Untitled Document


EXHIBIT 10.2 

 SECURED CONVERTIBLE PROMISSORY NOTE
  

	 $650,000 
	May 28, 2004


       FOR
  VALUE RECEIVED,
  the undersigned, WITS
  BASIN PRECIOUS MINERALS INC.,
  a Minnesota corporation (the “Maker”), hereby promises to pay to the
  order of Pandora Select Partners L.P., a British Virgin Islands limited partnership,
  or its assigns (the “Payee”), at such place as the Payee may designate
  in writing, the principal sum of Six Hundred Fifty Thousand Dollars ($650,000),
  under the terms set forth herein. 

 1.     
   Interest.
        The
  unpaid principal balance hereof from time to time outstanding shall bear interest from the date hereof at the rate of ten percent (10%)
  per annum. 

 2.     
   Payment.
        The
  principal and interest hereof is payable as follows: 

      (a)
  Payments of $5,416.67 in cash of interest only are payable in arrears on June
  28, July 28 and August 28, 2004; and 

      (b)
  Commencing on September 28, 2004, and on the 28th day of each of the following
  14 months, Maker shall pay amortized principal and interest on this Note of
  $46,278.15 (the “Monthly Scheduled Payment”).

 3.     
   Optional
  Payment in Stock.

      (a)
  In lieu of making a cash payment under subsection 2(b) above, Maker may pay
  the Monthly Scheduled Payment, or any portion thereof, but only to the extent
  permitted by this subsection (a), by the issuance of shares of its $0.01 par
  value common stock (the “Common Stock”), the per-share value of which
  is computed as provided in Subsection (b) below. Despite the foregoing, the
  number of shares of Common Stock which may be issued to pay all or any portion
  of a particular Monthly Scheduled Payment may not exceed the lesser of (i) 10%
  of the aggregate number of traded shares of Common Stock reported on the OTC
  Bulletin Board as reported by bigcharts.com (or if this service is discontinued,
  such other reporting service acceptable to Payee) for the 30 trading days immediately
  preceding such Monthly Scheduled Payment due or (ii) the greatest number of
  shares of Common Stock which, when added to the number of shares of Common Stock
  "Beneficially Owned" (within the meaning set forth in subsection (d) below)
  by Payee, would not cause Payee to Beneficially Own more than 4.99% of the Maker’s
  outstanding Common Stock. In computing under this subsection (a) the aggregate
  number of traded shares during any time period, the Maker shall exclude (i)
  shares sold by or for the account or at the direction of the Maker, officers
  or directors of Maker or any members of their immediate families or any affiliates
  of Maker and (ii) shares determined solely by Payee (for which Payee shall so
  inform the Maker in writing) to represent unlawful or potentially unlawful sales.
  Maker may pay the Monthly Scheduled Payment, or any portion thereof, by the
  issuance of Common Stock only if, at the time of such payment, Maker has in
  effect a registration statement on Form S-2 or SB-2 with the U.S. Securities
  and Exchange Commission (the “SEC”) and applicable state securities
  laws covering the original issuance of such shares by the Maker or the resale
  of such shares by the Payee (the “Registration Statement”). 



      (b)
  The per-share value of the Common Stock as of a specified Scheduled Monthly
  Payment date for the purposes of this Section 3 is 85% (rounded to the nearest
  $.01) of the average (rounded to the nearest $.01) of the high closing bid prices
  of Maker’s Common Stock on the OTC Bulletin Board as reported by bigcharts.com
  (or if this service is discontinued, such other reporting service acceptable
  to Payee) for the 20 trading days immediately preceding the particular Scheduled
  Monthly Payment date. 

      (c)
  Payment by Common Stock shall be deemed to be made by Maker by giving written
  notice to the Payee of the number of shares being issued in such payment, and
  the Maker’s calculation of the per-share market value under subsection
  (b) above; provided that certificates representing those shares are delivered
  to Payee within 20 days of the due date of the Scheduled Monthly Payment. 

 4.     
   Conversion.

      (a)
  At any time while any portion of the principal or interest of this Note is outstanding
  (including during the notice period prior to any optional cash prepayment by
  the Maker), the Payee may give the Maker written notice (the “Payee’s
  Notice”) of its intention to convert all or any portion of the outstanding
  principal and/or accrued but unpaid interest on this Note into shares of the
  Maker’s Common Stock based on a conversion rate per share computed below
  (the “Conversion Rate”). Upon receipt of the Payee’s notice,
  the Maker shall immediately cause certificates representing these shares to
  be delivered to Payee within 20 days of, and Payment shall be deemed to have
  been made on, the date of such notice. 

