UTE
AGREEMENT

    ESTELAR RESOURCES LTD.
ARGENTINA BRANCH – FOMENTO MINERO
DE

    SANTA CRUZ
S.E.

     

    This
AGREEMENT is made and entered by and between:

    


    (i)
FOMENTO MINERO DE SANTA CRUZ SOCIEDAD DEL ESTADO (henceforth “FOMICRUZ”), domiciled at Alberdi,
643 y 646 Rio Gallegos, Provincia de Santa Cruz, represented herein by Mr.
Miguel Ángel Ferro, in his capacity as President (henceforth FOMICRUZ) as party to the
first part, and

    


    (ii)
ESTELAR RESOURCES LTD. (ARGENTINA BRANCH), an EXETER RESOURCE CORPORATION
Affiliate (henceforth, “ESTELAR”), domiciled at Martin
Zapata 445 CP 5500, Mendoza, Provincia de Mendoza, and registered under File No.
7095, pages 1, 17 and 18 of the Public Registry of Corporations of the Province
of Mendoza, represented herein by Matt Williams, in his capacity as legal
representative with sufficient powers to execute this agreement, and jointly
with FOMICRUZ, the PARTIES
or individually and indistinctly the PARTY, as the case may
be,

    


    WHEREAS

     

    a)
FOMICRUZ is a State-owned corporation dedicated to promote mining developments
in the Province of Santa Cruz, Argentine Republic;

    


    b) EXETER
RESOURCE CORP. (henceforth, “EXETER”), through its Affiliate, ESTELAR, is
actively involved in exploring mining projects in the Province of Santa Cruz,
Argentine Republic;

     

    c)
ESTELAR owns the mining properties conforming the area called “ Cerro Moro”, as
stated in Exhibit III
attached hereto (henceforth, the “CERRO
MORO PROSPECT”);

     

    d)
FOMICRUZ owns the mining properties conforming the area called “Bahía Laura”, as
stated in Exhibit IV
attached hereto (henceforth, the “BAHIA
LAURA
PROSPECT ”);

     

    e)
FOMICRUZ, EXETER and ESTELAR have executed a “Letter of Intent” dated March 4,
2008 (the “Letter of Intent”) in which they set out the parameters for the
future exploration and potential development of the CERRO MORO and BAHIA LAURA
PROSPECTS;

     

    f)
ESTELAR has written a private initiative dated April 11, 2008 (the “Private
Initiative”) submitted to FOMICRUZ within the provisions set forth in Chapter
XXIII of the Contracting Regulations of FOMICRUZ for the exploration and
potential development of “CERRO MORO” and “BAHÍA LAURA”
PROSPECTS;


    
      
         


      

      
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    g) The
Private Initiative submitted by ESTELAR was declared of public interest and
resulted in a Public Bid for Private Initiative Offer Improvement as set forth
in Chapter XXII of the Contracting Regulations of FOMICRUZ;

    


    h) The
Public Bid for Private Initiative Offer Improvement submitted by ESTELAR was
considered to be the best offer and FOMICRUZ has accepted ESTELAR’s Bid. Such
acceptance has been ratified in accordance to law; and, as a consequence
thereof, the PARTIES wish to enter into this UTE Agreement.

    


    
      NOW,
THEREFORE, the PARTIES agree as follows:

       

      SECTION 1.
PURPOSE.

    

    


    
      	
              1.1.

            	
              The
      PARTIES hereby agree to jointly constitute an UTE, with the purpose of
      carrying out Exploration activities, and, should it be feasible from a
      business standpoint, to carry out the Exploitation and commercialization
      of mineral production from the ESTELAR mining properties included in the
      CERRO MORO PROPSECT and from the FOMICRUZ mining properties included in
      the BAHIA LAURA PROSPECT, including all tasks and construction necessary
      to fulfill such purpose.

            


    

    


    
      	
              1.2.

