Filed by Automated Filing Services Inc. (604) 609-0244 - Evolving Gold Corporation - Exhibit 4.5





 OPTION AND ROYALTY AGREEMENT

  (Swordfish Property) 

 DATED for reference the 3rd day of December, 2004 


BETWEEN: 


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

        (the “Optionor”) 

    

  




AND: 


  
    
       AHL HOLDINGS LTD., a corporation duly incorporated
        pursuant to the laws of Nevada and having an office at 210-5511 West Boulevard,
        Vancouver, British Columbia V6M 3W6

        (the “Optionor Sub”) 

    

  




AND: 


  
    
       EVOLVING GOLD CORPORATON, a corporation duly
        incorporated pursuant to the laws of British Columbia and having an office
        at Suite 1200, 1188 West Georgia Street, Vancouver, British Columbia V6E
        4A2

        (the "Optionee”) 

    

  




WHEREAS: 

	 A.      	 The Optionor is the sole owner of all of the issued
        shares in AHL Holdings Ltd., a Nevada corporation (the “Optionor
        Sub”); 

	 
	 B.      	 The Optionor Sub entered into an option agreement
        dated March 22, 2004 (the “Underlying Option Agreement”
        – a copy of which forms Schedule “C” to this Agreement)
        with Golden Arc Mining and Refining Inc. (“Golden Arc”)
        regarding the unpatented mining claims listed in Schedule “A”
        to this Agreement and any other unpatented mining claims that become subject
        to the option in the Underlying Option Agreement (together the “Golden
        Arc Claims”), all of which are located in the County of Humboldt,
        State of Nevada, USA, as more particularly described in Schedule “A”;
      

	 
	 C.      	 The names of the registered owners of the Golden
        Arc Claims are as set out in Schedule “A”; 

	 
	 D.      	 The beneficial owner of the Golden Arc Claims is
        Golden Arc; 

	 
	 E.      	 The Optionor Sub had located on the ground by the
        construction of the monument of discovery, posting of the notices of location
        and construction of the corner monuments, but has not had recorded the
        certificates of location and mining claim map in the office of the county
        recorder or filed with the Bureau of Land Management, certain unpatented
        mining claims nearby the Golden Arc claims (the “Underlying Additional
        Claims”); 












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	 F.      	 Under the terms of the Underlying Option Agreement,
        Golden Arc has the option to have any mineral claims acquired by the Optionor
        Sub and located within one mile of the Golden Arc Claims listed in Schedule
        “A” become subject to the terms of the option granted by Golden
        Arc to the Optionor Sub (the “Underlying Area of Influence Option”);
      

	 
	 G.      	 As of the date of this Agreement, it is not known
        whether Golden Arc will exercise the Underlying Area of Influence Option;
      

	 
	 H.      	 The Optionor Sub has exclusive possession of and
        the right to explore and mine the Claims free and clear of all claims,
        liens or encumbrances; and 

	 
	 I.      	 The parties now wish to enter into an agreement
        whereby the Optionor will grant an option to the Optionee to purchase
        100% of the right, title and interest in and to the Claims on the terms
        and conditions as hereinafter set forth; 




THE PARTIES AGREE AS FOLLOWS: 

	 1.      	 INTERPRETATION 

	 
	 1.1      	 In this Agreement: 

	 
	 	 (a)     
      
	 “Advance Royalty Payments”
        has that meaning set out in Subsection 11.5 of this Agreement; 

	 
	 	 (b)      
	 “Claims” means the Golden
        Arc Claims and the Underlying Additional Claims; 

	 
	 	 (c)      
	 "Dollars ($)" means legal currency
        of the United States; 

	 
	 	 (d)      
	 "Effective Date" means the date that both
        parties have signed this Agreement; 

	 
	 	 (e)      
	 “exploration expense” shall
        include any development expenses incurred by the Optionee; 

	 
	 	 (f)      
	 “Golden Arc” means Golden
        Arc Mining & Refining Inc, a Nevada company; 

	 
	 	 (g)      
	 "Golden Arc Claims" means those mineral
        claims set out in Schedule “A” of this Agreement and any other
        unpatented mining claims that become subject to the option in the Underlying
        Option Agreement and includes any mineral claims covering any portion
        of the ground currently covered by the Golden Arc Claims which may have
        been re- acquired by the Optionee or its successors, assigns or associates
        as a result of any of the Golden Arc Claims having been previously abandoned;
      

	 
	 	 (h)      
	 "Net Smelter Returns" means the proceeds
        received by the Optionee from any smelter or other purchaser from the
        sale of any ores, concentrates or minerals produced from the Golden Arc
        Claims after deducting from such proceeds the following charges only to
        the extent that they are not deducted by the smelter or other purchaser
        in computing the proceeds: 

	 
	 	 	 (i)     
      
	 the cost of transportation of the ores, concentrates
        or minerals from the Golden Arc Claims to such smelter or other purchaser,
        including related transport; 

	 
	 	 	 (ii)      
	 smelting and refining charges including penalties;
      












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	 	  	(iii)
	 marketing costs; 