      The
  "Conversion Rate" is the average (rounded to the nearest $.01) of the high closing
  bid prices of Maker’s Common Stock on the OTC Bulletin Board as reported
  by bigcharts.com (or if this service is discontinued, such other reporting service
  acceptable to Payee) for the 30 trading days immediately following the effective
  date with the SEC of Maker’s Registration Statement on Form S-2, SEC File
  No. 333-110831 (the “S-2 Registration Statement”). However, the Conversion
  Rate shall not be lower than $0.35 or higher than $0.65 per share. If by the
  date of the Payee’s Notice, the SEC has not declared the S-2 Registration
  Statement effective, then the Conversion Rate is $0.35 per share. 

      (b)
  The Conversion Rate shall be adjusted proportionally for any subsequent stock
  dividend or split, stock combination or other similar recapitalization, reclassification
  or reorganization of or affecting Maker’s Common Stock. In case of any
  consolidation or merger to which the Maker is a party other than a merger or
  consolidation in which the Maker is the continuing corporation, or in case of
  any sale or conveyance to another corporation of the property of the Maker as
  an entirety or substantially as an entirety, or in the case of any statutory
  exchange of securities with another corporation (including any exchange effected
  in connection with a merger of a third corporation into the Maker), then instead
  of receiving shares of Maker’s Common Stock, Payee shall have the right
  thereafter to receive the kind and amount of shares of stock and other securities
  and property which the Payee would have owned or have been entitled to receive
  immediately after such consolidation, merger, statutory exchange, sale or conveyance
  had the same portion of this Note been paid or converted immediately prior to
  the effective date of such consolidation, merger, statutory exchange, sale or
  conveyance and, in any such case, if necessary, appropriate adjustment shall
  be made in the application of the provisions set forth in this Section with
  respect to the rights and interests thereafter of the Payee, to the end that
  the provisions set forth in this Section shall thereafter correspondingly be
  made applicable, as nearly as may reasonably be, in relation to any shares of
  stock and other securities and property thereafter deliverable in connection
  with this Note. The provisions of this subsection shall similarly apply to successive
  consolidations, mergers, statutory exchanges, sales or conveyances. 

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      (c)
  Despite anything above to the contrary, the Payee may not convert this Note
  into Common Stock under this Section 4 during the time period and to the extent
  that the shares of Maker’s Common Stock that the Payee could acquire upon
  the conversion would cause Payee’s Beneficial Ownership of Maker’s
  Common Stock to exceed 4.99% of Maker’s outstanding Common Stock; provided,
  however, that the limitations on the right to exercise a warrant for Common
  Stock being issued to Payee in connection with this Note (the “Warrant”),
  as provided by such Warrant, shall first reduce Payee’s Beneficial Ownership
  of Maker’s Common Stock before limitation of Payee’s conversion rights
  hereunder; and provided further, that the limitation of Payee’s conversion
  rights hereunder shall first reduce Payee’s Beneficial Ownership before
  limiting the number of shares that Maker may issue to Payee as payment hereunder
  pursuant to Section 3(a) above. The Payee will, at the request of Maker, from
  time to time, notify Maker of Payee’s computation of Payee’s Beneficial
  Ownership. The parties shall compute Payee’s "Beneficial Ownership" of
  Maker’s Common Stock in accordance with SEC Rule 13d-3. 

      (d)
  If (but only if) the Common Stock shall be listed for trading on the NASDAQ
  System during the term of this Note, then, unless the Maker shall have obtained
  the approval of its voting shareholders to such issuance in accordance with
  the rules of NASDAQ or such other stock market with which the Maker shall be
  required to comply (but only to the extent required thereby), the Maker shall
  not issue shares of Common Stock upon conversion of the Note or in payment of
  interest on the Note, which when added to the number of shares of Common Stock
  previously issued by Maker (i) upon conversion of the Note, (ii) upon exercise
  of the Warrant and (iii) in payment of interest on the Note, would equal or
  exceed 20% of the number of shares of the Maker’s Common Stock which were
  issued and outstanding on the date of issuance (the “Maximum Issuance Amount”).
  In the event that a properly executed conversion notice is received by the Maker
  which would require the Maker to issue shares of Common Stock equal to or in
  excess of the Maximum Issuance Amount, the Maker shall honor such conversion
  request by (i) converting the Note into the number of shares of Common Stock
  stated in the conversion notice but not in excess of the Maximum Issuance Amount,
  and (ii) redeeming the number of shares of Common Stock stated in the conversion
  notice equal to or in excess of the Maximum Issuance Amount in cash at a price
  equal to the then-current fair market value (i.e., the closing bid price of
  Maker’s Common Stock on the NASDAQ System, or if not then traded on the
  NASDAQ System, then on the OTC Bulletin Board as reported by bigcharts.com,
  or if this service is discontinued, such other reporting service acceptable
  to Payee) on the date of redemption. In the event that the Maker shall elect
  to pay interest on this Note in shares of Common Stock which would require the
  Maker to issue shares of Common Stock equal to or in excess of the Maximum Issuance
  Amount, the Maker shall pay interest in shares of Common Stock equal to one
  share less than an amount which would result in the Maker issuing shares equal
  to the Maximum Issuance Amount, and the balance of the interest payment in cash.
  