            	
              It
      is hereby expressly agreed by the PARTIES that nothing in this AGREEMENT
      shall create, or be deemed to create a mining or business corporation or
      any other form of partnership and/or civil association other than this
      UTE.

            


    

    


    
      	
              1.3.

            	
              It
      is hereby expressly stated that the ownership of the mining rights and
      properties included in the CERRO MORO PROSPECT shall continue to be held
      by ESTELAR and that the ownership of mining rights and properties within
      the BAHIA LAURA PROSPECT shall continue to be held by FOMICRUZ. The
      ownership of each of the PARTIES’ mining properties shall remain unaltered
      by this AGREEMENT.

            


    

    


    SECTION 2. DEFINITIONS.

    


    
      	
              2.1

            	
              AFFILIATE means any
      legal entity that controls or is controlled by said corporation or legal
      entity controlling such corporation and includes any subsidiary company
      and branch of such subsidiary company. For the purposes hereof, “Control”
      shall mean the possession, directly or indirectly, of more than fifty
      percent (50%) of the voting power to approve ordinary resolutions in
      shareholders’ meetings or any similar body within the controlled
      corporation.

            


    


    
      
         


      

      
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              2.2

            	
              YEAR means each current calendar year
      during the term of effectiveness of the
UTE.

            


    

    


    
      	
              2.3

            	
              AREA or AREAS shall
      mean, respectively, either the CERRO MORO AREA or the BAHÍA LAURA AREA or
      both areas jointly.

            


    

    


    
      
        	
                2.4

              	
                BAHÍA LAURA AREA
      means the area, the location and surface of which is defined by the
      external limits of mining rights, as listed in Exhibit IV of this
      AGREEMENT.

              


      

    

    


    
      
        	
                2.5

              	
                CERRO MORO AREA means
      the area, the location and surface of which is defined by the external
      limits of mining rights, as listed in Exhibit
      III of this
      AGREEMENT.

              


      

    

    


    
      
        	
                2.6

              	
                AUTHORITY means the
      current Provincial Mining Department of the Province of Santa Cruz or any
      authority that may replace such Department in its duties in the
      future.

              


      

    

    


    
      
        	
                2.7

              	
                EXPENSE AUTHORIZATION OR INVESTMENT AUTHORIZATION
      means any expense, investment or disbursement authorization granted
      by the CERRO MORO SUB-COMMITTEE or the BAHIA LAURA
      SUB-COMMITTEE.

              


      

    

    


    
      
        	
                2.8

              	
                FORCE MAJEURE: The
      applicable definition of Force Majeure shall be the one set forth by the
      Argentine Civil Code (Sections 513, 514 and related sections) at the time
      of execution of this AGREEMENT and by Section 13 of this AGREEMENT. Force
      Majeure shall include, but not be limited to, sovereign acts, either
      federal, provincial or municipal, which delay or halt EXPLORATION or
      EXPLOITATION; general or regional labour trouble; strikes; lockouts;
      non-availability of labour; fire; storm; lightning; floods; hurricanes;
      washouts; tornadoes; explosions; breakdown or failure of equipment;
      accidents; the failure, cancellation or delay by suppliers in providing
      equipment, material or supplies or where applicable any repair or
      maintenance of equipment.

              


      

    

    


    
      	
              2.9

            	
              ASSIGNMENT means the
      sale, donation, promise to sell or any other form of
    disposal.

            


    

    


    
      	
              2.10

            	
              OPERATING COMMITTEE
      refers to the UTE Governing Body, the duties of which are entirely
      subsumed under the CERRO MORO SUB-COMMITTEE and the BAHÍA LAURA
      SUB-COMMITTEE for the purposes of managing all the direct and indirect
      activities related to the EXPLORATION and EXPLOITATION of the AREAS for
      the benefit of the UTE.

            


    

    


    
      	
              2.11

            	
              AGREEMENT means this
      agreement.

