Cardero Resource Corp.: Exhibit 4.11 - Filed by newsfilecorp.com





DATED AS OF JUNE 15, 2010

 

B E T W E E N


CARBON CREEK PARTNERSHIP 

-and -

COALHUNTER MINING CORPORATION

 

_____________________________________

CARBON
CREEK
JOINT VENTURE
AGREEMENT
_____________________________________





INDEX TO JOINT VENTURE
AGREEMENT 
made as of the 15th day of June, 2010

	ARTICLE	PAGE NO.
	ARTICLE 1
      INTERPRETATION 	1
    
	       1.1 	DEFINITIONS 	1 
	       1.2 	INTERPRETATION 	8 
	
      ARTICLE 2 REPRESENTATIONS AND WARRANTIES BY THE CARBON
      CREEK PARTNERSHIP
	8

	       2.1 	REPRESENTATIONS AND WARRANTIES BY THE CARBON CREEK
      PARTNERSHIP 	8 
	       2.2 	REPRESENTATIONS SURVIVE
    	11 
	       2.3 	WAIVER
    	11

	ARTICLE 3 REPRESENTATIONS
      AND WARRANTIES BY COALHUNTER 	11 
	       3.1 	REPRESENTATIONS AND WARRANTIES BY COALHUNTER 	11

	       3.2 	REPRESENTATIONS SURVIVE
    	14 
	       3.3 	WAIVER
    	15

	ARTICLE 4 ESTABLISHING THE
      CARBON CREEK JOINT VENTURE 	15 
	       4.1 	PAYMENTS TO
      THE CARBON CREEK PARTNERSHIP 	15

	       4.2 	ISSUANCE OF SECURITIES
    	15 
	       4.3 	VOTING TRUST
      AGREEMENT 	16

	       4.4 	APPOINTMENT OF DIRECTOR
    	16 
	       4.5 	CO-OWNER
      INTERESTS 	16

	       4.6 	CARBON CREEK PARTNERSHIP
      CARRIED INTEREST 	16 
	       4.7 	CO-OWNERS’
      ACCESS AND RIGHT TO INFORMATION 	16

	       4.8 	USE OF INTEREST IN PREMISES
      	16 
	       4.9 	DIVISION OF
      PRODUCTION 	17

	       4.10 	JOHNSON LICENCES 	17 
	       4.11 	COALHUNTER
      LICENCES 	17

	       4.12 	CARBON CREEK PARTNERSHIP
      LICENSES 	17 
	       4.13 	CARBON CREEK
      COAL LEASE 	17

	ARTICLE 5 RELATIONSHIP OF
      THE PARTIES 	18 
	       5.1 	SEVERAL
      OBLIGATIONS 	18

	       5.2 	CO-OWNERS’ RELATIONSHIP
    	18 
	       5.3 	INDEMNIFICATION 	18

	       5.4 	OTHER BUSINESS ACTIVITIES OF
      CO-OWNERS 	18 
	       5.5 	OPERATION
      WITH OTHER PROPERTIES 	18

	       5.6 	SINGLE OPERATION WITH PEACE
      RIVER PARTNERSHIP LANDS 	19 
	       5.7 	COMMINGLING
      	19

	       5.8 	ACQUISITION OF ADDITIONAL
      COAL INTERESTS (AREA OF INTEREST) 	20 
	       5.9 	SPECIFIC
      COAL INTERESTS 	20

	       5.10 	ABANDONMENT 	21 
	       5.11 	MANAGER AS
      INDEPENDENT CONTRACTOR 	21

	ARTICLE 6 MANAGEMENT
      COMMITTEE 	21 
	       6.1 	ESTABLISHMENT/MEETINGS 	21

	       6.2 	COMPOSITION 	21 
	       6.3 	APPOINTMENT
      OF MEMBERS AND ALTERNATES 	21

	       6.4 	CHAIRPERSON 	22 
	       6.5 	VOTING
    	22

	       6.6 	NOTICE OF ANNUAL MEETINGS
      	22 
	       6.7 	NOTICE OF
      SPECIAL MEETINGS 	22

	       6.8 	QUORUM 	22 


-i-





	       6.9 	MINUTES OF
      MEETINGS 	23

	       6.10 	RESOLUTIONS IN WRITING
    	23 
	       6.11 	MISCELLANEOUS 	23

	ARTICLE 7 FEASIBILITY
      STUDY 	23 
	       7.1 	PREPARATION
      OF FEASIBILITY STUDY 	23

	       7.2 	REQUEST FOR FEASIBILITY
      STUDY 	23 
	       7.3 	APPROVAL OF
      FEASIBILITY STUDY 	24

	       7.4 	NOTICE OF PRODUCTION
      DECISION 	24 
	ARTICLE 8
      MANAGER 	24
      
	       8.1 	ENGAGEMENT OF MANAGER
	24 
	       8.2 	AUTHORITY
      AND DUTIES 	24

	       8.3 	WORKING FUND 	27 
	       8.4 	EXPENDITURES
      WITHOUT APPROVAL 	28

	       8.5 	MANAGER’S RECOVERY OF COSTS
      	28 
	       8.6 	ALTERNATE
      WORK PLAN 	29

	       8.7 	REMOVAL OF MANAGER 	29 
	ARTICLE 9
      TECHNICAL REPORTS 	31
      
	       9.1 	TECHNICAL REPORTS 	31 
	ARTICLE 10
      ENCUMBRANCE AND TRANSFER OF THE INTEREST OF A CO-OWNER 	31
      
	       10.1 	ENCUMBRANCE OF THE INTEREST
      OF A CO-OWNER; PROHIBITION AGAINST CREATION OF ROYALTIES 	31 
	       10.2 	TRANSFER OF
      INTEREST 	32

	       10.3 	IMPROPER TRANSFER IS VOID
      	35 
	ARTICLE 11
      WITHDRAWAL 	35
      
	       11.1 	ELECTION TO WITHDRAW 	35 
	       11.2 	RIGHTS AND
      OBLIGATIONS OF WITHDRAWING CO-OWNER 	36

	ARTICLE 12 DEFAULT OF
      CO-OWNER 	36 
	       12.1 	EVENT OF
      DEFAULT 	36

	       12.2 	ADDITIONAL REMEDIES 	38 
	ARTICLE 13
      ACCESS TO PREMISES AND INFORMATION 	38
      
	       13.1 	INSPECTION 	38 
	       13.2 	CARBON CREEK
      COAL INFORMATION 	38

	       13.3 	REPORTS 	39 
	       13.4 	PROPRIETARY
      INFORMATION 	39

	ARTICLE 14 PARTITION
      	39 
	       14.1 	WAIVER OF
      RIGHT OF PARTITION 	39

	ARTICLE 15 FORCE
      MAJEURE 	39 
	       15.1 	FORCE
      MAJEURE 	39

	ARTICLE 16 TERMINATION
      	40 
	       16.1 	TERM 	40

	       16.2 	EFFECT OF TERMINATION
	40 
	ARTICLE 17
      NON-DISCLOSURE 	40
      
	       17.1 	NON-DISCLOSURE 	40 
	       17.2 	CONFIDENTIAL
      INFORMATION 	40
  


 -ii-  









	       17.3
      	PUBLICITY
      	41
      
	       17.4
      	P.
      BURNS PRIVACY 	41
      
	ARTICLE
      18 RECLAMATION FUND 	41
      
	       18.1
      	RECLAMATION
      FUND 	41
      
	       18.2
      	ANNUAL
      REVIEW 	42
      
	       18.3
      	SUBMISSIONS
      BY CO-OWNERS 	42
      
	ARTICLE
      19 INDEMNITIES 	42
      
	       19.1
      	INDEMNIFICATION
      BY PARTNERSHIP 	42
      
	       19.2
      	INDEMNIFICATION
      BY COALHUNTER 	43
      
	ARTICLE
      20 NOTICES 	43
      
	       20.1
      	NOTICES
      	43
      
	ARTICLE
      21 GENERAL 	44
      
	       21.1
      	FURTHER
      ASSURANCES 	44
      
	       21.2
      	AMENDMENTS
      	44
      
	       21.3
      	BUSINESS
      DAYS 	45
      
	       21.4
      	ASSIGNMENTS
      BY CO-OWNERS 	45
      
	       21.5
      	SCHEDULES
      	45
      
	       21.6
      	MAP
      	45
      
	       21.7
      	COUNTERPARTS
      	45
      
	       21.8
      	GOVERNING
      LAW 	45
      
	       21.9
      	TIME
      OF ESSENCE 	45
      
	       21.10
      	ENTIRE
      AGREEMENT 	45
      
	       21.11
      	SEVERABILITY/ILLEGALITY
      	46
      
	       21.12
      	REMEDIES
      CUMULATIVE 	46
      
	       21.13
      	ENUREMENT
      	46
      


SCHEDULE “A” - THE PROPERTY 
SCHEDULE “B” – MAP
SCHEDULE
“C” - CALCULATION OF NET PROCEEDS

                                APPENDIX
C-1
                                APPENDIX
C-2 
SCHEDULE “D” - VOTING TRUST AGREEMENT

-iii-




CARBON CREEK JOINT VENTURE AGREEMENT

THIS AGREEMENT is made as of the 15th day of June, 2010.

BETWEEN:


CARBON CREEK
PARTNERSHIP, a partnership existing under the laws of Alberta between P.
Burns Carbon Creek Coal Corporation and P. Burns Partners Limited, having an
office at Suite 620, 5920 Macleod Trail SW, Calgary, Alberta, T2H OK2

(hereinafter referred
to as the “Carbon Creek Partnership”)

OF THE FIRST PART


AND:


COALHUNTER MINING
CORPORATION, a body corporate incorporated under the laws of British
Columbia and having its registered office at Suite 1500 — 1055 West Georgia
Street, Vancouver, British Columbia, V6E 4N7

(hereinafter referred
to as “Coalhunter”)


OF THE SECOND PART


WHEREAS:


A. the Carbon Creek Partnership and Coalhunter wish to
associate themselves in a Joint Venture (hereinafter defined) to own the
Premises (hereinafter defined) as tenants in common; and

B. the Carbon Creek Partnership and Coalhunter have agreed to
participate in a Common Operation for Exploration, Development and Production
(all as hereinafter defined) on the Premises on and subject to the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter contained, the parties agree as
follows:

ARTICLE 1
INTERPRETATION


1.1 Definitions


In this Agreement, the following terms shall have the meanings
specified below:




- 2 -

	 	(a) 	
      “Affiliate” means any individual, body corporate,
      limited liability company, partnership, joint venture, firm or other form
      of enterprise which directly or indirectly Controls or is Controlled by or
      is under common Control with a Co-owner;

	 	 	 
	 	(b) 	
      “Area of Interest” means the area which lies
      within twenty-five (25) kilometres of the boundaries of any of the Licence
      Applications as they exist on the date hereof, excluding the area covered
      by the Peace River Partnership Lands;

	 	 	 
	 	(c) 	
      “Auditor” means the external auditors appointed by
      the Manager which shall be accredited by the Canadian Institute of
      Chartered Accountants and fully independent and acting at arm’s length to
      the Co-Owners;

	 	 	 
	 	(d) 	
      “Business Day” means a day other than a Saturday,
      Sunday or a day on which banks in Vancouver, British Columbia are
      generally authorized or obligated by Law to close;

	 	 	 
	 	(e) 	
      “Capital Cost” means any cost of the Common
      Operation paid by the Manager under this Agreement which would constitute
      a capital expenditure, as distinguished from a maintenance and repair
      expenditure, in accordance with generally accepted accounting principles
      in Canada;

	 	 	 
	 	(f) 	
      “Carbon Creek Coal Lease” means a coal lease over
      the Peace River Partnership Lands which may be granted to Coalhunter under
      the terms of the Coal Lease Option Agreement;

	 	 	 
	 	(g) 	
      “Carbon Creek Joint Venture” means the joint
      venture formed under and governed by this Agreement;

	 	 	 
	 	(h) 	
      “Carbon Creek Joint Venture Letter Agreement”
      means the letter agreement dated May 11, 2010 between Coalhunter and
      Resources in respect of the Carbon Creek Joint Venture;

	 	 	 
	 	(i) 	
      “Carbon Creek Partnership Licences” means any coal
      licences which may be issued to the Carbon Creek Partnership pursuant to
      the Resources Applications;

	 	 	 
	 	(j) 	
      “Carried Interest” means the carried interest of
      the Peace River Partnership in the Carbon Creek Joint Venture as provided
      in section 4.5, section 4.6 and Schedule “C” hereto;

	 	 	 
	 	(k) 	
      “coal” includes lignite, sub-bituminous coal,
      bituminous coal and anthracite;

	 	 	 
	 	(l) 	
      “Coalhunter Application” means the coal licence
      application submitted by Coalhunter to the MEMPR described in Part C of
      Error! Reference source not found.Schedule “A” hereto;

	 	 	 
	 	(m) 	
      “Coalhunter Licences” means any coal licences or
      other Coal Tenures which may be issued to Coalhunter pursuant to the
      Coalhunter Application;







- 3 -

	 	(n) 	
      “Coal Interest” means any coal licence
      application, coal licence, coal lease or other interest in a coal
      property, or any direct or indirect right or interest therein or relating
      thereto;

	 	 	 
	 	(o) 	
      “Coal Lease Option Agreement” means a coal lease
      option agreement dated as of June 15, 2010 between the Peace River
      Partnership and Coalhunter pursuant to which the Carbon Creek Coal Lease
      over the Peace River Partnership Lands may be granted to
  Coalhunter;

	 	 	 
	 	(p) 	
      “Coal Leases” means the Crown Coal Leases and the
      Carbon Creek Coal Lease;

	 	 	 
	 	(q) 	
      “Coal Licence Applications” means the coal licence
      applications more particularly described in Schedule “A” attached hereto
      and, apart from the Coalhunter Licence Application, shown on the map
      attached as Schedule “B”;

	 	 	 
	 	(r) 	
      “Coal Licences” means the coal licences which may
      be issued by the MEMPR pursuant to the Coal Licence Applications, and
      including any Coal Tenures into which the same may be converted, but not
      including any coal licences abandoned pursuant to section 5.10 of this
      Agreement;

	 	 	 
	 	(s) 	
      “Coal Tenures” means a coal licence, coal lease or
      other form of tenure to a coal property;

	 	 	 
	 	(t) 	
      “Common Account” means the books of account of the
      Common Operation kept by the Manager for the Co-Owners in accordance with
      accounting procedures approved by the Management Committee in conformity
      with generally accepted accounting principles in Canada;

	 	 	 
	 	(u) 	
      “Common Operation” means the performance of
      Exploration, Development and Production on or for the Premises for the
      Co-Owners as tenants in common by the Manager acting under the direction
      and control of the Management Committee to the extent provided by this
      Agreement;

	 	 	 
	 	(v) 	
      “Control” means the right to the exercise,
      directly or indirectly, of greater than fifty percent (50%) of the voting
      rights attributable to the shares or other ownership interests in any body
      corporate, limited liability company, partnership, joint venture, firm of
      other enterprise;

	 	 	 
	 	(w) 	
      “Co-Owner” means the owner of an Interest and
      “Co-Owners” has a corresponding meaning. At the date hereof, the Co-Owners
      are the Carbon Creek Partnership and Coalhunter;

	 	 	 
	 	(x) 	
      “Co-Owner Group” means any Co-Owner at the date
      hereof together with all permitted assignees or transferees (other than
      the other Co-Owner at the date hereof) of any portion of such Co-Owner’s
      Interest;

	 	 	 
	 	(y) 	
      “Crown Coal Leases” means any coal leases which
      may be issued by the MEMPR in respect of the Coal Licence Applications,
      and including any Coal Tenures into which the same may be converted, but not including any Crown
coal leases abandoned pursuant to section 5.10 of this Agreement;







- 4 -

	 	(z) 	
      “Current Litigation” means:

	 	 	 	 
	 		(i) 	
      the Petition brought by Johnson in the B.C. Supreme
      Court, Vancouver Registry, on January 10, 2007 under No. S-070190 against
      Resources and other parties (the “First Johnson Petition”);

	 	 	 	 
	 		(ii) 	
      the Petition brought by Johnson in the B.C. Supreme
      Court, Vancouver Registry on May 7, 2007 under No. S-073118 against
      Resources and other parties (the “Second Johnson Petition”); and

	 	 	 	 
	 		(iii) 	
      the Petition brought by Resources in the B.C. Supreme
      Court, Vancouver Registry, on September 5, 2006 under No. S-065691 against
      Johnson and other parties (the “Resources Petition”);

	 	 	 	 
	 	(aa) 	
      “Development” means all work that may reasonably
      be required in connection with the preparation of a mine for operation on
      or related to the Premises and including the construction and installation
      of roads, mill, beneficiation or other treatment facilities and the
      procurement of materials, tools, equipment and supplies;

	 	 	 	 
	 	(bb) 	
      “Encumbrances” means all interests, mortgages,
      charges, royalties, security interests, liens, encumbrances, actions,
      claims, demands and equities of any nature whatsoever or however arising
      and any rights or privileges capable of becoming any of the
    foregoing;

	 	 	 	 
	 	(cc) 	
      “Environmental Harm” means any harm, damage,
      degradation or adverse effect on the environment;

	 	 	 	 
	 	(dd) 	
      “Environmental Laws” means all Laws now or
      hereafter in force relating in any way to the environment, occupational
      health and safety or transportation of dangerous goods;

	 	 	 	 
	 	(ee) 	
      “Exploration” means the activity, operations or
      work performed in ascertaining or attempting to ascertain the existence,
      location, quality or quantity of coal deposits on or related to the
      Premises, including the preparation of any Feasibility Study;

	 	 	 	 
	 	(ff) 	
      “Feasibility Study” means a report or reports
      prepared and submitted to the Management Committee in accordance with
      section 7.1 or 7.2 containing a description and analysis of the methods
      and costs of bringing into production and operation a mine on the Premises
      and associated facilities related thereto, which report, in the opinion of
      the person commissioning same, would be in a form acceptable to a
      financial institution for the purposes of considering whether or not to
      provide financing for a mine on the Premises and associated facilities
      related thereto and, without limiting the generality of the foregoing,
      shall include:







- 5 -

	 	(i) 	
      the estimated recoverable reserves of coal and the
      estimated average grade and tonnage thereof which may be produced from the
      Premises;

	 	 	 
	 	(ii) 	
      procedures for developing, mining, and producing coal
      from the Premises;

	 	 	 
	 	(iii) 	
      the nature and extent of the machinery, equipment and
      other facilities proposed to be acquired for the purposes of producing and
      marketing coal from the Premises, which may include mill or beneficiation
      or other facilities for processing such coal if in the judgment of the
      person commissioning the Feasibility Study the size, extent, and location
      of the deposit(s) of coal on the Premises which will be available for
      processing in such processing facilities appear to make such processing
      facilities feasible, in which event such person shall also include a
      preliminary design for any such processing facilities in the Feasibility
      Study;

	 	 	 
	 	(iv) 	
      the total costs, including capital budget, which the
      person commissioning the Feasibility Study reasonably estimates will be
      required to purchase, construct and install all machines and equipment
      referred to in the preceding subparagraph, including a schedule of the
      timing of the capital requirements for such purchases;

	 	 	 
	 	(v) 	
      the estimated costs of decommissioning, reclamation and
      related environmental costs, both pre and post mine closure; and

	 	 	 
	 	(vi) 	
      an economic feasibility report, taking into account
      subparagraphs (i) to (v) above and all other matters the person
      commissioning the Feasibility Study deems relevant and material. Such
      economic feasibility report shall include an estimate of the financial
      return for the mine based on the estimated market price of the Products,
      as determined by the person commissioning the Feasibility
  Study;




	 	(gg) 	
      “Interest” of a Co-Owner or a Co-Owner Group means
      the undivided beneficial interest, expressed as a percentage, of that
      Co-Owner or Co-Owner Group in and to the Premises. At the date hereof, the
      Interest of Coalhunter is seventy-five percent (75%) and the Interest of
      the Carbon Creek Partnership is twenty-five percent (25%);

	 	 	 
	 	(hh) 	
      “Johnson” means Alan Arthur Johnson of Calgary,
      Alberta;

	 	 	 
	 	(ii) 	
      “Johnson Application” means the coal licence
      application submitted by Johnson to the MEMPR described in Part A of
      Schedule “A” hereto;

	 	 	 
	 	(jj) 	
      “Johnson Licenses” means any coal licences or
      other Coal Tenures which may be issued to Johnson pursuant to the Johnson
      Application;

	 	 	 
	 	(kk) 	
      “Laws” means all federal, provincial, territorial,
      municipal or local statutes, regulations and by-laws applicable to the
      parties hereto or to the Coal Licence Applications, any Coal Licences, any
      Crown Coal Leases, the Carbon Creek Coal Lease or any other Coal Tenure forming part of the Premises or
to any activities thereon, including all orders, notices, rules, decisions,
codes, guidelines, policies, directions, permits, approvals, licenses and
similar authorizations issued, rendered or imposed by any level of government
including any ministry, department or administrative or regulatory agency or
authority, including the common law and principles of equity;







- 6 -



	 	(ll) 	
      “Legal Proceedings” means any litigation, action,
      application, suit, investigation, hearing, claim, deemed complaint,
      grievance, civil, administrative, regulatory, criminal or arbitration
      proceeding or other similar proceeding, before or by any court or other
      tribunal and includes any appeal or review thereof and any application for
      leave for appeal or review;

	 	 	 
	 	(mm) 	
      “Losses” means claims, losses, demands, judgments,
      liabilities, expenses, damages, fines, charges and costs including legal
      costs incurred on a solicitor and own client basis;

	 	 	 
	 	(nn) 	
      “Management Committee” means the committee
      appointed in accordance with Article 6 of this Agreement;

	 	 	 
	 	(oo) 	
      “Manager” means the person designated as Manager
      in section 8.1 hereof or otherwise engaged by the Co-Owners to conduct the
      Common Operation;

	 	 	 
	 	(pp) 	
      “MEMPR” means the British Columbia Ministry of
      Energy, Mines and Petroleum Resources;

	 	 	 
	 	(qq) 	
      “Operating Cost” means, with the exception of
      Capital Costs, any cost of the Common Operation paid by the Manager
      hereunder including but not limited to all costs described in section 8.5
      of this Agreement;

	 	 	 
	 	(rr) 	
      “P. Burns Entities” means P. Burns Carbon Creek
      Coal Corporation, P. Burns Partners Limited, the Carbon Creek Partnership,
      P. Burns Peace River Resources Corporation, the Peace River Partnership
      and Resources;

	 	 	 
	 	(ss) 	
      “Peace River Partnership” means a partnership
      between P. Burns Peace River Resources Corporation and P. Burns Partners
      Limited;

	 	 	 
	 	(tt) 	
      “Peace River Partnership Lands” means District
      Lots 319 to 328 inclusive in the Peace River District of British Columbia
      owned by the Peace River Partnership;

	 	 	 
	 	(uu) 	
      “Premises” means the Coal Licence Applications,
      any Coal Licences once issued, any Crown Coal Leases once issued,
      Coalhunter’s interest in the Carbon Creek Coal Lease once granted by the
      Peace River Partnership, any other Coal Tenures issued in respect of any
      of the foregoing, and all lands, leases, interests in land and coal, mines
      and plants and the production therefrom, buildings, machinery, equipment,
      materials, supplies, inventories of Production, Products, cash, rights,
      powers, privileges, accounts and other property, real or personal, movable
      or immovable, tangible or intangible, of whatever nature or kind hereafter
      acquired, and at any time held, by or for the Co-Owners as tenants in
common under or pursuant to this Agreement;







- 7 -



	 	(vv) 	
      “Production” means the mining, extracting,
      milling, beneficiation, processing, storing, handling or delivering of
      coal and coal by-products discovered on or under the Premises and all
      other activity and work incidental thereto that may reasonably be required
      in connection therewith including the procurement of machinery, equipment,
      materials and supplies but not including any processing of any Products
      not performed on the Premises, whether or not the same is performed by a
      Co-Owner, and shall be deemed to include periods during which operations
      are temporarily suspended or curtailed in the normal course of business,
      and periods during which reclamation and remediation are carried
    out;

	 	 	 
	 	(ww) 	
      “Production Decision” means a decision made by the
      Management Committee to establish and bring into production a mine on the
      Premises substantially in accordance with a Feasibility Study;

	 	 	 
	 	(xx) 	
      “Products” means the products referred to in
      section 4.9;

	 	 	 
	 	(yy) 	
      “Proportionate Share” of a Co-Owner means the
      percentage share equal to the Interest of that Co-Owner, being
      seventy-five percent (75%) in the case of Coalhunter and twenty-five
      percent (25%) in the case of the Carbon Creek Partnership;

	 	 	 
	 	(zz) 	
      “Representatives” means the directors, employees,
      auditors, legal counsel, professional advisors and other authorized
      representatives of a party and any of its contractors and
      subcontractors;

	 	 	 
	 	(aaa) 	
      “Resources” means P. Burns Resources Limited, an
      Alberta corporation;

	 	 	 
	 	(bbb) 	
      “Resources Applications” means the coal licence
      applications submitted by Resources to the MEMPR described in Part B of
      Schedule “A” hereto;

	 	 	 
	 	(ccc) 	
      “Resources Licences” means any coal licences or
      other Coal Tenures which may be issued to Resources pursuant to the
      Resources Applications;

	 	 	 
	 	(ddd) 	
      “Voting Trust Agreement” means a voting trust
      agreement between the Carbon Creek Partnership and Coalhunter in the form
      attached as Schedule “D”;

	 	 	 
	 	(eee) 	
      “Work Plan” means a plan for Exploration,
      Development or Production submitted by the Manager for the approval of
      and, if desired, modification by the Management Committee which describes
      the work proposed to be performed, sets forth estimates of Capital Costs
      and Operating Costs to be paid in carrying out the work, including the
      cost of the acquisition of real or personal property, or any interest
      therein, and specifies an estimate of the period of time required to
      perform the work; and

	 	 	 
	 	(fff) 	
      “Working Fund” means the fund referred to in
      section 8.3.







- 8 -


1.2 Interpretation

For purposes of this Agreement:

	 	(a) 	
      headings are for convenience of reference only and are
      not intended to interpret, define or limit the scope of this Letter or any
      provision hereof;

	 	 	 
	 	(b) 	
      the singular of any term includes the plural and vice
      versa, and use of any term is generally applicable to either gender and
      where applicable, a body corporate, firm or other entity;

	 	 	 
	 	(c) 	
      the word “including” is not limiting whether or not
      non-limiting language (such as “without limitation” or “but not limited
      to” or words of similar import) is used with reference thereto;
  and

	 	 	 
	 	(d) 	
      unless otherwise indicated, all dollar references are to
      Canadian dollars.



ARTICLE 2
REPRESENTATIONS AND WARRANTIES BY THE
CARBON CREEK 
PARTNERSHIP

2.1 Representations and Warranties by the Carbon Creek
Partnership

The Carbon Creek Partnership represents and warrants to
Coalhunter that:

	 	(a) 	
      it is a valid and subsisting partnership duly formed
      under the Laws of Alberta and has full power and authority to execute and
      deliver this Agreement and to observe and perform its covenants and
      obligations hereunder and has taken all necessary proceedings and obtained
      all necessary approvals in respect thereof and, upon execution and
      delivery of this Agreement by it, this Agreement shall constitute a legal,
      valid and binding obligation of the Carbon Creek Partnership enforceable
      against it in accordance with its terms, except that:

	 	 	 	 
	 		(i) 	
      enforceability may be limited by bankruptcy, insolvency
      or other Laws affecting creditors’ rights generally;

	 	 	 	 
	 		(ii) 	
      equitable remedies, including the remedies of specific
      performance and injunctive relief, are available only in the discretion of
      the applicable court;

	 	 	 	 
	 		(iii) 	
      a court is not required to treat as conclusive, final or
      binding those certificates and determinations which this Agreement states
      are to be so treated;

	 	 	 	 
	 		(iv) 	
      a court may stay proceedings before it by virtue of
      equitable or statutory powers; and







- 9 -

	 	(v) 	
      rights of indemnity and contribution hereunder may be
      limited under applicable Laws;




	 	(b) 	
      neither the execution of this Agreement nor the
      consummation of the transactions contemplated hereby conflict with, result
      in a breach of or accelerate the performance required by any agreement to
      which it is a party;

	 	 	 
	 	(c) 	
      neither the execution of this Agreement nor the
      consummation of the transactions contemplated hereby, result in a breach
      of the Laws of any applicable jurisdiction, its constating documents or
      any resolutions of its partners;

	 	 	 
	 	(d) 	
      Schedule “A” attached hereto accurately sets out all of
      the Resources Applications;

	 	 	 
	 	(e) 	
      Resources is the legal and beneficial owner of a one
      hundred percent (100%) interest in the Resources Applications, in each
      case free and clear of all Encumbrances;

	 	 	 
	 	(f) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      once the Resources Licences have been issued, the Carbon Creek Partnership
      will be entitled to become the sole legal and beneficial owner of a one
      hundred percent (100%) interest in the Resources Licences free and clear
      of all Encumbrances;

	 	 	 
	 	(g) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      upon issuance of Coal Licences under the Coal Act (British
      Columbia) in respect of the Resources Applications and their transfer to
      the Carbon Creek Partnership, the Carbon Creek Partnership will have the
      exclusive right to explore, develop and conduct mining operations on the
      area covered by such Coal Licences;

	 	 	 
	 	(h) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      there has been no act or omission by Resources, or to the knowledge of the
      Carbon Creek Partnership by anyone else, that could result by notice or
      lapse of time, or both, in the breach, termination, abandonment,
      forfeiture, relinquishment or other premature termination of the Resources
      Licence Applications or any of Resources’ rights with respect
    thereto;

	 	 	 
	 	(i) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      the Resources Applications are in good standing under the Laws of British
      Columbia up to and including the date hereof, and other than the Current
      Litigation in respect of the Resources Applications, no proceedings have
      been instituted to invalidate or assert an adverse claim or challenge
      against or to the ownership of or title to the Resources Application, nor
      is there any basis therefore, and no other person is entitled to an
      agreement or option to acquire or purchase the Resources Applications or
      any portion thereof, and no person has any royalty or other interest
      whatsoever in production from any part of the Resources
    Applications;

	 	 	 
	 	(j) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      other than the Current Litigation, there are no actions, suits or
      proceedings pending or to its knowledge, threatened, against or adversely affecting or which could
adversely affect the Resources Applications before any federal, provincial,
municipal or other governmental authority, court, department, commission, board,
bureau, agency or instrumentality, domestic or foreign, whether or not insured,
and which might involve the possibility of any Encumbrance on the Resources
Applications;







- 10 -



	 	(k) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      all work carried out on the areas covered by the Resources Applications by
      Resources or by anyone else on its behalf, has been carried out in
      compliance with all applicable Laws, including Environmental Laws, and
      neither Resources, nor to the knowledge of the Carbon Creek Partnership
      any other person, has received any notice of any breach of any such Laws
      and it has no knowledge of any environmental liabilities associated with
      the Resources Applications and there are no environmental audits,
      evaluations, assessments or studies relating to the areas covered by the
      Resources Applications;

	 	 	 
	 	(l) 	
      no consent or approval, except as has been obtained, is
      required to permit the execution and delivery of this Agreement by the
      Carbon Creek Partnership, or the performance of its obligations
      hereunder;

	 	 	 
	 	(m) 	
      no representation or warranty made by the Carbon Creek
      Partnership in this Agreement or any statement, schedule, certificate or
      other document delivered by it pursuant to or in connection with this
      Agreement or in connection with any transaction contemplated hereby
      contains any untrue statement of a material fact or omits to state a
      material fact required to be stated herein or therein or necessary to make
      the statements contained herein or therein not misleading;

	 	 	 
	 	(n) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      there is no proceeding initiated by or on behalf of any aboriginal group
      or to which any aboriginal group is legally a necessary party pending or,
      to the knowledge of the Carbon Creek Partnership, threatened by any
      aboriginal group with respect to the areas covered by the Resources
      Applications or with respect to any exploration activities carried out by
      Resources in such areas, and Resources has not engaged in any negotiations
      with any aboriginal group in respect of the Resources Applications or
      entered into any impact and benefits agreement with any aboriginal group
      in respect of the Resources Applications;

	 	 	 
	 	(o) 	
      to the best of the Carbon Creek Partnership’s knowledge,
      Resources and the Carbon Creek Partnership have made full disclosure to
      Coalhunter of all material facts of which the Carbon Creek Partnership and
      Resources have knowledge, relating to the Resources Applications and all
      relevant information that the Carbon Creek Partnership and Resources
      possess which relates to the Resources Applications which could have any
      effect upon Coalhunter determining whether it shall enter into this
      Agreement and this Agreement does not contain any untrue statement by the
      Carbon Creek Partnership of a material fact of which the Carbon Creek
      Partnership has knowledge and the Carbon Creek Partnership has
  not omitted to state in this Agreement a material fact necessary in
order to make the statements contained herein not misleading;







- 11 -



	 	(p) 	
      the Carbon Creek Partnership is current with all material
      filings required to be made in all jurisdictions in which the Carbon Creek
      Partnership exists or carries on any material business and the Carbon
      Creek Partnership is not in default of any filings required to be made
      under applicable securities Laws; and

	 	 	 
	 	(q) 	
      other than the Current Litigation, there are no material
      Legal Proceedings pending or, to the knowledge of the Carbon Creek
      Partnership, threatened against, or relating to the Carbon Creek
      Partnership or affecting the assets of the Carbon Creek Partnership and,
      to the best of the Carbon Creek Partnership’s knowledge, there is no
      reasonable basis for any such proceeding, and there are no judgments
      outstanding against the Carbon Creek Partnership or affecting the Carbon
      Creek Partnership’s assets.



2.2 Representations Survive


The representations and warranties contained in section 2.1 are
provided for the exclusive benefit of Coalhunter and shall survive the execution
of this Agreement, the consummation of the transactions contemplated in this
Agreement and any termination of this Agreement, and Coalhunter shall be
entitled to rely upon the same notwithstanding any independent investigations
Coalhunter may make or could have made at any time, unless specifically waived
by Coalhunter.