	 
	 	 (i)      	 "NSR Royalty" means
        a net smelter returns royalty, to be paid by the Optionee to the Optionor
        pursuant to Subsection 11.1; 

	 
	 	 (j)      	 “Optionor Sub”
        has that meaning as set out in Recital A; 

	 
	 	 (k)      	 "Shares" means the 1,800,000
        (One Million, Eight Hundred Thousand) common shares in the capital of
        the public company referred to in Subsection 3.1 to be allotted and issued
        pursuant to Subsection 3.1; 

	 
	 	 (l)      	 “Underlying Additional
        Claims” has that meaning as set out in Recital E of this Agreement
        and includes any mining claims covering any portion of the ground currently
        covered by the Underlying Additional Claims which may have been re-acquired
        by the Optionee or its successors, assigns or associates as a result of
        any of the Underlying Additional Claims having been previously abandoned;
      

	 
	 	 (m)      	 “Underlying Area of
        Influence Option” has that meaning as set out in Recital F; and
      

	 
	 	 (n)      	 “Underlying Option
        Agreement” has that meaning set out in Recital B. 

	 
	 2.      	 REPRESENTATIONS AND WARRANTIES AND ACKNOWLEDGEMENTS
    
	 
	 2.1      	 The Optionee represents and warrants to the Optionor and the
      Optionor Sub that: 
	 
	 	 (a)      	 the Optionee is a corporation
        duly incorporated pursuant to the laws of British Columbia; 

	 
	 	 (b)      	 the Optionee currently has
        its shares quoted for trading on the Canadian Trading & Quotation
        System, commonly known as the “CNQ”; 

	 
	 	 (c)      	 the Optionee is currently
        in the process of becoming a reporting issuer under the United States
        Securities and Exchange Act of 1934 by January 1, 2005 and if the Optionee
        is not a reporting issuer by that date, then the Optionee will continue
        to use its best efforts thereafter to become a reporting issuer as soon
        as possible thereafter, and immediately following the Optionee becoming
        such a reporting issuer, the Optionee will use its best efforts to cause
        the shares of the Optionee to be quoted for trading on the United States
        Over the Counter Bulletin Board, commonly known as “OTCBB”,
        as soon as possible thereafter and will continue to use its best efforts
        to have such shares so quoted as soon as possible thereafter and, in no
        event, later than July 31, 2005; and 

	 
	 	 (d)      	 it has full power and authority
        to carry on its business and to enter into this Agreement and any agreement
        or instrument referred to or contemplated by this Agreement. 

	 
	 2.2      	 The Optionee expressly acknowledges and agrees that the map
      forming Schedule “C” is attached for simply illustrative purposes
      and is not to be relied upon by any party to this Agreement and will not
      be a term, representation or warranty of this Agreement as the Claims have
      not been surveyed. 
	 
	 2.3      	 The Optionor and the Optionor Sub represent and warrant to
      the Optionee: 
	 
	 	 (a)      	 the Optionor is a corporation
        duly incorporated pursuant to the laws of British Columbia and is in good
        standing with respect to filing of its Annual Reports; 













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	 	 (b)      	 the Optionor Sub is a corporation duly incorporated
        pursuant to the laws of Nevada and is in good standing with respect to
        filing of its Annual List of Directors, Officers and Resident Agent with
        the Secretary of State of Nevada; 

	 
	 	 (c)      	 the Underlying Option Agreement is in good standing
        and enforceable in accordance with its terms; 

	 
	 	 (d)      	 the Golden Arc Claims have been duly and validly
        located, staked and recorded, are accurately described in Schedule "A",
        are presently in good standing under the laws of the jurisdiction in which
        they are located and, except as set forth herein, are free and clear of
        all liens, charges and encumbrances; 

	 
	 	 (e)      	 the Underlying Additional Claims have been located
        on the ground by the construction of the monument of discovery, posting
        of the notices of location and construction of the corner monuments. The
        certificates of location and mining claim map have not been recorded in
        the office of the county recorder or filed with the Bureau of Land Management,
        but it is the company's intent to complete these actions within 90 days
        after the dates of location in accordance with applicable law; 

	 
	 	 (f)      	 the names of the registered owners of the Golden
        Arc Claims are as set out in Schedule “A”; 

	 
	 	 (g)      	 subject to the terms of the Underlying Option Agreement,
        the Optionor Sub is the sole beneficial owner of a 100% interest in and
        to the Golden Arc Claims and has the exclusive right to enter into this
        Agreement and all necessary authority to dispose of a 100% interest in
        and to the Golden Arc Claims in accordance with the terms of this Agreement;
      

	 
	 	 (h)      	 the name of the registered owner of the Underlying
        Additional Claims will be, upon due recordation of such claims, the Optionor
        Sub; 

	 
	 	 (i)      	 provided that the Underlying Area of Influence Option
        is not exercised, the Optionor Sub will remain the sole beneficial owner
        of a 100% interest in and to the Underlying Additional Claims and will,
        in any case, have the exclusive right and all necessary authority to dispose
        of a 100% interest in and to the Underlying Additional Claims in accordance
        with the terms of this Agreement; 