            


    


    
      
         


      

      
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              2.12

            	
              BAHÍA LAURA
      ACCOUNT means the accounts and accounting records to be kept by the
      OPERATOR for the benefit of the UTE pursuant to the provisions of this
      AGREEMENT or the ACCOUNTING PROCEDURE, with the purpose of recording all
      transactions, investments, expenses, costs, credits and any other
      transactions in connection with the BAHÍA LAURA PROSPECT JOINT
      OPERATIONS.

            


    

    


    
      	
              2.13

            	
              CERRO MORO ACCOUNT means
      the accounts and accounting records to be kept by the OPERATOR for the
      benefit of the UTE pursuant to the provisions of this AGREEMENT or the
      ACCOUNTING PROCEDURE, with the purpose of recording all transactions,
      investments, expenses, costs, credits and any other transactions in
      connection with the CERRO MORO PROSPECT JOINT
  OPERATIONS.

            


    

    


    
      	
              2.14

            	
              OPERATOR’s NEGLIGENCE
      means an action on the part of the OPERATOR’s Senior Supervisory
      personnel in breach of the law, a breach of this AGREEMENT or any of the
      AREAS WORK SCHEDULE AND BUDGET, either by willful misconduct or gross
      negligence which result in harmful and avoidable
    consequences.

            


    

    


    
      	
              2.15

            	
              DAY means any business day and excludes
      any Saturday, Sunday or public holiday in the Province of Santa Cruz,
      Argentine Republic.

            


    

    


    
      	
              2.16

            	
              US DOLLAR(S) OR U$S is the legal tender of the United
      States of America.

            


    

    


    
      	
              2.17

            	
              EXPLORATION means any
      and/or all activities with the intent of determining the existence,
      location, quantity, quality and commercial value of the PRODUCT, including
      any direct or indirect activities necessary for such purpose, as
      determined by the OPERATING COMMITTEE and/or as provided for by this
      AGREEMENT.

            


    

    


    
      	
              2.18

            	
              EXPLOITATION means the
      extraction, processing, production, recovery and commercialization of
      PRODUCTS, the closure and rehabilitation activities, including any direct
      or indirect activities necessary for such purpose, and as determined by
      the OPERATING COMMITTEE and/or as provided for by this
      AGREEMENT.

            


    

    


    
      	
              2.19

            	
              EFFECTIVE DATE shall
      mean the date of execution of this AGREEMENT by all of the
      PARTIES.

            


    

     

    
      	
              2.20

            	
              COMMON OPERATING FUND
      means the fund established by the OPERATOR for the benefit of the
      UTE pursuant to the provisions set forth in Section 6 of this
      AGREEMENT.

            


    

    


    
      	
              2.21

            	
              NON-OPERATOR refers to a
      PARTY other than the OPERATOR.

            


    


    
      
         


      

      
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              2.22

            	
              JOINT OPERATIONS refers to the
      activities carried out by the OPERATOR in compliance with this AGREEMENT
      for the benefit of the UTE on behalf of the
  PARTIES.

            


    

    


    
      	
              2.23

            	
              OPERATOR means ESTELAR
      or whoever may replace it in its capacity as OPERATOR as set forth in
      Section 8 of this AGREEMENT.

            


    

    


    
      	
              2.24

            	
              PARTY or PARTIES shall
      have the meaning conveyed by said terms in the introduction to this
      AGREEMENT.

            


    

    


    
      
        	
                2.25

              	
                PARTICIPATION means the
      undivided percentage interest in each UTE corresponding to each PARTY as
      set out in Section 5 of this AGREEMENT regarding its rights and interest
      in any assets and
liabilities.

              


      

    

    


    
      	
              2.26

            	
              PESO(S) or $ is the legal tender in the Argentine
      Republic.

            


    

    


    
      	
              2.27

            	
              BUDGET means the
      estimated detail of costs and expenses to be incurred with regards to the
      Work Schedule of each AREA.