2.3 Waiver


The breach of any representation, warranty or covenant
contained in this Agreement may be waived by Coalhunter, either in whole or in
part, at any time without prejudice to Coalhunter’s rights in respect of any
other or continuing breach of the same or any other representation, warranty or
covenant. No waiver by Coalhunter of any breach of any representation, warranty
or covenant shall be binding unless in writing. Any waiver shall be limited to
the specific purpose for which it is given.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES BY
COALHUNTER

3.1 Representations and Warranties by Coalhunter

Coalhunter represents and warrants to the Carbon Creek
Partnership that:

	 	(a) 	
      it is a valid and subsisting corporation duly formed
      under the Laws of British Columbia and has full corporate power and
      authority to execute and deliver this Agreement and to observe and perform
      its covenants and obligations hereunder and has taken all necessary
      proceedings and obtained all necessary approvals in respect thereof and,
      upon execution and delivery of this Agreement by it,
this Agreement shall constitute a legal, valid and binding
obligation of Coalhunter enforceable against it in accordance with its terms,
except that:







- 12 -

	 	(i) 	
      enforceability may be limited by bankruptcy, insolvency
      or other Laws affecting creditors’ rights generally;

	 	 	 
	 	(ii) 	
      equitable remedies, including the remedies of specific
      performance and injunctive relief, are available only in the discretion of
      the applicable court;

	 	 	 
	 	(iii) 	
      a court is not required to treat as conclusive, final or
      binding those certificates and determinations which this Agreement states
      are to be so treated;

	 	 	 
	 	(iv) 	
      a court may stay proceedings before it by virtue of
      equitable or statutory powers; and

	 	 	 
	 	(v) 	
      rights of indemnity and contribution hereunder may be
      limited under applicable Laws;




	 	(b) 	
      neither the execution of this Agreement nor the
      consummation of the transactions contemplated hereby conflict with, result
      in a breach of or accelerate the performance required by any agreement to
      which it is a party;

	 	 	 
	 	(c) 	
      neither the execution of this Agreement nor the
      consummation of the transactions contemplated hereby, result in a breach
      of the Laws of any applicable jurisdiction, its constating documents or
      any resolutions of its partners;

	 	 	 
	 	(d) 	
      Schedule “A” attached hereto accurately sets out the
      Johnson Application and the Coalhunter Application;

	 	 	 
	 	(e) 	
      to the best of Coalhunter’s knowledge, Johnson is the
      legal and beneficial owner of a one hundred percent (100%) interest in the
      Johnson Application, free and clear of all Encumbrances other than the
      Current Litigation;

	 	 	 
	 	(f) 	
      Coalhunter is the legal and beneficial owner of a one
      hundred percent (100%) interest in the Coalhunter Application, free and
      clear of all Encumbrances;

	 	 	 
	 	(g) 	
      to the best of Coalhunter’s knowledge, once the Johnson
      Licences have been issued, Coalhunter will be entitled to become the sole
      legal and beneficial owner of a one hundred percent (100%) interest in the
      Johnson Licences free and clear of all Encumbrances;

	 	 	 
	 	(h) 	
      to the best of Coalhunter’s knowledge, upon issuance of
      Coal Licences under the Coal Act (British Columbia) to Johnson in
      respect of the Johnson Application and the transfer of the Johnson
      Licences to Coalhunter, Coalhunter will have the exclusive right to
      explore, develop and conduct mining operations on the areas covered by
      such Coal Licences;







- 13 -

	 	(i) 	
      upon issuance of Coal Licences under the Coal Act
      (British Columbia) to Coalhunter in respect of the Coalhunter
      Application, Coalhunter will have the exclusive right to explore, develop
      and conduct mining operations on the areas covered by such Coal
      Licences;

	 	 	 
	 	(j) 	
      to the best of Coalhunter’s knowledge, there has been no
      act or omission by Coalhunter, or to its knowledge by anyone else, that
      could result by notice or lapse of time, or both, in the breach,
      termination, abandonment, forfeiture, relinquishment or other premature
      termination of the Johnson Application or the Coalhunter Application or
      any of Coalhunter’s rights with respect thereto;

	 	 	 
	 	(k) 	
      to the best of Coalhunter’s knowledge, the Johnson
      Application and the Coalhunter Application are in good standing under the
      Laws of British Columbia up to and including the date hereof, and other
      than the Current Litigation, no proceedings have been instituted to
      invalidate or assert an adverse claim or challenge against or to the
      ownership of or title to the Johnson Application or the Coalhunter
      Application, nor is there any basis therefore, and no person other than
      Coalhunter is entitled to an agreement or option to acquire or purchase
      the Johnson Licences once issued or any portion thereof, and no person has
      any royalty or other interest whatsoever in production from any part of
      the Johnson Application or the Coalhunter Application;

	 	 	 
	 	(l) 	
      to the best of Coalhunter’s knowledge, other than the
      Current Litigation, there are no actions, suits or proceedings pending or
      to its knowledge, threatened, against or adversely affecting or which
      could adversely affect the Johnson Application or the Coalhunter
      Application before any federal, provincial, municipal or other
      governmental authority, court, department, commission, board, bureau,
      agency or instrumentality, domestic or foreign, whether or not
    insured;

	 	 	 
	 	(m) 	
      to the best of Coalhunter’s knowledge, all work carried
      out on the area covered by the Johnson Application by Johnson, Coalhunter
      or anyone on his behalf and all work carried out on the area covered by
      the Coalhunter Application by Coalhunter or anyone on its behalf has been
      carried out in compliance with all applicable Laws, including
      Environmental Laws, and neither Coalhunter, nor to its knowledge Johnson
      or any other person, has received any notice of any breach of any such Law
      and Coalhunter has no knowledge of any environmental liabilities
      associated with the areas covered by the Johnson Application or the
      Coalhunter Application and there are no environmental audits, evaluations,
      assessments or studies relating to the areas covered by the Johnson
      Application or the Coalhunter Application;

	 	 	 
	 	(n) 	
      no consent or approval, except as has been obtained, is
      required to permit the execution and delivery of this Agreement by
      Coalhunter or the performance of its obligations hereunder;

	 	 	 
	 	(o) 	
      no representation or warranty made by Coalhunter in this
      Agreement or any statement, schedule, certificate or other document
      delivered by it pursuant to or in connection with this Agreement or in
      connection with any transaction contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact required to be stated herein or therein
or necessary to make the statements contained herein or therein not
misleading;







- 14 -



	 	(p) 	
      to the best of Coalhunter’s knowledge, there is no
      proceeding initiated by or on behalf of any aboriginal group or to which
      any aboriginal group is legally a necessary party pending or, to the
      knowledge of Coalhunter, threatened by any aboriginal group with respect
      to the areas covered by the Johnson Application or the Coalhunter
      Application or with respect to any exploration activities carried out by
      Johnson or Coalhunter in such areas, and neither Johnson nor Coalhunter
      has engaged in any negotiations with any aboriginal group in respect of
      the areas covered by the Johnson Application or the Coalhunter Application
      or entered into any impact and benefits agreement with any aboriginal
      group in respect of the areas covered by the Johnson Application or the
      Coalhunter Application;

	 	 	 
	 	(q) 	
      to the best of Coalhunter’s knowledge, Coalhunter has
      made full disclosure to Resources of all material facts of which
      Coalhunter has knowledge relating to the Johnson Application and the
      Coalhunter Application and all relevant information that Coalhunter
      possesses which relates to the Johnson Application or the Coalhunter
      Application which could have any effect upon Resources determining whether
      it shall enter into this Agreement and this Agreement does not contain any
      untrue statement by Coalhunter of a material fact of which Coalhunter has
      knowledge and Coalhunter has not omitted to state in this Agreement a
      material fact necessary in order to make the statements contained herein
      not misleading;

	 	 	 
	 	(r) 	
      Coalhunter is current with all material filings required
      to be made in all jurisdictions in which Coalhunter exists or carries on
      any material business and Coalhunter is not in default of any filings
      required to be made under applicable securities Laws;

	 	 	 
	 	(s) 	
      other than the Current Litigation, there are no material
      Legal Proceedings pending or, to the knowledge of Coalhunter, threatened
      against, or relating to Coalhunter or affecting the assets of Coalhunter
      and, to the best of Coalhunter’s knowledge, there is no reasonable basis
      for any such proceeding, and there are no judgments outstanding against
      Coalhunter or affecting Coalhunter’s assets;

	 	 	 
	 	(t) 	
      upon their issuance, the Coalhunter Shares and the common
      shares underlying the Coalhunter Warrants shall be validly issued and
      outstanding as fully paid and non-assessable shares of Coalhunter and
      registered in the name of the Carbon Creek Partnership; and

	 	 	 
	 	(u) 	
      upon their issuance, the Coalhunter Warrants shall be
      validly created, issued and outstanding, and registered in the name of the
      Carbon Creek Partnership.







- 15 -


3.2 Representations Survive


The representations and warranties contained in section 3.1 are
provided for the exclusive benefit of the Carbon Creek Partnership and shall
survive the execution of this Agreement, the consummation of the transactions
contemplated in this Agreement and any termination of this Agreement, and the
Carbon Creek Partnership shall be entitled to rely upon the same notwithstanding
any independent investigations the Carbon Creek Partnership may make or could
have made at any time, unless specifically waived by the Carbon Creek
Partnership.

3.3 Waiver


The breach of any representation, warranty or covenant
contained in this Agreement may be waived by the Carbon Creek Partnership,
either in whole or in part, at any time without prejudice to the Carbon Creek
Partnership’s rights in respect of any other or continuing breach of the same or
any other representation, warranty or covenant. No waiver by the Carbon Creek
Partnership of any breach of any representation, warranty or covenant shall be
binding unless in writing. Any waiver shall be limited to the specific purpose
for which it is given.

ARTICLE 4
ESTABLISHING THE CARBON CREEK JOINT
VENTURE

4.1 Payments to the Carbon Creek Partnership

As partial consideration for the Carbon Creek Partnership to
enter into the Carbon Creek Joint Venture, Coalhunter shall make the following
payments to the Carbon Creek Partnership on or before the dates specified
below:

	 	(a) 	
      one million dollars ($1,000,000) on the date of and
      concurrently with the execution of this Agreement;

	 	 	 
	 	(b) 	
      two million five hundred thousand dollars ($2,500,000) on
      or before November 15, 2010; and

	 	 	 
	 	(c) 	
      two million five hundred thousand dollars ($2,500,000) on
      or before November 15, 2011.



4.2 Issuance of Securities


As partial consideration for the Carbon Creek Partnership to
enter into the Carbon Creek Joint Venture, Coalhunter shall issue to the Carbon
Creek Partnership on the date of and concurrently with the execution of this
Agreement:

	 	(a) 	
      two million (2,000,000) common shares in the capital of
      Coalhunter (the “Coalhunter Shares”) for deemed consideration not greater
      than thirty cents ($0.30) per Coalhunter Share;
and







- 16 -

	 	(b) 	
      warrants entitling the Carbon Creek Partnership to
      acquire an additional two million (2,000,000) common shares of Coalhunter
      at forty cents ($0.40) per Coalhunter Share exercisable for a period of
      two (2) years from the later of the commencement of an initial public
      offering by Coalhunter or November 15, 2010 (the “Coalhunter
      Warrants”).



4.3 Voting Trust Agreement


The Carbon Creek Partnership shall on the date of and
concurrently with the execution of this Agreement enter into the Voting Trust
Agreement with Coalhunter.

4.4 Appointment of Director


Coalhunter shall upon the written request of the Carbon Creek
Partnership at any time after the Closing Date appoint or cause to be appointed
a nominee of the Carbon Creek Partnership as a director of Coalhunter. Any such
nominee shall be qualified to act as a director of Coalhunter pursuant to
section 124 of the Business Corporations Act (British Columbia). Should
any director nominated by the Carbon Creek Partnership be unable or unwilling
for any reason to continue to act as a director of Coalhunter, Coalhunter shall
upon the written request of the Carbon Creek Partnership appoint or cause to be
appointed a substitute director to replace the director so unable or unwilling
to act as a director of Coalhunter.

4.5 Co-Owner Interests


Coalhunter shall have a seventy-five percent (75%) Interest in
the Carbon Creek Joint Venture. The Carbon Creek Partnership shall have a
twenty-five percent (25%) Interest in the Carbon Creek Joint Venture. The
Interest of the Carbon Creek Partnership in the Carbon Creek Joint Venture shall
be a carried interest (the “Carried Interest”) as more particularly described in
section 4.6 and in Schedule “C” hereto.

4.6 Carbon Creek Partnership Carried Interest

Coalhunter shall bear all of the costs of carrying out all
exploration, development and mining on the Premises and the marketing of
Products for its own account and the Carbon Creek Partnership shall not be
required to make any contribution towards any such costs. The Carbon Creek
Partnership shall have the right in respect of its Carried Interest to receive
twenty-five percent (25%) of the net proceeds of production from the Premises
calculated as provided in Schedule “C” hereto.

4.7 Co-Owners’ Access and Right to Information

So long as a Co-Owner retains an Interest it shall have the
right to all information and data, subject to the provisions of Article 17,
resulting from any Work Plan carried out with respect to the Premises, provided
that no Co-Owner or the Manager shall be required to disclose any proprietary
information or any trade secrets. Each Co-Owner shall be entitled, at its own
risk and cost and upon reasonable notice to the Manager, to reasonable access to
the Premises accompanied by the Manager. When a Co-Owner ceases to have an
Interest it shall no longer be entitled to access to the Premises and the remaining Co-Owners
may keep for their sole benefit information, data, studies, samples and assays
obtained in respect thereof




- 17 -



4.8 Use of Interest in Premises


Each Co-Owner shall make available exclusively for the purposes
of the Common Operation its Interest, on the terms and conditions set forth
herein.

4.9 Division of Production


Each Co-Owner shall have the right to take in kind and
separately dispose of its Proportionate Share of all coal and coal by-products
produced by the Common Operation from the Premises at their highest state of
beneficiation on the Premises (the “Products”), and for that purpose shall take
delivery of its share of the Products as the same are produced and placed in the
storage facilities for its account. Any Co-Owner who intends to take delivery of
its share of the Products shall give sixty (60) days advance notice of such
intention to the Manager. Individual ownership of its share of said Products
shall pass to each Co-Owner concurrently with the taking of delivery thereof in
kind. If, after reasonable notice by the Manager, any Co-Owner (other than the
Manager, if a Co-Owner) shall fail to make the arrangements necessary to take in
kind or separately dispose of its share of said Products, the Manager may
purchase for its own account or sell to others for such Co-Owner’s account such
share at not less than the fair market price then prevailing for such Products.
Any sales proceeds received by the Manager for the share of such Co-Owner shall,
after deduction by the Manager of its reasonable fees and costs of sale, be
distributed, and accounted for monthly, to such Co-Owner independently of the
Common Operation accounting. Notwithstanding the foregoing, the Co-Owners may,
upon mutual agreement at any time and from time to time, jointly sell or
otherwise dispose of their respective shares of the Products and make such
arrangements in connection therewith as they deem mutually advisable, without in
any way causing them to be deemed to be in partnership. The proceeds from such
joint sales shall be dealt with in accordance with section 8.2(g).

4.10 Johnson Licences


If and when any Johnson Licences are issued and transferred to
Coalhunter, the Johnson Licences shall form part of the Premises and shall be
held by Coalhunter in trust for the benefit of the Carbon Creek Joint Venture
for so long as the Carbon Creek Joint Venture remains in effect.

4.11 Coalhunter Licences


If and when any Coalhunter Licences are issued and transferred
to Coalhunter, the Coalhunter Licences shall form part of the Premises and shall
be held by Coalhunter in trust for the benefit of the Carbon Creek Joint Venture
for so long as the Carbon Creek Joint Venture remains in effect.

4.12 Carbon Creek Partnership Licenses


If and when any Resources Licences are issued and transferred
to the Carbon Creek Partnership, the Resources Licences shall form part of the
Premises and shall be held by the Carbon Creek Partnership in trust for the benefit of the Carbon Creek Joint
Venture for so long as the Carbon Creek Joint Venture remains in effect.




- 18 -



4.13 Carbon Creek Coal Lease


If and when the Carbon Creek Coal Lease is granted to
Coalhunter, the Carbon Creek Coal Lease shall form part of the Premises and the
interest of Coalhunter therein shall be held by Coalhunter in trust for the
benefit of the Carbon Creek Joint Venture for so long as the Carbon Creek Joint
Venture remains in effect.

ARTICLE 5
RELATIONSHIP OF THE
PARTIES


5.1 Several Obligations


The rights and obligations of each Co-Owner shall be in every
case several and neither joint nor joint and several.

5.2 Co-Owners’ Relationship


Nothing contained herein shall be deemed to constitute any
Co-Owner, in its capacity as such, the partner, agent or legal representative of
any other Co-Owner, or to create any fiduciary relationship between them, for
any purpose whatsoever.

5.3 Indemnification


To the extent that any liability to any third person, asserted
upon the ground that action taken under this Agreement has resulted in or will
result in loss or damage to such third person, is paid by the Carbon Creek
Partnership, Coalhunter shall indemnify and hold the Carbon Creek Partnership
harmless. The term “liability” as used in this section 5.3 shall mean any
liability determined finally by any court of competent jurisdiction or any duly
constituted judicial or administrative tribunal or a liability which has been
admitted by Coalhunter.

5.4 Other Business Activities of Co-Owners


Except as may be otherwise expressly provided in this
Agreement, nothing herein shall be deemed to restrict in any way the freedom of
any Co-Owner, except with respect to its Interest in the Premises, to conduct as
it sees fit any business or activity whatsoever, whether in competition with the
Carbon Creek Joint Venture or otherwise, including the exploration for, or the
development, mining, production or marketing of coal and coal by-products,
without any accountability to the other Co-Owners. In particular, no Co-Owner
which is the owner or operator of another coal property, beneficiation plant or
other facility shall be obliged to beneficiate or otherwise handle any coal or
coal by-products from the Premises or otherwise deal with the Carbon Creek Joint
Venture. The Manager, in its capacity as owner or operator of another mining
property, beneficiation plant or other facility, and any Affiliate of the
Manager, may contract or enter into other arrangements with the Carbon Creek
Joint Venture provided that at the time of formation of such contract or
arrangement the terms thereof, including the allocation of revenues, costs, obligations and liabilities, are
fair and reasonable, and that any charges do not exceed the fair market value
therefor.




- 19 -



5.5 Operation with other Properties


Except as provided in section 5.6, if the Premises are brought
into commercial production, the Premises shall not be operated as a single
operation with other mining properties owned by third parties or in which the
Manager or a Co-Owner has an interest.

5.6 Single Operation with Peace River Partnership
Lands

If the Premises are brought into production, the Premises may
be operated as a single operation with the Peace River Partnership Lands, in
which event the parties agree that (notwithstanding separate ownership thereof)
coal mined from the Premises may be blended at the time of mining or at any time
thereafter with coal mined from the Peace River Partnership Lands, provided,
however, that the respective mining properties shall bear and have allocated to
them their proportionate part of costs incurred relating to the bringing of such
single operation into commercial production and thereafter operating the same,
and shall have allocated to each of them the proportionate part of the revenues
earned relating to such single operation. In making any such allocation, effect
shall be given to the tonnages and location of coal and other material mined and
beneficiated and the characteristics of such coal, and to any special charges
relating particularly to coal or coal by-products or the treatment thereof
derived from, either such property. The Manager shall ensure that reasonable
practices and procedures are adopted and employed for weighing, determining
moisture content, sampling and assaying and determining recovery factors.

