Exhibit
10.34

       

    UNDERWRITING
AGREEMENT

     

    September
26, 2007 

    Western
Goldfields Inc. 

    2 Bloor
St. West, Suite 2102 

    Toronto,
Ontario M4W 3E2

     

    Attention:     Raymond
Threlkeld, President and Chief Executive Officer

     

    Dear
Sir:

     

    Wellington
West Capital Markets Inc. (“WWCM”) and RBC Dominion Securities Inc.
(“RBC”),
acting as co-lead managers and joint book runners, and Scotia Capital
Inc. (collectively, the “Underwriters” and individually an “Underwriter”) understand that Western Goldfields
Inc. (“Western” or the “Company”) proposes to issue and sell to the
Underwriters 9,840,000 common shares (the “Purchased Shares”), and at the election of the
Underwriters, up to 1,476,000 additional common shares to cover over-allotments
(the common shares in respect of which such option is exercised are called “Over-Allotment Shares”). The Purchased Shares and the
Over-Allotment Shares are referred to collectively herein as the “Shares”.

     

    The
Underwriters understand that the Company will file within the time limits and on
the terms set out below, a preliminary short form prospectus (the “Preliminary Prospectus”) and a (final) short form prospectus
(the “Final Prospectus”) and all related documents,
including all documents incorporated by reference therein, with the securities
regulatory authority in each of the provinces of Canada, other than Quebec (the
“Securities Commissions”, and the provinces, the “Qualifying Jurisdictions”) in order to qualify for
distribution to the public the Shares in each of the provinces of Canada, other
than Quebec.

     

    The
Shares will also be distributed in the United States on a private placement
basis by U.S. Affiliates (defined below) of the Underwriters to QIBs (defined
below) pursuant to the U.S. 144A Memorandum (defined below). Subject to
applicable law, including U.S. Securities Laws (defined below) and the terms of
this underwriting agreement (the “Agreement”), the Shares may also be distributed
outside Canada and the United States by the registered broker-dealer affiliates
of the Underwriters, where they may be lawfully sold on a basis exempt from the
prospectus and registration requirements of any such jurisdictions.

     

    Except as
set forth in this Agreement, the purchase and sale of the Purchased Shares
shall
occur on October 12, 2007 (the “Closing Date”).

     

    The
Company, as and to the extent indicated above, hereby grants to the Underwriters
the right to purchase at their election up to 1,476,000 Over-Allotment Shares,
at the purchase price per share set forth in the paragraph below, for the sole
purpose of covering over-allotments in the sale of the Purchased Shares and for
market stabilization purposes permitted pursuant to Applicable Securities Laws,
provided, however, that the number of Over-Allotment Shares to be purchased
shall not exceed 15% of the total number of Purchased Shares purchased by the
Underwriters. Any such election to purchase Over-Allotment Shares may be
exercised only by written notice from WWCM on behalf of the Underwriters, to the
Company at any time until the close of business on the 30th day following the
Closing Date, such notice to set forth (i) the aggregate number of
Over-Allotment Shares to be purchased, and (ii) the closing date for the
Over-Allotment Shares, provided that unless otherwise agreed such Closing Date
shall not be less than three (3) Business Days and no more than seven (7)
Business Days following the date of such notice.


    
      
         


      

      
         


        
          

        

      

      
         


        -
2 -

      

    

    
       

    

    On the
basis of the representations, warranties, covenants and agreements contained
herein, but subject to the terms and conditions further set out
below:

     

    
      	
               
      

            	
              (a)

            	
              the
      Company agrees to sell to each of the Underwriters and each of the
      Underwriters agrees, severally, and not jointly, to purchase from the
      Company the respective percentage of the Purchased Shares set forth
      opposite the respective names of the Underwriters in Section 18, at a
      purchase price of $3.05 per share for Purchased Shares (the “Offering Price”);
  and

            


    

     

    
      	
               
      

            	
              (b)

            	
              in
      the event and to the extent that the Underwriters shall exercise the
      election to purchase any or all Over-Allotment Shares (the “Over-Allotment Option”) as provided herein, the
      Company agrees to sell to each of the Underwriters and each of the
      Underwriters agrees, severally, and not jointly, to purchase from the
      Company the respective percentage of Over-Allotment Shares set forth
      opposite the name of such Underwriter in Section 18 at a purchase price
      equal to the Offering Price per share for Over-Allotment
      Shares.

            


    

     

    The
Company and the Underwriters agree that any sales or purchases of Shares in the
United States will be conducted through a duly registered affiliate of each
Underwriter in compliance with U.S. Securities Laws.

     

    The
Company shall pay to the Underwriters a fee of 5% of the gross proceeds realized
on the sale of Shares in consideration of the services to be provided by the
Underwriters under this Agreement (the “Underwriting Fee”) and as further set forth in Section
13 herein.

     

    The
Underwriters may offer the Purchased Shares at a price less than the Offering
Price in compliance with the requirements under National Instrument
44-101 – Short Form Prospectus Distributions and the disclosure concerning
the same contained in the Preliminary Prospectus and the Final
Prospectus.

     

    The
Underwriters and the Company acknowledge that Schedule “A” forms a part of this
Agreement.

     

    The
following are the terms and conditions of the agreement between the Company and
the Underwriters:


    
      
         


      

      
         


        
          

        

      

      
         


        - 3
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    TERM
AND CONDITIONS

     

    Section
1        Definitions and
Interpretation

     

    
      	
              (1) 

            	
              In
      this Agreement:

            


    

     

    “Affiliate” means an affiliated entity for
purposes of the Securities Act (Ontario);

     

    “Applicable Securities Laws” means the Canadian Securities Laws
and the U.S. Securities Laws;

     

    “Business Day” means any day other than a Saturday,
Sunday or statutory or civic holiday in the city of Toronto,
Ontario;

     

    “Canadian Securities Laws” means, collectively, all applicable
securities laws of each of the Qualifying Jurisdictions and the respective rules
and regulations under such laws together with applicable published instruments,
notices and orders of the securities regulatory authorities in the Qualifying
Jurisdictions;

     

    “Closing Date” means October 12, 2007 or any
earlier or later date as may be agreed to by Western and the Underwriters, each
acting reasonably, but will in any event not be
later than October 30, 2007;

     

    “distribution” means distribution or distribution
to the public, as the case may be, for the purposes of Applicable Securities
Laws or any of them;

     

    “Exchange” means the TSX;

     

    “Final Prospectus” has the meaning ascribed in the
second paragraph of this Agreement, such prospectus expected to be dated on or
about October 5, 2007;

     

    “Final U.S. Private Placement Memorandum” means the U.S. private placement
memorandum, in a form satisfactory to the Underwriters, to which will be
attached the Final Prospectus, to be delivered to any offerees and purchasers of
the Shares in the United States in accordance with Schedule “A”
hereto;

     

    “Financial Information” means the annual consolidated
financial statements of Western (or its predecessor) incorporated by reference
into the Preliminary Prospectus, the Final Prospectus and any Supplementary
Material, including the notes with respect thereto together with the respective
auditors’ reports thereon as at and for the periods included therein, and the
respective accompanying Management’s Discussion and Analyses;

     

    “Indemnified Party” has the meaning given to that term
in Section 15 of this Agreement;


    
      
         


      

      
         


        
          

        

      

      
         


        - 4
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    “Liens” means any encumbrance or title
defect of whatever kind or nature, regardless of form, whether or not registered
or registrable and whether or not consensual or arising by law (statutory or
otherwise), including any mortgage, lien, charge, pledge or security interest,
whether fixed or floating, or any assignment, lease, option, right of
pre-emption, privilege, encumbrance, easement, servitude, right of way,
restrictive covenant, right of use or any other right or claim of any kind or
nature whatever which affects ownership or possession of, or title to, any
interest in, or the right to use or occupy such property or assets;

     

    “Material Adverse Effect” means the effect resulting from any
event or change which has a material adverse effect on the business, affairs,
capital, operations, Mining Claims or assets of Western considered on a
consolidated basis;

     

    “material change” means a material change for the
purposes of Applicable Securities Laws or any of them, or where undefined under
the Applicable Securities Laws of an Offering Jurisdiction means a change in the
business, affairs, operations, assets, financial condition or capital of Western
on a consolidated basis that would reasonably be expected to have a significant
effect on the market price or value of the common shares, and includes a
decision to implement such a change made by the directors of
Western;

     

    “material fact” means a material fact for the
purposes of Applicable Securities Laws or any of them, or where undefined under
the Applicable Securities Laws of an Offering Jurisdiction means a fact that
would reasonably be expected to have a significant effect on the market price or
value of the common shares;

     

    “Material Subsidiaries” means each of Western Goldfields USA
Inc., Western Goldfields (Canada) Inc. and Western Mesquite Mines,
Inc.;

    


    “Mesquite Project” means the mine project located in
Imperial County, California, U.S.A. as further described in the Technical
Report;

     

    “Mining Claims” has the meaning given to such term
in Section 7(1)(m);

     

    “misrepresentation” means a misrepresentation for the
purposes of the Applicable Securities Laws or any of them, or where undefined
under the Applicable Securities Laws of an Offering Jurisdiction means: (i) an
untrue statement of a material fact, or (ii) an omission to state a material
fact that is required to be stated or that is necessary to make a statement not
misleading in light of the circumstances in which it was made;

     

    “MRRS” means the mutual reliance review
system procedures provided for under National Policy 43-201 “Mutual Reliance
Review System for Prospectuses and Annual Information Forms” among the
securities commissions and other securities regulatory authorities in each of
the provinces and territories of Canada;

     

    “MRRS Decision Document” means a decision document issued by
the applicable Canadian securities regulatory authority pursuant to the MRRS and
which evidences the receipt by the applicable Securities Commission of the
Qualifying Jurisdictions for the Preliminary Prospectus or the Final Prospectus,
as the case may be;


    
      
         


      

      
         


        
          

        

      

      
         


        - 5
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    “Offering” means distribution of the Shares in
each of the Offering Jurisdictions;

     

    “Offering Documents” means, collectively, the Preliminary
Prospectus, the Final Prospectus, any Prospectus Amendment, the U.S. 144A
Memorandum and any Supplementary Material;

     

    “Offering Jurisdictions” means the United States and the
Qualifying Jurisdictions;

     

    “Over-Allotment Closing Date” means no less than three (3)
Business Days and no more than seven (7) Business Days following the date of the
notice of exercise of the Over-Allotment Option being delivered to the Company,
or any earlier or later date as may be agreed to in writing by the Company and
the Underwriters, each acting reasonably;

     

    “Preliminary Prospectus” has the meaning ascribed in the
second paragraph of this Agreement, such amended and restated preliminary short
form prospectus dated the date hereof;

     

    “Preliminary U.S. Private Placement
Memorandum” means the U.S.
private placement memorandum, in a form satisfactory to the Underwriters, to
which will be attached a copy of any Preliminary Prospectus, to be delivered to
offerees and purchasers of the Shares in the United States in accordance with
Schedule “A” hereto;

     

    “Prospectus Amendment” means any amendment to any or all of
the Preliminary Prospectus or the Final Prospectus required to be prepared and
filed by Western under Applicable Securities Laws in connection with the
Offering;

     

    “QIB” or “Qualified Institutional Buyer” means a “qualified institutional
buyer” as defined in Rule 144A;

     

    “Qualifying Jurisdictions” means, collectively, each of the
provinces of Canada, other than Quebec;

     

    “Rule 144A” means Rule 144A adopted by the SEC
under the U.S. Securities Act;

     

    “SEC” means the United States Securities
and Exchange Commission;

     

    “Securities Commissions” means the applicable securities
commission or regulatory authority in each of the Qualifying
Jurisdictions;

     

    “Standard Listing Conditions” has the meaning given to that term
in Section 3(3)(c) of this Agreement;

     

    “Subsidiary” means a subsidiary for purposes of
the Securities Act (Ontario);

     

    “Supplementary Material” means, collectively, any amendment
to the Preliminary Prospectus, the Final Prospectus, the U.S. 144A Memorandum,
any amendment or supplemental prospectus or ancillary materials that may be
filed by or on behalf of Western under Applicable Securities Laws relating to
the qualification for distribution of, inter alia, the Shares;


    
      
         


      

      
         


        
          

        

      

      
         


        - 6
-

      

    

     

    “Technical Report” means the “Mesquite Mine Expansion
Feasibility Study Technical Report” dated August 6, 2006 prepared by Micon
International Limited;

     

    “Time of Closing” means 8:00 a.m. (Toronto time) on
the Closing Date or the Over-Allotment Closing Date, as applicable, or any other
time on the Closing Date or the Over-Allotment Closing Date as may be agreed to
by Western and the Underwriters;

     

    “TSX” means the Toronto Stock
Exchange;

     

    “United States” means the United States of America,
its territories and possessions, any state of the United States, and the
District of Columbia;

     

    “U.S. Affiliate” means the U.S. registered
broker-dealer affiliate of any Underwriter;

     

    “U.S. Exchange Act” means the United States Securities
Exchange Act of 1934, as amended;

     

    “U.S. Securities Act” means the United States Securities
Act of 1933, as amended;

     

    “U.S. Securities Laws” means all applicable securities
legislation in the United States, including without limitation, the U.S.
Securities Act, the U.S. Exchange Act and the rules and regulations promulgated
thereunder, and any applicable state securities laws;

     

    “U.S. 144A Memorandum” means, together, the Preliminary
U.S. Private Placement Memorandum and the Final U.S. Private Placement
Memorandum; and

     

    “Western Auditor” means HJ & Associates,
LLP;

     

    
      	
              (2)

            	
              Headings, etc. The
      division of this Agreement into sections, subsections, paragraphs and
      other subdivisions and the insertion of headings are for convenience of
      reference only and shall not affect the construction or interpretation of
      this Agreement. Unless something in the subject matter or context is
      inconsistent therewith, references herein to sections, subsections,
      paragraphs and other subdivisions are to sections, subsections, paragraphs
      and other subdivisions of this
Agreement.

            


    

     

    
      	
              (3)

            	
              Currency. Except as
      otherwise indicated, all amounts expressed herein in terms of money refer
      to lawful currency of Canada and all payments to be made hereunder shall
      be made in such currency.

            


    

     

    Section
2       Filing of the Preliminary and Final
Prospectuses

     

    
      	
              (1)

            	
              The
      Company shall, as soon as possible and not later than 12:00 noon (Toronto
      time) on September 26, 2007 have prepared and filed under the Canadian
      Securities Laws, and shall have obtained a receipt therefor from each of
      the Qualifying Jurisdictions (in the form of a preliminary MRRS Decision
      Document) by 5:00 p.m. (Toronto time) on September 26, 2007, for the
      Preliminary Prospectus and other related documents relating to the
      proposed distribution in Canada of the
Shares.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 7 -

      

    

     

    
      	
              (2)

            	
              Unless
      otherwise agreed to in writing by WWCM and RBC on behalf of the
      Underwriters, the Company shall use its reasonable commercial efforts to
      satisfy all comments with respect to the Preliminary Prospectus and the
      Company shall, not later than 5:00 p.m. (Toronto time) on October 5, 2007,
      have made all its reasonable commercial efforts to have prepared and filed
      under the Canadian Securities Laws, and shall have obtained a receipt
      therefor from each of the Qualifying Jurisdictions (in the form of a final
      MRRS Decision Document) by 5:00 p.m. (Toronto time) on such date, the
      Final Prospectus and other related documents relating to the proposed
      distribution in Canada of the Shares; and shall have taken all other steps
      and proceedings that may be necessary to be taken by the Company in order
      to qualify the Shares for distribution (or distribution to the public, as
      the case may be) in each of the other Qualifying Jurisdictions by the
      Underwriters under the Canadian Securities Laws by 5:00 p.m. (Toronto
      time) on such date.