            


    

    


    
      	
              2.28

            	
              ACCOUNTING PROCEDURE
      refers to the accounting procedure attached hereto as Exhibit
    2.28

            


    

    


    
      
        	
                2.29

              	
                NET PROCEEDS is the
      amount, calculated as set out in the ACCOUNTING PROCEDURE that is
      distributable to the PARTIES, in
      proportion to their respective PARTICIPATION in either the CERRO MORO or
      BAHIA LAURA AREA

              


      

    

    


    
      	
              2.30

            	
              DISTRIBUTION shall have
      the meaning indicated in Section
5.3.1.

            


    

    


    
      	
              2.31 
      

            	
              PRODUCT means any ore,
      concentrate or metal, including precious metal, recovered from minerals
      mined from any of the AREAS subject to
  EXPLOITATION.

            


    

    


    
      	
              2.32

            	
              WORK SCHEDULE refers to
      a description of the operations to be carried out and the objectives to be
      met by the OPERATOR during a FISCAL YEAR in connection with any of the
      AREAS.

            


    

    


    
      	
              2.33

            	
              PROPERTY refers to
      mining rights of any nature, awarded or in the process of being awarded,
      over each of the AREAS.

            


    

    


    
      	
              2.34

            	
              JOINT PROPERTY means the
      BAHÍA LAURA JOINT PROPERTY and CERRO MORO JOINT PROPERTY held for the
      benefit of the PARTIES
collectively.

            


    


    
      
         


      

      
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              2.35

            	
              BAHÍA LAURA JOINT PROPERTY
      means all the assets and rights acquired (excluding any and all
      kinds of mining rights) to be used and exercised in BAHÍA LAURA PROSPECT,
      for JOINT OPERATIONS.

            


    

    


    
      	
              2.36

            	
              CERRO MORO JOINT PROPERTY
      means all of the assets and rights acquired (excluding any and all
      kinds of mining rights) to be used and exercised in CERRO MORO PROSPECT,
      for JOINT OPERATIONS.

            


    

    


    
      	
              2.37

            	
              PROSPECT AND PROSPECTS
      shall mean, respectively, the BAHÍA LAURA PROSPECT and the CERRO
      MORO PROSPECT; and jointly, both the BAHÍA LAURA PROSPECT and CERRO MORO
      PROSPECT.

            


    

    


    
      	
              2.38

            	
              BAHÍA LAURA PROSPECT
      shall have the meaning assigned to it in RECITAL d)
      above.

            


    

    


    
      	
              2.39

            	
              CERRO MORO PROSPECT
      shall have the meaning assigned to it in RECITAL c)
      above.

            


    

    


    
      	
              2.40 

            	
              PROVINCE means the
      Province of Santa Cruz, Argentine Republic.


            


    

     

    
      	
              
                2.41

              

            	
              UTE
      REPRESENTATIVE shall be the
OPERATOR.

            


    

     

    
      	
              2.42

            	
              SUB-COMMITTEE shall be
      individually the BAHÍA LAURA SUB-COMMITTEE or the CERRO MORO
      SUB-COMMITTEE.

            


    

    


    
      	
              2.43

            	
              BAHÍA
      LAURA SUB-COMMITTEE shall be the UTE’s governing body for the
      management of any and all
      direct and indirect EXPLORATION and EXPLOITATION activities until
      the BAHÍA LAURA PROSPECT has finally been closed or
      abandoned.

            


    

    


    
      	
              2.44

            	
              CERRO MORO SUB-COMMITTEE
      shall be the UTE’s governing body for the management of any and all
      direct and indirect EXPLORATION and EXPLOITATION activities until CERRO
      MORO PROSPECT has finally been closed or
  abandoned.

            


    

    


    
      	
              2.45

            	
              UNIÓN TRANSITORIA DE
      EMPRESAS/UTE shall refer to this UTE according to this
      AGREEMENT.

            


    

    


    
      
        	
                2.46

              	
                QUALIFIED VOTE means the
      positive vote of one or more PARTY in a SUB-COMMITTEE who, pursuant to
      this AGREEMENT, individually or jointly represents an eighty five percent
      (85%) PARTICIPATION or
      more.