5.7 Commingling


Except as provided in section 5.6, coal produced from the
Premises shall not be commingled with coal produced from any other property
without the prior written consent of the Carbon Creek Partnership, which consent
shall be in the sole discretion of the Carbon Creek Partnership, provided
that:

	 	(a) 	
      Coalhunter shall have the right to blend coal from the
      Premises with coal extracted from other properties if the effect of such
      commingling is consistent with the intention of enhancing the value of the
      coal produced from the Premises; and

	 	 	 
	 	(b) 	
      Coalhunter shall not wash, process or treat coal
      extracted from any property other than the Premises at any facility
      established under this Agreement without the prior written consent of the
      Carbon Creek Partnership, which consent shall be in the sole discretion of
      the Carbon Creek Partnership.



In the event of any such commingling under this section 5.7 of
coal produced from the Premises with coal produced from any other property, the
respective mining properties shall bear and have allocated to them their
proportionate part of costs incurred relating to the treatment, shipping and
marketing of such commingled coal, and shall have allocated to each of them the
proportionate part of the revenues earned relating to such commingled coal. In
making any such allocation, effect shall be given to the tonnages of coal and other
material beneficiated and commingled and the characteristics of such coal, and
to any special charges relating particularly to coal or coal by-products or the
treatment thereof derived from, either such property. The Manager shall ensure
that reasonable practices and procedures are adopted and employed for weighing,
determining moisture content, sampling and assaying and determining recovery
factors.




- 20 -



5.8 Acquisition of Additional Coal Interests (Area of
Interest)

Subject to section 5.7:

	 	(a) 	
      if any Co-Owner (hereinafter called the “Acquiring
      Co-Owner”) shall, directly or indirectly, locate or otherwise acquire
      during the term of this Agreement any Coal Interest which lies wholly or
      partly within the Area of Interest, the Acquiring Co-Owner shall within
      thirty (30) days of such acquisition give notice of such acquisition or
      right to the same to the other Co-Owners together with copies of all
      related geological and other data in its possession;

	 	 	 
	 	(b) 	
      upon receipt of such notice, the other Co-Owners
      (hereinafter called the “Invited Co-Owners”) shall have the right
      during the thirty (30) days next following the receipt of such notice and
      data, by written notice to the Acquiring Co-Owner, to elect to participate
      in such acquisition to the extent of its respective Interests. Failure to
      provide such notice to the Acquiring Co-Owner shall be deemed to
      constitute an election by the Invited Co-Owners not to participate in such
      acquisition.

	 	 	 
	 	(c) 	
      if the Acquiring Co-Owner is the Carbon Creek
      Partnership, and the Invited Co-Owners elect to participate, the Invited
      Co-Owners shall, within sixty (60) days of such election or of the date of
      any later payment or expenditure made by the Carbon Creek Partnership,
      reimburse the Carbon Creek Partnership for all acquisition costs paid (or
      the cash equivalent thereof) with respect to such Coal Interest, including
      payments made to third parties or payments or expenditures made to acquire
      such Coal Interest, and upon such reimbursement being duly made such right
      or interest shall be deemed to form part of the Premises and an interest
      therein equivalent to the Interest of the Invited Co-Owner shall forthwith
      be conveyed to the Invited Co-Owner; and

	 	 	 
	 	(d) 	
      if the Acquiring Co-Owner is not the Carbon Creek
      Partnership, and if the Carbon Creek Partnership elects to participate,
      such right or interest shall be deemed to form part of the Premises and a
      twenty-five percent (25%) carried interest therein shall forthwith be
      conveyed to the Carbon Creek Partnership to be held by the Carbon Creek
      Partnership as part of the Carried Interest.



5.9 Specific Coal Interests


For greater certainty, the following Coal Interests shall be
deemed to form part of the Premises and section 5.8 shall not apply thereto:


	 	(a)	
      the Johnson Licences, if and when issued or transferred
      to Coalhunter;








- 21 -

	 	(b) 	
      the Coalhunter Licences, if and when issued to
      Coalhunter;

	 	 	 
	 	(c) 	
      the Carbon Creek Licences, if and when issued or
      transferred to the Carbon Creek Partnership;

	 	 	 
	 	(d) 	
      the Crown Coal Leases, if and when issued to Coalhunter
      and the Carbon Creek Partnership, as applicable; and

	 	 	 
	 	(e) 	
      the interest of Coalhunter in the Carbon Creek Coal
      Lease, if and when granted to Coalhunter by the Peace River
      Partnership.



5.10 Abandonment


If the Manager wishes to abandon or permit to lapse any of the
Coal Tenures comprised in the Premises, it may do so provided that it gives
notice of its intention in writing to the Co-Owners, and, if one or more of the
Co-Owners shall so request in writing within fourteen (14) days of such notice,
transfers such Coal Tenures to those Co-Owners as tenants in common in
accordance with their respective Interests. All costs of such transfers shall be
borne by such Co-Owners, including transfer taxes or other taxes payable in
respect thereof. Any Coal Tenures so abandoned or transferred shall cease to be
subject to this Agreement, except with respect to obligations or liabilities
theretofore accrued.

5.11 Manager as Independent Contractor


In the conduct of the Common Operation, the Manager shall act
strictly as an independent contractor and not as an agent of the Co-Owners or
any of them except as specifically authorized in this Agreement.

ARTICLE 6
MANAGEMENT COMMITTEE


6.1 Establishment/Meetings


A Management Committee shall be established on or forthwith
after the execution of this Agreement. All decisions required to be made by the
Co-Owners with respect to the Common Operation shall be made by the Management
Committee, which shall meet at least once each calendar year.

6.2 Composition


Coalhunter shall have the right to appoint three (3) members to
the Management Committee and the Carbon Creek Partnership shall have the right
to appoint one (1) member to the Management Committee. Coalhunter and the Carbon
Creek Partnership also shall be entitled to designate alternate members to
represent it at meetings of the Management Committee in the absence of any of
the regular members appointed by such Co-Owner and to exercise the rights and
powers of the member for whom it is acting as an alternate.




- 22 -


6.3 Appointment of Members and Alternates


Each Co-Owner shall notify the other Co-Owner in writing of the
name of its members and alternate member on the Management Committee and may
from time to time by like notice remove and replace any such members or
alternate member.

6.4 Chairperson


The Management Committee shall have a chairperson who shall
preside at meetings of the Management Committee. The chairperson shall be
designated from time to time from among the Management Committee members by
Coalhunter.

6.5 Voting


Each member of the Management Committee shall have one (1)
vote. All matters coming before the Management Committee shall require for
approval the affirmative vote of the members or alternates present at the
meeting representing a simple majority of votes. In the event of a tied vote,
the chairperson shall have a casting vote in addition to the vote the chairman
is entitled to cast as the representative of a party.

6.6 Notice of Annual Meetings


The chairman shall give at least ten (10) days’ advance notice
to the members of the date and time of the annual meetings to be held pursuant
to section 6.1, unless waived by unanimous agreement of the members or Co-Owners
designating them, which meetings shall be convened in or about the City of
Vancouver, British Columbia on the date and at the time stated in such notice,
or at such other location, date or time agreed upon by the members. This notice
shall also include the proposed agenda of the meeting and adequate supporting
data. Any member may, by notice to the other members at least five (5) days
prior to the date of the meeting, make additions to the agenda.

6.7 Notice of Special Meetings


A Co-Owner may convene a meeting of the Management Committee at
any time by ten (10) days’ advance notice to the other party and to the
chairperson, unless waived by unanimous agreement of the members or Co-Owners
designating them, which notice shall state the location in or about the City of
Vancouver, British Columbia or some other location agreed upon by the members,
and the date and time of the meeting. Such notice shall also include the
proposed agenda of the meeting and adequate supporting data. A Co-Owner may, by
notice to the other Co-Owner at least five (5) days prior to the date of the
meeting, make additions to such agenda.

6.8 Quorum


A quorum for a meeting of the Management Committee shall be
three (3) members and may include alternate members duly designated and acting
pursuant to sections 6.2 and 6.3 in the absence of the primary members and
representing both Coalhunter and the Carbon Creek Partnership. Members of the
Management Committee may attend and participate in meetings by conference
telephone call and in such case shall be included in the quorum. In the absence
of a quorum, the meeting shall be adjourned for at least seven (7)
days and if written notice of the adjourned meeting date is given to both
members of the Management Committee at least three (3) Business Days in advance,
the meeting shall be reconvened on the specified date at the specified location
and time and at such adjourned meeting a quorum shall be those voting members
who shall be present.




- 23 -



6.9 Minutes of Meetings


The chairperson of meetings of the Management Committee shall
keep or cause to be kept minutes of all decisions reached at the meetings of the
Management Committee and such other matters as the Management Committee shall
decide and shall cause copies of these minutes to be sent to the Co-Owners as
soon as practicable after each meeting to which the minutes refer.

6.10 Resolutions in Writing


Notwithstanding the preceding provisions, a resolution in
writing signed by all members of the Management Committee or their alternate
members at that time or signed by the Co-Owners shall be as valid and effectual
as if it were a resolution of a duly convened and constituted meeting of the
Management Committee and any such resolution may be in one or more signed
counterparts.

	6.11 Miscellaneous
	 	 	 
		(a) 	
      Management Committee decisions made in accordance with
      this Agreement shall be binding upon both the parties to this
      Agreement.

	 	 	 
		(b) 	
      Each Co-Owner shall bear the expenses incurred by its
      member and alternate member in attending meetings of the Management
      Committee.

	 	 	 
		(c) 	
      Meetings of the Management Committee may be held by
      telephone conference in lieu of meetings held in person, and all actions
      taken or authorized at any such telephone conference meeting shall be
      effective provided such actions are confirmed in writing to the Co-Owners
      by the secretary of the meeting.

	 	 	 
		(d) 	
      The Management Committee may, by agreement of the members
      of both the Co-Owners, establish such other rules of procedure, not
      inconsistent with this Agreement, as the Management Committee deems
      fit.



ARTICLE 7
FEASIBILITY STUDY


7.1 Preparation of Feasibility Study


At the request of the Management Committee, the Manager shall
prepare or have prepared and submit a Feasibility Study, the purpose of which
shall be to establish whether a coal deposit on the Premises is of sufficient
size and grade to justify development of a mine and such other related facilities as may be desirable, including, without
limitation, a beneficiation plant for processing coal.




- 24 -



7.2 Request for Feasibility Study


Any Co-Owner may request the Management Committee to instruct
the Manager to prepare or have prepared a Feasibility Study when, in the
reasonable good faith opinion of such Co-Owner, sufficient coal resources have
been found to justify preparation of a Feasibility Study, and if the Management
Committee fails or refuses to direct the Manager to prepare such study, such
Co-Owner may at its own expense, prepare and submit such study along with its
recommendations to the Management Committee.

7.3 Approval of Feasibility Study


The Management Committee shall have ninety (90) days after
receipt of any Feasibility Study and the recommendations of the Co-Owner
commissioning or conducting such Feasibility Study to meet and consider, and to
approve or reject the Feasibility Study and its recommendations. If the
Management Committee approves or makes substantial use of a Feasibility Study
prepared by the Non-Manager in its decision to proceed to place the Premises
into commercial production, it shall reimburse the Non-Manager for the
reasonable costs of preparing the same. If the Management Committee rejects a
Feasibility Study, it may in its discretion direct the Manager to perform or
have performed such additional work as the Management Committee deems necessary
to revise the Feasibility Study. In such event, the Manager shall promptly
perform such additional work, revise the Feasibility Study accordingly and
submit it to the Management Committee for approval or rejection.

7.4 Notice of Production Decision


If a Feasibility Study is approved pursuant to section 7.3, the
Management Committee shall forthwith cause a notice of a Production Decision to
be given to each of the Co-Owners stating that the Management Committee intends
to establish and bring a mine into Production in accordance with the Feasibility
Study so approved.

ARTICLE 8
MANAGER


8.1 Engagement of Manager


Coalhunter is hereby engaged by the Co-Owners as the Manager
and hereby agrees to such engagement in accordance with this Agreement, provided
that if Coalhunter should elect to withdraw as Manager or if Coalhunter shall at
any time be in default of its obligations under this Agreement, the Carbon Creek
Partnership shall have the right to appoint a third party to act as the Manager
as provided in section 8.7. If Coalhunter elects to withdraw as Manager, it
shall do so by notice in writing to the other Co-Owners and the appointment of a
successor Manager shall be effective on the first day of January of the year
next following the date of such notice. In the event Coalhunter is removed as
Manager, the successor Manager’s appointment shall be effective as of the first
day of the month following such removal.




- 25 -


8.2 Authority and Duties


Subject at all times to the direction and control of the
Management Committee, the Manager shall conduct the Common Operation and do all
things necessary or appropriate for the proper conduct thereof in accordance
with the Work Plans and in compliance with all applicable Laws and in a sound
and miner-like manner in accordance with sound mining and engineering practices
and with due regard to sound and acceptable environmental practices including
without limitation the following:

	 	(a) 	
      Work Plans - Prepare and propose for the approval
      of and, if desired, for modification by the Management Committee such Work
      Plans as will lead to the orderly and diligent Exploration and Development
      of the Premises and Production therefrom including without limitation, any
      Work Plans requested by the Management Committee, and deliver Work Plans
      to the Co-Owners after approval and adoption by the Management
      Committee.

	 	 	 
	 	(b) 	
      Maintenance of Premises in Good Standing - Perform
      or cause to be performed, all of the obligations of the Co-Owners, the
      performance of which is required in order to maintain in good standing all
      mines, Coal Tenures, surface and equipment leases and rights, conditional
      sales contracts, and similar agreements and property rights constituting a
      part of the Premises and shall maintain the Premises free of any liens
      which might otherwise arise as a result of carrying on the Common
      Operation except inchoate liens, liens for payments not then due and liens
      being contested in good faith;

	 	 	 
	 	(c) 	
      Acquisition of Premises - Acquire on behalf of the
      Co-Owners real and personal property and interests therein;

	 	 	 
	 	(d) 	
      Tangible Personal Property - Sell, assign or
      transfer, at the fair market value thereof, any item or group of related
      items of tangible personal property included in the Premises which, in the
      opinion of the Manager, is no longer useful in the Common
  Operation;

	 	 	 
	 	(e) 	
      Consultants - Procure from experts and consultants
      such special engineering, design, legal and other professional services
      authorized or directed by the Management Committee in connection with the
      conduct of the Common Operation;

	 	 	 
	 	(f) 	
      Insurance - Procure and maintain such insurance
      coverage as the Manager may reasonably deem to be desirable to protect
      itself, in its capacity as Manager, and the Co-Owners against liability to
      third parties and such other insurance coverage as the Management
      Committee may require or approve. The Manager and each Co-Owner shall and
      do hereby waive any right of action against the others with respect to all
      claims arising out of this Agreement which are covered by insurance which
      permits such waiver. The Manager shall ensure that each policy of
      insurance contains an appropriate waiver of subrogation to protect each
      Co-Owner against any claim by the insurer or the other Co-Owner,
  and notwithstanding the foregoing, procure and maintain the
following minimum insurance coverage:







- 26 -

	 	(i) 	
      registration as an employer with the appropriate Workers’
      Compensation Board and payment of all sums which may be required
      thereunder;

	 	 	 
	 	(ii) 	
      Comprehensive General Liability insurance which shall
      include personal injury and property damage coverage of not less than ten
      million dollars ($10,000,000) each of which shall contain a
      cross-liability section;

	 	 	 
	 	(iii) 	
      Owned and Non-owned Automobile Liability coverage of not
      less than five million dollars ($5,000,000);




	 	(g) 	
      Joint Sales - With respect to any joint sale or
      other joint disposition of Products agreed to pursuant to section 4.9,
      procure and negotiate on behalf of the Co-Owners such contracts as are
      required and, subject to section 4.9, deposit the proceeds from such sales
      to the Working Fund;

	 	 	 	 
	 	(h) 	
      Common Account - Keep the Common Account and
      maintain, to the extent and in such detail and at such places as the
      Management Committee may determine, such books and records pertaining to
      the Common Operation and to the costs and expenses thereof and the
      performance of the Manager hereunder, and to the receipt and disposition
      of proceeds from any joint sales agreed to pursuant to section 4.9, as
      will properly reflect, in accordance with generally accepted accounting
      principles in Canada, to the extent applicable and not in conflict with
      the provisions hereof, all transactions of the Manager in relation to the
      Common Operation and the performance of its duties hereunder and all costs
      paid by it in the performance thereof, all of which books and records
      shall be made available to each of the Co-Owners and the Management
      Committee, upon reasonable notice and at all reasonable times, for
      inspection, audit and reproduction. As soon as possible after the close of
      each fiscal year of the Manager, all the books and accounts of the Manager
      relating to the Common Operation for such fiscal year of the Manager shall
      be audited by the Auditor and copies of the report of the Auditor shall be
      sent promptly to each Co-Owner. Any claim of a Co-Owner against the
      Manager, and vice versa, relating to any transactions during the period
      covered by such audit shall be made within two years after such
    audit;

	 	 	 	 
	 	(i) 	
      Reports - Communicate to the Co-Owners all
      information pertinent and material to the Common Operation and the
      performance of the Manager’s duties as herein provided, including the
      furnishing of:

	 	 	 	 
	 		(i) 	
      prior to the commencement of Development, (A) access to
      drill core and once prepared and reviewed by the Manager, assay and other
      exploration results in respect of the Premises; and (B) on or before the
      last day of each calendar quarter, a summary in writing of the nature of
      the work conducted in the previous calendar quarter and of the results and
      information obtained therefrom which have been compiled by or are in the
      possession of the Manager or its agents, Affiliates or
  contractors, including without limitation, details of costs incurred and
conclusions and technical information such as current maps, assay results and
calculations of tonnages of ore and waste rock;







- 27 -



	 	(ii) 	
      after commencement of Development, a written report to
      each Co-Owner on or before the last day of each calendar month, of the
      operations of the Manager under this Agreement during the preceding
      calendar month, including a statement of the coal and coal by-products, if
      any, produced from the Premises during said preceding calendar month and
      the coal and coal by-products, if any, in storage on the last day of the
      preceding month; and

	 	 	 
	 	(iii) 	
      such other reports of the Common Operation as may be
      reasonably requested by the Management Committee or any of the Co-Owners,
      including timely notice of significant events;




	 	(j) 	
      Distribution of Premises on Termination - Upon the
      termination of this Agreement, provide for the salvage, liquidation and
      distribution of the Premises to the Co-Owners in their respective
      Proportionate Shares thereof, after deduction of amounts sufficient to
      fund the cost of ultimate reclamation, pollution controls and shut-down of
      the Premises. As a part of such distribution, each Co-Owner shall be
      entitled to all information acquired in the conduct of the Common
      Operation, including copies of maps, data and reports which can be
      reproduced and which have not theretofore been furnished to such
      Co-Owners;

	 	 	 
	 	(k) 	
      Exploration - Conduct Exploration on or related to
      the Premises, as approved by the Management Committee;

	 	 	 
	 	(l) 	
      Use of Assets - Unless the unanimous consent of
      the Management Committee has been obtained, use all assets acquired at the
      cost of the Common Operation only in respect of the Common
    Operation;

	 	 	 
	 	(m) 	
      Litigation - Prosecute claims or, where a defence
      is available, defend litigation arising out of work carried out on the
      Coal Tenures, provided that a Co-Owner may join in the prosecution or
      defence at its own expense; and

	 	 	 
	 	(n) 	
      GST/HST Election - With respect to the Goods and
      Services Tax (the “GST”) and the Harmonized Sales Tax (the “HST”), account
      for all GST and HST in respect of any supplies made to or by the Joint
      Venture. The Co-Owners shall be registrants and will each execute and
      provide to the Manager any joint venture elections required to be made,
      confirming that the Manager shall account for all GST and HST in respect
      of any supplies made to or by the Joint Venture and the Manager shall file
      such elections with the Canada Revenue Agency along with the Manager’s
      returns as and when required and shall pay GST and HST, as the case may
      be, on all taxable purchases and claim the corresponding input tax credits
      on behalf of the Joint Venture.