            


    

     

    
      	
              (3)

            	
              Until
      the date on which the distribution of the Shares is completed, the Company
      will promptly take, or cause to be taken, all additional steps and
      proceedings that may from time to time be required under Applicable
      Securities Laws to continue to qualify the distribution of the Shares or,
      in the event that the Shares have, for any reason, ceased so to qualify,
      to so qualify again the Shares, as applicable, for
      distribution.

            


    

     

    Section
3       Delivery of the Final Prospectus and
Related Matters

     

    
      	
              (1)

            	
              The
      Company shall deliver without charge to the Underwriters, as soon as
      practicable and in any event no later than September 26, 2007 in the case
      of the Preliminary Prospectus and the Preliminary U.S. Private Placement
      Memorandum, and no later than noon (Toronto time) on October 6, 2007 (or
      other such date that is the day following the filing of the Final
      Prospectus) in the case of the Final Prospectus and the Final U.S. Private
      Placement Memorandum and thereafter from time to time during the
      distribution of the Shares, as many commercial copies of the Preliminary
      Prospectus, the Preliminary U.S. Private Placement Memorandum, the Final
      Prospectus and the Final U.S. Private Placement Memorandum, as the case
      may be, (and in the event of any Prospectus Amendment, such Prospectus
      Amendment) as the Underwriters may reasonably request in advance for the
      purposes contemplated by the relevant securities laws. The Company will
      similarly cause to be delivered to the Underwriters, commercial copies of
      any Supplementary Material required to be delivered to purchasers or
      prospective purchasers of the Shares. Each delivery of the Preliminary
      Prospectus, the Preliminary U.S. Private Placement Memorandum, the Final
      Prospectus, the Final U.S. Private Placement Memorandum or any
      Supplementary Material will have constituted and constitute the Company’s
      consent to the use of the Preliminary Prospectus, the Preliminary U.S.
      Private Placement Memorandum, the Final Prospectus, the Final U.S. Private
      Placement Memorandum and any Supplementary Material by the Underwriters
      for the distribution of the Shares in the Offering Jurisdictions in
      compliance with the provisions of this Agreement and Applicable Securities
      Laws.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 8
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                (2)

              	
                Each
      delivery of the Preliminary Prospectus, the Preliminary U.S. Private
      Placement Memorandum, the Final Prospectus, the Final U.S. Private
      Placement Memorandum and any Supplementary Material to the Underwriters by
      Western in accordance with this Agreement will constitute the
      representation and warranty of Western to the Underwriters that (except
      for information and statements relating solely to the Underwriters and
      furnished by them specifically for use in the Preliminary Prospectus, the
      Preliminary U.S. Private Placement Memorandum, the Final Prospectus and
      the Final U.S. Private Placement Memorandum under the heading “Plan of
      Distribution”), at the respective times of
  delivery:

              


      

       

      
        	
                 
      

              	
                (a)

              	
                the
      information and statements contained in each of the Preliminary
      Prospectus, the Preliminary U.S. Private Placement Memorandum, the Final
      Prospectus, the Final U.S. Private Placement Memorandum and any
      Supplemental Material, together with the documents incorporated by
      reference therein:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                are
      true and correct in all material respects and contain no
      misrepresentation; and

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                constitute
      full, true and plain disclosure of all material facts relating to the
      Shares, and Western and its Material Subsidiaries considered as a
      whole;

              


      

       

      
        	
                 
      

              	
                (b)

              	
                no
      material fact has been omitted from any of the Offering Documents that is
      required to be stated in the document or is necessary to make the
      statements therein not misleading in the light of the circumstances in
      which they were made;

              


      

       

      
        	
                 
      

              	
                (c)

              	
                to
      the knowledge of the Company based on the advice of its legal counsel and
      auditors, each of the Preliminary Prospectus, the Final Prospectus and the
      Supplemental Material, as applicable, complies in all material respects
      with the form requirements of Canadian Securities Laws;
  and

              


      

       

      
        	
                 
      

              	
                (d)

              	
                to
      the knowledge of the Company based on the advice of its legal counsel and
      auditors, each of the Preliminary U.S. Private Placement Memorandum and
      the Final U.S. Private Placement Memorandum complies in all material
      respects with U.S. Securities Laws.

              


      

       

      
        	
                (3)

              	
                Western
      will also deliver to the Underwriters, without charge, contemporaneously
      with, or prior to the filing of, the Preliminary Prospectus and the Final
      Prospectus, unless otherwise
indicated:

              


      

       

      
        	
                 
      

              	
                (a)

              	
                a
      copy of the Preliminary Prospectus and the Final Prospectus, each manually
      signed on behalf of Western, by the persons and in the form required by
      Canadian Securities Laws;

              


      


      
        
           


        

        
           


          
            

          

        

        
           


          - 9
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              (b)

            	
              a
      copy of the Final U.S. Private Placement Memorandum in the form required
      by U.S. Securities Laws;

            


    

     

    
      	
               
      

            	
              (c)

            	
              evidence
      satisfactory to the Underwriters by the date of the Final Prospectus that
      Western has applied for the approval (or conditional approval) for the
      listing and posting for trading on the TSX of the Shares and received such
      approval (or conditional approval) subject only to satisfaction by Western
      of customary post-closing conditions imposed by the TSX in similar
      circumstances (the “Standard Listing Conditions”);

            


    

     

    
      	
               
      

            	
              (d)

            	
              in
      the case of the Final Prospectus, a “long-form” comfort letter or letters
      dated the date of the Final Prospectus, in form and substance satisfactory
      to the Underwriters and their counsel, acting reasonably, addressed to the
      Underwriters, from the Western Auditor, and based on a review completed
      not more than two (2) Business Days prior to the date of such letter, with
      respect to financial and accounting information relating to Western,
      included in the Offering Documents, which letter shall be in addition to
      the auditor’s report contained in the Final Prospectus and any auditor’s
      comfort letter addressed to the Securities Commissions and filed with or
      delivered to the Securities Commissions under the Canadian Securities
      Laws. Each such letter shall further state
that:

            


    

     

    
      
        	
              	
                (i)

              	
                such
      auditors are independent with respect to the Company within the
      meaning of Applicable Securities
Laws; 

              


      

       

      
        	
              	
                (ii)

              	
                that
      in the opinion of such auditors, the audited financial
      statements
      of
      the Company included in the Offering Documents comply in all
      material
      respects with the applicable accounting requirements of the
      Applicable
      Securities Laws;

              


      

    

     

    
      
        	
              	
                (iii)

              	
                that
      they have performed the procedures set forth in SAS No. 100 and
      CICA
      Handbook Section 7200 on the unaudited financial statements included
      in the Offering Documents and nothing has come to their attention
      that caused them to believe that said unaudited financial statements
      did not comply in all material respects with the applicable accounting
      requirements of U.S. Securities Laws and Canadian Securities
      Laws; and

              


      

    

     

    
      
        	
              	
                (iv)

              	
                shall
      address such other matters as the Underwriters shall reasonably
      request.

              


      

    

     

    
      	
              (4)

            	
              Opinions,
      comfort letters and other documents substantially similar to those
      referred to in this section of this Agreement will be delivered to the
      Underwriters and Western, and their respective counsel, as applicable,
      with respect to any Supplementary Material, contemporaneously with, or
      prior to the filing of, any Supplementary
  Material.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 10
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    Section
4       Material Changes During the
Distribution of the Shares

     

    
      
        	
                (1)

              	
                Western
      will promptly inform the Underwriters in writing during the period prior
      to
      the
      completion of the distribution of the Shares of the full particulars
      of:

              


      

    

     

    
      	
               
      

            	
              (a)

            	
              any
      material change (whether actual, anticipated, threatened, contemplated, or
      proposed by, to, or against) (whether financial or otherwise) in the
      assets, liabilities (contingent or otherwise), business, affairs,
      operations, assets, financial condition, capital or prospects of Western,
      considered on a consolidated basis;

            


    

     

    
      	
               
      

            	
              (b)

            	
              any
      material fact that has arisen or has been discovered and would have been
      required to have been stated in any of the Offering Documents had that
      fact arisen or been discovered on, or prior to, the date of the Offering
      Documents, as the case may be;

            


    

     

    
      	
               
      

            	
              (c)

            	
              any
      change in any material fact or any misstatement of any material fact
      contained in any of the Offering Documents, or the existence of any new
      material fact; and

            


    

     

    
      	
               
      

            	
              (d)

            	
              any
      change in applicable laws, materially and adversely affecting, or which
      would reasonably be expected to materially and adversely affect, the
      condition (financial or otherwise), or the properties, business,
      prospects, affairs, operations, assets or liabilities of the Company and
      its subsidiaries on a consolidated basis, the Shares or the distribution
      thereof, under the Final Prospectus or the Final U.S. Private Placement
      Memorandum,

            


    

     

    which
change or new material fact is, or may reasonably be expected to be, of such a
nature as:

     

    
      	
               
      

            	
              (e)

            	
              to
      render any of the Offering Documents or any Supplementary Material, as
      they exist taken together in their entirety immediately prior to such
      change or new material fact, misleading or untrue in any respect or would
      result in any of such documents, as they exist taken together in their
      entirety immediately prior to such change or material fact, containing a
      misrepresentation;

            


    

     

    
      	
               
      

            	
              (f)

            	
              would
      result in any of the Offering Documents or any Supplementary Material, as
      they exist taken together in their entirety immediately prior to such
      change or material fact, not complying with any Applicable Securities
      Laws;

            


    

     

    
      	
               
      

            	
              (g)

            	
              would
      reasonably be expected to have a material effect on the market price or
      value of any of the Shares or constitute a Material Adverse Effect;
      or

            


    

     

    (h)           would
be material to a prospective purchaser of the Shares.

     

    
      
        	
                (2)

              	
                The
      Company will notify the Underwriters promptly, and confirm the notice in
      writing:

              


      

    


    
      
         


      

      
         


        
          

        

      

      
         


        - 11
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              (a)

            	
              when
      any supplement to the Offering Documents or any Supplementary Material
      shall have been filed;

            


    

     

    
      	
               
      

            	
              (b)

            	
              of
      any request by any Securities Commission to amend or supplement the
      Preliminary Prospectus or the Final Prospectus or for additional
      information; and

            


    

     

    
      	
               
      

            	
              (c)

            	
              of
      the issuance by any Securities Commission or any Exchange of any order
      having the effect of ceasing or suspending the distribution of the Shares
      or the trading in any securities of the Company, or of the institution or,
      to the knowledge of the Company, threatening of any proceedings for any
      such purpose. The Company will use reasonable commercial efforts to
      prevent the issuance of any such stop order or of any order preventing or
      suspending such use or such order ceasing or suspending the distribution
      of the Shares or the trading in the shares of the Company and, if any such
      order is issued, to obtain the lifting thereof at the earliest possible
      time.

            


    

     

    
      	
              (3)

            	
              Western
      shall comply with section 57 of the Securities Act (Ontario) and with the
      comparable provisions of U.S. Securities Laws, and Western will prepare
      and will file promptly at the request of the Underwriters, any
      Supplementary Material, which, in the opinion of the Underwriters and
      their counsel, acting reasonably, may be necessary or desirable, and will,
      until the distribution of the Shares is complete, otherwise comply with
      all applicable filing and other requirements under Applicable Securities
      Laws arising as a result of such fact or change necessary to continue to
      qualify the Shares for distribution in each of the Offering
      Jurisdictions.

            


    

     

    
      	
              (4)

            	
              The
      Company and the Underwriters acknowledge that the Company is required by
      Canadian Securities Laws to prepare and file a Prospectus Amendment, if at
      any time prior to the completion of the distribution of the Shares, the
      Final Prospectus (as then amended) contains a misrepresentation. The
      Company will promptly prepare and file with the securities authorities in
      the Qualifying Jurisdictions any amendment or supplement thereto which in
      the opinion of the Underwriters and the Company, each acting reasonably,
      may be necessary or advisable to correct such
      misrepresentation.

            


    

     

    
      	
              (5)

            	
              In
      addition, if, during the period from the date hereof to the later of the
      Closing Date and the date of the completion of the distribution of the
      Shares, it shall be necessary to file a Prospectus Amendment to comply
      with any Applicable Securities Laws, the Company shall, in co-operation
      with the Underwriters and their counsel, make any such filing as soon as
      reasonably possible.

            


    

     

    
      	
              (6)

            	
              In
      addition to the provisions of Subsections 4(1) and 4(2), Western will, in
      good faith, discuss with the Underwriters any change, event, development
      or fact, contemplated, anticipated, threatened, or proposed in Subsections
      4(1) and 4(2) that is of such a nature that there may be reasonable doubt
      as to whether written notice should be given to the Underwriters under
      Section 4 of this Agreement and will consult with the Underwriters with
      respect to the form and content of any Supplementary Material proposed to
      be filed by Western, it being understood and agreed that no such
      Supplementary Material will be filed with any Securities Commission until
      the Underwriters and their legal counsel have been given a reasonable
      opportunity to review and approve such material, acting
      reasonably.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 12
-

      

    

     

    Section
5       Due Diligence

     

    Prior to
the Time of Closing, and, if applicable, prior to the filing of any
Supplementary Material, the Underwriters, their legal counsel, and technical
consultants will be provided with timely access to all information required to
permit them to conduct a full due diligence investigation of Western and its
business operations, properties, assets, affairs and financial condition. In
particular, the Underwriters shall be permitted to conduct all due diligence
that they may, in their sole discretion acting reasonably, require in order to
fulfil their obligations under Applicable Securities Laws, and in that regard,
Western will make available to the Underwriters, their legal counsel and
technical consultants, on a timely basis, all corporate and operating records,
material contracts, reserve reports, technical reports, feasibility studies,
financial information, budgets, key officers, and other relevant information
necessary in order to complete the due diligence investigation of Western and
its business, properties, assets, affairs and financial condition for this
purpose, and without limiting the scope of the due diligence inquiries the
Underwriter may conduct, to participate in one or more due diligence sessions to
be held prior to the Time of Closing. All information requested by the
Underwriters, their counsel and technical consultants in connection with the due
diligence investigations of the Underwriters will be treated by the
Underwriters, their counsel and technical consultants as confidential and will
only be used in connection with the Offering. It shall be a condition precedent
to the Underwriters’ execution of any certificate in any Offering Document that
the Underwriters be satisfied, acting reasonably, as to the form and content of
the document. The Underwriters shall not unreasonably withhold or delay the
execution of any such Offering Document required to be executed by the
Underwriters and filed in compliance with the Securities Laws for the purpose of
the Offering.