              
	 	 


      

    

    
      	
              2.47

            	
              MAJORITY VOTE means the
      positive vote of one or more PARTIES in a SUB-COMMITTEE who, pursuant to
      this AGREEMENT, individually or jointly represents a fifty one percent
      (51%) PARTICIPATION or more.

            


    


    
      
         


      

      
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              2.48

            	
              LENDER means any PARTY,
      including a PARTY or its AFFILIATES that directly or indirectly loan funds
      destined to finance JOINT OPERATIONS, pursuant to a LOAN
      AGREEMENT.

            


    

    


    
      
        	
                2.49

              	
                LOAN AGREEMENT means any
      loan agreement entered into between the OPERATOR or its AFFILIATES and a
      LENDER that may be appointed to finance JOINT OPERATIONS and including any
      and all extensions, renewals, refinancing or substitutions
      thereof.

              


      

    

    


    
      
        	
                2.50

              	
                The
      terms defined under this Section 2, when written in capital letters, in
      this AGREEMENT or in any of the Exhibits thereof shall bear the meaning
      assigned to them herein.

              


      

    

    


    
      	
              2.51

            	
              The
      Sections’ headings shall be used as reference only and shall not affect
      the provisions set forth in this
AGREEMENT.

            


    

    


    
      	
              2.52

            	
              Except
      as otherwise denoted by the context, any reference to Sections or Exhibits
      shall refer to the Sections or Exhibits
herein.

            


    

    


    
      	
              2.53

            	
              Any
      reference made to documents or other instruments include any approved
      amendments thereof.

            


    

    
       

      
        	
                2.54

              	
                Singular
      terms include their plural and vice
versa.

              


      

       

    

    
      SECTION
3. TERM.

    

    


    
      	
              3.1.

            	
              This
      AGREEMENT shall be in force as from the EFFECTIVE DATE and, subject
      to the provisions therein, until the expiration of the term
      necessary to carry out the activities comprised within the subject matter
      of this AGREEMENT.

            


    

    


    SECTION 4. NAME, DOMICILE
AND

    REPRESENTATION
OF THE UTE.

    


    
      	
              4.1

            	
              Name

            


    

    


    The name
of the UTE shall be “ESTELAR RESOURCES LTD. SUCURSAL ARGENTINA – FOMENTO MINERO DE SANTA CRUZ S.E.
Unión Transitoria de Empresas”.

     

    
      	
              4.2

            	
              Domicile

            


    

     

    For all
purposes deriving from this AGREEMENT with regards to third parties, the PARTIES hereby establish special domicile at
Comodoro Rivadavia 280 Piso 1 Rio Gallegos, Provincia de Santa Cruz,
Argentina.


    
      
         


      

      
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              4.3

            	
              Representations of the PARTIES
      

               

              Each
      PARTY hereby represents:

            


    

    


    (a) To be
legally authorized to enter into and execute this AGREEMENT and to assume the
obligations arising pursuant to the AGREEMENT;

    


    (b) To be
legally authorized to carry out the activities and transactions the subject of
this UTE; and

    


    (c) To
have complied with all legal and corporate requirements and to have fulfilled
all the requirements that empower them to enter into this
AGREEMENT.

    


    
      	
              4.4

            	
              UTE
      Representative

            


    

    


    4.4.1      
ESTELAR, domiciled at Comodoro Rivadavia 280 Piso 1 Rio Gallegos, Province of
Santa Cruz, is hereby appointed to represent the UTE. Said representation shall
be conducted by means of the signature or performance of its legal
representative or attorneys-in-fact vested with sufficient powers.

    


    4.4.2      
Neither of the PARTIES individually nor any
other person, unless said PARTY or individual is the UTE REPRESENTATIVE or were
duly empowered, shall be entitled to enter into agreements with third parties or
act in the name, place and stead of the UTE.