- 28 -


8.3 Working Fund


Upon the initial payment of any Operating Cost or Capital Cost
hereunder, and thereafter, the Manager shall account separately for all such
payments and establish and maintain at all times a cash fund (the “Working
Fund”) from which the Operating Costs and Capital Costs may be paid by the
Manager directly or from which the Manager may be reimbursed for reimbursable
Operating Costs and Capital Costs theretofore expended by it and from which it
may draw its costs as calculated pursuant to section 8.5.

8.4 Expenditures Without Approval


Expenditures not in excess of fifteen percent (15%) of the
estimated Capital Costs and Operating Costs of any Approved Work Plan may, if
necessary or unavoidable, be incurred by the Manager. The Manager shall promptly
notify the parties of such excess expenditures as soon as the incurrence thereof
appears reasonably foreseeable or has taken place. In case of emergency, the
Manager may make any expenditures as in its opinion are necessary to safeguard
life and property, the environment and health, but the Manager shall, as
promptly as possible, report the emergency and the amount expended or proposed
to be expended by it to the Co-Owners.

8.5 Manager’s Recovery of Costs


For the due performance of the services to be performed by the
Manager under this Agreement, the Manager shall be entitled to charge an amount
for general overhead and administrative costs and management fees equal to:

	 	(a) 	
      from the date hereof and until a Feasibility Study upon
      which a Production Decision is based has been delivered hereunder, the
      aggregate of five percent (5%) of amounts expended as Work
Costs;

	 	 	 
	 	(b) 	
      thereafter until the commencement of commercial
      production, one percent (1%) of any amounts expended as Work Costs;
    and

	 	 	 
	 	(c) 	
      thereafter, one and one-half percent (1.5%) of any
      amounts expended as Work Costs.



“Work Costs” means all expenditures and costs incurred by the
Manager relating directly to the Joint Venture Property, including all
expenditures and costs incurred: (a) in doing geophysical, geochemical, land,
airborne, environmental and geological examinations, assessments, assays, audits
and surveys; (b) in linecutting, mapping, trenching and staking; (c) in
searching for, digging, trucking, sampling, working, developing, mining and
extracting coal; (d) in conducting diamond and other drilling; (e) in obtaining,
providing, installing and erecting mining, treatment plant, ancillary
facilities, buildings, machinery, tools, appliances and equipment; (f) in
constructing access roads and other facilities on or for the benefit of the
Joint Venture Property or any part thereof; (g) in transporting personnel,
supplies, mining, milling and other treatment plant, ancillary facilities,
buildings, machinery, tools, appliances and equipment in, to or from the Joint
Venture Property or any part thereof; (h) in paying reasonable wages and
salaries (including “fringe benefits”, but excluding home office costs) of
personnel directly engaged in performing work on or with respect to the Joint
Venture Property; (i) in paying assessments and contributions under applicable employment legislation relating
to workers’ compensation and unemployment insurance and other applicable
legislation relating to such personnel; (j) in supplying food, lodging and other
reasonable needs for such personnel; (k) in obtaining and maintaining insurance;
(1) in obtaining legal, accounting, consulting and other contract and
professional services or facilities relating to work performed or to be
performed on the Joint Venture Property; (m) in paying any taxes, fees, charges,
payments and rentals (including payments made in lieu of assessment work) or
otherwise incurred to keep the Joint Venture Property or any part thereof in
good standing; (n) in paying goods and services tax and social services tax and
all other taxes charged on expenditures made or incurred by the Manager relating
to the Joint Venture Property; (o) in acquiring access and surface rights to the
Joint Venture Property; (p) in carrying out any negotiations and preparing,
settling and executing any agreements and other documents relating to
environmental or indigenous peoples’ claims, requirements or matters; (q) in
obtaining all necessary or appropriate approvals, permits, consents and
permissions relating to the carrying out of work, including environmental
permits, approvals and consents; (r) in carrying out reclamation and
remediation; (s) in improving, protecting and perfecting title to the Joint
Venture Property or any part thereof; (t) in carrying out mineral, soil, water,
air and other testing; (u) in preparing engineering, geological, financing,
marketing and environmental studies and reports and test work related thereto;
and (v) in preparing one or more feasibility studies including any work and
reports preliminary or supplementary thereto, but excluding all general overhead
and administrative costs and excluding the Manager’s management fees payable as
provided above.




- 29 -


Costs charged to the Manager by Affiliates of the Manager for
services rendered by such Affiliates shall not exceed the fair market value of
the services rendered. The certificate of an officer of the Manager setting
forth in reasonable detail the amounts expended in performing work hereunder
shall be prima facie evidence of the amounts expended.

8.6 Alternate Work Plan


The Manager shall present the first Work Plan following the
formation of the Joint Venture and, on or before April 1st of each
year, advise the Carbon Creek Partnership whether or not it will present a Work
Plan for that year. In the event the Manager elects not to present a Work Plan
(and failure to notify the Carbon Creek Partnership by April 1st shall be deemed
an election not to present such Work Plan), the Carbon Creek Partnership may, at
any time prior to April 30th of that year, present a Work Plan to the
Management Committee and upon acceptance or modification by the Management
Committee, the accepted or modified Work Plan shall be implemented by the
Manager as soon as practicable.

	8.7 	
      Removal of Manager

	 	 	 
		(a) 	
      In the event of any default by the Manager in its
      performance as Manager, a Co-Owner shall have the right to give to the
      Manager written notice setting forth in detail the default and the Manager
      shall act diligently to remedy the same.

	 	 	 
		(b) 	
      Notwithstanding any other provisions herein contained, a
      Co-Owner who is not the Manager shall have the right to replace the
      Manager by written notice to the Manager upon the occurrence of any of the
      following events:







- 30 -

	 	(i) 	
      if the Co-Owner has given notice of default under section
      8.7(a) and the Manager fails to cure such default, or to commence bona
      fide and reasonable curative measures to cure such default within thirty
      (30) days after receiving notice of the default, or commences such
      curative measures but does not continue such curative measures until the
      default is cured;

	 	 	 
	 	(ii) 	
      if an attachment is made on the Premises which is not
      discharged or bonded within sixty (60) days, or proceedings are not
      commenced by the Manager within the sixty (60) day period to contest or
      settle the claim for which the attachment was made provided however that
      this shall not apply to the filing of builders liens and other similar
      liens which may remain uncontested until legal proceedings are
      commenced;

	 	 	 
	 	(iii) 	
      if the Manager admits in writing its inability to pay its
      debts as they become due, makes an assignment for the benefit of
      creditors, consents to the appointment of a receiver for all or a
      substantial part of its property, files a petition in bankruptcy or for a
      reorganization or an arrangement under the Bankruptcy and Insolvency
      Act (Canada) or otherwise seeks the relief therein provided, or is
      otherwise adjudicated a bankrupt or insolvent; or

	 	 	 
	 	(iv) 	
      if a court order is entered with respect to the Manager
      without its consent (a) appointing a receiver or trustee for all or a
      substantial part of its property, (b) approving a petition in bankruptcy
      or for a reorganization pursuant to the Bankruptcy and Insolvency Act
      (Canada), or (c) for any other judicial modification or alteration of
      the rights of creditors, which order is not vacated, set aside or stayed
      within ninety (90) days from the date of its
entry.




	 	(c) 	
      If the Carbon Creek Partnership gives notice to
      Coalhunter pursuant to section 8.7(b), the Carbon Creek Partnership shall
      have the right to appoint a third party to act as the new Manager on terms
      and conditions that are consistent with the terms and conditions of this
      Agreement provided that the compensation for the new Manager’s services
      shall be based on reasonable commercial rates and shall not be limited to
      the amounts payable under section 8.5.

	 	 	 
	 	(d) 	
      Any third party appointed by a Co-Owner to act as Manager
      shall have the technical expertise and resources required to perform its
      obligations as Manager.

	 	 	 
	 	(e) 	
      The new Manager shall assume all of the rights, duties,
      liabilities and status of the Manager provided for in this Agreement. The
      new Manager shall have no obligation to hire any of the employees of the
      former Manager resulting from the change of Manager.

	 	 	 
	 	(f) 	
      Upon ceasing to be Manager: (i) the former Manager shall
      remain responsible for any liabilities incurred in its capacity as Manager
      to the date of ceasing to be Manager; and (ii) the former Manager shall
      forthwith deliver to its successor custody of the
  Premises.







- 31 -

	 	(g) 	
      If the Manager resigns and no other party consents to act
      as Manager, the Joint Venture shall terminate and the provisions of
      Article 16 shall apply mutatis mutandis.



ARTICLE 9
TECHNICAL REPORTS


9.1 Technical Reports


Where any Co-Owner or any Affiliate (in this section 9.1,
collectively the “Discloser”) is required by Canadian National Instrument 43-101
Standards of Disclosure for Mineral Projects as amended from time to time
(“NI 43-101”) to file a Technical Report (as defined in NI 43-101) with respect
to the Licences:

	 	(a) 	
      the Manager shall prepare and provide the Technical
      Report and designate the Qualified Person to prepare or supervise the
      preparation of such Technical Report, all at the expense of the
      Discloser;

	 	 	 
	 	(b) 	
      the Discloser shall use such Technical Report only for
      the purpose of compliance with NI 43-101 and for no other purpose;
    and

	 	 	 
	 	(c) 	
      where the Manager obtains information subsequent to the
      filing of the Technical Report which renders the Technical Report
      inaccurate, the Manager shall at the Discloser’s request disseminate such
      information in a manner which satisfies the Discloser’s obligations under
      applicable securities Laws, and if the Manager fails to do so the
      Discloser shall have the right (but not the obligation) to do so on the
      Manager’s behalf.



ARTICLE 10
ENCUMBRANCE AND TRANSFER OF THE
INTEREST OF A CO-OWNER

10.1 Encumbrance of the Interest of a Co-Owner; Prohibition
Against Creation of Royalties

Any Co-Owner may at any time mortgage, hypothecate, charge or
otherwise encumber the whole or an undivided part of its Interest, but only upon
the condition that the holders of such Encumbrance shall have first entered into
an agreement with the other Co-Owners binding upon such holders and the
assignees of such Encumbrance to the effect that:

	 	(a) 	
      such Encumbrance will be subordinate to any encumbrance
      in relation to any project financing arranged by such Co-Owner of its
      Interest;

	 	 	 
	 	(b) 	
      notwithstanding any provisions of such Encumbrance or of
      the applicable Law, such holders or assignees will not:

	 	 	 
	 		
      (i)
	enter into possession of the Encumbered interest,
  or






- 32 -

	 		(ii) 	
      institute any proceedings to obtain possession of the
      Encumbered interest or otherwise for the foreclosure of such Encumbrance,
      but with respect to proceedings for foreclosure, will limit their remedies
      against the Encumbered interest to the sale thereof, either private or
      judicial, in conformity with the provisions of section 10.2; and

	 	 	 	 
	 	(c) 	
      before taking any step leading toward the sale of the
      Encumbered interest, such holders or assignees will offer the same to the
      other Co-Owners in the manner provided in and subject to all of the
      provisions of section 10.2 hereof.



Notwithstanding anything contained herein neither party may
create a royalty interest in any of the Coal Licence Applications, Coal Licences
or Crown Coal Leases, except as provided for herein without the other party’s
consent which may be arbitrarily withheld.

10.2 Transfer of Interest

No sale, assignment, transfer or other disposition of the whole
or any part of a Co-Owner’s Interest may be made by contract, gift, operation of
Law or otherwise except upon the following conditions:

	 	(a) 	
      Qualifications of Transferee - Any transferee
      hereunder must be qualified under all applicable Laws to own any interest
      in the Premises which may be acquired by a party hereto and must have
      obtained all requisite government approvals and provided that such
      transfer does not result in any loss of rights with respect to the
      Premises;

	 	 	 
	 	(b) 	
      Transfer to Wholly Owned Subsidiary, Holding Company
      or Sister Company – A Co-Owner may at any time, subject to delivery of
      the agreement referred to in section 10.2(e), transfer the whole or any
      undivided part of its Interest to:




	 	(i) 	
      a body corporate all the issued and outstanding shares in
      the capital of which are owned directly or indirectly by the Co-Owner;
      or

	 	 	 
	 	(ii) 	
      a body corporate which owns directly or indirectly all of
      the issued and outstanding shares in the capital of the Co-Owner;
  or

	 	 	 
	 	(iii) 	
      a body corporate all the issued and outstanding shares in
      the capital of which are owned directly or indirectly by a body corporate
      referred to in subsection 10.2(b)(ii);



provided that prior to such body
corporate thereafter ceasing to have the relationship with the Co-Owner which is
described in subsection 10.2(b)(i), 10.2(b)(ii) or 10.2(b)(iii) as the case may
be, such Interest must be either:

	 	(iv) 	
      transferred back to the transferring Co-Owner;
  or

	 	 	 
	 	(v) 	
      transferred to another body corporate having the
      relationship with the Co-Owner described in subsection 10.2(b)(i),
      10.2(b)(ii) or 10.2(b)(iii); or







- 33 -

	 	(vi) 	
      offered for sale to the other Co-Owner in accordance with
      this section 10.2;




	 	(c) 	
      Right of First Refusal

	 	 	 	 
	 		(i) 	
      Except as provided in sections 10.2(b) and 10.2(c)(iii),
      a Co-Owner who desires to sell, assign, transfer or dispose of the whole
      or any part of its Interest to a proposed transferee, and from whom it has
      received a bona fide offer which it is prepared to accept, shall first
      offer such Interest for one hundred twenty (120) days, to the other
      Co-Owner, at the same price (such price, if not in cash, to be expressed
      in its cash equivalent and subject to arbitration as provided in section
      10.2(c)(iii)) and on the same terms as are contained in the bona fide
      offer from the proposed transferee, and shall specify the proposed
      transferee. The Co-Owner shall also provide the other Co-Owner with a copy
      of the bona fide written offer that it has received from the proposed
      transferee. Within such period the offeree Co-Owner shall give written
      notice of acceptance or rejection of the said offer. Failure to deliver a
      notice of acceptance or rejection within any specified time period herein
      shall be deemed a rejection of the offer. If the offeree Co-Owner does not
      wish to acquire all of the Interest offered, the transferring Co-Owner
      may, during the period of one hundred twenty (120) days next following the
      expiry of all the time periods required hereunder, subject to delivery of
      the agreement referred to in section 10.2(e), may sell, assign, transfer
      or otherwise dispose of to the Purchaser the Interest (or the remaining
      portion thereof) at the same or at a higher price but otherwise on
      substantially the same terms and conditions as the original offer received
      from the Purchaser under this paragraph, as may have been amended by
      arbitration under section 10.2(c)(iii). If any change of substance is made
      in such terms, the Interest shall first again be offered in accordance
      with the foregoing provisions to the other Co-Owner, upon the changed
      terms, before a transfer may be made;