	 
	 	 (j)      	 the Optionor Sub has the right to cause the registered
        owners of the Golden Arc Claims to transfer the Golden Arc Claims to the
        Optionor Sub, free and clear of all claims, liens and other encumbrances;
      

	 
	 	 (k)      	 once all of the Golden Arc Claims have been transferred
        to and recorded in the name of the Optionor Sub and the Underlying Option
        has been exercised, the Optionor Sub then will have the right to transfer
        the Golden Arc Claims to the Optionee, free and clear of all claims, liens
        and other encumbrances, but subject to the terms of the Underlying Option
        Agreement; 

	 
	 	 (l)      	 no person, firm or corporation, other than Golden
        Arc, has any proprietary or possessory interest in the Golden Arc Claims
        other than the Optionor Sub and Golden Arc and no person is entitled to
        any royalty or other payment in the nature of rent or royalty on any diamonds,
        minerals, ores, metals or concentrates or any other such products removed
      












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	 	 	 from the Golden Arc Claims, except for Golden Arc
        under the terms of the Underlying Option Agreement; 

	 
	 	(m) 
	 once all of the Additional Underlying Claims have
        been recorded in the name of the Optionor Sub and the Underlying Option
        has been exercised, the Optionor Sub then will have the right to transfer
        the Additional Underlying Claims to the Optionee, free and clear of all
        claims, liens and other encumbrances, but subject to the terms of the
        Underlying Option Agreement, if the Underlying Area of Influence Option
        has been exercised; 

	 
	 	(n) 
	 no person, firm or corporation, has any proprietary
        or possessory interest in the Underlying Additional Claims other than
        the Optionor Sub and Golden Arc if the Underlying Area of Influence Option
        has been exercised and no person is entitled to any royalty or other payment
        in the nature of rent or royalty on any diamonds, minerals, ores, metals
        or concentrates or any other such products removed from the Underlying
        Additional Claims, except for Golden Arc if the Underlying Area of Influence
        Option has been exercised; 

	 
	 	(o)
	 neither the execution and delivery of this Agreement
        nor any of the agreements referred to herein or contemplated hereby, nor
        the consummation of the transactions hereby contemplated will conflict
        with, result in the breach of or accelerate the performance required by
        any agreement to which the Optionor or the Optionor Sub is a party or
        by which it is bound; 

	 
	 	(p) 
	 the execution and delivery of this Agreement and
        the agreements contemplated hereby will not violate or result in the breach
        of the laws of any jurisdiction applicable or pertaining thereto; 

	 
	 	(q) 
	 with respect to Schedule “A” to this
        Agreement, those claims registered in the name of Arctic Precious Metals
        Inc. are beneficially owned by Golden Arc and the Optionor Sub is in the
        process of seeking a court order from the applicable courts of Nevada,
        for the transfer of such claims to Golden Arc and, immediately thereafter,
        the Optionor Sub will cause those claims to be registered in the name
        of the Optionor Sub; and 

	 
	 	(r) 
	 the map forming Schedule “C” is attached
        for simply illustrative purposes and is not to be relied upon by any party
        to this Agreement and will not be a term, representation or warranty of
        this Agreement as the Claims have not been surveyed. 

	 
	2.4 	 The representations, warranties and
        acknowledgements hereinbefore set have been relied on by the parties in
        entering into this Agreement and will survive the acquisition of any interest
        in the Golden Arc Claims by the Optionee and each party will indemnify
        and save the other party harmless from all loss, damage, costs, actions
        and suits arising out of or in connection with any breach or any representation,
        warranty, covenant, agreement or condition made by the other party and
        contained in this Agreement. 













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	 3.      	 GRANT OF OPTION TO PURCHASE 

	 
	 3.1      	 The Optionor hereby grants to the Optionee
        the exclusive and irrevocable option (the “Option”)
        to acquire, free of all liens, charges, encumbrances, claims or rights
        of others, an undivided 100% right, title and interest in and to the Claims,
        exercisable by the Optionee paying $70,000, issuing and delivering
        1,800,000 shares, incurring at least $4,000,000 of exploration expense
        and having prepared and paid for a pre-feasibility study, as follows:
      

	 
	 	 (a)     
      
	 issuing in the name of Golden Arc and delivering
        to the lawyer for the Optionor 100,000 shares in the capital of the Optionee
        within five business days of the date of this Agreement; 

	 
	 	 (b)      
	 paying to the Optionor $30,000 by December 15,
        2004, payable by delivering to the lawyer for the Optionor a certified
        cheque or bank draft made payable to the lawyer for the Optionor in Trust;
      

	 
	 	 (c)      
	 issuing and delivering to the Optionor 200,000 shares
        in the capital of the Optionee by December 15, 2004; 

	 
	 	 (d)      
	 paying to the Optionor $40,000 by January 31,
        2005, payable by delivering to the lawyer for the Optionor a certified
        cheque or bank draft made payable to the lawyer for the Optionor in Trust;
      