 5. Contingent Additional
  Interest. In the event that Maker fails by the "Registration Deadline"
  (as that term is defined in Section 5(e) of the Warrant) to obtain effectiveness under the Securities Act of 1933, as amended, and applicable
  state securities laws of the Registration Statement as required by the terms of a Registration Rights Agreement of this date between
  Maker and Payee covering all of the shares of Common Stock issuable as payment under or upon conversion of this Note or upon exercise
  of the Warrant (the “Registration Rights Agreement”), then for each full month thereafter (prorated for partial months) that
  this failure continues (the “Failure Term”), Maker shall pay in arrears in cash, with the next otherwise Scheduled Monthly
  Payment under Sections 2(b) or 3(a) above (or if the last Scheduled Monthly Payment has been made, then on the same day of each succeeding
  month), additional interest (the “Contingent Additional Interest”) equal to the greater of $1,000 or 1% of the outstanding
  principal balance on this Note as of the last day of the prior month. Despite the foregoing, if the Payee consents (as provided under
  the Registration Rights Agreement) to an extension of the effective date of the Registration
  Statement beyond the original Registration Deadline, then the Registration Deadline hereunder shall be extended by a like period. 

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 6.      Security.
       The full and timely payment of this Note (together with the Maker’s obligations under a Purchase
  Agreement of this date between Maker and Payee) shall be secured by a Security Agreement of this date (the “Security Agreement”)
  covering all of Maker’s assets, including all of the membership units owned by Maker in Active Hawk Minerals, LLC, a Minnesota
  limited liability company, and all of the capital stock owned by Maker in Brazmin Ltda., a limited liability company organized under
  the laws of Brazil. The security interest granted under the Security Agreement shall be a first priority security interest subordinate
  to no other secured rights. 

 7.      Optional
  Prepayments.      The Maker may prepay this
  Note, in whole or in part, and in cash, without penalty by Maker upon fifteen days written notice to Payee. Prepayments shall be applied
  first to accrued but unpaid interest and then to principal. 

 8.      Default.
       The occurrence of any one or more of the following events shall constitute an event of default, upon which
  Payee may declare the entire principal amount of this Note, together with all accrued but unpaid interest, to be immediately due and
  payable in cash (despite provisions otherwise for payment with Common Stock): 

      (a)
  The Maker shall fail
  to make any required payment of principal or interest (including Contingent
  Additional Interest) when due, and in its proper form (i.e., in cash, in stock
  or by a combination thereof), and such failure shall continue through five days
  after Payee gives written notice of such failure to Maker. 

      (b)
  The Maker shall be
  in material default of any term or provision of the Purchase Agreement, the
  Security Agreement, the Registration Rights Agreement or the Warrant, and such
  failure shall continue through five days after Payee gives written notice of
  such default to Maker. 

      (c)
  The Maker shall become
  insolvent or any bankruptcy, reorganization, debt arrangement or other proceeding
  under any bankruptcy or insolvency law shall be instituted by or against the
  Maker. 

       (d) Wayne W. Mills shall be in default of any term
  or provision of the Guaranty Agreement being entered into by him on the date hereof for the benefit of the Payee. 

       (e) The Maker shall be in default under a Supplemental
  Note or Supplemental Warrant, if any, issued by Maker to Payee after the date hereof in connection with a Call and Option Agreement
  of this date between such parties. 

       Without limiting the above, the Maker acknowledges
  that payments on the various scheduled due dates in Sections 2, 3(c) and 5 are of essence and that any failure to timely pay any installment
  of principal or interest (whether as permitted by cash, with stock or by a combination thereof and within any permitted grace period
  above) permits Payee to declare this Note immediately due in cash in its entirety without any prior notice of any kind to Maker, except
  for the specific notices provided above. 

 9.      Applicable
  Law.      THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
  OF THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA,
  WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. 

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 10.      Waivers.
       The Maker hereby waives presentment for payment, notice of dishonor, protest and notice of payment and
  all other notices of any kind in connection with the enforcement of this Note. 

 11.      No
  Setoffs.      The Maker shall pay principal
  and interest under the Note without any deduction for any setoff or counterclaim. 

 12.      Costs
  of Collection.     If this Note is not paid
  when due, the Maker shall pay Payee’s reasonable costs of collection, including reasonable attorney’s fees.

	 	WITS BASIN PRECIOUS MINERALS INC.
	 	 	 
	 	By 	 /s/ Mark D. Dacko
	 	 	

	 	 	   Mark D. Dacko, Chief Financial Officer


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