	 	 	 	 
	 		(ii) 	
      A Co-Owner at any time, if it has no commitments from any
      proposed transferee and intends to seek out such a proposed transferee,
      shall offer to sell to the other Co-Owner, its Interest at a price in cash
      or upon such other terms and conditions expressed in their cash equivalent
      (subject to arbitration as provided in section 10.2(c)(iii)). The offeror
      Co-Owner shall submit with the offer a list of not greater than four bona
      fide proposed transferees. Upon receipt by the other Co-Owner of the offer
      to sell, the offeree Co-Owner shall within the period of sixty (60) days
      next following the receipt of the offer to sell, deliver to the offeror a
      written notice of acceptance or rejection of the said offer. An offeree
      Co-Owner may, if it intends to reject the offer, specify which of the
      proposed transferees are unacceptable to it acting reasonably. Failure to
      deliver a notice of acceptance or rejection within any specified time
      period herein shall be deemed a rejection of the offer. If the said offer
      is not accepted so that all of the Interest offered is acquired by the
      offeree Co-Owner then the offeror may, during the period of one hundred and twenty
(120) days next following the expiry of all the time periods required hereunder,
subject to delivery of the agreement referred to in section 10.2(e), complete a
sale of its Interest (or the remaining portion thereof) only to one of those
parties referred to in the list accompanying its offer (which was not
subsequently specified by an offeree Co-Owner as being unacceptable), at a price
and upon terms no more favourable to the purchaser thereof than were contained
in the offer to the offeree Co-Owners, as may have been amended by arbitration
under section 10.2(c)(iii);







- 34 -



	 	(iii) 	
      If the offer received by the offeree Co-Owner from the
      offeror Co-Owner under subparagraph (i) or (ii) of this section 10.2(c)
      provides for any consideration payable to the offeror Co-Owner otherwise
      than in cash, the offer shall include the offeror Co-Owner’s good faith
      estimate of the cash equivalent of the non-cash consideration. If the
      offeree Co-Owner disagrees with such good faith estimate the offeree
      Co-Owner shall so notify the offeror Co-Owner within the sixty (60) day
      period following receipt of the offer and the cash equivalent of any
      non-cash consideration shall be determined by arbitration by a single
      arbitrator pursuant to the Commercial Arbitration Act of British
      Columbia and the said sixty (60) day period shall be suspended and the
      offer shall remain open during the arbitration. Following the arbitration,
      the provisions of sections 10.2(c)(i) or (ii), as the case may be, shall
      continue to apply but the terms of the offer shall be deemed amended to
      conform to the cash equivalent determined by the
  arbitrator;




	 	(d) 	
      Right to be Manager - Except in the case of the
      transfer by Coalhunter to a company having the relationship to Coalhunter
      described in section 10.2(b)(i), 10.2(b)(ii) or 10.2(b)(iii), no transfer
      of any Interest or portion thereof, whether to a subsidiary or otherwise,
      by a Co-Owner that is Manager shall, of itself, entitle the transferee to
      be Manager;

	 	 	 
	 	(e) 	
      Rights and Liabilities - Any sale, assignment,
      transfer or other disposition by a Co-Owner of its Interest or portion
      thereof pursuant to the provisions of this section 10.2 shall carry the
      rights, and shall delegate and make the Interest subject to, all the
      liabilities and obligations of such Co-Owner under this Agreement. Each
      transferee of such Interest shall, by written agreement with and for the
      benefit of the other Co-Owners, in form satisfactory to such other
      Co-Owners, assume and agree to pay and perform such liabilities and
      obligations. Such assumption shall not serve to release or discharge the
      transferring Co-Owner from any of the said liabilities or obligations
      theretofore accrued with respect to the Interest or portion thereof being
      transferred, but shall release and discharge the transferring Co-Owner
      from all of the said liabilities and obligations
  thereafter accruing with respect to the Interest or portion thereof being
transferred. Each transferee and assignee shall appoint a single agent to
represent it for all purposes under this Agreement; and







- 35 -



	 	(f) 	
      Amalgamation or Merger - The provisions of this
      section 10.2 apply to an amalgamation, corporate merger or other statutory
      arrangement unless a transfer to each corporate entity involved in the
      amalgamation, corporate merger or other statutory arrangement would be
      exempt under section 10.2(b).



10.3 Improper Transfer is Void


Any sale, assignment, transfer or other disposition of the
whole or any part of a party’s Interest or any interest therein or of any
rights, benefits or interests hereunder which violates the terms of this
Agreement shall be void.

ARTICLE 11
WITHDRAWAL


11.1 Election to Withdraw


If any Co-Owner wishes to withdraw from the Common Operation
(other than as provided in section 10.2), it shall give the other Co-Owner one
hundred and eighty (180) days’ notice of its wish to do so and shall offer to
convey its Interest to the other Co-Owner for one dollar ($1.00). If the other
Co-Owner does not purchase such Interest within the said period and assume the
offeror’s liabilities as hereinafter provided, this Agreement shall be deemed
terminated and the Manager shall cease operation of the Common Operation and
shut down the Premises in accordance with section 8.2(j) hereof, upon the expiry
of the said one hundred and eighty (180) day period, or such other period to
which the Co-Owner may agree. Any transfer of an Interest to be made by the
withdrawing Co-Owner shall be without warranty of title other than the covenant
of the withdrawing Co-Owner that previous to the time of execution of such
transfer it has not transferred its Interest, or any part thereof or interest
therein, except as required or permitted by this Agreement, to any other person
and that its Interest at the time of the execution of such transfer is free from
any Encumbrance done, made or suffered by it or any person claiming under it.
Upon the making of such transfer, the withdrawing Co-Owner shall have no further
Interest or rights with reference to the Common Operation and the ownership as
tenant in common of the Premises and shall be released, indemnified and held
harmless by the remaining Co-Owner from all liabilities of the Common Operation
thereafter accruing, but shall remain liable:

	 	(a) 	
      for the performance of its obligations under this
      Agreement theretofore accrued;

	 	 	 
	 	(b) 	
      in the case of Coalhunter, for the performance of all
      obligations, including all costs and expenses pursuant to any Work Plan
      previously approved by the Management Committee but incurred after the
      effective date of such withdrawal, but not in excess of the most recent
      cost estimates thereof; and







- 36 -

	 	(c) 	
      in the case of Coalhunter, for, and to post appropriate
      security sufficient for, the cost of ultimate reclamation, remediation,
      pollution controls and shut-down of the Premises pursuant to its
      obligations referred to in Article 18. If the Co-Owners are unable to
      agree on the amount of security, the same shall be determined by a single
      arbitrator pursuant to the Commercial Arbitration Act (British
      Columbia).



11.2 Rights and Obligations of Withdrawing Co-Owner

A withdrawing Co-Owner under sections 10.2 and 11.1 shall be
entitled to all information acquired in the conduct of the Common Operation
prior to such withdrawal and pursuant to any Work Plan of which the withdrawing
Co-Owner has duly paid its Proportionate Share of costs and expenses, including
copies of maps, data and reports which can be reproduced and which have not
theretofore been furnished to such withdrawing Co-Owner, but such withdrawing
Co-Owner shall for a period for two (2) years from the date of such withdrawal
or the completion of the aforementioned Work Plan, whichever is the later, hold
in strict confidence all information acquired by it in the conduct of the Common
Operation. For purposes of this section 11.2, the Carbon Creek Partnership shall
be deemed to have paid its Proportionate Share of costs and expenses.

ARTICLE 12
DEFAULT OF CO-OWNER


12.1 Event of Default


In the event of the occurrence with respect to any Co-Owner of
any one or more of the following:

	 	(a) 	
      upon any default by a Co-Owner in the payment of any
      indebtedness or the performance of any obligation under this Agreement,
      and the failure of such party to cure any such default in the payment of
      any monies required hereby within thirty (30) days after receipt of
      written notice thereof from the Management Committee, or another Co-Owner,
      or the Manager, or the failure to cure any such default in the performance
      of any other obligation within sixty (60) days after receipt of written
      notice thereof from the Management Committee, or another Co-Owner or the
      Manager; or

	 	 	 
	 	(b) 	
      if the whole or any material part of the Interest of the
      Co-Owner shall be the subject of a levy or attachment and such levy and
      attachment shall not have been discharged within sixty (60) days
      thereafter; or

	 	 	 
	 	(c) 	
      if a decree or order by a court of competent jurisdiction
      shall have been entered adjudging the Co-Owner a bankrupt or insolvent, or
      approving as properly filed a petition seeking reorganization of or
      arrangement by the Co-Owner under the Bankruptcy and Insolvency Act
      (Canada) or any other similar applicable Law, and such decree or order
      shall have continued undischarged and unstayed for a period of sixty (60)
      days; or a decree or order of a court of competent jurisdiction for the
      appointment of a receiver or liquidator or trustee or assignee in
      bankruptcy or insolvency of the Co-Owner or any of its property, or for
      the compulsory winding-up of its affairs, shall have been entered, and
      such decree or order shall have remained in force undischarged or unstayed
  for a period of sixty (60) days; or







- 37 -

	 	(d) 	
      if the Co-Owner shall institute proceedings to be
      adjudicated a voluntary bankrupt, or shall consent to the filing of a
      bankruptcy proceeding against it, or shall file a petition or answer or
      consent seeking reorganization or an arrangement under the Bankruptcy
      and Insolvency Act or any other similar applicable Law, or shall
      consent to the appointment of a receiver or trustee or assignee in
      bankruptcy or insolvency of it or of its property, or shall make an
      assignment for the benefit of creditors, or shall admit in writing its
      inability to pay its debts generally as they become due, or corporate
      action shall be taken by the defaulting Co-Owner in furtherance of any of
      the aforesaid purposes;



then:

	 	(e) 	
      if such event occurs before the Management Committee
      makes a Production Decision, the defaulting Co-Owner shall be deemed to
      have assigned and conveyed its Interest to the other Co-Owner, and shall
      be paid fair market value for such Interest, such value to be determined
      by an independent appraiser appointed by the non-defaulting Co-Owner and
      acceptable to the non-defaulting Co-Owner, such acceptance not to be
      unreasonably withheld. With respect to such Co-Owner, this Agreement shall
      thereby be terminated subject to any then outstanding liabilities;
    or

	 	 	 	 
	 	(f) 	
      if such event occurs after the Management Committee has
      made a Production Decision, the other Co-Owner, without prejudice to any
      other remedy it may have, shall have the right to purchase the Interest of
      the defaulting Co-Owner, upon the following terms and
conditions:

	 	 	 	 
	 		(i) 	
      any non-defaulting Co-Owner wishing to exercise the said
      right of purchase may do so at any time during the continuance of such
      default by giving concurrent written notice of its election to do so to
      the defaulting Co-Owner and to the Manager, if a default of the Manager is
      involved;

	 	 	 	 
	 		(ii) 	
      the completion of the purchase of the said defaulting
      Interest shall take place at the time and place, and the defaulting
      Co-Owner shall perform such acts and execute such documents, as the
      purchasing Co-Owner may reasonably specify or provide. The purchase price
      of the aforesaid Interest to the purchasing Co-Owner shall be the fair
      market value thereof to be determined, within seventy-five (75) days of
      receipt by the defaulting Co-Owner of the notice provided for in section
      12.1(f)(i), by an independent appraiser appointed by the purchasing
      Co-Owner and acceptable to the non-defaulting Co-Owner, such acceptance
      not to be unreasonably withheld; and







- 38 -

	 	(iii) 	
      any purchase made as aforesaid shall be a perpetual bar
      both at law and in equity to any claim by the defaulting Co-Owner and its
      successors and assigns against the other Co-Owner, its successors and
      assigns.



12.2 Additional Remedies


In the event of the occurrence with respect to any Co-Owner of
any one or more of the events referred to in section 12.1, each non-defaulting
Co-Owner, without prejudice to any other remedy it may have, shall have the
right to do any one or more of the following:

	 	(a) 	
      pursue any remedy available at law or in equity, it being
      acknowledged by each of the Co-Owners that specific performance,
      injunctive relief (mandatory or otherwise) or other equitable relief may
      be the only adequate remedy for a default;

	 	 	 
	 	(b) 	
      take all actions in its own name or in the name of the
      defaulting Co-Owner as may reasonably be required to cure the default, in
      which event all payments, costs and expenses incurred therefor shall be
      payable by the defaulting Co-Owner to the non-defaulting Co-Owner on
      demand; and

	 	 	 
	 	(c) 	
      be entitled to a lien for the payment of any indebtedness
      arising out of such remedies aforesaid or to secure the due performance of
      any obligations arising hereunder from the defaulting Co-Owner to the
      non-defaulting Co-Owner.



ARTICLE 13
ACCESS TO PREMISES AND
INFORMATION

13.1 Inspection


Each Co-Owner, its employees and agents shall have the right,
at the cost and risk of such Co-Owner and upon reasonable notice to the Manager,
to enter into and upon the Premises with a duly authorized representative of the
Manager at all reasonable times for the purpose of inspecting the same and the
work performed hereunder. Subject to section 13.4, each Co-Owner, its employees
and agents shall have the right at all reasonable times to inspect all drilling
data, samples, cores, logs and other data pertaining to the Premises, and upon
reasonable request from a Co-Owner, the Manager shall furnish to such Co-Owner
copies of all logs, assay reports, maps or other documents connected with the
Common Operation and reasonable samples of material for testing purposes. Each
Co-Owner, its employees and agents shall also have the right at all reasonable
times in connection with any such inspection to consult with employees of the
Manager and, in collaboration with such employees, any contractors retained by
the Manager. The inspection and access rights herein are granted on the
conditions that the Co-Owners comply with the Manager’s rules and not obstruct
or interfere with the Manager’s work.




- 39 -


13.2 Carbon Creek Coal Information


The Carbon Creek Partnership shall make available or cause to
be made available to Coalhunter and its Representatives all technical
information and data in the possession of any of the P. Burns Entities relating
to historical operations within the Carbon Creek Basin.

13.3 Reports


The Manager shall communicate to the Co-Owners all information
pertinent to the operation of the Carbon Creek Joint Venture, including the
furnishing of access to all exploration results. The Manager shall also provide
monthly reports on or before the last day of each calendar month on operations
during the preceding calendar month, and comprehensive annual reports on the
results of the work conducted and results and information obtained therefrom,
including details of all costs incurred and conclusions and technical
information such as current maps and calculations of coal mined. The Manager
shall provide such other reports as may be reasonably requested by the
Co-Owners.

13.4 Proprietary Information


Notwithstanding any other provision of this Agreement, the
Manager shall not be required to disclose to a Non-Manager any of the Manager’s
confidential processes, trade secrets or proprietary information.

ARTICLE 14
PARTITION


14.1 Waiver of Right of Partition


Each Co-Owner waives the benefit of all provisions of Law, as
now in effect or as enacted in the future, relating to actions of 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.

ARTICLE 15
FORCE MAJEURE


15.1 Force Majeure


No party shall be liable to any other party hereto and no party
shall be deemed in default hereunder for any failure to perform or delay in
performing any of its covenants and agreements caused by or arising out of any
act beyond the reasonable control of such party, excluding lack of funds but
including, without limitation, lack of rights or permission by First Nations or
indigenous peoples groups to enter upon the Premises to conduct exploration,
development and mining operations thereon, war or war conditions, actual or
potential, earthquake, fire, storm, flood, explosion, strike, labour trouble,
accident, riot, unavoidable casualty, act of restraint, present or future, of
any lawful authority, act of God, protests, or demonstrations by environmental lobbyists, First Nations or indigenous peoples’
groups, acts of the public enemy, delays in transportation, breakdown of
machinery, inability to obtain necessary materials in the open market or
unavailability of equipment. No right of a party shall be affected for failure
or delay of a party to meet any condition of this Agreement, if the failure or
delay is caused by one of the events referred to above. All times provided for
in this Agreement shall be extended for the period commensurate with the period
of the delay and, so far as possible, the party affected shall take all
reasonable steps to remedy the cause of the delay attributable to the events
referred to above; provided, however, that nothing contained in this section
shall require any party to settle any labour dispute, protest or demonstration,
or to question or test the validity or constitutionality of any Law or claim of
right by First Nations or indigenous peoples’ groups. The party affected shall
give notice to the other party of the commencement and termination of each
period of force majeure.




- 40 -



ARTICLE 16
TERMINATION


16.1 Term


This Agreement shall become effective on the date hereof and,
unless sooner terminated as provided herein, shall continue in effect so long as
any two of the original parties hereto or any of their respective successors in
interest or wholly owned subsidiaries continue to own any Interest or have any
liabilities or obligations hereunder, contingent or otherwise.

16.2 Effect of Termination


The termination of this Agreement shall not relieve any
Co-Owner from its liabilities and obligations hereunder theretofore accrued.

ARTICLE 17
NON-DISCLOSURE


17.1 Non-Disclosure


All Confidential Information concerning this Agreement or any
matters arising from this Agreement shall be treated as confidential by the
Co-Owners and shall not be disclosed by a Co-Owner to any other person (other
than a wholly owned subsidiary, or a Controlling Shareholder of a Co-Owner who
has agreed in writing not to disclose such information to any other person
except as permitted hereby) without the previous written consent of the other
Co-Owners, except to the extent that such disclosure may be necessary for
observance of legal or stock exchange listing requirements or for the
accomplishment of the purposes of this Agreement; provided that no such
disclosure shall be made to such other person until the other person shall have
given a written undertaking not to disclose any such information. A copy of all
information disclosed by a Co-Owner hereto (whether or not requiring permission
pursuant hereto) shall be given forthwith to the other Co-Owners.




- 41 -


17.2 Confidential Information


As used herein, “Confidential Information” means all
information regarding the assets, liabilities, contracts, documents, operations,
employee matters, customer matters, supplier matters and business matters of
Coalhunter, any of the P. Burns Entities and their respective Affiliates, as the
case may be, including all information regarding the Lands and including in each
case any such information provided to the other party or to the other’s
Representatives together with all analyses, compilations, studies, notes or
other documents, whether prepared by Coalhunter, any of the P. Burns Entities,
their respective Representatives or by others, which contain or otherwise
reflect such information. The term Confidential Information shall not include
such information which:

	 	(a) 	
      is or becomes generally available to the public other
      than as a result of a disclosure by the party bound by a confidentiality
      obligation hereunder with respect to such information or by any of its
      Representatives;

	 	 	 
	 	(b) 	
      is or becomes available to such party on a
      non-confidential basis from a source (other than the other party) which,
      to such party’s knowledge, is not prohibited from disclosing such
      information or other information to such party or its Representatives;
      or

	 	 	 
	 	(c) 	
      is required to be disclosed by a party under applicable
      Laws.