    


    4.4.3      Unless
expressly agreed otherwise, the PARTIES shall be liable to the OPERATOR under
this AGREEMENT for all obligations entered into by the latter with third parties
with regard to JOINT OPERATIONS in connection with its PARTICIPATION in the UTE
and the PROSPECT. In the case of FOMICRUZ, said obligation shall be subject only
to the reimbursement of costs and expenses provided for under Subsection 5.1.2
or 5.2.2, as the case may be.

    


    4.4.4     
The PARTIES shall not be jointly and severally liable with respect to the
compliance with any and all obligations arising from this AGREEMENT or for the
obligations undertaken before third parties by the OPERATOR including, without
limitation, any labor or social security claims on the
grounds of JOINT OPERATIONS performed by for the benefit of the UTE in the
PROSPECTS.


    
      
         


      

      
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              4.5

            	
              Financial Statements and
      Accounting

            


    

    
       

      
        	
                 

              	
                4.5.1

              	
                Financial
      statements related to activities carried out for the benefit of the UTE
      shall be prepared by the OPERATOR in compliance with the provisions set
      out in the ACCOUNTING
PROCEDURE.

              


      

    

    


    
      	
               
      

            	
              4.5.2

            	
              Income
      and expenses from JOINT OPERATIONS carried out for the benefit of the UTE
      shall be recorded as income and expenses of the
  OPERATOR.

            


    

    


    
      	
               
      

            	
              4.5.3

            	
              It
      is hereby understood and agreed by the PARTIES that the OPERATOR shall
      apply for all VAT recoverable from JOINT OPERATIONS and that such VAT
      recovery will, in as much as it relates to the expenditure recoverable
      from FOMICRUZ, be utilized to offset and reduce any amount owed by
      FOMICRUZ and will not form part of any amount that is distributable to
      FOMICRUZ until ESTELAR has recovered all amounts owed to it by FOMICRUZ,
      as stated in Section 5.

            


    

     

    
      	
              4.6

            	
              Final Annual Statement of
      Accounts

            


    

     

    
      	
               
      

            	
              4.6.1

            	
              Each
      YEAR, and within one hundred and twenty (120) days after each YEAR end,
      the OPERATOR shall offer the PARTIES a final statement of account,
      together with any other documentation that is reasonably required by the
      PARTIES. The final statements of account and any other financial
      information shall be subject to approval procedures as approved by the
      appropriate SUB-COMMITTEE. Subject to the auditing rights
      provided for in the ACCOUNTING PROCEDURE, the above mentioned final annual
      statement of account and any other accounting information submitted shall
      be deemed approved and therefore final and conclusive, unless a PARTY
      objects to said statements within five (5) months following the relevant
      YEAR end.

            


    

    


    
      SECTION
5. PARTICIPATION, COSTS, INVESTMENTS AND

      INCOME
DISTRIBUTION IN THE PROSPECTS.

    

     

    
      	
              5.1

            	
              CERRO MORO
      PROSPECT

            


    

     

    5.1.1.
PARTICIPATION

     

    As from
the day following the date upon which ESTELAR and or the OPERATOR for the
benefit of the UTE, receive the last authorization or permit or agreement
necessary to start the EXPLOITATION of the CERRO MORO AREA, each PARTY’S
PARTICIPATION in the UTE regarding the CERRO MORO PROSPECT shall be as
follows:

    


    
      
        
          
            	
                    FOMICRUZ

                  	
                    Five
      percent (5%)

                  
	 
      	 
      
	
                    ESTELAR

                  	
                    Ninety
      five percent
(95%)

                  


          

        

      

    

     

    
      
         


      

      
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    5.1.2.
Costs, Expenses and
Investments

    


