.  A Participating Party will be entitled on notice to the Operator to request that the
independent public accountants of the Operator provide the Participating Party with their opinion
that any invoice or statement delivered by the Operator has been prepared in accordance with the
Agreement.  The time required for giving the audit opinion will not extend the time provided in
Section 6.2 for the Operator to adjust an invoice or statement.  The cost of such opinion will be
for the account of the Participating Party unless the audit disclosed an error which is greater than
1% and adverse to the Participating Party, in which case the cost will be for the account of the
Operator.

6.4	Adjustments.  Notwithstanding the foregoing provisions of this Section 6, the Operator
may make adjustments to an invoice or statement which arise out of a Count or as a result of an
audit.