17.3 Publicity


Notwithstanding section 17.1, each Co-Owner shall provide the
other with a copy of any news release proposed to be published by such Co-Owner
prior to publication of the same for the other Co-Owner’s consent, which shall
not be unreasonably withheld or delayed in view of any timely disclosure
obligations which may be applicable. Each Co-Owner shall use all reasonable
efforts to respond to any request for consent by the other Co-Owner within two
(2) Business Days. For the avoidance of doubt, nothing in this section 17.3
shall prevent a Co-Owner from complying with its obligations under applicable
securities Laws or the rules or policies of any stock exchange on which such
party’s securities are listed.

17.4 P. Burns Privacy


Coalhunter acknowledges that the P. Burns Entities are all
private entities, and that none of them are or will be subject to the same level
of scrutiny as publicly traded entities and that all of them wish to maintain
privacy with respect to their business affairs. Coalhunter shall make all
reasonable efforts to prevent any unnecessary disclosure of any of their names
or financial or ownership interests.




- 42 -


ARTICLE 18
RECLAMATION FUND


18.1 Reclamation Fund


Upon the commencement of commercial production from the
Premises, the Manager shall establish a fund (the “Reclamation Fund”) to be
maintained as a separate, escrow account, for the purpose of paying all costs of
environmental, reclamation, remediation, pollution control, decommissioning,
shut-down and other similar costs and liabilities (collectively the “Reclamation
Costs”) that may arise from time to time as a result of the operation of a mine
on the Premises. At the time the Reclamation Fund is established, the Manager,
in good faith, shall estimate the amount of money required to pay the
Reclamation Costs throughout the life of the mine and, based upon the estimated
life of the mine, the amount of money (the “Reclamation Assessment”) that will
be required to be contributed by Coalhunter on an annual basis, or from time to
time in the case of special or unexpected Reclamation Costs, in order to
establish and maintain the Reclamation Fund. Coalhunter shall pay the
Reclamation Assessment into a segregated account with a chartered bank within
thirty (30) days from the time of such assessment. The Manager shall in its
reasonable discretion accept security in lieu of such payment being made in
cash. Coalhunter shall not be entitled to a refund of any Reclamation
Assessments (or security in lieu thereof) upon ceasing to be a Co-Owner under
this Agreement.

18.2 Annual Review


At least once each year throughout the term of this Agreement,
the Manager shall review the estimates of the amount of Reclamation Costs that
will then be necessary, based upon the information then available, and may
adjust the size of the Reclamation Fund and the Reclamation Assessment
accordingly. If the Manager determines, acting reasonably, that there are excess
moneys in the Reclamation Fund, it shall disburse such excess to Coalhunter.

18.3 Submissions by Co-Owners


The Manager shall, prior to the time it establishes the
Reclamation Fund and prior to each annual review thereof, give notice to the
Co-Owners that it is considering or reconsidering the matter of the Reclamation
Fund and invite the Co-Owners to submit any information or ideas they may have
relating to the same. The Manager shall consider any such information or ideas
that are submitted to it within thirty (30) days of its notice aforesaid,
although any decisions to be made by the Manager with respect to the subject
matter hereof are solely within its own powers.

ARTICLE 19
INDEMNITIES


19.1 Indemnification by Partnership


The Carbon Creek Partnership shall indemnify and save harmless
Coalhunter and its Representatives (collectively the “Coalhunter Indemnified
Parties”) from and against any and all Losses of every kind whatsoever, whether
direct or indirect, which at any time or from time to time are directly or
indirectly incurred or suffered by any of the Coalhunter Indemnified Parties in
connection with, as a result of or arising out of:




- 43 -

	 	(a) 	
      any misrepresentation or untrue warranty of the Carbon
      Creek Partnership;

	 	 	 
	 	(b) 	
      any breach of this Agreement by the Carbon Creek
      Partnership;

	 	 	 
	 	(c) 	
      the performance of any obligations imposed by any
      Environmental Laws, the taking of steps by or on behalf of any of the
      Coalhunter Indemnified Parties to protect against or in connection with
      Environmental Harm, or any liability of any of the Coalhunter Indemnified
      Parties for any Environmental Harm, insofar as such performance, taking of
      steps or liability may directly or indirectly relate to conditions
      existing on the Premises prior to the date of this Agreement, provided
      that the indemnity contained in this section 19.1(c) shall not apply to
      the extent, if any, that such Losses are the consequence of the
      activities, acts or omissions after the date of this Agreement of
      Coalhunter or any of its Representatives;

	 	 	 
	 	(d) 	
      with the exception of any Losses caused by the gross
      negligence or wilful misconduct of Coalhunter, any injury (including
      injury causing death) of any Representative of the Carbon Creek
      Partnership while on the Premises; or

	 	 	 
	 	(e) 	
      any damages to the property of Coalhunter on the Premises
      caused by any Representative of the Carbon Creek
  Partnership.



For greater certainty, no termination of this Agreement shall
disentitle any of the Coalhunter Indemnified Parties from obtaining
indemnification from the Carbon Creek Partnership pursuant to this section.

19.2 Indemnification by Coalhunter


Coalhunter shall indemnify and save harmless the Carbon Creek
Partnership and its Representatives (collectively the “Carbon Creek Partnership
Indemnified Parties”) from and against any and all Losses of every kind
whatsoever, whether direct or indirect, which at any time or from time to time
are directly or indirectly incurred or suffered by any of the Carbon Creek
Partnership Indemnified Parties in connection with, as a result of or arising
out of:

	 	(a) 	
      any misrepresentation or untrue warranty of
      Coalhunter;

	 	 	 
	 	(b) 	
      any breach of this Agreement by Coalhunter;

	 	 	 
	 	(c) 	
      the performance of any obligations imposed by any
      Environmental Laws, the taking of steps by or on behalf of any of the
      Carbon Creek Partnership Indemnified Parties to protect against or in
      connection with Environmental Harm, or any liability of any of the Carbon
      Creek Partnership Indemnified Parties for any Environmental Harm, insofar
      as such performance, taking of steps or liability may directly or
      indirectly arise as a consequence of the activities, acts or omissions
      during the term of this Agreement of Coalhunter or any of its
      Representatives;







- 44 -

	 	(d) 	
      with the exception of any Losses caused by the gross
      negligence or wilful misconduct of the Carbon Creek Partnership, any
      injury (including injury causing death) of any Representatives of
      Coalhunter while on the Lands; or

	 	 	 
	 	(e) 	
      any damages to the property of the Carbon Creek
      Partnership on the Lands caused by any Representatives of
    Coalhunter.



For greater certainty, no termination of this Agreement shall
disentitle any of the Carbon Creek Partnership Indemnified Parties from
obtaining indemnification from Coalhunter pursuant to this section.

ARTICLE 20
NOTICES


20.1 Notices


Any notice, commitment, election, consent or other
communication required or permitted to be given hereunder by any party to any
other party, in any capacity, (hereinafter called a “Notice”) shall be in
writing and shall be deemed to have been well and sufficiently given if mailed
by prepaid registered mail return receipt requested, telefaxed or delivered, to
the address of such other party hereinafter set forth:

If to the Carbon Creek
Partnership:


Carbon Creek Partnership
Suite
620
5920 Macleod Trail SW
Calgary, Alberta
T2H OK2
Attention: Larry
Horan
Fax: 403-259-2633


If to Coalhunter:


Coalhunter Mining Corporation Suite
507
475 Howe Street
Vancouver, B.C.
V6C 2B32
Attention: Michael
Hunter 
Fax: 604-687-7848


or to such substitute address as such party may from time to
time direct in writing, and any such Notice shall be deemed to have been
received, if mailed, on the date noted on the return receipt, if telefaxed, on
the first Business Day after the date of transmission, and if delivered, upon
the day of delivery or if such day is not a Business Day, then on the first
Business Day thereafter.




- 45 -


ARTICLE 21
GENERAL


21.1 Further Assurances


Each party shall promptly do and provide all acts and things
and shall promptly execute and deliver such deeds, bills of sale, assignments,
endorsements and instruments and evidences of transfer and other documents and
shall give such further assurances as shall be necessary or appropriate in
connection with the performance of this Agreement. The parties agree to
co-operate fully in applying for all necessary governmental approvals and
permits. Each party shall give to the Manager from time to time such powers of
attorney and other evidences of authority as shall be necessary to enable the
Manager to perform its duties hereunder.

21.2 Amendments


No alteration, amendment, modification or interpretation of any
provision of this Agreement shall be binding unless in writing and executed by
each of the parties hereto.

21.3 Business Days


In the event that any date on or by which any payment is
required to be made or any action is required to be taken hereunder by any of
the parties hereto is not a Business Day, such payment shall be required to be
made or such action shall be required to be taken on the next succeeding day
which is a Business Day.

21.4 Assignments by Co-Owners


Neither this Agreement nor any interest herein nor any claim
arising hereunder may be sold, leased, transferred, assigned or otherwise dealt
with by a Co-Owner except in conjunction with the sale, assignment or transfer
by such Co-Owner of all or part of its Interest as provided in Article 10,
Article 11 or Article 12 hereof.

21.5 Schedules


All Schedules attached to this Agreement are deemed to form
part of this Agreement.

21.6 Map


The map attached as Schedule “B” hereto provides an
approximation of the areas covered by the Johnson Applications, the Resources
Applications and the Peace River Partnership Lands. The Carbon Creek Partnership
makes no representation or warranty as to the accuracy or completeness of the
said map.

21.7 Counterparts


This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one and the
same instrument.




- 46 -


21.8 Governing Law


This Agreement shall be governed by, and interpreted and
construed in accordance with, the Laws of the Province of British Columbia and
the federal Laws of Canada applicable therein, which shall be deemed to be the
proper law thereof. Subject to sections 10.2 and 11.1, each party irrevocably
submits to the non-exclusive jurisdiction of the courts of British Columbia with
respect to any matter arising under this Agreement or relating hereto.

21.9 Time of Essence

Time shall be of the essence of this Agreement.

21.10 Entire Agreement


This Agreement contains the entire understanding between the
parties hereto dealing with the subject matter hereof and supersedes all
negotiations, correspondence, letters of intent, letters of agreement, and prior
agreements or understandings relating thereto including the Carbon Creek Joint
Venture Letter Agreement.

21.11 Severability/Illegality


If one or more provisions of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable Law, the validity,
legality or enforceability of the remaining terms or provisions hereof shall not
be affected or impaired by reason thereof.

21.12 Remedies Cumulative


The rights and remedies of the parties set out herein are in
addition to and not in derogation of any other rights or remedies such party may
have at law or in equity.

21.13 Enurement


This Agreement shall enure to and be binding upon the parties
hereto and their respective successors and permitted assigns.




- 47 -


IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement to have effect as of the day and year first above written.

	SIGNED, SEALED and DELIVERED on 	  ) 
	behalf of the CARBON CREEK 	  ) 
	PARTNERSHIP by: 	  ) 
	  	  ) 
	  	  ) 
	  	  ) 
	/s/ Larry
      Horan 	  ) 
	Authorized Signatory 	  ) 
	 	 
	Date Executed: June 15, 2010 	  ) 
	  	  ) 



	SIGNED, SEALED and DELIVERED on 	  ) 
	behalf of the COALHUNTER MINING 	  ) 
	CORPORATION by: 	  ) 
	  	  ) 
	  	  ) 
	  	  ) 
	/s/ Michael
      Hunter 	  ) 
	Authorized Signatory 	  ) 
	 	 
	Date Executed: June 15, 2010 	  ) 
	  	  ) 


This is Page 47 of the Joint Venture Agreement between the
Carbon Creek Partnership and Coalhunter Mining Corporation made as of the 15th
day of June, 2010.




This is Schedule “A” to the Carbon Creek Joint Venture
Agreement between the 
CARBON CREEK PARTNERSHIP and 
COALHUNTER MINING
CORPORATION 
made as of the 15th day of June, 2010

THE PROPERTY


The mining property consists of the coal applications in the
Liard Mining Division of the Peace River Land District in the Province of
British Columbia described as follows:

	A. 	
      Johnson Application

	 	 	 
		1. 	
      Coal Licence Application 414151

	 	 	 
	B. 	
      Resources Applications

	 	 	 
		1. 	
      Coal Licence Application 416891

	 	 	 
		2. 	
      Coal Licence Application 416892

	 	 	 
		3. 	
      Coal Licence Application 416893

	 	 	 
		4. 	
      Coal Licence Application 416894

	 	 	 
		5. 	
      Coal Licence Application 416895

	 	 	 
		6. 	
      Coal Licence Application 416896

	 	 	 
		7. 	
      Coal Licence Application 416897

	 	 	 
		8. 	
      Coal Licence Application 416898

	 	 	 
		9. 	
      Coal Licence Application 416899

	 	 	 
		10. 	
      Coal Licence Application 416890

	 	 	 
	C. 	
      Coalhunter Application

	 	 	 
		1. 	
      Coal Licence Application
417753







This is Schedule “B” to the Carbon Creek Joint Venture
Agreement between the
CARBON CREEK PARTNERSHIP and 
COALHUNTER MINING
CORPORATION 
made as of the 15th day of June, 2010

MAP




This is Schedule “C” to the Carbon Creek Joint Venture
Agreement between the 
CARBON CREEK PARTNERSHIP and 
COALHUNTER MINING
CORPORATION 
made as of the 15th day of June, 2010

CALCULATION OF NET PROCEEDS

	1. 	
      For the purposes of this Schedule “C”, unless otherwise
      defined in this Schedule “C”, all capitalized terms shall have the
      meanings assigned to them in the agreement to which this Schedule “C” is
      attached (the “Agreement”).

	 	 	 	 
	2. 	
      For the purposes hereof, the term “Net Proceeds” shall
      mean, subject to paragraphs 3, 4, 5, 6 and 7 below, the sum of the
      following revenues:

	 	 	 	 
		(a) 	
      revenue earned by Coalhunter from the sale of all coal
      and coal by-products produced from the Premises;

	 	 	 	 
		(b) 	
      other revenue of Coalhunter which is a direct result of
      the recovery of or a reduction of costs described in this paragraph 2
      below, including:

	 	 	 	 
			(i) 	
      proceeds received from the sale, lease, rental or
      disposal of plant, buildings, machinery, equipment and lands which were or
      may be acquired pursuant to the Agreement and insurance proceeds from the
      loss, damage or destruction thereof; and

	 	 	 	 
			(ii) 	
      refunds of reclamation bonds, deposits and taxes, to the
      extent previously deducted in calculating Net Proceeds;

	 	 	 	 
			
      and any business interruption insurance proceeds but
      excluding interest on working capital;

	 	 	 	 
		
      less successively without duplication the following
      expenses:

	 	 	 	 
		(c) 	
      all payments made by Coalhunter to Johnson to acquire the
      Coalhunter Licences, up to a maximum of five million four hundred thousand
      dollars ($5,400,000);

	 	 	 	 
		(d) 	
      all direct costs incurred by Coalhunter:

	 	 	 	 
			(i) 	
      to acquire and maintain Coal Licences and Crown Coal
      Leases within the Area of Interest which are by the terms of the Agreement
      or by agreement between the Parties included in the Premises, including
      all amounts payable by way of royalties in respect thereto;
  and







C-2

	 	(ii) 	
      for the acquisition, exploration and development of the
      Premises including the Work Costs incurred under the Agreement, whether
      such costs are treated as capital or expense for accounting purposes, but
      excluding (A) all costs incurred by Coalhunter for legal, accounting and
      other professional services relating to the preparation and execution of
      the Carbon Creek Joint Venture Letter Agreement and this Agreement and in
      respect of the closing of the transactions contemplated in the Carbon
      Creek Joint Venture Letter Agreement; (B) all payments made by Coalhunter
      pursuant to section 4.1 of the Agreement; (C) the cost of the Coalhunter
      Shares and the Coalhunter Warrants to be issued pursuant to section 4.2 of
      the Agreement; and (D) for greater certainty, all payments made by
      Coalhunter pursuant to the Coal Lease Option Agreement and the Carbon
      Creek Coal Lease;




	 	(e) 	
      all direct costs incurred by Coalhunter to acquire,
      construct, erect or develop capital assets required solely for the
      operation of the Premises whether or not such assets are located on the
      Premises and including roads, employee housing, townsite development and
      all equipment, facilities and amenities for the use and welfare of
      employees. No amount shall be included for depletion, depreciation, or
      amortization of capitalized costs;

	 	 	 	 
	 	(f) 	
      all direct costs of development, production, operation,
      repair and maintenance, remediation, reclamation, marketing, employee
      compensation and related costs and benefits, materials, management,
      supervision and administration incurred by Coalhunter in connection with
      or related to the operation of the Premises and with coal mined from the
      Premises or coal by-products derived therefrom and including:

	 	 	 	 
	 		(i) 	
      all mining and treatment costs with respect to the coal
      and by-products derived therefrom and all insurance and transportation
      costs to the purchaser thereof;

	 	 	 	 
	 		(ii) 	
      all taxes, assessments, fees, duties and other levies of
      any kind payable to any federal, provincial, territorial, state and
      municipal government or governmental body charged, levied or imposed upon
      the Premises, or payable on or in respect of or measured by the products
      of the Premises, including all governmental royalties relating to such
      mining, and mining duties or mining or resource taxes or capital taxes.
      However, no income taxes levied under federal or provincial income tax
      legislation shall be included;

	 	 	 	 
	 		(iii) 	
      all insurance, legal, audit and accounting costs, and
      other direct costs to obtain and maintain permits, licences and other
      regulatory approvals, reasonably incurred by or on behalf of Coalhunter in
      connection with operations and assets relating to the
  Premises;







C-3

	 	(iv) 	
      the amount payable to reimburse Coalhunter for all of its
      general overhead and administrative costs and management fees connected
      with the operation of the Premises or with coal mined from the Premises,
      such amount to be calculated as provided in section 8.5 of the
      Agreement;

	 	 	 
	 	(v) 	
      all costs for licences, permits and reclamation,
      including reclamation deposits and funding required by government, in
      connection with or related to the operation of the Premises and with coal
      mined from the Premises. Any amount included in paragraph 2(b) above in
      respect of revenue earned as a result of costs described in this
      subparagraph (v) shall be deemed a cost incurred for the purpose of this
      subparagraph (v) unless the amount in paragraph 2(b) represents a
      government-approved reduction or return of the amount on deposit or a
      reduction of the funding requirements for
reclamation;




	 	(g) 	
      once the Premises has been placed into Commercial
      Production, all subsequent reasonable costs of obtaining financing, costs
      of financing and costs of providing security incurred by Coalhunter in
      connection with the funding of the costs described in all subparagraphs of
      this paragraph 2 of this Schedule, including an amount equal to interest
      on the monies utilized by Coalhunter out of its own available cash
      resources for the payment of such costs at the best rate available to
      Coalhunter for Canadian currency financing of such costs through a
      chartered bank or banks in Canada. Any amount equal to interest on monies
      so utilized by Coalhunter shall accrue from the date on which the monies
      were spent;

	 	 	 
	 	(h) 	
      all amounts provided for bad debts and for doubtful
      accounts where the necessity for such provision is agreed to by
      Coalhunter’s external auditors; and

	 	 	 
	 	(i) 	
      for all years after the calendar year in respect of which
      the first payment of Net Proceeds is made in accordance with this
      Schedule, or which would otherwise be payable but for an amount offset
      against the amount due, 100% of negative Net Proceeds of the prior
      calendar year, if any;



provided that with respect to both the
items which make up revenue and those that make up the deductions, there shall
be no duplication of items relating to the same transaction.