	 
	 	 (e)      
	 issuing and delivering to the Optionor a further
        200,000 shares in the capital of the Optionee by January 31, 2005; 

	 
	 	 (f)      
	 issuing and delivering to the Optionor a further
        400,000 shares in the capital of the Optionee by August 31, 2005; 

	 
	 	 (g)      
	 incurring exploration expense on the Golden Arc
        Claims by December 31, 2005 of not less than 70% of the funds raised by
        the Optionee from the date of this Agreement to and including October
        31, 2005; 

	 
	 	 (h)      
	 issuing and delivering to the Optionor 400,000 shares
        in the capital of the Optionee by August 31, 2006; 

	 
	 	 (i)      
	 incurring cumulative exploration expense of not
        less than $1,000,000 on the Golden Arc Claims by December 31, 2006;
      

	 
	 	 (j)      
	 incurring cumulative exploration expense of not
        less than $2,000,000 on the Golden Arc Claims by December 31, 2007;
      

	 
	 	 (k)      
	 issuing and delivering to the Optionor 500,000 shares
        in the capital of the Optionee by December 31, 2007; 

	 
	 	 (l)      
	 incurring cumulative exploration expense of not
        less than $4,000,000 on the Golden Arc Claims by December 31, 2008;
        and 

	 
	 	 (m)      
	 having had prepared and having paid for a pre-feasibility
        study on the Claims and having delivered that study to the Optionor by
        June 30, 2009. 












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	 3.2      	 If and whenever the shares at any time
        outstanding are subdivided into a greater or consolidated into a lesser
        number of shares of the Optionee the number of shares deliverable hereunder
        will be increased or decreased proportionately as the case may be. 

	 
	 4.      	 EXERCISE OF OPTION 

	 
	 4.1      	 Immediately upon the completion of the
        payments set out in Subsection 3.1, the issuance and delivery of the shares
        set out in Subsection 3.1, the incurrence of exploration expense set out
        in Subsection 3.1 and the production of and payment for the pre-feasibility
        study set out in Subsection 3.1, the Option shall be immediately exercised
        and the Optionee will, subject to the right of the Optionor Sub to receive
        the NSR Royalty, own 100% of the right, title and interest in and to the
        Claims. 

	 
	 5.      	 TRANSFER OF TITLE 

	 
	 5.1      	 Upon the exercise of the Option, as provided
        in Section 4.1, the Optionor Sub will deliver to the Optionee a duly executed
        deed in recordable form of 100% right, title and interest in and to the
        Claims in favour of the Optionee which the Optionee will be entitled to
        immediately record against title to such Claims. 

	 
	 6.      	 OPTION ONLY 

	 
	 6.1      	 Other than the money payments set out
        in Subsections 3.1(a) and (c) of this Agreement, the share issuances set
        out in Subsections 3.1(b), (d), (e) and (f), and the incurring of exploration
        expense set out in Subsection 3.1(g), the Optionee is not obliged to make
        any payment of money to the Optionor, issue and deliver any shares in
        the capital of the Optionee or incur exploration expense on the Claims.
        Subject to the foregoing firm obligations, the Optionor and the Optionor
        Sub hereby agree that the Optionee may terminate the Option, subject to
        the provision of Subsections 10.1(d) and (h).

	 
	 7.      	 OTHER ACQUISITIONS 

	 
	 7.1      	 The parties agree that any unpatented
        or patented mining claims acquired or located by or on behalf of any party
        during the currency of this Agreement which are located wholly or partially
        within three miles of the Claims shall, at the option of the other party,
        will form part of the Claims and be subject to the terms of the Option
        provided that if the such unpatented or patented mining claims are located
        by the Optionor Sub, then the Optionee will first be required to reimburse
        the Optionor Sub for its acquisition costs. 

	 
	 8.      	 RIGHT OF ENTRY 

	 
	 8.1      	 During the currency of this Agreement,
        the Optionee, its employees, agents and independent contractors, will
        have the sole and exclusive right to: 

	 
	 	 (a)     
      
	 enter upon the Claims; 

	 
	 	 (b)      
	 have exclusive and quiet possession thereof, 

	 
	 	 (c)      
	 do such prospecting, exploration, development or
        other mining work thereon and thereunder as the Optionee in its sole discretion
        may consider advisable; and 

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












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	 9.      	 COVENANTS OF THE OPTIONOR AND THE OPTIONOR
        SUB 

	 
	 9.1      	 During the currency of this Agreement
        the Optionor and the Optionor Sub will not do any act or thing which would
        or might in any way adversely affect the rights of the Optionee hereunder.
      

	 
	 9.2      	 The Optionor and the Optionor Sub, will
        from time to time, cooperate with and assist the Optionee in obtaining
        any required Federal, State and local permits. 

	 
	 9.3      	 The Optionor and the Optionor Sub will
        use their best efforts to cause by January 31, 2005, all of the Golden
        Arc Claims listed in Schedule “A” that are not recorded in
        the name of the Optionor Sub, to be duly recorded in the name of the Optionor
        Sub, both at the Humboldt County office and also at the office of the
        Bureau of Land Management and, in the event that such claims are not recorded
        in the name of the Optionor Sub by January 31, 2005, then the Optionor
        and the Optionor Sub will continue to use their bests efforts to cause
        such transfer as soon as possible thereafter. 