     

    Section
6       Conditions of Closing

     

    The
Underwriters’ obligations under this Agreement (including the obligation to
complete the purchase of the Shares or any of them) are conditional upon and
subject to:

     

    
      
        	
                (1)

              	
                Canadian Legal Opinions.
      The Underwriters receiving at the Time of Closing favourable legal
      opinions from Cassels Brock & Blackwell LLP, Canadian counsel to
      Western, as to the qualification of the Shares for sale to the public and
      as to other matters governed by the laws of Ontario (with separate legal
      opinions provided by local counsel in other Canadian provinces) and may
      rely as to matters of fact on certificates of officers, public and
      exchange officials or of the auditor or transfer agent of Western), to the
      effect set forth below:

              


      

    

     

    
      	
               
      

            	
              (a)

            	
              Western
      having been incorporated and existing under the laws of the Province of
      Ontario;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Western
      having the corporate capacity and power to own and lease its properties
      and assets and to conduct its business as described in the Final
      Prospectus and to execute and deliver this Agreement and to carry out the
      transactions contemplated hereby under the laws of the Province of
      Ontario;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 13
-

      

    

     

    
      	
               
      

            	
              (c)

            	
              the
      authorized share capital of Western being as described in the Final
      Prospectus;

            


    

     

    
      	
               
      

            	
              (d)

            	
              all
      necessary corporate action having been taken by Western to authorize the
      execution and delivery of this Agreement and the performance of its
      obligations hereunder;

            


    

     

    
      	
               
      

            	
              (e)

            	
              this
      Agreement having been duly executed and delivered by Western and
      constituting a legal, valid and binding obligation of, and is enforceable
      against Western, in accordance with its terms (subject to bankruptcy,
      insolvency or other laws affecting the rights of creditors generally,
      general equitable principles including the availability of equitable
      remedies and the qualification that no opinion need be expressed as to
      rights to indemnity, or
contribution);

            


    

     

    
      	
               
      

            	
              (f)

            	
              the
      execution and delivery by Western of this Agreement, the fulfilment of the
      terms hereof by Western, and the issue, sale and delivery on the Closing
      Date of the Purchased Shares (and subsequently the Over-Allotment Shares,
      if issued) to the Underwriters as contemplated herein, not constituting or
      result in a breach of or a default under, and do not creating a state of
      facts which, after notice or lapse of time or both, will constitute or
      result in a breach of, and will not conflict with, any of the terms,
      conditions or provisions of the articles or by-laws of
      Western;

            


    

     

    
      	
               
      

            	
              (g)

            	
              all
      necessary corporate action having been taken by Western to authorize the
      creation, execution, issuance and delivery of the
  Shares;

            


    

     

    
      	
               
      

            	
              (h)

            	
              all
      documents required to be filed by Western and all proceedings required to
      be taken by Western under Canadian Securities Laws having been filed and
      taken in order to qualify the distribution of the Shares in each of the
      Qualifying Jurisdictions through investment dealers or brokers registered
      under the applicable laws thereof who have complied with the relevant
      provisions thereof and no other documents will be required to be filed,
      proceedings taken, or approvals, permits, consents or authorizations
      obtained under Canadian Securities Laws to permit the trading in the
      Qualifying Jurisdictions of the Shares, through registrants registered
      under Canadian Securities Laws or in circumstances in which there is an
      exemption from the registration requirements of such applicable
      laws;

            


    

     

    
      
        	
              	
                (i)

              	
                the
      attributes of the Shares conforming in all respects to the description
      thereof
      in the Final Prospectus;

              


      

    

     

    
      	
               
      

            	
              (j)

            	
              the
      Shares having been conditionally approved for listing on the TSX subject
      only to the Standard Listing
Conditions;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 14
-

      

    

     

    
      	
               
      

            	
              (k)

            	
              the
      Purchased Shares (and subsequently the Over-Allotment Shares, if issued)
      having been validly issued by Western and being fully-paid and
      non-assessable shares in the capital of
Western;

            


    

     

    
      	
               
      

            	
              (l)

            	
              the
      Company being a reporting issuer (or equivalent) under the securities laws
      of British Columbia, Alberta, Manitoba and Ontario, and not being included
      on a list of defaulting reporting issuers maintained by the securities
      regulators of British Columbia, Alberta, Manitoba and
    Ontario;

            


    

     

    
      	
               
      

            	
              (m)

            	
              the
      statements under the headings “Eligibility for Investment” in the Final
      Prospectus being true and correct;

            


    

     

    
      	
              (2)

            	
              U.S. Legal Opinion. At
      the Closing Time, the Underwriters shall have received the favourable
      opinion, dated the Closing Date, of United States counsel for the Company,
      in form and substance satisfactory to United States counsel for the
      Underwriters (acting reasonably), as to the tax disclosure included in the
      Final Prospectus and to the effect that it is not necessary in connection
      with the offer and sale of the Shares in the United States to register the
      Shares under the U.S. Securities
Act.

            


    

     

    
      	
              (3)

            	
              Title Opinion. At the
      Closing Time, the Underwriters shall have received the favourable opinion,
      dated the Closing Date, of United States counsel for the Company, in form
      and substance satisfactory to United States counsel for the Underwriters
      (acting reasonably), as to the title and ownership interest in the
      Company’s material properties;

            


    

     

    
      	
              (4)

            	
              Canadian Local Counsel
      Opinion. The Underwriters receiving at the Time of Closing,
      favourable legal opinions of local Canadian counsel as to the
      qualification of the Shares for sale to the public and as to other matters
      governed by the laws of the jurisdictions in Canada which Cassels Brock
      & Blackwell LLP is not qualified to practice, in each case in a form
      acceptable in all reasonable respects to counsel to the Underwriters,
      Stikeman Elliott LLP;

            


    

     

    
      	
              (5)

            	
              Secretary Certificates.
      The Underwriters having received certificates dated the Closing
      Date signed by the Corporate Secretary of Western or another officer
      acceptable to the Underwriters, acting reasonably, in form and content
      satisfactory to the Underwriters, acting reasonably, with respect
      to:

            


    

     

    
      	
            	
              (a) 

            	
              the
      constating documents of Western;

            


    

     

    
      	
               
      

            	
              (b)

            	
              the
      resolutions of the directors of Western relevant to the Offering,
      allotment, issue (or reservation for issue) and sale of the Shares and, as
      applicable, the authorization of this Agreement, and the other agreements
      and transactions contemplated by this Agreement;
  and

            


    

     

    
      	
            	
              (c) 

            	
              the
      incumbency and signatures of signing officers of
  Western;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 15
-

      

    

     

    
      	
              (6)

            	
              Certificates of Status.
      Western having delivered to the Underwriters, at the Time of
      Closing, certificates of status and/or compliance, where issuable under
      applicable law, for each of the Material Subsidiaries and Western, each
      dated within two (2) days of the Closing
Date;

            


    

     

    
      	
              (7)

            	
              Closing Certificates.
      Western having delivered to the Underwriters, at the Time of
      Closing, a certificate dated the Closing Date addressed to the
      Underwriters and signed by the Chief Executive Officer and Chief Financial
      Officer of Western (or such other senior officers as acceptable to the
      Underwriters), certifying for and on behalf of Western, and not in their
      personal capacities, after having made due inquiries, with respect to the
      following matters:

            


    

     

    
      	
               
      

            	
              (a)

            	
              Western
      having complied with all the covenants and satisfied all the terms and
      conditions of this Agreement on its part to be complied with and satisfied
      at or prior to the Time of Closing;

            


    

     

    
      	
               
      

            	
              (b)

            	
              no
      order, ruling or determination (including any stop order) having the
      effect of ceasing or suspending trading in any securities of the Company
      or prohibiting the sale of the Shares or any of the Company’s issued
      securities having been issued and no proceeding for such purpose being
      pending or, to the knowledge of such officers, threatened by any
      securities regulatory authority or stock exchange in Canada or the United
      States;

            


    

     

    
      	
               
      

            	
              (c)

            	
              subsequent
      to the respective dates as at which information is given in the Final
      Prospectus, there having not occurred a Material Adverse Effect, or any
      change or development involving a prospective Material Adverse Effect, or
      the coming into existence of a new material fact, other than as disclosed
      in the Final Prospectus or any Supplementary Material, as the case may
      be;

            


    

     

    
      	
               
      

            	
              (d)

            	
              the
      Company being a “reporting issuer” or its equivalent under the securities
      laws of each of the Qualifying Jurisdictions, being eligible in accordance
      with the provisions of NI 44-101 to file a short form prospectus with the
      Canadian Securities Administrators and no material change relating to the
      Company on a consolidated basis having occurred since the date hereof with
      respect to which the requisite material change report has not been filed
      and no such disclosure having been made on a confidential basis that
      remains subject to confidentiality;
and

            


    

     

    
      	
               
      

            	
              (e)

            	
              the
      representations and warranties of Western contained in this Agreement and
      in any certificates of Western delivered pursuant to or in connection with
      this Agreement, being true and correct as at the Time of Closing, with the
      same force and effect as if made on and as at the Time of Closing, after
      giving effect to the transactions contemplated by this
      Agreement;

            


    

     

    
      	
              (8)

            	
              Certificate of Transfer Agent.
      Western having delivered to the Underwriters at the Time of
      Closing, a certificate of Computershare Investor Services Inc., as
      registrar and transfer agent of the common shares, which certifies the
      number of common shares issued and outstanding on the date prior to the
      Closing Date;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 16
-

      

    


    
      	
              (9)

            	
              Bring Down Auditor Comfort
      Letters. Western having caused the Western Auditor to deliver to
      the Underwriters at the Time of Closing a comfort letter, dated the
      Closing Date, in form and substance satisfactory to the Underwriters,
      acting reasonably, bringing forward to the date which is two (2) Business
      Days prior to the Closing Date, the information contained in the comfort
      letter referred to in Subsection Section
      3(3)(d);

            


    

     

    
      	
              (10)

            	
              No Termination. The
      Underwriters not having exercised any rights of termination set forth in
      Section 14;

            


    

     

    
      	
              (11)

            	
              Adverse Proceedings. At
      the Closing Time, no order, ruling or determination having the effect of
      ceasing or suspending trading in any securities of the Company or
      prohibiting the sale of the Shares or any of the Company’s issued
      securities being issued and no proceeding for such purpose being pending
      or, to the knowledge of the Company, threatened by any securities
      regulatory authority or stock exchange in Canada or the United
      States;

            


    

     

    
      	
              (12)

            	
              Exchange. At the
      Closing Time, the Shares having been listed, or conditionally listed, for
      trading on the TSX; and

            


    

     

    
      	
              (13)

            	
              Other Documentation.
      The Underwriters having received at the Time of Closing such
      further certificates, opinions of counsel and other documentation from
      Western as may be contemplated herein or as the Underwriters or their
      counsel may reasonably require, provided, however, that the Underwriters
      or their counsel shall request any such certificate or document within a
      reasonable period prior to the Time of Closing that is sufficient for
      Western to obtain and deliver such certificate, opinion or document, and
      in any event, at least two (2) Business Days prior to the Time of
      Closing.

            


    

     

    Section
7       Representations and Warranties of
Western

     

    
      	
              (1)

            	
              Western
      hereby represents and warrants to the Underwriters, intending that the
      same may be relied upon by the Underwriters
  that:

            


    

     

    
      	
               
      

            	
              (a)

            	
              Good Standing of Western.
      Western has been duly incorporated or organized and is validly
      existing under the laws of Ontario, and has all requisite corporate power
      and authority to carry on its business, as now conducted and as presently
      proposed to be conducted by it, and to own, lease and operate its
      properties and assets and to carry out the transactions contemplated by
      this Agreement; and that the Company is duly qualified as an
      extra-provincial corporation to transact business and is in good standing
      (in respect of the filing of annual returns where required or other
      information filings under applicable corporations information legislation)
      in each jurisdiction in which such qualification is required, whether by
      reason of the ownership or leasing of property or the conduct of business,
      except where the failure to so qualify or to be in good standing would not
      reasonably be expected to result in a Material Adverse
    Effect.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 17
-

      

    

     

    
      	
               
      

            	
              (b)

            	
              Good Standing of Subsidiaries.
      At the Time of Closing, Western’s only subsidiaries will be the
      Material Subsidiaries. At the Time of Closing, each Material Subsidiary
      will be a corporation or company incorporated or established, organized
      and existing under the laws of the jurisdiction of its incorporation, will
      be current and up-to-date with all material filings required to be made
      under the laws of its jurisdiction of incorporation and will have the
      requisite corporate power and capacity to own, lease and operate its
      properties and to conduct its business as now carried on by it, and will
      be duly qualified to transact business and will be in good standing in
      each jurisdiction in which such qualification is required, whether by
      reason of the ownership or leasing of property or the conduct of business,
      except where the failure to be so would not reasonably be expected to
      result in a Material Adverse Effect. At the Time of Closing, all of the
      issued and outstanding shares in the capital of each Material Subsidiary
      will have been duly authorized and validly issued, will be fully paid and
      non-assessable and will be directly or indirectly beneficially owned by
      Western, free and clear of any Lien (except pursuant to any security
      interest pursuant to its amended and restated credit facility originally
      dated March 30, 2007 as amended and restated May 31, 2007 (the “Credit Facility”)); and none of the outstanding
      shares of the capital stock of any Material Subsidiary was issued in
      violation of pre-emptive or similar rights of any security holder of such
      subsidiary. Other than as disclosed in the Final Prospectus, there exist
      no options, warrants, purchase rights, or other contracts or commitments
      that could require Western to sell, transfer or otherwise dispose of any
      capital stock of any Material Subsidiary. No act or proceeding has been
      taken by or against the Material Subsidiaries in connection with their
      liquidation, winding-up or
bankruptcy.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Compliance with Prospectus and
      Registration Requirements. The Company meets the general
      eligibility requirements for use of a short form prospectus under National
      Instrument 44-101. No order suspending the distribution of the Shares has
      been issued by the Securities Commissions under Canadian Securities Laws
      and no proceedings for that purpose have been instituted or are pending
      or, to the knowledge of the Company, are contemplated by any Securities
      Commissions, and any request on the part of any Securities Commissions for
      additional information has been complied
with.

            


    

     

    At all
times up to any Closing Time:

     

    
      	
               
      

            	
              (i)

            	
              the
      Final Prospectus complied and will comply in all material respects with
      Canadian Securities Laws as interpreted and applied by the Securities
      Commissions;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              none
      of the Offering Documents nor any amendment or supplement thereto
      contained or will contain an untrue statement of a material fact or omit
      to state a material fact required to be stated therein, or necessary to
      make the statements therein, in light of the circumstances in which they
      were made, not misleading; and

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 18
-

      

    

     

    
      	
            	
              (iii)
      

                 

              

            	
              each
      of the Offering Documents, and any Supplementary Material or any amendment
      or supplement thereto constituted and will constitute full, true and plain
      disclosure of all material facts relating to the Company and its Material
      Subsidiaries, considered as one enterprise, and the Shares, and did not
      and will not include an untrue statement of a material fact or omit to
      state a material fact necessary in order to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading, except that the representations and warranties contained in
      paragraph (ii) above and this paragraph (iii) do not apply to statements
      relating solely to the Underwriters or furnished by the Underwriters
      concerning the Underwriters under the section “Plan of Distribution”
      contained in the Offering Documents, any Prospectus Amendment or
      Supplementary Material.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Share Capital of Western.
      The share capital of Western described under the heading
      “Description of Securities Distributed” in the Final Prospectus is true
      and correct. At the Time of Closing, but prior to giving effect to the
      issuance of any Shares, the issued share capital of Western will consist
      only of common shares, and no other equity or voting
    shares.