	3. 	
      No percentage of Net Proceeds shall be paid hereunder
      until, subject to the provisos of paragraph 2 and paragraphs 4, 5, 6 and 7
      below, the cumulative total, since the effective date of the Agreement, of
      revenue described in subparagraphs (a) and (b) of paragraph 2 of this
      Schedule exceeds the cumulative total of costs described in subparagraphs
      (c) to (i) inclusive thereof. In the calendar year during which Net
      Proceeds are generated for the first payment of a percentage of Net
      Proceeds in accordance with this paragraph or which would otherwise be
      payable but for an amount offset against the amount due, only those
      revenues and costs, described in the aforesaid subparagraphs (a) to (i)
      inclusive, relating to that calendar year and arising after the said
      cumulative total of revenue exceeds the said cumulative total of costs,
      shall be included in the calculation of Net
Proceeds.







C-4

	4. 	
      Coalhunter may not engage in price protection (hedging)
      or speculative transactions such as futures contracts and commodity
      options covering all or any part of production from the Premises without
      the prior written consent of the Carbon Creek Partnership, which consent
      will be in the sole discretion of the Carbon Creek Partnership. For
      greater certainty, a contract to supply coal to a purchaser for a term not
      exceeding one (1) year under which Production from the Premises is
      delivered to the purchaser shall not contravene this paragraph
4.

	 	 
	5. 	
      If the Premises are brought into Commercial Production,
      the Premises shall not be operated as a single operation with other mining
      properties owned by third parties or in which Coalhunter has an interest,
      provided that with the prior written approval of Coalhunter, the Carbon
      Creek Partnership and the Peace River Partnership, the Premises may be
      operated as a single operation with the Peace River Partnership Lands.
      Coal produced from the Premises shall not be commingled with coal produced
      from any other property, other than coal produced from the Peace River
      Partnership Lands, without the prior written consent of the Carbon Creek
      Partnership, which consent shall be in the sole discretion of the Carbon
      Creek Partnership. For greater certainty:




	 	(a) 	
      Coalhunter may blend coal from the Premises with coal
      extracted from other properties if the effect of such commingling is
      consistent with the intention of enhancing the value of the coal mined
      from the Premises; and

	 	 	 
	 	(b) 	
      Coalhunter shall not wash, process or treat coal
      extracted from any property other than the Premises at any facility
      established under the Agreement without the prior written consent of the
      Carbon Creek Partnership, which consent shall be in the sole discretion of
      the Carbon Creek Partnership.




	6. 	(a) 	
      Where revenue otherwise to be included under this
      Schedule is earned by Coalhunter in a transaction with a party with whom
      it is not dealing at arm’s length, the revenue to be included shall be
      based on the fair market value under the circumstances and at the time of
      the transaction. 

	  	  	
      

		(b) 	
      Where a cost otherwise deductible under this Schedule is
      incurred by Coalhunter in a transaction with a party with whom it is not
      dealing at arm’s length, the cost to be deducted shall be the fair market
      cost under the circumstances and at the time of the transaction.


	  	  	
      

	7. 	(a) 	
      If Coalhunter sells, assigns or transfers all or part of
      Coalhunter’s interest in the Carbon Creek Joint Venture and the Premises
      (the “Interest”), having first offered such Interest to the Carbon Creek
      Partnership pursuant to section 10.2 of the Agreement, Coalhunter may, by
      giving notice to the Carbon Creek Partnership, elect to have the
      purchaser, assignee or transferee of all or such part of the Interest
      assume the contractual obligation to pay all or the appropriate pro rata
      portion of the percentage of Net Proceeds payable to the Carbon Creek
      Partnership pursuant to the Agreement, provided that the purchaser,
      assignee or transferee provides the written agreement assuming such
      contractual obligation to the Carbon Creek Partnership referred to in
      subparagraph 7(b) below effective upon such sale,
assignment or transfer. If Coalhunter gives the Carbon Creek
Partnership such notice of election as aforesaid (i) the Carbon Creek
Partnership shall perform such acts as shall be required to implement the sale,
transfer or assignment when requested by Coalhunter, and (ii) no amount for the
related sale, transfer or assignment price for all or such part of the Interest
shall be included as revenue, nor shall any related cost of the transaction
incurred by Coalhunter be treated as a deduction, for the purposes of paragraph
2 above. In this event, the purchaser, assignee or transferee shall succeed to
the position of Coalhunter from whom it is receiving all or part of the
Interest, as the case may be, and shall be deemed to have earned all or its pro
rata portion of the revenues earned by Coalhunter and to have incurred all costs
incurred by Coalhunter or deemed to have been incurred by Coalhunter under
paragraph 2. The purchaser, assignee or transferee shall not be entitled to
deduct the acquisition price paid as a cost incurred under paragraph 2.







C-5



	 	(b) 	
      No sale, assignment or transfer by Coalhunter of all or
      any part of the Interest may be completed pursuant to this paragraph 7
      unless and until the purchaser, assignee or transferee of all or part of
      the Interest delivers a written agreement with and for the benefit of the
      Carbon Creek Partnership, in a form satisfactory to the Carbon Creek
      Partnership, to assume and agree to pay and perform all or a pro rata
      portion of the liabilities and obligations of Coalhunter under the
      Agreement relating to the Carbon Creek Partnership’s Carried Interest, as
      the case may be. Such assumption shall not serve to release or discharge
      Coalhunter from any liabilities or obligations theretofore accrued with
      respect to the payment of Net Proceeds to the Carbon Creek Partnership,
      but shall release and discharge Coalhunter from the obligation to pay the
      Net Proceeds payable to the Carbon Creek Partnership in respect of the
      portion of Coalhunter’s Interest so transferred accruing
  thereafter.




	8. 	
      The estimated portion of the Net Proceeds due hereunder
      shall be paid in four quarterly instalments with a final adjustment to be
      made when the final amount of Net Proceeds is determined for the calendar
      year in question. Final determination of Net Proceeds shall be completed
      for any particular calendar year on or before May 1 in the next calendar
      year and any adjustment required by such final determination shall be made
      to the following quarterly instalments.

	 	 
	9. 	
      The Carbon Creek Partnership shall be provided annually
      on or before May 1 of each year with a copy of the calculation of Net
      Proceeds for the preceding year, accompanied by a review engagement report
      given by the external auditors of Coalhunter in the form set out in
      Appendix C-1 to this Schedule “C”. However, if after the commencement of
      commercial production (i) revenue earned in any year is less than $100,000
      adjusted for the effect of inflation since the effective date of the
      Agreement and (ii) in the opinion of Coalhunter no positive Net Proceeds
      arose in that same year, then Coalhunter is relieved of any obligation to
      provide the review engagement report described in this paragraph
  9.

	 	 
	10. 	
      The Carbon Creek Partnership may, on or before July 1 of
      any year and the twenty-four months thereafter, give written notice to
      Coalhunter requiring an audit. Coalhunter
shall then arrange for an audit to be carried out and a copy of the
auditor’s report shall be provided to Coalhunter and the Carbon Creek
Partnership promptly upon completion of the audit. The auditor’s report shall be
in the form set out in Appendix C-2 to this Schedule “C” and shall be subject to
such qualifications the auditor wishes to make, if any, and shall cover a period
no longer than three years ending on December 31 of the year immediately
preceding the year of the notice.







C-6



	11. 	
      Coalhunter shall retain all books and records relating to
      the Premises for the current year and for the six (6) calendar years prior
      to the current year. Books and records no longer required to be retained
      under this paragraph may at the option of the Carbon Creek Partnership be
      delivered to the Carbon Creek Partnership or
destroyed.







Appendix C-1 to Schedule “C”, Net Proceeds

Review Engagement Report

	To: 	Coalhunter Mining Corporation (“Coalhunter”)
  
	 	 
	And To: 	Carbon Creek Partnership (the “Partnership”)
  


At the request of the Partnership, we have reviewed the
calculation of Net Proceeds (as defined in Schedule “C” to the Carbon Creek
Joint Venture Agreement dated as of the 15th day of June, 2010 between the
Partnership and Coalhunter). Our review was made in accordance with generally
accepted standards for review engagements and accordingly consisted primarily of
enquiry, analytical procedures and discussion related to information supplied to
us by the Partnership.

A review does not constitute an audit and consequently we do
not express an opinion on the calculation of Net Proceeds.

Based on our review, nothing has come to our attention that
causes us to believe that this calculation of Net Proceeds is not, in all
material respects, in accordance with the provisions of the Schedule to the
Agreement referred to above.

 

Chartered Accountants




Appendix C-2 to Schedule “C”, Net Proceeds

Auditors’ Report 
On Schedule of Net Proceeds

	To: 	Coalhunter Mining Corporation (“Coalhunter”)
  
	 	 
	And To: 	Carbon Creek Partnership (the “Partnership”)
  


We have audited the calculation of Net Proceeds (as defined in
Schedule “C” to the Carbon Creek Joint Venture Agreement dated as of June 15,
2010 between the Partnership and Coalhunter). This financial information is the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on this financial information based on our audit.

We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial information is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial information. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
financial information.

In our opinion, this calculation presents fairly, in all
material respects, the Net Proceeds of the Partnership for the year ended
December 31, 20•, in accordance with the provisions of this Schedule to the
Agreement referred to above.

 

Chartered Accountants




This is Schedule “D” to the Carbon Creek Joint Venture
Agreement between the 
CARBON CREEK PARTNERSHIP and 
COALHUNTER MINING
CORPORATION 
made as of the 15th day of June, 2010

VOTING TRUST AGREEMENT


THIS AGREEMENT is made as of the 15th day of June, 2010
(the “Effective Date”)

BETWEEN:


CARBON CREEK PARTNERSHIP, a
partnership existing under the laws of Alberta between P. Burns Carbon Creek
Coal Corporation and P. Burns Partners Limited, having an office at 5920 Macleod
Trail SW, Calgary, Alberta, T2H OK2

(the “Carbon Creek
Partnership”)


AND:


COALHUNTER MINING CORPORATION, a
corporation existing under the laws of British Columbia, having its registered
office at Suite 1500 — 1055 West Georgia Street, Vancouver, B.C., V6E 4N7

(“Coalhunter”)


WHEREAS:

	A. 	
      the Carbon Creek Partnership and Coalhunter have agreed
      to enter into a joint venture agreement dated as of June 15, 2010 (the
      “Carbon Creek Joint Venture Agreement”) for the formation of a
      joint venture between the Carbon Creek Partnership and Coalhunter (the
      “Carbon Creek Joint Venture”);

	 	 
	B. 	
      as partial consideration for the Carbon Creek Partnership
      to enter into the Carbon Creek Joint Venture, Coalhunter has agreed to
      issue to the Carbon Creek Partnership two million (2,000,000) common
      shares in the capital of Coalhunter (the “Coalhunter Shares”) and a
      warrant entitling the Carbon Creek Partnership to acquire an additional
      two million (2,000,000) common shares of Coalhunter at forty cents ($0.40)
      per share exercisable for a period of two (2) years from the later of the
      commencement of an initial public offering by Coalhunter or November 15,
      2010 (the “Coalhunter Warrants”); and

	 	 
	C. 	
      the Carbon Creek Partnership has agreed to enter into
      this voting trust agreement (the “Voting Trust”) to vote the
      Coalhunter Shares and any further common shares of Coalhunter issued upon
      exercise of any of the Coalhunter Warrants
  (“Additional Shares”, and collectively with the Coalhunter Shares and
Coalhunter Warrants, the “Coalhunter Securities”) in accordance with the
provisions set out in this Voting Trust.







D-2



NOW, THEREFORE, in consideration of the premises and of
the covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

	1. 	
      Term of Voting Trust. This Voting Trust shall be
      effective as of the Effective Date and shall terminate on June 15, 2025 or
      the date that Michael Hunter ceases to be the chief executive officer of
      Coalhunter, whichever is earlier (the “Termination
Date”).

	 	 
	2. 	
      Agreement to Vote the Coalhunter Securities. Until
      the Termination Date, the Carbon Creek Partnership shall, at the request
      of Coalhunter from time to time, vote those Coalhunter Securities which
      are voting securities in favour of the proposals of Coalhunter’s
      management on all ordinary resolutions of the shareholders proposed to be
      passed at general meetings of Coalhunter’s shareholders.

	 	 
	3. 	
      No Inconsistent Agreements. Prior to the
      Termination Date, the Carbon Creek Partnership shall not enter into any
      agreement or understanding with any person to vote or otherwise give
      instructions in any manner inconsistent with section 2 hereof.

	 	 
	4. 	
      Irrevocable Proxy. Subject to the terms hereof
      relating to the Termination Date, at the request of Coalhunter from time
      to time, the Carbon Creek Partnership shall deliver to Coalhunter an
      irrevocable proxy addressing the matters in section 2 hereof covering
      those Coalhunter Securities which are voting securities.

	 	 
	5. 	
      Concerning the Coalhunter Securities. In the event
      of the subdivision, consolidation, change, exercise, classification or
      reclassification at any time any of the Coalhunter Securities into a
      greater or lesser number of common shares or other securities of
      Coalhunter, or in the event of the conversion of any of the Coalhunter
      Securities into other securities or upon the amalgamation, merger,
      arrangement, or other corporate combination of Coalhunter with any other
      corporation or corporations, or the division of Coalhunter into two or
      more entities, any voting securities received by the Carbon Creek
      Partnership in respect of the Coalhunter Securities resulting from such
      subdivision, consolidation, change, exercise, classification,
      reclassification, conversion, amalgamation, merger, arrangement or other
      corporate combination, or division shall be subject to this Voting
      Trust.




	6. 	
      Additional Documents. The parties shall execute
      and deliver any additional documents reasonably necessary or desirable to
      carry out the purpose and intent of this Voting Trust.

	 	 	 
	7. 	
      General.

	 	 	 
		(a) 	
      Effective Date. Notwithstanding the date of
      execution and delivery of this Voting Trust, this Voting Trust shall be
      effective only from and after the Effective Date.

	 	 	 
		(b) 	
      Severability. If any term, provision, covenant or
      restriction of this Voting Trust is held by a court of competent
      jurisdiction to be invalid, void or
unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Voting Trust shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.







D-3



	(c) 	
      Remedies. The Carbon Creek Partnership
      acknowledges that a breach by it of any of the covenants contained in this
      Voting Trust would result in damage to Coalhunter and that Coalhunter may
      not be adequately compensated for such damages by monetary award alone.
      Accordingly, the Carbon Creek Partnership agrees that in the event of any
      such breach, in addition to any other remedies available at law or
      otherwise, Coalhunter shall be entitled as a matter of right to apply to a
      court of competent jurisdiction for relief by way of injunction,
      restraining order, decree or otherwise as may be appropriate to ensure
      compliance by the Carbon Creek Partnership with the provisions of this
      Voting Trust. Any remedy expressly set out in this Voting Trust shall be
      in addition to and not inclusive of or dependent upon the exercise of any
      other remedy available at law or otherwise.

	 	 
	(d) 	
      Amendments and Modification. This Voting Trust may
      not be modified, amended, altered or supplemented except by the execution
      and delivery of a written agreement executed by the parties
  hereto.

	 	 
	(e) 	
      Waiver. No waiver by any party hereto of any
      condition or of any breach of any provisions of this Voting Trust shall be
      effective unless in writing.

	 	 
	(f) 	
      Governing Law. This Voting Trust shall be governed
      by and construed in accordance with the laws of British Columbia and the
      federal laws of Canada applicable therein, without giving effect to
      principles governing conflicts of laws.

	 	 
	(g) 	
      Headings. The headings herein are for convenience
      only and shall not affect the construction or interpretation of this
      Voting Trust.

	 	 
	(h) 	
      Counterparts. This Voting Trust may be executed in
      several counterparts, each of which shall be an original, but all of which
      together shall constitute one and the same agreement.

	 	 
	(i) 	
      Enurement. This Voting Trust shall enure to the
      benefit of and be binding upon the parties hereto and upon their
      respective successors and assigns.



IN WITNESS WHEREOF, the undersigned have executed this
Voting Trust on the date first written above.

	
      CARBON CREEK PARTNERSHIP
	 	
      COALHUNTER MINING CORPORATION

	 	 	 	 	 
	By: 		 	By: 	
	 	Name 	 	 	Name 
	 	Title 	 	 	Title