	 
	 9.4      	 During the currency of this Agreement
        the Optionor and the Optionor Sub will make available to the Optionee
        and its representatives all records and files in the possession of the
        Optionor or the Optionor Sub relating to the Claims and permit the Optionee
        and its representatives, at its own expense, to take abstracts therefrom
        and make copies thereof. 

	 
	 9.5      	 The Optionor and the Optionor Sub will
        cause the certificates of location and mining claim map relating to the
        Underlying Additional Claims to be recorded in the office of the county
        recorder or filed with the Bureau of Land Management, within 90 days after
        the dates of location in accordance with applicable law. 

	 
	 9.6      	 During the term of the Option, the Optionor
        and the Optionor Sub will promptly provide the Optionee with any and all
        notices and correspondence received by the Optionor or the Optionor Sub
        from government agencies in respect of the Claims. 

	 
	 9.7      	 The expenses associated with the Optionor
        performing its obligations under Sections 9 will be paid by the Optionee.
      

	 
	 10.      	 COVENANTS OF THE OPTIONEE 

	 
	 10.1      	 During the currency of this Agreement,
        the Optionee will: 

	 
	 	 (a)     
      
	 do all such things required to keep the Claims in
        good standing, including, but not restricted to, paying all fees and taxes
        relating to the Claims and by the doing and filing of all necessary work;
      

	 
	 	 (b)      
	 keep the Claims free and clear of all liens, charges
        and encumbrances arising from the Optionee’s operations hereunder
        and making all other payments which may be necessary in that regard, it
        being understood that the Optionee may subsequently contest any such lien,
        charge or encumbrance; 

	 
	 	 (c)      
	 permit the Optionor or the Optionor sub, or their
        representatives duly authorized by it in writing, at their own risk and
        expense, access to the Claims at all reasonable times and to all records
        prepared by the Optionee in connection with work done on or with respect
        to the Golden Arc Claims; 












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	 	 (d)     
      
	 prepare a technical report on the Claims and deliver
        that technical report to the Optionee within 90 days of each June 30 and
        December 31 of the term of this Agreement and, in the event that the Optionee
        terminates this Agreement, within 90 days of such termination; 

	 
	 	 (e)      
	 prepare an exploration expenditure report relating
        to exploration on the Claims and deliver that exploration expenditure
        report to the Optionee within 90 days of each June 30 and December 31
        of the term of this Agreement and, in the event that the Optionee terminates
        this Agreement, within 90 days of such termination; and 

	 
	 	 (f)      
	 conduct all work on or with respect to the Claims
        in a careful and minerlike manner and in compliance with all applicable
        Federal, State and local laws, rules, orders and regulations, and indemnify
        and save the Optionor harmless from any and all claims, suits, actions
        made or brought against it as a result of work done by the Optionee on
        or with respect to the Claims; 

	 
	 	 (g)      
	 make all filings and disclosures as required and
        within the time periods specified under all applicable securities legislation
        with respect to the allotment and issuance of the Shares pursuant to this
        Agreement; and 

	 
	 	 (h)      
	 in the event that the Optionee terminates the Option,
        the Optionee will ensure that the Claims will be unencumbered with respect
        to any exploration work conducted on the Claims by the Optionee or any
        of its employees, agents or contractors, and that the Claims will remain
        unencumbered with respect to any exploration work conducted on the Claims
        by the Optionee or any of its employees, agents or contractors and in
        good standing for a period of least 12 months from the date of such termination.
      

	 
	 10.2      	 The Optionee is currently in the process
        of becoming a reporting issuer under the United States Securities and
        Exchange Act of 1934 by January 1, 2005 and if the Optionee is not a reporting
        issuer by that date, then the Optionee will continue to use its best efforts
        thereafter to become a reporting issuer as soon as possible thereafter,
        and immediately following the Optionee becoming such a reporting issuer,
        the Optionee will use its best efforts to cause the shares of the Optionee
        to be quoted for trading on the United States Over the Counter Bulletin
        Board, commonly known as “OTCBB”, as soon as possible
        thereafter and will continue to use its best efforts to have such shares
        so quoted as soon as possible thereafter and, in no event, later than
        July 31, 2005. 

	 
	 11.      	 NSR ROYALTY 

	 
	 11.1      	 The Optionee will pay to the Optionor
        Sub a royalty equal to a two percent (2.0%) in aggregate net smelter returns
        royalty (as defined in Subsection 1.1), subject to Subsection 11.4. The
        NSR Royalty will be payable for so long as the Optionee and/or its successors
        and assigns hold any interest in the Claims. 