            


    

     

    
      	
               
      

            	
              (e)

            	
              Authorization and Description
      of Shares. The Shares have been duly authorized for issuance and
      sale to the Underwriters pursuant to this Agreement and when issued and
      delivered by Western pursuant to this Agreement, against payment of the
      consideration set forth herein, will be validly issued as fully paid and
      non-assessable shares. The Shares conform and will conform to all
      statements relating thereto contained in the Offering Documents and such
      description conforms to the rights set forth in the instruments defining
      the same. The issuance of the Shares is not subject to the pre-emptive
      rights of any shareholder of Western (or such rights have been irrevocably
      waived), and all corporate action required to be taken by Western for the
      authorization, issuance, sale and delivery of the Shares has been validly
      taken at the date hereof.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Absence of Rights. No
      person has any right, agreement or option, present or future, contingent
      or absolute, or any right capable of becoming a right, agreement or
      option, for the issue or allotment of any unissued shares of Western or
      any other agreement or option, for the issue or allotment of any unissued
      shares of Western or any other security convertible into or exchangeable
      for any such shares or to require Western to purchase, redeem or otherwise
      acquire any of the issued and outstanding shares of Western except as
      otherwise disclosed in the Offering
Documents.

            


    

     

    
      	
               
      

            	
              (g)

            	
              Financial Statements
      The Financial Information incorporated by reference in the Offering
      Documents and the notes
thereto,

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 19
-

      

    


    
      	
               
      

            	
               (i)

            	
              present
      fairly, in all material respects, the financial position of Western and
      its subsidiaries, and the statements of operations, retained earnings,
      cash flow from operations and changes in financial  information
      of Western and its subsidiaries for the periods specified in such
      Financial Information;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              have
      been prepared in conformity with generally accepted accounting principles
      in the United States of America (“U.S. GAAP”) in accordance with and to the
      full extent required by applicable U.S. Securities Laws;
    and

            


    

     

    
      	
               
      

            	
              (iii)

            	
              as
      it relates to the audited financial statements of Western for the
      financial years ended 2006, 2005 and 2004, do not contain any untrue
      statement of a material fact or omit to state a material fact required to
      be stated or that is necessary to make a statement not misleading in light
      of the circumstances under which it was made, with respect to the period
      covered by the Financial
Information.

            


    

     

    
      	
               
      

            	
              (h)

            	
              Liabilities. Neither
      Western nor its subsidiaries, have any liabilities, obligations,
      indebtedness or commitments, whether accrued, absolute, contingent or
      otherwise, which are not disclosed or referred to in the Financial
      Information or referred to or disclosed herein, other than liabilities,
      obligations, or indebtedness or commitments (i) incurred in the normal
      course of business, or (ii) which would not have a Material Adverse
      Effect.

            


    

     

    
      	
               
      

            	
              (i)

            	
              No Default. The Company
      is not in default or breach or violation of, and the execution and
      delivery of, and the performance of, and compliance with, the terms of
      this Agreement do not and will not:

            


    

     

    
      	
               
      

            	
              (i)

            	
              result
      in any breach of, or constitute a default under, and do not and will not
      create a state of facts which, after notice or lapse of time or both,
      would result in a breach of or constitute a default under, any term or
      provision of the constating documents, or resolutions of the Company, any
      applicable laws, mortgage, note, contract, agreement (written or oral),
      instrument, lease or other document to which the Company is a party or by
      which it is bound, or any judgment, decree, order, statute, rule or
      regulation applicable to the Company or any subsidiaries, which default or
      breach might reasonably be expected to have a Material Adverse Effect;
      or

            


    

     

    
      	
               
      

            	
              (ii)

            	
              create
      a right for any other party to terminate, accelerate or in any way alter
      any other rights existing under any indenture, mortgage, note, contract,
      agreement (written or oral), instrument, lease or other document to which
      the Company or any subsidiary is a party or by which it is bound which,
      upon exercise of such right, might reasonably be expected to have a
      Material Adverse Effect;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 20
-

      

    

     

    
      	
               
      

            	
              (j)

            	
              Independent Accountants.
      The accountants who reported on and certified the Financial
      Information, are independent public accountants as required by the U.S.
      Securities Act and the rules and regulations thereunder, and are
      independent with respect to the Company within the meaning of the Canadian
      Institute of Chartered Accountants
Handbook.

            


    

     

    
      	
               
      

            	
              (k)

            	
              Accounting Controls.
      Western and each of its Material Subsidiaries maintains, and will
      maintain, at all times prior to the Closing Date a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or
      specific authorizations, (ii) transactions are recorded as necessary to
      permit preparation of financial statements in conformity with U.S. GAAP
      and to maintain asset accountability, (iii) access to assets is permitted
      only in accordance with management’s general or specific authorization,
      and (iv) the recorded accountability for assets is compared with the
      existing assets at reasonable intervals and appropriate action is taken
      with respect to any differences.

            


    

     

    
      	
               
      

            	
              (l)

            	
              Title to Real Property.
      At the Time of Closing, all of the leases, subleases and agreements
      in real property (other than mining claims, mineral or exploration
      concessions and other mineral property rights) material to the business of
      Western and the Material Subsidiaries, considered as one enterprise, and
      under which Western or any of the Material Subsidiaries has an interest as
      described in the Offering Documents, are in full force and effect, and
      neither Western nor any Material Subsidiary has received any notice of any
      material claim of any sort that has been asserted by anyone adverse to the
      rights of Western or any Material Subsidiary under any of the lease or
      subleases mentioned above, or affecting or questioning the rights of
      Western or such Material Subsidiary to the continued possession of the
      property under any such lease, sublease, or agreement, except as disclosed
      in the Offering Documents.

            


    

     

    
      	
               
      

            	
              (m)

            	
              Mining Claims. The
      material mining licenses claims, concessions, exploration, extraction and
      other mineral property rights that are set forth in the title opinion (the
      “January Title Opinion”) provided to WWCM pursuant to
      the Company’s most recent equity financing completed in January 2007
      (collectively, the “Mining Claims”) is, in all material respects
      (but subject to non-material variations since the date of the January
      Title Opinion), a complete and accurate list of all such rights held by
      Western and the Material Subsidiaries. All Mining Claims of Western and
      the Material Subsidiaries that are held by Western or the Material
      Subsidiaries, are in good standing, are valid and enforceable, are free
      and clear of any material Liens or charges (except pursuant to security
      interests granted under the Credit Facility) and no material royalty is
      payable in respect of any of them, except as set out in the Offering
      Documents. Except as set out in the Offering Documents, no other property
      rights are necessary for the conduct of Western’s or the Material
      Subsidiaries’ business as it is currently being conducted; and there are
      no material restrictions on the ability of Western or the Material
      Subsidiaries to use, transfer or otherwise exploit any such property
      rights except as required by applicable law. Except as disclosed in the
      Offering Documents, the Material Subsidiaries are the owners of Mining
      Claims necessary to carry on their current and proposed mining and
      exploration activities as disclosed in the Offering Documents. Except as
      disclosed in the Offering Documents, Mining Claims held by Western or the
      Material Subsidiaries cover the properties required by Western for such
      purposes as contemplated by the Technical
  Report.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
21 -

      

    

     

    
      	
               
      

            	
              (n)

            	
              Mineral Information.
      The information set forth in the Offering Documents relating to the
      estimates by Western and the Material Subsidiaries of the mineral
      resources and mineral reserves have been reviewed and verified by the
      qualified persons described under the heading “Interests of Experts” and,
      in all cases, the resource information has been prepared in accordance
      with Canadian industry standards set forth in National Instrument 43-101
      -“Standards of Disclosure for Mineral Projects”, and the information upon
      which the estimates of resources and reserves were based, was, at the time
      of delivery thereof, complete and accurate in all material respects and
      there have been no material adverse changes to such information since the
      date of delivery or preparation thereof. The Technical Report is a
      “current” technical report for the purposes of National Instrument 43-101
      “Standards of Disclosure for Mineral
Projects”.

            


    

     

    
      	
               
      

            	
              (o)

            	
              Environmental Laws.
      Except as described in the Offering Documents, (a) neither Western
      nor any of the Material Subsidiaries is in violation of any federal,
      provincial, state, local, municipal or foreign statute, law, rule,
      regulation, ordinance, code, policy or any judicial or administrative
      interpretation thereof, including any judicial or administrative order,
      consent decree or judgment, relating to pollution or protection of human
      health, the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata) or
      wildlife, including, without limitation, laws and regulations relating to
      the release or threatened release of chemicals, pollutants, contaminants,
      wastes, toxic substances, hazardous substances, petroleum or petroleum
      products (collectively, “Hazardous Materials”) or to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport or
      handling of Hazardous Materials (collectively, “Environmental Laws”) except where such violations
      would not be reasonably expected, on an individual or aggregate basis, to
      have a Material Adverse Effect, (b) Western and the Material Subsidiaries
      have all permits, authorizations and approvals required under any
      applicable Environmental Laws and are each in compliance with their
      requirements, except where the failure to have such permits,
      authorizations and approvals would not reasonably be expected, on an
      individual or aggregate basis, to have a Material Adverse Effect, and (c)
      there are no pending or threatened administrative, regulatory or judicial
      actions, suits, demands, demand letters, claims, liens, notices of
      non-compliance or violation, investigation or proceedings relating to any
      Environmental Laws against Western or any of the Material Subsidiaries,
      which if determined adversely, would reasonably be expected to have a
      Material Adverse Effect.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
22 -

      

    

     

    
      	
               
      

            	
              (p)

            	
              Possession of Licenses and
      Permits. Western and the Material Subsidiaries possess such
      permits, certificates, licenses, approvals, consents and other
      authorizations (collectively, “Governmental Licenses”) issued by the appropriate
      federal, provincial, state, local or foreign regulatory agencies or bodies
      necessary to own, lease, stake or maintain the Mining Claims and other
      property interests and to conduct the business now operated, including to
      conduct mining and processing operations on the Mesquite Project, except
      where the failure to possess such permits, certificates, licenses,
      approvals, consents or authorizations would not reasonably be expected to
      have a Material Adverse Effect or where such failure has been disclosed or
      referred to in the Offering Documents. Western and the Material
      Subsidiaries are in compliance, in all material respects, with the terms
      and conditions of all such Governmental Licenses. All of the Governmental
      Licenses are valid and in full force and effect. Neither Western nor any
      of the Material Subsidiaries have received any notice of proceedings
      relating to the revocation or material modification of any such
      Governmental Licenses.

            


    

     

    
      	
               
      

            	
              (q)

            	
              Insurance. Western and
      each Material Subsidiary maintains policies of insurance in force as at
      the date hereof that adequately cover all those risks reasonably and
      prudently foreseeable in the current operation and conduct of their
      respective businesses which, having regard to the nature of such risk and
      the relative costs of obtaining insurance, it is reasonable to seek rather
      than to provide for self-insurance.

            


    

     

    
      	
               
      

            	
              (r)

            	
              Executive Compensation.
      The directors and officers of Western and their compensation
      arrangements with Western, whether as directors, officers or employees of
      Western are as disclosed in the Offering
  Documents.

            


    

     

    
      	
               
      

            	
              (s)

            	
              Material Contracts. All
      of the material contracts and agreements of Western and of the Material
      Subsidiaries not made in the ordinary course of business (collectively the
      “Material Contracts”) have been disclosed in the
      Offering Documents and if required under the Applicable Securities Laws
      have been filed with the applicable Securities Commissions. Neither
      Western nor any Material Subsidiary has received notification from any
      party claiming that Western is in material breach or default under any
      Material Contract.

            


    

     

    
      	
               
      

            	
              (t)

            	
              No Material Adverse Effect.
      Since June 30, 2006, (a) there has been no change in the condition
      (financial or otherwise), or in the properties, capital, affairs,
      prospects, operations, assets or liabilities of Western and the Material
      Subsidiaries considered on a consolidated basis, whether or not arising in
      the ordinary course of business which would give rise to a Material
      Adverse Effect, and (b) there have been no transactions entered into by
      Western or any of the Material Subsidiaries, other than those in the
      ordinary course of business, which are material with respect to Western
      and the Material Subsidiaries considered as one enterprise, in each case,
      except as disclosed in the Offering
Documents.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
23 -

      

    

     

    
      	
               
      

            	
              (u)

            	
              Absence of Proceedings.
      There is no action, suit, proceeding, inquiry or investigation
      before or brought by any court or governmental agency, governmental
      instrumentality or body, domestic or foreign, now pending or, to the
      knowledge of Western, threatened against or affecting Western or any
      Material Subsidiary, which is required to be disclosed in the Offering
      Documents and which is not so disclosed, or which if determined adversely,
      would have a Material Adverse Effect, or which if determined adversely
      would materially and adversely affect the consummation of the transactions
      contemplated in this Agreement or the performance by Western of its
      obligations hereunder.

            


    

     

    
      	
               
      

            	
              (v)

            	
              Transfer Agent. Each of
      Computershare Investor Services Inc., at its offices in Toronto, Ontario,
      and Computershare Trust Company, Inc., at its offices in Golden, Colorado,
      has been duly appointed as transfer agent and registrar for the Common
      Shares.

            


    

     

    
      	
               
      

            	
              (w)

            	
              Absence of Further
      Requirements. No filing with, or authorization, approval, consent,
      license, order, registration, qualification or decree of any court or
      governmental authority or agency is necessary or required for the
      performance by the Company of its obligations hereunder, in connection
      with the proposed distribution, issuance or sale of the Shares hereunder,
      or the consummation of the transactions contemplated by this Agreement,
      except (a) such as have been already obtained or as may be required under
      the U.S. Securities Laws, and (b) such as have been obtained, or as may be
      required, under Canadian Securities
Laws.

            


    

     

    
      	
               
      

            	
              (x)

            	
              Unlawful Payment.
      Neither Western nor any of its Material Subsidiaries nor, any
      employee or agent of Western or any Material Subsidiary, has made any
      unlawful contribution or other payment to any official of, or candidate
      for, any federal, state, provincial or foreign office, or failed to
      disclose fully any contribution, in violation of any law, or made any
      payment to any foreign, Canadian, United States or provincial or state
      governmental officer or official, or other person charged with similar
      public or quasi-public duties, other than payments required or permitted
      by applicable laws.

            


    

     

    
      	
               
      

            	
              (y)

            	
              Brokerage Fees. Other
      than the Underwriters, there is no person, firm or corporation acting or,
      to the knowledge of Western, purporting to act at the request of Western,
      who is entitled to any brokerage or finder’s fees in connection with the
      Offering contemplated herein.

            


    

     

    
      	
               
      

            	
              (z)

            	
              Agreement. This
      Agreement has been duly authorized, executed and delivered by Western and
      is a legal, valid and binding obligation of, and is enforceable against,
      Western in accordance with its terms (subject to bankruptcy, insolvency or
      other laws affecting the rights of creditors generally, the availability
      of equitable remedies and the qualification that rights to indemnity and
      waiver of contribution may be contrary to public
  policy).

