Unassociated Document


      Exhibit
10.40

       

    


    To:

    Western
Mesquite Mines, Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Treasurer

    


    Western
Goldfields Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Chief Financial Officer

    


    Western
Goldfields (USA) Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Chief Financial Officer

     

    E

    14 August
2008

     

    Amendment of Repayment
Schedule and approval of new Development

    Plan

     

    US$105,000,000
credit agreement originally dated 30 March 2007 (as amended and restated by an
amendment and restatement agreement dated 31 May 2007 and as further amended on
29 June 2007, 16 July 2007 and 14 August 2007) between Western Mesquite Mines,
Inc. as Borrower, Western Goldfields (USA) Inc. (formerly known as Western
Goldfields, Inc.) as Guarantor, Investec Bank (UK) Limited as Agent, Mandated
Lead Arranger and Security Trustee, Commonwealth Bank of Australia as Lead
Arranger, the Banks (as defined therein) and the Hedging Banks (as defined
therein) (the “Credit Agreement”)

     

    
      
         


      

      
         


        
          

          Page 1

      

      
         


      

    

     

    
      
        	
                
                

              	
                1

              	
                We
      refer to the Credit Agreement. Terms and expressions defined in the Credit
      Agreement
      shall have the same meaning when used herein unless otherwise
      defined.

              


      

    

     

    
      
      

    

    
      	
              
              

            	
              2

            	
              The
      Agent (acting on the instructions of the Majority Banks) hereby
      approves the alterations to the Development Plan proposed by
      the Borrower reflecting:

            


    

     

    
      
        	
              	
                 
      (a)

              	
                an
      amended leach curve; and

              


      

    

    
      
        	
              	
                 
      (b)

              	
                updated
      operating cost figures,

              


      

    

     

      in
accordance with clause 11.1(c) of the Credit Agreement.

     

    
      	
               
      

            	
              3

            	
              In
      addition, the Agent, the Banks and the Hedging Banks hereby propose that
      the Repayment Schedule in Schedule 6 of the Credit Agreement be deleted
      and replaced with the following (the
  “Amendment”):

            


    

         

    
      
        
          
            
              
                
                  	
                          Repayment Date

                        	 	
                          Repayment

                          Instalment

                        	 
	 	 	 	 
	
                          31
      December 2008

                        	 	 	
                          11.50%

                        	 
	
                           30
      June 2009

                        	 	 	
                          6.00%

                        	 
	
                          31
      December 2009

                        	 	 	
                          9.00%

                        	 
	
                           30
      June 2010

                        	 	 	
                          7.00%

                        	 
	
                          31
      December 2010

                        	 	 	
                          6.50%

                        	 
	
                           30
      June 2011

                        	 	 	
                          6.75%

                        	 
	
                          31
      December 2011

                        	 	 	
                          5.50%

                        	 
	
                           30
      June 2012

                        	 	 	
                          5.75%

                        	 
	
                          31
      December 2012

                        	 	 	
                          6.25%

                        	 
	
                           30
      June 2013

                        	 	
                           

                        	
                          6.50%

                        	 
	
                          31
      December 2013

                        	 	 	
                          5.75%

                        	 
	
                           30
      June 2014

                        	 	 	
                          7.25%

                        	 
	
                          31
      December 2014

                        	 	 	
                          16.25%

                        	 


                

              

            

          

        

      

    

     

    
      	
               
      

            	
              4

            	
              The
      approval given in paragraph 2 above and the Amendment will not come into
      effect until the Agent notifies the Borrower that it has received all of
      the following documents in form and substance satisfactory to it (the
      “Effective Date”):

            


    

     

    
      	
               
      

            	
              (a)

            	
              board
      minutes of the Borrower, Western Goldfields (USA) Inc. and the 

                Guarantor
      approving and authorizing:

              

            


    

    
      
      

    

    


    (i)   the proposed alterations to
the Development Plan; and

    (ii)  the Amendment;

    


    
      	
               
      

            	
              (b)

            	
              a
      report from the Independent Technical Consultant on the alterations to the
      Development Plan; and

            


    

     

    
      
         


      

      
         


        
          

          Page 2

      

      
         


      

    

     

    
      
        	
              	
                (c)

              	
                evidence
      that an amount representing US$9,700,000 of additional Equity has been
      deposited into the Proceeds Account since 1 April 2008 and applied against
      approved Operating Costs or Financing
Costs.

              


      

    

     

    
      
        	
              	
                5 

              	
                By
      the acceptance of this letter you agree to the repetition of the Repeating
      Representations by yourselves by reference to the facts and circumstances
      existing on:

              


      

    

     

    
      	
            	
              (a)

            	
              the
      date of this letter; and

            


    

     

    
      	
            	
              (b)

            	
              the
      Effective Date.

            


    

     

    
      
        	
              	
                6

              	
                Without
      prejudice to the rights of any Financing Party which have arisen on or
      before the date of this letter or the Effective Date, by the acceptance of
      this letter you confirm that, on and after the Effective
    Date:

              


      

    

     

    
      
        	
              	
                (a)

              	
                the
      Credit Agreement as amended by this letter, and the other Financing
      Documents, will remain in full force and effect;
  and

              


      

    

    


    
      
        	
              	
                (b)

              	
                the
      Security Documents to which you are a party will continue to secure all
      liabilities which are expressed to be secured by
  them.

              


      

    

     

    
      
        	
              	
                7

              	
                This
      letter is hereby designated as a Financing
  Document.

              


      

    

     

    
      
        	
              	
                8

              	
                This
      letter shall be governed by and construed in accordance with English
      law.

              


      

    

     

    
      
        	
              	
                9

              	
                The
      courts of England have exclusive jurisdiction to settle any dispute
      arising out of or in connection with this letter (including a dispute
      regarding the existence, validity or termination of this
      letter).

              


      

    

     

    
      
        	
              	
                10

              	
                This
      letter may be signed in any number of counterparts, and this has the same
      effect as if the signatures on the counterparts were on a single copy of
      this letter.

              


      

    

     

    Please
indicate your acceptance of the terms and conditions of this letter by
countersigning the copy of this letter where indicated below.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        Yours
      faithfully

                                      	
                                         

                                         

                                      	 
      
	
                                        /s/
      Serena Smulansky

                                      	 	/s/
      John Barbour
	
                                        Investec
      Bank (UK) Limited

                                      	 	      
                                        Investec
      Bank (UK) Limited

                                      
	(as Agent on behalf of the Banks and Hedging Banks)	  
      	      
                                        (as Agent on behalf of the Banks and Hedging Banks)

                                      
	Serena
      Smulansky	 
      	
                                              
                                          John
      Barbour

                                        

                                      
	      
                                        Authorised
      Signatory

                                      	 
      	
                                              
                                          Authorised
      Signatory

                                        

                                      


                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
         


        
          

          Page 3

      

      
         


      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Accepted
      and agreed, on 14 August 2008

                                
	 
      
	
                                  /s/Brian
      Penny

                                	
                                     
      

                                
	
                                  Western
      Mesquite Mines, Inc.

                                
	 
      
	
                                  /s/Brian
      Penny

                                	
                                     
      

                                
	
                                  Western
      Goldfields Inc.

                                
	 
      
	
                                  /s/Brian
      Penny

                                	
                                     
      

                                
	
                                  Western
      Goldfields (USA)
Inc.

                                


                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

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