	 
	 11.2      	 Payment of the NSR Royalty will be made
        quarterly within 30 days after the end of each yearly quarter based upon
        a year commencing on the 1st day of January and expiring on the 31st day
        of December in any year in which ore is produced or removed from the Claims.
        Within 60 days after the end of each year for which the NSR Royalty is
        payable, the records relating to the calculation of the NSR Royalty for
        such year will be audited by the Optionee and any adjustments in the payment
        of the NSR Royalty will be made forthwith after completion of the audit.
        All payments of the NSR Royalty for a year will be deemed final and in
        full satisfaction of all obligations of the Optionee in respect thereof
        if such payments or calculations thereof are not disputed by the Optionor
        within 60 days after receipt by The Optionor of the said audit statement.
      












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	 	 The Optionee will maintain accurate records
        relevant to the determination of the NSR Royalty and the Optionor, or
        its authorized agent, shall be permitted the right to examine such records
        at all reasonable times. 

	 
	 11.3      	 The determination of the NSR Royalty hereunder
        is based on the premise that production will be developed solely on the
        Claims except that the Optionee will have the right to commingle ore mined
        from the Claims with ore mined and produced from other properties provided
        the Optionee will adopt and employ reasonable practices and procedures
        for weighing, sampling and assaying, in order to determine the amounts
        of products derived from, or attributable to ore mined and produced from
        the Claims. The Optionee will maintain accurate records of the results
        of such sampling, weighing and analysis with respect to any ore mined
        and produced from the Claims. 

	 
	 	 The Optionor or its authorized agents
        will be permitted the right to examine at all reasonable times such records
        pertaining to commingling of ore or to the calculation of Net Smelter
        Returns. 

	 
	 11.4      	 The Optionee shall have the right at any
        time to purchase up to 100% of the NSR Royalty on the Golden Arc Claims
        by paying to the Optionor the sum of $1,000,000 for each one of the
        two percentage points of the NSR Royalty on the Golden Arc Claims. 

	 
	 11.5      	 The Optionee shall pay advance royalty
        payments (the “Advance Royalty Payments”) as follows:
      

	 
	 	 (a)     
      
	 $10,000 by the first anniversary of the date
        of this Agreement; 

	 
	 	 (b)      
	 $10,000 by the second anniversary of the date
        of this Agreement; 

	 
	 	 (c)      
	 $20,000 by the third anniversary of the date
        of this Agreement; and 

	 
	 	 (d)      
	 $20,000 by each successive anniversary of the
        date of this Agreement until production commences from the Claims and
        continues uninterrupted for a period of 12 consecutive months, at which
        time all further obligations to pay Advance Royalties will terminate,
        except for those Advance Royalties, previously unpaid by the Optionee.
      

	 
	 11.6      	 All Advance Royalty Payments will be deducted
        from the NSR Royalty payments otherwise needed to be made under this Agreement.
      

	 
	 11.7      	 It is acknowledged that the Optionor Sub
        is responsible for paying a royalty to Golden Arc under the Underlying
        Option Agreement relating to the Golden Arc Claims and, possibly, the
        Underlying Additional Claims. Each of the Optionor, the Optionor Sub and
        the Optionee will use their best efforts to make reasonable arrangements
        between them from time to time to ensure that payments of royalty under
        this Agreement to the Optionor Sub, will also be paid by the Optionor
        Sub to Golden Arc to the extent necessary to ensure that the royalty payments
        of the Optionor Sub to Golden Arc are keep in good standing. 

	 
	 11.8      	 The Optionor Sub hereby agrees that it
        will make reasonable efforts to reduce the advance royalty payments to
        be paid under the Underlying Option Agreement and, in the event that the
        Underlying Optionor does agree to reduce those advance royalty payments,
        then the resulting benefit will be in turn provided to the Optionee and
        the Optionor, Optionor Sub and the Optionee will enter into an amending
        agreement to amend Section 11.5 of this Agreement. 












 - 11 - 

	 12.      	 REGISTRATION OF AGREEMENT 

	 
	 12.1      	 Notwithstanding any term of this Agreement, the
        Optionee will have the right at any time to register this Agreement or
        a Memorandum thereof against title to the Golden Arc Claims. 

	 
	 13.      	 DISPOSITION OF THE CLAIMS 

	 
	 13.1      	 Subject to Subsection 13.2, the Optionee may at
        any time sell, transfer or otherwise dispose of all or any portion of
        its interest in and to the Claims and this Agreement. 

	 
	 13.2      	 In the event that the Optionee intends to sell,
        transfer or otherwise dispose of all of his interest in and to the Claims
        and this Agreement, it will first cause the intended transferee to agree
        in writing with the Optionor and the Optionor Sub to comply with the terms
        of this Agreement. 

	 
	 14.      	 CONFIDENTIAL NATURE OF INFORMATION 

	 
	 14.1      	 The parties agree that all information obtained
        from the work carried out hereunder and under the operation of this Agreement
        will be the exclusive property of the parties and will not be used other
        than for the activities contemplated hereunder, it being agreed that the
        Optionee may disclose information to third parties in an effort to enter
        into an agreement with a third party for the further option, sale or other
        transfer of part or all of the interest of the Optionee, or for the financing
        or development of the Claims or the financing of the Optionee. Notwithstanding
        the foregoing, it is understood and agreed that a party will not be liable
        to the other party for the fraudulent or negligent disclosure of information
        by any of its employees, servants or agents, provided that such party
        has taken reasonable steps to ensure the preservation of the confidential
        nature of such information. 