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
24 -

      

    

     

    
      	
               
      

            	
              (aa)

            	
              Directors and Officers.
      None of the directors or officers of Western are now, or have ever
      been, subject to an order or ruling of any securities regulatory authority
      or stock exchange prohibiting such individual from acting as a director or
      officer of a public company or of a company listed on a particular stock
      exchange.

            


    

     

    
      	
               
      

            	
              (bb)

            	
              No Cease Trade Orders.
      No securities commission or any similar regulatory authority in any
      jurisdiction has issued any order which is currently outstanding
      preventing or suspending trading in any securities of the Company, no such
      proceeding is, to the knowledge of the Company, pending, contemplated or
      threatened, and the Company is not in default of any requirement of
      Canadian Securities Laws which would have a Material Adverse Effect on the
      Offering or the Company.

            


    

     

    
      	
               
      

            	
              (cc)

            	
              Reporting Issuer Status.
      The Company is a “reporting issuer” in the provinces of British
      Columbia, Alberta, Ontario and
Manitoba.

            


    

     

    
      	
               
      

            	
              (dd)

            	
              Short Form Eligibility.
      Western is eligible to file a prospectus in the form of a short
      form prospectus under National Instrument 44-101 of the Canadian
      Securities Administrators.

            


    

     

    
      	
               
      

            	
              (ee)

            	
              Disclosure. Western has
      filed all documents or information required to be filed by it with the
      Securities Commissions or the SEC under Applicable Securities Laws. Each
      such document or item of information filed by Western, as of its date, did
      not contain any untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were
      made, not misleading at the time at which it was filed with applicable
      securities regulators, including, without limitation, the Securities
      Commissions and the SEC. The Company has not filed any confidential
      material change report with any securities regulatory authority or
      regulator or any Exchange or any document for confidential treatment with
      the SEC that at the date hereof remains
  confidential.

            


    

     

    
      	
               
      

            	
              (ff)

            	
              Passive Foreign Investment
      Company. Western was not a passive foreign investment company (a
      “PFIC”) within the meaning of section 1297 of the Code for its taxable
      year ended December 31, 2006 and expects that it will not constitute a
      PFIC for its current taxable year ending December 31,
  2007.

            


    

     

    
      	
               
      

            	
              (gg)

            	
              Labour Practices.
      Neither Western no any Material Subsidiary is engaged in any unfair
      labour practice; except for matters which would not, individually or in
      the aggregate, have a Material Adverse Affect and that, to the Company’s
      knowledge:

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
25 -

      

    


    
      	
               
      

            	
              (i)

            	
              there
      is no unfair labour practice complaint pending or threatened against
      the Company or a Material Subsidiary and no grievance or arbitration
      proceeding arising out of or under collective bargaining agreements is
      pending or threatened;

            


    

    
       

    

    
      	
               
      

            	
              (ii)

            	
              no
      strike, labour dispute, slowdown or stoppage is pending or threatened
      against the Company or a Material
  Subsidiary;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              there
      is no union representation dispute currently existing concerning 
      the
      employees of the Company or a Material
  Subsidiary;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              there
      are no union organizing activities currently taking place concerning
      employees of the Company or a Material Subsidiary;
    and

            


    

     

    
      	
               
      

            	
              (v)

            	
              there
      has been no violation of any federal, state, provincial, local or foreign
      law relating to discrimination in the hiring, promotion or pay of
      employees, and applicable wage or hour laws or any provision of the
      Employee Retirement Income Security Act of 1974 or the rules and
      regulations promulgated thereunder concerning the Company or a Material
      Subsidiary.

            


    

     

    
      	
               
      

            	
              (hh)

            	
              Forward Looking Statements.
      Each “forward looking statement” contained or incorporated by
      reference in the Offering Documents, if any, has been made or reaffirmed
      with a reasonable basis and in good
faith.

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Trading in Securities.
      Neither the Company, nor any Material Subsidiary nor to the
      Company’s knowledge any of their respective directors, officers or
      controlling persons has taken, directly or indirectly, any action
      designed, or which has constituted or might reasonably be expected to
      cause or result in the stabilization or manipulation of the price of any
      security of the Company to facilitate the sale or resale of the
      Shares.

            


    

     

    
      	
              Section
      8 

            	
              Representations
      and Warranties of the Underwriters

            


    

     

    
      	
              (1) 

            	
              Each
      Underwriter hereby severally, and not jointly, represents and warrants
      that:

            


    

     

    
      	
               
      

            	
              (a)

            	
              it
      is, and will remain so, until the completion of the Offering,
      appropriately registered under Applicable Securities Laws so as to permit
      it to lawfully fulfil its obligations hereunder;
  and

            


    

     

    
      	
               
      

            	
              (b)

            	
              it
      has all requisite corporate power and authority to enter into this
      Agreement and to carry out the transactions contemplated under this
      Agreement on the terms and conditions set forth
  herein.

            


    

     

    
      	
              (2)

            	
              Any
      offer or sale of the Shares in the United States or to U.S. person will be
      made in accordance
      with Schedule “A” which forms part of this
    Agreement.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
26 -

      

    


    
      	
              (3)

            	
              The
      representations and warranties of each of the Underwriters contained in
      this Agreement shall be true at the Time of Closing as though they were
      made at the Time of Closing and they shall not survive the completion of
      the transactions contemplated under this Agreement but shall terminate on
      the completion of the distribution of the
  Shares.

            


    

     

    
      	
              Section
      9 

            	
              Additional
      Covenants of Western

            


    

     

    In
addition to any other covenant of Western set forth in this Agreement, Western
covenants with the Underwriters that:

     

    
      	
               
      

            	
              (a)

            	
              Stock Exchange Listings.
      Western will file or cause to be filed with the TSX all necessary
      documents and will take, or cause to be taken, all necessary steps to
      ensure that the Shares have been approved (or conditionally approved) for
      listing and for trading on the TSX, prior to the filing of the Final
      Prospectus with the Securities Commissions, subject only to satisfaction
      by Western of the Standard Listing Conditions, and Western shall
      thereafter, fulfill the Standard Listing Conditions within the time period
      prescribed by the TSX;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Other Filings. Western
      will make all necessary filings, obtain all necessary regulatory consents
      and approvals (if any) and Western will pay all filing fees required to be
      paid in connection with the transactions contemplated in this
      Agreement;

            


    

     

    
      	
               
      

            	
              (c)

            	
              Press Releases. Subject
      to compliance with applicable law, any press release of Western relating
      to the Offering will be provided in advance to WWCM and RBC on behalf of
      the Underwriters, and Western will use its reasonable commercial efforts
      to agree to the form and content thereof with WWCM and RBC on behalf of
      the Underwriters, prior to the release
thereof;

            


    

     

    
      	
               
      

            	
              (d)

            	
              Use of Proceeds.
      Western confirms its intention to use the net proceeds from the
      purchase and sale of the Shares in accordance with the descriptions set
      forth under the heading “Use of Proceeds” in the Final Prospectus. The
      Underwriters acknowledge that there may be circumstances where, for sound
      business reasons, a re-allocation of funds may be necessary or advisable;
      and

            


    

     

    
      	
               
      

            	
              (e)

            	
              Blackout Period.
      Western agrees that neither Western, nor any of its subsidiaries
      nor officers nor directors shall, directly or indirectly, offer, sell or
      issue for sale or resale any Shares or financial instruments or securities
      convertible into or exercisable or exchangeable for Shares, or agree to or
      announce any such offer, sale or issuance, except for (i) the issuance of
      securities pursuant to an exercise of already issued convertible
      securities or existing agreements, (ii) grant of such options or other
      securities under the Issuer’s incentive plans, and (iii) issuance of
      securities in connection with strategic merger and acquisition
      transactions, for a period of 90 days from Closing Date without the prior
      written consent of WWCM and RBC, such consent not to be unreasonably
      withheld. Western shall use its commercially reasonable best efforts to
      cause each of its directors and officers to enter into lock-up agreements
      in form and substance satisfactory to WWCM and RBC evidencing their
      agreement to be bound by the terms of this Subsection
  9(e);

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
27 -

      

    

     

    
      	
              Section
      10 

            	
              Covenants
      of the Underwriters

            


    

     

    
      	
              (1)

            	
              The
      Underwriters hereby severally, and not jointly, covenant and agree with
      Western
      the following:

            


    

     

    
      	
               
      

            	
              (a)

            	
              Offering Jurisdictions and
      Offering Price. During the period of distribution of the Shares by
      or through the Underwriters, the Underwriters will offer and sell Shares
      to the public only in the Offering Jurisdictions or where they may
      lawfully be offered for sale or sold, at an offering price not exceeding
      the offering price set forth on the cover page of the Final Prospectus.
      For the purposes of this Subsection 10(1)(a) the Underwriters shall be
      entitled to assume that the Shares are qualified for distribution in any
      Qualifying Jurisdiction where an MRRS Decision Document for the Final
      Prospectus shall have been obtained from the applicable Securities
      Commission following the filing of the Final
  Prospectus.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Compliance with Securities
      Laws. The Underwriters will comply with and shall require any other
      person participating in offer or sell activities to comply with Applicable
      Securities Laws in connection with the offer to sell and the distribution
      of the Shares, and all such selling persons will be registered (or have
      such exemptions from registration requirements) under the Applicable
      Securities Laws as may be required.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Completion of Distribution.
      The Underwriters will use their reasonable commercial efforts to
      complete the distribution of the Shares as promptly as possible after the
      Time of Closing and all parties agree that the distribution of the Shares
      shall be deemed to have been completed at 5:00 p.m. (Toronto time) on the
      Over-Allotment Closing Date. The Underwriters will notify Western when, in
      the Underwriters’ opinion, the Underwriters have ceased the distribution
      of the Shares, and, within 30 days after completion of the distribution,
      will provide Western, in writing, with a breakdown of the number of Shares
      distributed in each of the Offering Jurisdictions where that breakdown is
      required by a Securities Commission or the SEC, as the case may be, for
      the purpose of calculating fees payable to, or making filings with, that
      Securities Commission or SEC, as the case may
  be.

            


    

     

    
      	
              (2)

            	
              Liability on Default.
      No Underwriter shall be liable to Western under this Section 10
      with
      respect to a default by any of the other
    Underwriters.

            


    

     

    
      	
              Section
      11 

            	
              Closing

            


    

     

    
      	
              (1)

            	
              Location of Closing.
      The Offering of the Purchased Shares will be completed at the
      offices of Cassels Brock & Blackwell LLP in Toronto, Ontario at the
      Time of Closing on the Closing
Date.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
28 -

      

    


    
      	
              (2)

            	
              Certificates. At the
      Time of Closing, subject to the terms and conditions contained in this
      Agreement, Western shall deliver to the Underwriters a certificate or
      certificates representing the Shares against payment of the purchase price
      by certified cheque, bank draft or wire transfer dated the Closing Date
      payable to Western. Western will, at the Time of Closing and upon such
      payment of the aggregate Offer Price to Western, make payment in full of
      the Underwriting Fee and such amounts as are due pursuant to Section 17
      (the “Expenses”) which shall be made by
      Western directing WWCM to withhold the Underwriting Fee and the Expenses
      from the payment of the aggregate Offer Price. Certificates shall be
      registered in such names as the Underwriters may
  request.

            


    

     

    
      	
              Section
      12 

            	
              Over
      Allotment Option Closing

            


    

     

    
      	
              (1)

            	
              Closing. In the event
      that the Over-Allotment Option is exercised by the Underwriters and any of
      the Over-Allotment Shares are purchased by the Underwriters, payment of
      the purchase price for, and delivery of certificates for, such
      Over-Allotment Shares shall be made at the offices mentioned in Section 11
      above, or at such other place as shall be agreed upon by the Underwriters
      and the Company, on the Over-Allotment Closing Date as specified in the
      written notice from the Underwriters to the Company giving notice of the
      exercise of the Over-Allotment
Option.

            


    

     

    
      	
              (2)

            	
              Payments and Certificates.
      At the Time of Closing, if any, for the exercise of the
      Over-Allotment Option, subject to the terms and conditions contained in
      this Agreement, the Company shall deliver to the Underwriters a
      certificate or certificates representing the Over-Allotment Shares against
      payment of the purchase price by certified cheque, bank draft or wire
      transfer dated the Over-Allotment Closing Date payable to the Company. The
      Company will, at the time of the Over-Allotment Closing Date and upon such
      payment of the purchase price to the Company, make payment in full of the
      Underwriting Fee in respect of the Over-Allotment Shares by directing WWCM
      to withhold the Underwriting Fee and the Expenses from the payment of the
      aggregate Over-Allotment Share purchase price. Certificates shall be
      registered in such names as the Underwriters may
  request.

            


    

     

    
      	
              Section
      13 

            	
              Compensation
      of the Underwriters

            


    

     

    
      	
              (1)

            	
              Underwriting Fee on Shares.
      Western shall pay to the Underwriters at the Time of Closing a fee
      (the “Underwriting Fee”) equal to $0.1525 per Share
      sold pursuant to the terms of this Agreement (being 5% of the aggregate
      gross cash proceeds received from the sale of each of the Shares) in
      consideration of the services to be rendered by the Underwriters in
      connection with the Offering.

            


    

     

    
      	
              (2)

            	
              Underwriting Fee on
      Over-Allotment Shares. Western shall pay to the Underwriters at the
      closing of the exercise of the Over-Allotment Option, if any, the
      Underwriting Fee per Over-Allotment Shares
  purchased.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
29 -

      

    


    
      	
              Section
      14 

            	
              Termination
      Rights

            


    

     

    
      	
              (1)

            	
              All
      terms and conditions set out in this Agreement shall be construed as
      conditions and any breach or failure by Western to comply with any such
      conditions in favour of the Underwriters shall entitle the Underwriters to
      terminate their obligation to purchase the Shares by written notice to
      that effect given to Western prior to the Time of Closing on the Closing
      Date. Western shall use its reasonable commercial efforts to cause all
      conditions in this Agreement to be satisfied. It is understood that the
      Underwriters may waive in whole or in part, or extend the time for
      compliance with, any of such terms and conditions without prejudice to
      their rights in respect of any subsequent breach or non-compliance,
      provided that to be binding on the Underwriters, any such waiver or
      extension must be in writing.