	 
	 14.2      	 During the term of the Option, the Optionee will
        provide the Optionor drafts of all proposed news releases relating to
        the Claims and within 24 hours the Optionor will provide comments on the
        proposed news release and the parties will use their best efforts to agree
        on the final text of the proposed news release. If the Optionor fails
        to provide comments within such 24 hour period, then the Optionee may
        proceed to issue the proposed news release. 

	 
	 14.3      	 Notwithstanding Section 14.2, the parties acknowledge
        that the Optionee is a reporting issuer in the Province of British Columbia,
        pursuant to the Securities Act (British Columbia) and in the Province
        of Alberta, pursuant to the Securities Act (Alberta) and that the
        securities laws of each province requires that the Optionee comply with
        continuous disclosure requirements, including the immediate release of
        news releases upon any and all material changes. In the event that the
        Optionee provides a copy of any of its proposed news releases to either
        of the Optionor or the Optionor Sub for review, the Optionee may issue
        such news release at any time as required by applicable securities legislation,
        despite the delay or failure of either of the Optionor or the Optionor
        Sub to provide their comments to such news release. 

	 
	 15.      	 FURTHER ASSURANCES 

	 
	 15.1      	 The parties hereto agree that they and each of them
        will execute all documents and do all acts and things within their respective
        powers to carry out and implement the provisions or intent of this Agreement.
      












 - 12 - 

	 16.      	 NOTICE 

	 
	 16.1      	 Any notice, direction or other instrument required
        or permitted to be given under this Agreement will be in writing and will
        be given by the delivery or the same or by mailing the same by prepaid
        registered or certified mail in each case addressed as provided in page
        1 of this Agreement. 

	 
	 16.2      	 Any notice, direction or other instrument aforesaid
        will, if delivered, be deemed to have been given and received on the day
        it was delivered, and if mailed, be deemed to have been given and received
        on the tenth business day following the day of mailing, except in the
        event of disruption of the postal services in which event notice will
        be deemed to be received only when actually received. 

	 
	 16.3      	 Any party may at any time give to the other notice
        in writing of any change of address of the party giving such notice and
        from and after the giving of such notice, the address or addresses therein
        specified will be deemed to be the address of such party for the purpose
        of giving notice hereunder. 

	 
	 17.      	 HEADINGS 

	 
	 17.1      	 The headings to the respective sections herein will
        not be deemed part of this Agreement but will be regarded as having been
        used for convenience only. 

	 
	 18.      	 DEFAULT 

	 
	 18.1      	 If any party (a "Defaulting Party") is in
        default of any requirement herein set forth (including any provision of
        Subsection 3.1 of this Agreement, except for Subsections 3.1 (a) to and
        including (g), the party affected by such default will give written notice
        to the defaulting Party specifying the default and the Defaulting Party
        will not lose any rights under this Agreement, unless within 30 days after
        the giving of notice of default by the affected party the Defaulting Party
        has not cured or diligently commenced to cure the default by the appropriate
        performance and if the Defaulting Party fails within such period to cure
        or diligently commenced to cure any such default, the affected party will
        be entitled to seek any remedy it may have on account of such default.
      

	 
	 19.      	 PAYMENT 

	 
	 19.1      	 All references to monies hereunder will be in United
        States funds except where otherwise designated. All payments to be made
        to any party hereunder will be either wired to the bank account of the
        intended party or mailed or delivered to such party at its address for
        notice purposes as provided herein, or for the account of such party at
        such bank or banks as such party may designate from time to time by written
        notice. Said bank or banks will be deemed the agent of the designating
        party for the purpose of receiving, collecting and receiving such payment.
      

	 
	 20.      	 ENUREMENT 

	 
	 20.1      	 This Agreement will enure to the benefit of and
        be binding upon the parties hereto and their respective successors and
        permitted assigns. 












 - 13 - 

	 21.      	 GOVERNING LAW 

	 
	 21.1      	 This Agreement will be construed in accordance
        with and governed by the laws in force in British Columbia. 

	 
	 21.2      	 The courts of British Columbia will have
        exclusive jurisdiction to hear and determine all disputes arising hereunder.
        This Section 21 will not be construed: 

	 
	 	 (a)     
      
	 to affect the rights of a party to enforce a judgment
        or award outside British Columbia, including the right to record or enforce
        a judgment or award in a jurisdiction in which the Claims are situated;
      

	 
	 	 (b)      
	 to supersede the laws of Nevada applicable to the
        Claims and the rights and obligations of a holder of mineral rights thereunder.
      

	 
	 22.      	 FORCE MAJEURE 

	 
	 22.1      	 No party will be liable for its failure
        to perform any of its obligations under this Agreement due to a cause
        beyond its control (except those caused by its own lack of funds) including,
        but not limited to acts of God, fire, flood, explosion, strikes, lockouts
        or other industrial disturbances, laws, rules and regulations or orders
        of any duly constituted governmental authority or non- availability of
        materials or transportation (each an "Intervening Event"). 