            


    

     

    
      	
              (2)

            	
              In
      addition to any other remedies which may be available to the Underwriters
      in respect of any default, act or failure to act, or non-compliance with
      the terms of this Agreement by Western, the Underwriters shall be
      entitled, at their option, to terminate and cancel, without any liability
      on the part of the Underwriters, their obligations under this Agreement to
      purchase the Shares by giving written notice to Western at any time at or
      prior to the Time of Closing on the Closing
  Date:

            


    

     

    
      	
               
      

            	
              (a)

            	
              if,
      in relation to Western, any inquiry, investigation or other proceeding
      (whether formal or informal) is commenced, threatened or announced, or any
      order or ruling is issued by any exchange or market, or any other
      regulatory authority in Canada, or the United States, or if any law or
      regulation under or pursuant to any statute of Canada or of any province
      thereof, or of the United States or any state or territory thereof or, is
      promulgated or changed which moratorium, inquiry, investigation,
      proceeding, order, ruling, law or regulation, in the reasonable opinion of
      the Underwriters (or any of them), operates to prevent or materially
      restrict trading of the common shares or the distribution of the Shares or
      could reasonably be expected to have a Material Adverse Effect, including
      as to the market price or value of the
Shares;

            


    

     

    
      	
               
      

            	
              (b)

            	
              if
      there is, in the reasonable opinion of any of the Underwriters: (i) a
      material change; (ii) a change in any material fact; or (iii) a new
      material fact that has arisen, or an Underwriter become aware of any
      undisclosed material change or material fact, that could reasonably be
      expected to have a Material Adverse
Effect;

            


    

     

    
      	
               
      

            	
              (c)

            	
              if
      there should develop, occur or come into effect or existence any event,
      action, state, condition or major financial occurrence of national or
      international consequence, including without limiting the generality of
      the foregoing, any military conflict, civil insurrection, or any terrorist
      action (whether or not in connection with such conflict or insurrection),
      which, in the Underwriters’ reasonable opinion (or any one of them),
      materially adversely affects or involves, or will materially adversely
      affect or involve, the Canadian, or United States financial markets and/or
      prevent or materially restrict the trading of the Common Shares or the
      distribution of the Shares, may result in a Material Adverse
      Effect;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
30 -

      

    


    
      	
               
      

            	
              (d)

            	
              if
      the Company fails to file the Preliminary Prospectus, or the Final
      Prospectus, and obtain receipts therefore, within the time limits set
      forth in this Agreement; or

            


    

     

    
      	
               
      

            	
              (e)

            	
              if
      Western is in material breach of any term, condition or covenant of this
      Agreement, or any representation or warranty given by Western in this
      Agreement becomes or is materially
false.

            


    

     

    
      	
              (3)

            	
              If
      the obligations of the Underwriters are terminated under this Agreement
      pursuant to these termination rights, the liability of Western to the
      Underwriters shall be limited to the obligations under Sections 15, 16 and
      17.

            


    

     

    
      	
              Section
      15 

            	
              Indemnity

            


    

     

    
      	
              (1)

            	
              Western
      (for the purposes of this Section 15, the “Indemnifiers”) covenants and agrees to
      protect, indemnify, and save harmless, each of the Underwriters and their
      respective U.S. broker-dealer affiliates, and each of their respective
      directors, officers, employees, affiliates and agents and each person, if
      any, who controls any Underwriter or its U.S. broker-dealer affiliates
      within the meaning of section 15 of the U.S. Securities Act or section 20
      of the U.S. Exchange Act (individually, an “Indemnified Party” and collectively, the “Indemnified Parties”), against all losses (other
      than loss of profits), claims, damages, suits, liabilities, costs,
      damages, or expenses caused or incurred, whether directly or indirectly,
      by reason of:

            


    

     

    
      	
               
      

            	
              (a)

            	
              any
      statement (except for statements relating solely to the Underwriters and
      furnished by them specifically for use in any of the Offering Documents)
      contained in the Offering Documents (including in any documents
      incorporated by reference therein), which at the time and in the light of
      the circumstances under which it was made contains or is alleged to
      contain a misrepresentation (as such term is defined in the Securities Act
      (Ontario)) or any misstatement of a material
  fact;

            


    

     

    
      	
               
      

            	
              (b)

            	
              the
      omission or alleged omission to state in the Offering Documents (including
      in any documents incorporated by reference therein), or any certificate of
      Western delivered hereunder or pursuant hereto, any material fact (other
      than a material fact relating solely to the Underwriters) required to be
      stated therein or necessary to make any statement therein not
      misleading;

            


    

     

    
      	
               
      

            	
              (c)

            	
              any
      order made, or inquiry, investigation or proceeding commenced by any
      securities regulatory authority or other competent authority based upon
      any misrepresentation, untrue statement or omission or alleged untrue
      statement or omission in the Offering Documents (including in any
      documents incorporated by reference therein), (except for information and
      statements relating solely to the Underwriters and furnished by them
      specifically for use in the Offering Documents) that prevents or restricts
      the trading in any of Western’s securities or the distribution or
      distribution to the public, as the case may be, of any of the Shares in
      any of the Offering
Jurisdictions;

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 31
-

      

    


    
      	
               
      

            	
              (d)

            	
              Western
      not complying with any requirement of Applicable Securities Laws or stock
      exchange requirements in connection with the transactions herein
      contemplated including Western’s non-compliance with any statutory
      requirement to make any document available for inspection;
    or

            


    

     

    
      	
               
      

            	
              (e)

            	
              any
      breach of a representation or warranty of Western contained in this
      Agreement or the failure of Western to comply with any of its obligations
      hereunder.

            


    

     

    
      	
              (2)

            	
              Notwithstanding
      Section 15(1), the indemnification in Section 15(1) does not and shall not
      apply to the extent that a court of competent jurisdiction in a final
      judgment that has become non-appealable shall determine that such losses,
      claims, liabilities, damages or expenses were caused or incurred solely by
      negligence, dishonesty, fraud or wilful misconduct of the
      Underwriters.

            


    

     

    
      	
              (3)

            	
              If
      any matter or thing contemplated by this section shall be asserted against
      any Indemnified Party in respect of which indemnification is or might
      reasonably be considered to be provided, such Indemnified Party will
      notify the Indemnifiers as soon as possible of the nature of such claim
      (provided that omission to so notify the Indemnifiers will not relieve the
      Indemnifiers of any liability that it may otherwise have to the
      Indemnified Party hereunder, except to the extent the Indemnifiers are
      materially prejudiced by such omission) and the Indemnifiers shall be
      entitled (but not required) to assume the defence of any suit brought to
      enforce such claim; provided, however, that the defence shall be through
      legal counsel reasonably acceptable to such Indemnified Party and that no
      settlement may be made by the Indemnifiers or such Indemnified Party
      without the prior written consent of the other, such consent not to be
      unreasonably withheld.

            


    

     

    
      	
              (4)

            	
              In
      any such claim, such Indemnified Party shall have the right to retain
      other legal counsel to act on such Indemnified Party’s behalf, provided
      that the fees and disbursements of such other legal counsel shall be paid
      by such Indemnified Party, unless: (i) the Indemnifiers and such
      Indemnified Party mutually agree to retain other legal counsel; or (ii)
      the representation of the Indemnifiers and such Indemnified Party by the
      same legal counsel would, in the opinion of such counsel, be inappropriate
      due to actual or potential differing interests, in which event such fees
      and disbursements shall be paid by the Indemnifiers to the extent that
      they have been reasonably incurred, provided that in no circumstances will
      the Indemnifiers be required to pay the fees and expenses of more than one
      set of legal counsel for all Indemnified
  Parties.

            


    

     

    
      	
              (5)

            	
              To
      the extent that any Indemnified Party is not a party to this Agreement,
      the Underwriters shall obtain and hold the right and benefit of this
      section in trust for and on behalf of such Indemnified
    Party.

            


    

     

    
      	
              (6)

            	
              The
      Indemnifiers hereby consents to personal jurisdiction in any court in
      which any claim that is subject to indemnification hereunder is brought
      against the Underwriters or any Indemnified Party and to the assignment of
      the benefit of this section to any Indemnified Party for the purpose of
      enforcement provided that nothing herein shall limit Western’s right or
      ability to contest the appropriate jurisdiction or forum for the
      determination of any such
claims.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        - 32
-

      

    

     

    
      	
              (7)

            	
              The
      rights of the Indemnifiers contained in this section shall not enure to
      the benefit of any Indemnified Party if the Underwriters were provided
      with a copy of any amendment or supplement to the Offering Documents which
      corrects any untrue statement or omission or alleged omission that is the
      basis of a claim by a party against such Indemnified Party and that is
      required, under the applicable securities legislation or regulations, to
      be delivered to such party by the
Underwriters.

            


    

     

    
      	
              (8)

            	
              The
      rights of the Indemnifiers contained in this section shall not enure to
      the benefit of any Indemnified Party to the extent that any such loss,
      claim, damage, or liability arises out of or is based upon any untrue
      statement or alleged untrue statement or omission or alleged omission made
      in any Offering Document in reliance upon and in conformity with written
      information concerning the Underwriters furnished to Western by the
      Underwriters in writing specifically for use therein under the heading
      “Plan of Distribution” contained in the Offering
  Documents.

            


    

     

    
      	
              (9)

            	
              Western
      shall not be liable under this section for any settlement of any claim or
      action effected without its prior written consent, which shall not be
      unreasonably withheld.

            


    

     

    
      	
              Section
      16 

            	
              Contribution

            


    

     

    In the
event that the indemnity provided for in Section 15 is declared by a court of
competent jurisdiction to be illegal or unenforceable as being contrary to
public policy or for any other reason, the Underwriters and the Indemnifiers
shall contribute to the aggregate of all losses, claims, costs, damages,
expenses or liabilities of the nature provided for above such that each
Underwriter shall be responsible for that portion represented by the percentage
that the portion of the Underwriting Fee payable by Western to such Underwriter
bears to the gross proceeds realized by Western from the distribution, whether
or not the Underwriters have been sued together or separately, and the
Indemnifiers shall be responsible for the balance, provided that, in no event,
shall an Underwriter be responsible for any amount in excess of the portion of
the Underwriting Fee actually received by such Underwriter. In the event that
the Indemnifiers, or any of them may be held to be entitled to contribution from
the Underwriters under the provisions of any statute or law, the Indemnifiers
shall be limited to contribution in an amount not exceeding the lesser of: (a)
the portion of the full amount of losses, claims, costs, damages, expenses, and
liabilities giving rise to such contribution for which such Underwriter is
responsible; and (b) the amount of the Underwriting Fee actually received by any
Underwriter. Notwithstanding the foregoing, a person guilty of fraud or
fraudulent misrepresentation shall not be entitled to contribution from any
other party. Any party entitled to contribution will, promptly after receiving
notice of commencement of any claim, action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this section, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party shall not
relieve the party from whom contribution may be sought from any obligation it
may have otherwise under this section, except to the extent that the party from
whom contribution may be sought is materially prejudiced by such omission. The
right to contribution provided herein shall be in addition and not in derogation
of any other right to contribution which the Underwriters may have by statute or
otherwise by law.


    
      
         


      

      
         


        
          

        

      

      
         


        -
33 -

      

    

     

    
      	
              Section
      17 

            	
              Expenses

            


    

     

    The
Company will be responsible, whether or not the Offering is completed, for all
reasonable expenses and fees in connection with the Offering, including, without
limitation, all expenses of or incidental to the issue, sale or distribution of
the Shares; the fees and expenses of the Company’s counsel, auditors and
independent engineers; all costs incurred in connection with the preparation of
documents relating to the Offering; and all expenses and fees incurred by the
Underwriters which shall include the reasonable fees and disbursements of the
Underwriters’ counsel and applicable taxes thereon (such fees not to exceed
$100,000 excluding disbursements and taxes). All such expenses incurred by or on
behalf of the Underwriters shall be payable by the Company forthwith upon
receiving an invoice in respect thereof and may be deducted from the gross
proceeds of the Offering at the Time of Closing.

     

    
      	
              Section
      18 

            	
              Liability
      of the Underwriters

            


    

     

    
      	
              (1)

            	
              The
      obligation of the Underwriters to purchase the Purchased Shares (or the
      Over-Allotment Shares, if the Over-Allotment Option is exercised) in
      connection with the Offering at the Time of Closing on the Closing Date
      shall be several, and not joint, nor joint and several, and shall be as to
      the following percentages of the Purchased Shares to be purchased at any
      such time:

            


    

     

    
      
        
          
            	
                    Wellington West Capital Markets
    Inc.

                  	 	 	40	%
	
                    RBC
      Dominion Securities Inc.

                  	 	 	40	%
	
                    Scotia
      Capital Inc.

                  	 	 	20	%


          

        

      

    

     

    
      	
              (2)

            	
              If
      one of the Underwriters fails to purchase its applicable percentages of
      the aggregate amount of the Purchased Shares (or the Over-Allotment
      Shares, if the Over-Allotment Option is exercised) at the Time of Closing,
      the other Underwriters shall have the right, but shall not be obligated,
      to purchase, all but not less than all, of the applicable Shares which
      would otherwise have been purchased by the Underwriter that failed to
      purchase. If, with respect to the Shares, any non-defaulting Underwriter
      elects not to exercise such right so as to assume the entire obligation of
      the defaulting Underwriter (the Shares in respect of which the defaulting
      Underwriter(s) fail to purchase and the non-defaulting Underwriters do not
      elect to purchase being hereinafter called the “Default Securities”),
      Western shall have the right to either (i) proceed with the sale of
      the Shares (less the Default Securities) to the non-defaulting
      Underwriters, or (ii) terminate its obligations hereunder without
      liability to the non-defaulting Underwriters except under Sections 15, 16
      and 17.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


        -
34 -

      

    


    
      	
              Section
      19 

            	
              Action
      by Underwriters

            


    

     

    All steps
which must or may be taken by the Underwriters in connection with this
Agreement, with the exception of the matters relating to termination
contemplated by Section 14, may be taken by WWCM on behalf of itself and the
other Underwriters, and the execution of this Agreement by Western shall
constitute Western’s authority for accepting notification of any such steps
from, and for delivering the definitive documents constituting the Shares to, or
to the order of, WWCM.

     

    
      	
              Section
      20 

            	
              Governing
      Law

            


    

     

    This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable therein.

     

    
      	
              Section
      21 

            	
              Survival
      of Warranties, Representations, Covenants and
  Agreements

            


    

     

    Except as
expressly provided for in this Agreement, all warranties, representations,
covenants and agreements of Western herein contained, or contained in, documents
submitted or required to be submitted pursuant to this Agreement, shall survive
the purchase by the Underwriters of the Shares and shall continue in full force
and effect, regardless of the closing of the sale of the Shares and regardless
of any investigation which may be carried on by the Underwriters, or on their
behalf, for a period of two years following the Closing Date. Without limitation
of the foregoing, the provisions contained in this Agreement in any way related
to the indemnification or the contribution obligations shall survive and
continue in full force and effect, indefinitely, subject only to the limitation
requirements of applicable law.

     

    
      	
              Section
      22 

            	
              Notices

            


    

     

    All
notices or other communications by the terms hereof required or permitted to be
given by one party to another shall be given in writing by personal delivery or
by facsimile delivered or facsimile to such other party as follows:

     

    (a)      
to Western at:

     

    Western
Goldfields Inc. 

    2 Bloor
St. West, Suite 2102

    Toronto,
Ontario M4W 3E2

     

    Attention:      Raymond
Threlkeld, President and Chief Executive Officer

    Facsimile
No.: 416-324-9494

     

    with a
copy (for informational purposes only and not constituting notice) to:


     

    Cassels
Brock & Blackwell LLP

    2100
Scotia Plaza

    40 King
Street West 

    Toronto,
Ontario M5H 3C2


    
      
         


      

      
         


        
          

        

      

      
         


        -
35 -

      

    


    Attention:      Cameron
Mingay

    Facsimile
No.: 416-640-3163

     

    (b)      
to the Underwriters at:

    


    Wellington
West Capital Markets Inc. 

    Investment
Banking 

    145 King
Street West, Suite 700 

    Toronto,
Ontario M5H 1J8

     

    Attention:      Bill
Washington, Managing Director, Investment Banking

    Facsimile
No.: 416-642-1910

     

    and

     

    RBC
Dominion Securities Inc. 

    Royal
Bank Plaza, 200 Bay Street 

    4th Floor,
South Tower

    Toronto,
Ontario M5J 2W2

     

    Attention:      Max
Weis, Vice President, Corporate Finance

    Facsimile
No.: 416-842-7527

     

    with a
copy to:

     

    Stikeman
Elliott LLP

    5300
Commerce Court West

    199 Bay
Street

    Toronto,
Ontario M5L 1B9

     

    Attention:      Quentin
Markin

    Facsimile
No.: 416-947-0866

     

    or at
such other address or facsimile number as may be given by either of them to the
other in writing from time to time and such notices or other communications
shall be deemed to have been received when delivered or, if facsimile, on the
next business day after such notice or other communication has been sent (with
receipt confirmed).

     

    Section
23     Counterpart Signature

     

    This
Agreement may be executed in one or more counterparts (including counterparts by
facsimile), which together shall constitute an original copy hereof as of the
date first noted above.

     

    Section
24     Time Of The Essence

     

    Time
shall be of the essence in this Agreement.


    
      
         


      

      
         


        
          

        

      

      
         


        - 36
-

      

    

     

    Section
25     Severability

     

    If any
provision of this Agreement is determined to be void or unenforceable, in whole
or in part, such void or unenforceable provision shall not affect or impair the
validity of any other provision of this Agreement and shall be severable from
this Agreement.

     

    Section
26     Entire Agreement

     

    This
Agreement constitutes the entire agreement between the Underwriters and Western
relating to the subject matter hereof and supersedes all prior agreements
between the Underwriters and Western.

     

    Section
27     General

     

    The
parties have expressly required this Agreement and all other documents required
or permitted to be given or entered into pursuant hereto to be drawn up in the
English language only. Les parties ont expressément
demandé
que la présente convention ainsi que tout autre document à
être
ou pouvant être donné ou conclu en vertu des dispositions des présentes, soient
rédigés en langue anglaise seulement.

     

    [The
Remainder of this page is intentionally blank.]


    
      
         


      

      
         


        
          

        

      

      
         


        - 37 -

      

    


    If this
agreement accurately reflects the terms of the transaction which we are to enter
into and if such terms are agreed to by Western, please communicate your
acceptance by executing where indicated below and returning by facsimile one
copy and returning by courier an originally executed copy to each of WWCM and
RBC.

    


    
      
        
          
            	
                    Yours
      very truly,

                  
	 
	
                    WELLINGTON
      WEST CAPITAL MARKETS INC.

                  
	 
      
	 
      
	
                    (Signed)
      BILL WASHINGTON 

                    Managing
      Director 

                    RBC DOMINION SECURITIES
      INC.

                  
	 
      
	 
      
	
                    (Signed)
      MAX
      WEIS               
      

                    Vice
      President          
      

                  
	
                    SCOTIA
      CAPITAL
      INC.                      
      

                  
	 
      
	 
      
	
                    (Signed)
      JEFF RICHMOND

                  
	
                    Managing
      Director

                  


          

        

      

    


    
      
         


      

      
        
        

        
          

        

      

      
        - 38
-  

      

    


    The
foregoing accurately reflects the terms of the transaction that we are to enter
into and such terms are agreed to.

     

    ACCEPTED
at Toronto as of this _________ day of ________________,
2007.

    


    
      
        
          
            	
                    WESTERN
      GOLDFIELDS INC.

                  
	 
	 
      
	
                    (Signed)
      Brian Penny 

                    Chief
      Financial
Officer

                  


          

        

      

    


    
      
         


      

      
        
        

        
          

        

      

      
        - 1
-  

      

    


    SCHEDULE
“A”

    UNITED
STATES OFFERS AND SALES

     

    U.S. Selling
Restrictions

     

    As used
in this Schedule “A”, the following terms have the following
meanings:

     

    “Directed Selling Efforts”
means directed selling efforts as that term is defined in Regulation S.
Without limiting the foregoing, but for greater clarity in this Schedule “A”, it
means, subject to the exclusions from the definition of directed selling efforts
contained in Regulation S, any activity undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States for any of the Shares and shall include, without limitation,
the placement of any advertisement in a publication with a general circulation
in the United States that refers to the offering of any of the
Shares;

     

    “Foreign Issuer” means a
foreign issuer as that term is defined in Regulation S. Without limiting the
foregoing, but for greater clarity in this Schedule, it means any issuer which
is (a) the government of any foreign country or of any political subdivision of
a foreign country; or (b) a corporation or other organization incorporated under
the laws of any foreign country, except an issuer meeting the following
conditions: (1) more than 50 percent of the outstanding voting securities of
such issuer are held of record either directly or through voting trust
certificates or depositary receipts by residents of the United States; and (2)
any of the following: (i) the majority of the executive officers or directors
are United States citizens or residents, (ii) more than 50 percent of the assets
of the issuer are located in the United States, or (iii) the business of the
issuer is administered principally in the United States;

     

    “General Solicitation” and
“General Advertising”
means “general solicitation” and “general advertising”, respectively, as
used in Rule 502(c) of Regulation D, including, without limitation,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over television, radio or the
Internet, or any seminar or meeting whose attendees had been invited by general
solicitation or general advertising or in any other manner involving a public
offering within the meaning of Section 4(2) of the U.S. Securities
Act;

     

    “Regulation D” means
Regulation D adopted by the SEC under the U.S. Securities Act;

     

    “Regulation S” means
Regulation S adopted by the SEC under the U.S. Securities Act;

     

    “Selling Dealer Group” means
the dealers and brokers other than the Underwriters who participate in the offer
and sale of the Shares pursuant to the Underwriting Agreement;

     

    “Substantial U.S. Market Interest”
means “substantial U.S. market interest” as that term is defined in
Regulation S;

     

    All other
capitalized terms used but not otherwise defined in this Schedule “A” shall have
the meanings assigned to them in the Agreement to which this Schedule “A” is
attached.


    
      
         


      

      
        A-1

        
          

        

      

      
        - 2
-  

      

    


    
      	
              1.

            	
              Each
      Underwriter represents and warrants to the Company
  that:

            


    

     

    
      	
               
      

            	
              (a)

            	
              It
      acknowledges that the Shares have not been and will not be registered
      under the U.S. Securities Act and may not be offered or sold within the
      United States or to, or for the account or benefit of, U.S. persons,
      except in accordance with Regulation S or pursuant to an exemption from
      the registration requirements of the U.S. Securities Act. It has not
      offered and sold and will not offer and sell the Shares (i) as part of its
      distribution at any time and (ii) otherwise until 40 days after the later
      of the commencement of the offering and the closing date, except in
      accordance with Rule 903 of Regulation S or as provided in paragraphs 2 or
      3 below. It agrees that, at or prior to confirmation of the sale of the
      Shares, it will have sent to each distributor, dealer or person receiving
      a selling concession, fee or other remuneration that purchases Shares from
      it during the restricted period a confirmation or notice to substantially
      the following effect:

            


    

     

    “The
securities covered hereby have not been registered under the U.S. Securities Act
of 1933, as amended, (the ”U.S. Securities Act“) and may not be offered or sold
within the United State or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the closing date, except
in either case in accordance with Regulation S under the U.S. Securities
Act.”

     

    Furthermore,
neither it nor its affiliate(s), nor any persons acting on its or their behalf
have engaged or will engage in any Directed Selling Efforts with respect to the
Shares;

     

    
      	
               
      

            	
              (b)

            	
              It
      has not entered and will not enter into any contractual arrangement with
      respect to the distribution of the Shares, except with its affiliates, any
      Selling Dealer Group members or with the prior written consent of the
      Company; and

            


    

     

    
      	
               
      

            	
              (c)

            	
              It
      shall require each Selling Dealer Group member to agree, for the benefit
      of the Company, to comply with, and shall use its best efforts to ensure
      that each Selling Dealer Group member complies with, the applicable
      provisions of this Schedule “A” as if such provisions applied to such
      Selling Dealer Group member.

            


    

    


    
      	
              2.

            	
              Each
      Underwriter covenants to and agrees with the Company
  that:

            


    

     

    
      	
               
      

            	
              (a)

            	
              All
      offers and sales of the Shares in the United States will be effected
      through one or more United States affiliates of an Underwriter (each, a
      “U.S. Placement Agent”) in accordance with all applicable U.S.
      broker-dealer requirements;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Each
      U.S. Placement Agent is a Qualified Institutional Buyer, is a duly
      registered broker-dealer with the SEC, and is a member of, and in good
      standing with, the National Association of Securities Dealers, Inc. on the
      date such representation is
made;

            


    


    
      
         


      

      
        A-2

        
          

        

      

      
        - 3
-  

      

    


    
      	
               
      

            	
              (c)

            	
              It
      will not, either directly or through a U.S. Placement Agent, solicit
      offers for, or offer to sell, the Shares in the United States by means of
      any form of General Solicitation or General Advertising and neither it nor
      its affiliate(s), nor any persons acting on its or their behalf have
      engaged or will engage in any Directed Selling Efforts with respect to the
      Shares;

            


    

     

    
      	
               
      

            	
              (d)

            	
              It
      will solicit, and will cause each U.S. Placement Agent to solicit, offers
      for the Shares in the United States only from, and will offer the Shares
      only to, persons it reasonably believes to be Qualified Institutional
      Buyers in accordance with Rule 144A. It also agrees that it will solicit
      offers for the Shares only from, and will offer the Shares only to,
      persons that in purchasing such Shares will be deemed to have represented
      and agreed as provided in paragraphs (3)(a) through (l)
    below;

            


    

     

    
      	
               
      

            	
              (e)

            	
              It
      will inform, and cause each U.S. Placement Agent to inform, all purchasers
      of the Shares in the United States that the Shares have not been and will
      not be registered under the U.S. Securities Act and are being sold to them
      without registration under the U.S. Securities Act in reliance upon Rule
      144A;

            


    

     

    
      	
               
      

            	
              (f)

            	
              It
      will deliver, through a U.S. Placement Agent, a copy of a Final U.S.
      Private Placement Memorandum which shall include the Final Prospectus
      (together, the “U.S. Offering Documents”) to each person in the United
      States purchasing Shares from it;

            


    

     

    
      	
               
      

            	
              (g)

            	
              It
      shall cause each U.S. Placement Agent to agree, for the benefit of the
      Company, to the same provisions as are contained in paragraphs (1) and (2)
      of this Schedule “A”;

            


    

     

    
      	
               
      

            	
              (h)

            	
              At
      least one business day prior to closing, it shall cause each U.S.
      Placement Agent to provide Computershare Investor Services Inc.
      (“Computershare”) with a list of all purchasers of the Shares in the
      United States; and

            


    

     

    
      	
               
      

            	
              (i)

            	
              If
      it or its United States affiliates have offered or sold Shares in the
      United States, at closing it, together with each such U.S. Placement
      Agent, will provide a certificate, substantially in the form of Exhibit 1
      to this Schedule “A”, relating to the manner of the offer and sale of the
      Shares in the United States.

            


    

     

    
      	
              3.

            	
              It
      is understood and agreed by the Underwriters that the Shares may be
      offered and resold by the Underwriters and members of the Selling Dealer
      Group in the United States pursuant to the provisions of Rule 144A to
      persons who are, or are reasonably believed by them to be, Qualified
      Institutional Buyers in transactions meeting the requirements of Rule 144A
      and in compliance with any applicable state securities laws of the United
      States, provided that prior to any such sale each purchaser shall have
      been provided with the U.S. Offering Documents and by purchasing Shares,
      each purchaser shall be deemed to have represented and warranted for the
      benefit of the Company and the Underwriters
  that:

            


    

     

    
      	
               
      

            	
              (a)

            	
              It
      is authorized to consummate the purchase of the
  Shares;

            


    


    
      
         


      

      
        A-3

        
          

        

      

      
        - 4
-  

      

    

     

    
      	
               
      

            	
              (b)

            	
              It
      understands and acknowledges that the Shares have not been and will not be
      registered under the U.S. Securities Act or the securities laws of any
      state of the United States, and that the offer and sale of Shares to it
      are being made in reliance upon Rule 144A and exemptions from registration
      under applicable state securities
law;

            


    

     

    
      	
               
      

            	
              (c)

            	
              It
      is a Qualified Institutional Buyer and is acquiring the Shares for its own
      account or for the account of one or more Qualified Institutional Buyers
      with respect to which it exercises sole investment discretion and not with
      a view to any resale, distribution or other disposition of the Shares in
      violation of United States federal or state securities
    laws;

            


    

     

    
      	
               
      

            	
              (d)

            	
              It
      acknowledges that it has not purchased the Shares as a result of any
      General Solicitation or General Advertising, including advertisements,
      articles, notices or other communications published in any newspaper,
      magazine or similar media, or broadcast over radio, television or the
      Internet or any seminar or meeting whose attendees have been invited by
      general solicitation or general advertising or in any other manner
      involving a public offering within the meaning of Section 4(2) of the U.S.
      Securities Act;

            


    

     

    
      	
               
      

            	
              (e)

            	
              It
      understands and acknowledges that the if it should reoffer, resell, pledge
      or otherwise transfer Shares prior to the date that is the later of (x)
      the date which is two years after the later of the last date of original
      issuance of such Shares (which would include the issuance of
      Over-Allotment Shares pursuant to the exercise of the overallotment
      option) and the last date that the Company or its affiliates were owners
      of such Shares (or any predecessor thereto) or such shorter period of time
      as permitted by Rule 144(k) under the U.S. Securities Act or any successor
      provision thereunder and (y) such later date, if any, as may be required
      by applicable law, it will do so only (i) to the Company; (ii) pursuant to
      an effective registration statement under the U.S. Securities Act; (iii)
      to a Qualified Institutional Buyer in compliance with Rule 144A; (iv) in
      an offshore transaction in compliance with Rule 904 under Regulation S; or
      (v) pursuant to the exemption from registration under the U.S. Securities
      Act provided by Rule 144 thereunder (if available) or any other available
      exemption from registration under the U.S. Securities Act, in each case in
      accordance with all applicable state securities
  laws;

            


    

     

    
      	
               
      

            	
              (f)

            	
              It
      will deliver to each person to whom it transfers any of the Shares notice
      of any restrictions on transfer of such
Shares;

            


    

     

    
      	
               
      

            	
              (g)

            	
              It
      understands and acknowledges that the Shares sold in reliance on Rule 144A
      as part of this offering will bear a legend substantially to the following
      effect unless otherwise agreed by the Company and the holder
      thereof:

            


    

     

    THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE ACQUIROR


    
      
         


      

      
        A-4

        
          

        

      

      
        - 5
-  

      

    

     

    
      	
               
      

            	
              (a)

            	
              REPRESENTS
      THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED
      INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE 1933 ACT)
      AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH
      ACCOUNT;

            


    

     

    
      	
               
      

            	
              (b)

            	
              AGREES
      FOR THE BENEFIT OF THE CORPORATION THAT IT WILL NOT OFFER, SELL, PLEDGE OR
      OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN, PRIOR
      TO THE DATE THAT IS THE LATER OF

            


    

     

    
      	
               
      

            	
              (X)

            	
              TWO
      YEARS AFTER THE LATER OF THE LAST ORIGINAL ISSUE DATE HEREOF (WHICH WOULD
      INCLUDE THE ISSUANCE OF SECURITIES PURSUANT TO THE EXERCISE OF THE
      OVERALLOTMENT OPTION) AND THE LAST DATE ON WHICH THE CORPORATION OR ANY
      AFFILIATE OF THE CORPORATION WAS THE OWNER OF THIS SECURITY (OR ANY
      PREDECESSOR OF THIS SECURITY) OR SUCH SHORTER PERIOD OF TIME AS PERMITTED
      BY RULE 144(K) UNDER THE 1933 ACT OR ANY SUCCESSOR PROVISION THEREUNDER,
      AND

            


    

     

    
      	
               
      

            	
              (Y)

            	
              SUCH
      LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE
  LAW,

            


    

     

    EXCEPT
ONLY:

     

    
      	
            	
              (i)

            	
              TO
      THE CORPORATION;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              PURSUANT
      TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE 1933
      ACT;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              TO
      A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
      1933 ACT;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              IN
      AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATIONS UNDER
      THE 1933 ACT; OR

            


    

     

    
      	
               
      

            	
              (v)

            	
              PURSUANT
      TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144
      THEREUNDER (IF AVAILABLE) OR ANY OTHER AVAILABLE EXEMPTION FROM THE
      REGISTRATION REQUIREMENTS OF THE 1933
ACT,

            


    


    
      
         

      

      
        A-5

        
          

        

      

      
        -
6 -  

      

    


    IN EACH
SUCH CASE IN ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS.