	 
	 22.2      	 All time limits imposed by this Agreement
        will be extended by a period equivalent to the period of delay resulting
        from an Intervening Event described in Subsection 22.1. 

	 
	 22.3      	 A party relying on the provisions of Subsection
        22.1 will take all reasonable steps to eliminate an Intervening Event
        and, if possible, will perform its obligations under this Agreement as
        far as practical, but nothing herein will require such party to settle
        or adjust any labour dispute or to question or to test the validity of
        any law, rule, regulation or order of any duly constituted governmental
        authority or to complete its obligations under this Agreement if an Intervening
        Event renders completion impossible. 

	 
	 23.      	 CONDITIONS PRECEDENT 

	 
	 23.1      	 The obligations of the Optionor and the
        Optionor Sub are subject to the Optionee, (a) becoming a reporting issuer
        and the shares of the Optionee becoming quoted, in accordance with Subsection
        2.1(c), by July 31, 2005. If this condition is not met by the Optionee,
        then the Option will immediately terminate, but the Optionee will remain
        obligated to perform those things set out in Subsections 3.1(a) to and
        including (g). 

	 
	 24.      	 ENTIRE AGREEMENT 

	 
	 24.1      	 This Agreement constitutes the entire
        agreement between the parties and replaces and supersedes all prior agreements,
        memoranda, correspondence, communications, negotiations and representations.
      

	 
	 25.      	 TIME OF ESSENCE 

	 
	 25.1      	 Time will be of the essence in this Agreement.
      












 - 14 - 

	 26.      	 EXECUTION OF AGREEMENT 
	 	 
	 26.1      	 This Agreement may be signed in counterpart and by fax. 




	 GOLDEN SANDS EXPLORATION INC.  	 )  	 
	  	 )  	 
	  	 )  	 
	 Per:  	 )  	 
	  	 )  	 
	 Alexander Harry Lenec, President  	 )  	 
	  	 	 
	 AHL HOLDINGS LTD.  	 )  	 
	  	 )  	 
	  	 )  	 
	 Per:  	 )  	 
	  	 )  	 
	 Alexander Harry Lenec, President  	 )  	 
	  	 	 
	  	 	 
	 EVOLVING GOLD CORORATION  	 )  	 
	  	 )  	 
	  	 )  	 
	 Per:  	 )  	 
	  	 )  	 
	 Lawrence Dick, President and CEO  	 )  	 












Schedule “A” 

      This is Schedule "A" to the Option
  and Royalty Agreement dated December 3, 2004

  between Golden Sands Exploration Inc., as optionor, AHF Holdings Ltd., as optionor
  sub 

  and Evolving Gold Corporation, as optionee 


The Golden Arc Claims:  

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



(1) The acronym, “Arctic” in this column means Arctic Precious Metals Inc. 









Schedule “B” 

      This is Schedule "B" to the Option
  and Royalty Agreement dated December 3, 2004 

  between Golden Sands Exploration Inc., as optionor, AHL Holdings Ltd. as optionor
  sub 

  and Evolving Gold Corporation, as optionee 


The Underlying Additional Claims: 

	 Claim Name  	 BLM  
 Serial No.  	 Registered  
 Owner 
    	 Location  
 Date  	 Status  	 Expiry Date 
 (1) 
	 WM 101 to and  
 including WM 120  	 No Serial  
 No. Yet  	 To Be 
 Optionor 
 Sub 	 November 10, 2004  	 Staked but not yet filed 	 September 1, 2005 
	 WM 121  	 No Serial  
 No. Yet  	 To Be 
 Optionor 
 Sub 	 November 13, 2004  	 Staked but not yet filed 	 September 1, 2005 
	 WM 122 to and  
 including WM 125  	 No Serial  
 No. Yet  	 To Be 
 Optionor 
 Sub 	 November 10, 2004  	 Staked but not yet filed 	 September 1, 2005 




	 	 (1)	 The unpatented mining claims will become void in
        90 days from the date of location if the filing and recording are not
        timely. If they are timely, the claims will be in good standing until
        September 1, 2005. If the federal annual maintenance fees for the assessment
        year 2005 to 2006 are paid on or before September 1, 2005, the claims
        will remain in good standing until September 1, 2006. Otherwise, the claims
        will become void on September 1, 2005. 













Schedule “C” 

      This is Schedule "C" to the Option
  and Royalty Agreement dated December 3, 2004 

  between Golden Sands Exploration Inc., as optionor, AHL Holdings Ltd. as optionor
  sub 

  and Evolving Gold Corporation, as optionee 


The Underlying Option Agreement 









Schedule “D” 

      This is Schedule "D" to the Option
  and Royalty Agreement dated December 3, 2004

  between Golden Sands Exploration Inc., as optionor, AHF Holdings Ltd., as optionor
  sub 

  and Evolving Gold Corporation, as optionee 


Map of the Claims