     

    DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA. IF THE CORPORATION
IS A “FOREIGN ISSUER” WITHIN THE MEANING OF REGULATION S UNDER THE 1933 ACT AT
THE TIME OF TRANSFER, FOR ANY TRANSFER IN ACCORDANCE WITH (b)(iv) ABOVE, THE
LEGEND MAY BE REMOVED BY PROVIDING A DULY COMPLETED AND SIGNED CERTIFICATE, THE
FORM OF WHICH MAY BE OBTAINED FROM COMPUTERSHARE TRUST COMPANY, INC. (THE
“TRANSFER AGENT”), TO THE TRANSFER AGENT DELIVERY OF WHICH WILL CONSTITUTE “GOOD
DELIVERY”. FOR ANY TRANSFER IN ACCORDANCE WITH (b)(v) ABOVE, THE LEGEND MAY BE
REMOVED BY DELIVERY TO THE TRANSFER AGENT OF AN OPINION OF COUNSEL,
OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION,
TO THE EFFECT THAT SUCH LEGEND IS NO LONGER REQUIRED UNDER APPLICABLE
REQUIREMENTS OF THE 1933 ACT OR STATE SECURITIES LAWS.

     

    If the
Company is a Foreign Issuer at the time of transfer, and the Shares are being
sold in compliance with the requirements of Rule 904 of Regulation S, then
unless the Company or Computershare (or its successor) requires a legal opinion,
the legend may be removed by providing a declaration to Computershare (or its
successor), in the form attached hereto as Exhibit 2 (or as the Company may
prescribe from time to time).

     

    If the
Shares are being sold under Rule 144, the legend may be removed by delivering to
Computershare (or its successor) and to the Company an opinion of counsel of
recognized standing reasonably satisfactory to the Company to the effect, that
the legend is no longer required under the U.S. Securities Act or state
securities laws;

     

    
      	
               
      

            	
              (h)

            	
              It
      consents to the Company making a notation on its records or giving
      instructions to any transfer agent of the Shares in order to implement the
      restrictions on transfer set out and described in paragraph 3(e)
      above;

            


    

     

    
      	
               
      

            	
              (i)

            	
              It
      understands and acknowledges that the Company is not obligated to file and
      has no present intention of filing with the SEC or with any state
      securities administrator any registration statement in respect of resales
      of the Shares in the United States;

            


    

     

    
      	
               
      

            	
              (j)

            	
              It
      acknowledges that neither the Company, the Underwriters nor any person
      representing the Company or the Underwriters has made any representation
      to it with respect to the Company or the offering of Shares, other than
      the information contained or incorporated by reference in the U.S.
      Offering Documents, which has been delivered to it and upon which it is
      relying in making its investment decision with respect to the Shares.
      Accordingly, it acknowledges that no representation or warranty is made by
      the Underwriters as to the accuracy or completeness of such materials. It
      has had access to such financial and other information concerning the
      Company and the Shares as it has deemed necessary in connection with its
      decision to purchase the Shares, including an opportunity to ask questions
      of and request information from the Company and the
      Underwriters;

            


    


    
      
         


      

      
        A-6

        
          

        

      

      
        - 7
-  

      

    

     

    
      	
               
      

            	
              (k)

            	
              It
      acknowledges that the Company, the Underwriters and others will rely upon
      the truth and accuracy of the foregoing acknowledgements, representations,
      and agreements, and agrees that if any of the acknowledgements,
      representations or warranties deemed to have been made by it by its
      purchase of Shares are no longer accurate, it shall promptly notify the
      Company and the Underwriters. If it is acquiring any of the Shares as a
      fiduciary or agent for one or more investor accounts, it represents that
      it has sole investment discretion with respect to each such account and it
      has full power to make the foregoing acknowledgements, representations and
      agreements on behalf of each such
account;

            


    

     

    
      	
               
      

            	
              (l)

            	
              It
      understands and acknowledges that the Company (i) is not obligated to
      remain a Foreign Issuer, (ii) may not, at the time the Shares are resold
      by it or at any other time, be a Foreign Issuer, and (iii) may engage in
      one or more transactions which could cause the Company not to be a Foreign
      Issuer; and

            


    

     

    
      	
               
      

            	
              (l)

            	
              It
      understands and acknowledges that it is making the representations and
      warranties and agreements contained herein with the intent that they may
      be relied upon by the Company, the Underwriters and the affiliates of the
      Underwriters in determining its eligibility or (if applicable) the
      eligibility of others on whose behalf it is contracting hereunder to
      purchase the Shares.

            


    

     

    
      	
              4.

            	
              The
      Underwriters have not entered, and will not enter, into any contractual
      arrangement with respect to the distribution of the Shares, except (a)
      with their affiliates, (b) with members of the Selling Dealer Group in
      accordance with paragraph 1(c) of this Schedule “A”, or (c) with the prior
      written consent of the Company.

            


    

     

    
      	
              5.

            	
              The
      Company represents, warrants, covenants and agrees to and with the
      Underwriters that:

            


    

     

    
      	
            	
              (a)

            	
              it
      is a Foreign issuer;

            


    

     

    
      	
               
      

            	
              (b)

            	
              it
      is not, and giving effect to the offering and sale of the Shares and the
      application of the proceeds thereof as described in the Offering
      Documents, will not be required to register as an “investment company”
      pursuant to the provisions of the United States Investment Company Act of
      1940, as amended;

            


    

     

    
      	
               
      

            	
              (c)

            	
              at
      the date hereof, the Shares are not (A) part of a class listed on a
      national securities exchange in the United States, (B) quoted in an
      automated inter-dealer system in the United States, or (C) convertible or
      exchangeable at an effective conversion premium (calculated as specified
      in paragraph (a)(6) of Rule 144A under the U.S. Securities Act) of less
      than ten percent for securities so listed or
  quoted;

            


    


    
      
         


      

      
        A-7

        
          

        

      

      
        - 8
-  

      

    

     

    
      	
               
      

            	
              (d)

            	
              for
      so long as any of the Shares are outstanding and are “restricted
      securities” within the meaning of Rule 144(a)(3) under the U.S. Securities
      Act, it shall either: (A) furnish to the SEC all information required to
      be furnished in accordance with Rule 12g3-2(b) under the U.S. Exchange
      Act; (B) file reports and other information with the SEC under Section 13
      or 15(d) of the U.S. Exchange Act; or (C) provide to any holder of Shares
      and any prospective purchaser of Shares designated by such holder, upon
      the request of such holder, the information required to be provided by
      paragraph (d)(4), of Rule 144A;

            


    

     

    
      	
               
      

            	
              (e)

            	
              none
      of it, its affiliates or any person acting on its or their behalf has
      offered or will offer to sell the Shares by means of any form of General
      Solicitation or General Advertising;
and

            


    

     

    
      	
               
      

            	
              (f)

            	
              none
      of it, its affiliates or any person acting on its or their behalf has
      engaged or will engage in any Directed Selling Efforts with respect to the
      Shares.

            


    


    
      
         


      

      
        A-8

        
          

        

      

      
         


      

    


    EXHIBIT
1 TO SCHEDULE “A” 

    FORM
OF UNDERWRITERS’ CERTIFICATE

     

    In
connection with the offer and sale of common shares (the “Shares”) of Western
Goldfields Inc. (the “Company”) to one or more U.S. institutional investors, the
undersigned [Name of
Underwriter], on behalf of the several underwriters (the “Underwriters”)
referred to in the Underwriting Agreement dated as of [date] among the Company and
the Underwriters (the “Underwriting Agreement”), and [Name of U.S. broker-dealer affiliate
of Underwriter], who has signed below in its capacity as placement agent
in the United States for the Underwriters (the “U.S. Placement Agent”), do
hereby certify that:

     

    (a)           we
acknowledge that the Shares have not been and will not be registered under the
U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not
be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons, except in accordance with Regulation S under the U.S.
Securities Act (“Regulation S”) or pursuant to an exemption from the
registration requirements of the U.S. Securities Act. We have not offered or
sold, and will not offer or sell, the Shares (A) as part of our distribution at
any time and (B) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in accordance with Rule 903 of
Regulation S or as provided in paragraphs (b) through (f) below. We sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Shares from us during the restricted period a
confirmation or notice to substantially the following effect:

     

    “The
securities covered hereby have not been registered under the U.S. Securities Act
of 1933, as amended (the ”U.S. Securities Act“), and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the closing date, except
in either case in accordance with Regulation S under the U.S. Securities
Act.”

     

    (b)           the
U.S. Placement Agent is a duly registered broker-dealer with the Securities and
Exchange Commission, and is a member of, and in good standing with, the National
Association of Securities Dealers, Inc. on the date hereof, and all offers and
sales of Shares in the United States have been and will be effected by the U.S.
Placement Agent in accordance with all U.S. broker-dealer
requirements;

     

    (c)           neither
we nor our representatives have utilized, and neither we nor our representatives
will utilize, any form of general solicitation or general advertising (as those
terms are used in Regulation D under the U.S. Securities Act, including
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over television, radio or
Internet, or any seminar or meeting whose attendees had been invited by general
solicitation or general advertising or in any other manner involving a public
offering within the meaning of Section 4(2) of the U.S. Securities Act, in
connection with the offer or sale of the Shares in the United States or to U.S.
persons;


    
      
         


      

      
        Schedule
A-1

        
          

        

      

      
         


      

    

     

    (d)           each
offeree was provided with the final prospectus of the Company, together with a
U.S. covering memorandum relating to the offering of the Shares in the United
States (together, the “Offering Documents”), and we have not used and will not
use any written material other that the Offering Documents;

     

    (e)           immediately
prior to transmitting the Offering Documents to offerees, we had reasonable
grounds to believe and did believe that each offeree was a qualified
institutional buyer as defined in Rule 144A under the U.S. Securities Act (a
“Qualified
Institutional Buyer”), and, on the date hereof, we continue to believe
that each purchaser of the Shares is a Qualified Institutional
Buyer;

     

    (f)           the
offering of the Shares in the United States has been conducted by us in
accordance with the Underwriting Agreement.

     

    Terms
used in this certificate have the meanings given to them in the Underwriting
Agreement unless otherwise defined herein.

     

    Dated:_________________________

     

    
      
        
          
            	
                    [Underwriter]

                  	 
      	
                    [U.S.
      Broker-Dealer Affiliate  of

                  
	 
      	 
      	
                    Underwriter]

                  
	 
      	 
      	 
      
	
                    By:

                  	
                      

                  	 
      	
                    By:

                  	
                      

                  
	 
      	
                    Name:

                  	 
      	 
      	
                    Name:

                  
	 
      	
                    Title:

                  	 
      	 
      	
                    Title:

                  


          

        

      
 

    
      
         


      

      
        Schedule
A-2

        
          

        

      

      
         


      

    


    EXHIBIT
2 TO SCHEDULE “A”

    FORM
OF DECLARATION FOR REMOVAL OF LEGEND

    


    
      	
              TO:

            	
              Western
      Goldfields Inc.

            


    

     

    
      AND TO:
Computershare Investor Services Inc. 

       

      The
undersigned:

       

    

    
      
        
          	
                   ̈

                	
                  acknowledges
      that the sale of _______ common
      shares of Western Goldfields Inc. represented by certificate No. ___ to
      which this declaration relates is being made in reliance on Rule 904 of
      Regulation S (“Regulation S”) under the United States Securities Act of
      1933, as amended (the “U.S. Securities Act”),
      and

                


        

      

    

     

    
      	
               ̈

            	
              certifies
      that:

            


    

     

    
      	
               
      

            	
              1.

            	
              it
      is not an affiliate (as defined in Rule 405 under the U.S. Securities Act)
      of Western Goldfields Inc.;

            


    

     

    
      	
               
      

            	
              2.

            	
              the
      offer of the securities was not made to a person in the United States and
      either (a) at the time the buy order was originated, the buyer was outside
      the United States, or the seller and any person acting on its behalf
      reasonably believe that the buyer was outside the United States, or (b)
      the transaction was executed on or through the facilities of the Toronto
      Stock Exchange, and neither the seller nor any person acting on its behalf
      knows that the transaction has been prearranged with a buyer in the United
      States;

            


    

     

    
      	
               
      

            	
              3.

            	
              neither
      the seller nor any affiliate of the seller nor any person acting on any of
      their behalf has engaged or will engage in any “directed selling efforts”
      (as such term is defined in Regulation S) in the United States in
      connection with the offer and sale of the
  securities;

            


    

     

    
      	
               
      

            	
              4.

            	
              the
      sale is bona fide and not for the purpose of “washing off” the resale
      restrictions imposed because the securities are “restricted securities”
      (as that term is defined in Rule 144(a)(3) under the U.S. Securities
      Act);

            


    

     

    
      	
               
      

            	
              5.

            	
              the
      seller does not intend to replace the securities sold in reliance on Rule
      904 of Regulation S with fungible unrestricted securities;
    and

            


    

     

    
      	
               
      

            	
              6.

            	
              the
      contemplated sale is not a transaction, or part of a series of
      transactions which, although in technical compliance with Regulation S, is
      part of a plan or scheme to evade the registration provisions of the U.S.
      Securities Act.

            


    

    


    
      
        
          	
                  Dated:___________________________________

                	
                  By:

                	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title

                


        

      

    

     

    
      
         


      

      
        Schedule
A-3