    ESTELAR
or its AFFILIATES shall fund all expenses and costs corresponding to FOMICRUZ
arising from its PARTICIPATION in the UTE with respect to CERRO MORO PROSPECT
except for the allocation to operating reserves as determined by Section 5.3
and/or 5.6 and/or the CERRO MORO SUB-COMMITTEE. Under no circumstance shall
FOMICRUZ make any disbursement for expenses incurred by the UTE on the CERRO
MORO PROSPECT however expenses and costs corresponding to its PARTICIPATION
shall be reimbursed as follows:

    


    All
expenditures of any nature relating to the CERRO MORO AREA shall be borne
exclusively by ESTELAR. Following the commencement of EXPLOITATION, FOMICRUZ
will reimburse its proportionate share of all costs exceeding US$ 10,000,000
incurred by ESTELAR or its AFFILIATES on the CERRO MORO AREA.

    


    FOMICRUZ
and ESTELAR shall establish by mutual consent the amount that ESTELAR has spent
on the CERRO MORO AREA previously to the execution of this
AGREEMENT.

    


    
      	
              5.2.

            	
              BAHIA LAURA PROSPECT
      

            


    

     

    5.2.1.
PARTICIPATION


     

    Each
PARTY’s PARTICIPATION in the UTE with respect to BAHÍA LAURA PROSPECT shall vary
according to the stages stated below:

    


    First
Stage:

    


    FOMICRUZ                   Fifty
percent (50%)

    


    ESTELAR                   Fifty
percent (50%) as from the EFFECTIVE DATE and undertaking the responsibility to
fund directly or indirectly the amount of United States Dollars Five Million
(US$ 5,000,000) for EXPLORATION or EXPLOITATION on the BAHIA LAURA
PROSPECT.

    


    Second
Stage:

    


    Once
ESTELAR or its AFFILIATES have incurred the expenditure required for obtaining
its fifty percent (50%) PARTICIPATION, ESTELAR will have, at its exclusive
discretion, the option to earn from FOMICRUZ an additional thirty percent (30%)
PARTICIPATION in the BAHÍA LAURA PROSPECT by incurring additional expenditures
in the amount of United States Dollars Five Million (US$ 5,000,000) for
EXPLORATION or EXPLOITATION.


    
      
         


      

      
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    Upon
incurring expenditures of United States Dollars Ten Million (US$ 10,000,000),
ESTELAR will have earned an eighty (80) percent PARTICIPATION in the BAHIA LAURA
PROSPECT.

    


    Should
the above-mentioned option be exercised, each PARTY’s PARTICIPATION shall be the
following:

    


    
      
        
          	
                  FOMICRUZ

                	
                  twenty
      percent (20%)

                
	
                  ESTELAR

                	
                  eighty
      percent (80%)

                


        

      

    

    


    
      	
               
      

            	
              5.2.2

            	
              Costs, Expenses and
      Investments

            


    

    


    ESTELAR
shall continue to finance all the costs corresponding to FOMICRUZ arising from
its PARTICIPATION in the UTE with respect to the BAHIA LAURA PROSPECT, except
for the allocation to operating reserves as determined by Section 5.3 and/or 5.6
and/or the BAHIA LAURA SUBCOMMITTEE and will recover FOMICRUZ’s share of costs
and expenses in excess of the first United States Dollars Ten Million (US$
10,000,000), which is ESTELAR’s responsibility, as set out in Section 5.3
below

    


    It is
hereby expressly stated that FOMICRUZ’s share of any expenditure including any
type of investment, disbursement or cost incurred, undertaken, paid or dealt
with by ESTELAR or its AFFILIATES in excess of the first Ten Million United
States Dollars (US$ 10,000,000) required for the acquisition of its
PARTICIPATION in the BAHIA LAURA PROSPECT, shall be reimbursed by FOMICRUZ to
ESTELAR.

    


    
      	
              5.3

            	
              Distribution
      Policy

            


    

    


    
      	
              5.3.1.

            	
              DISTRIBUTION:
      Subject to 5.3.2 below, the OPERATOR shall only distribute NET PROCEEDS to
      the PARTIES where the NET PROCEEDS exceed an amount equal to fund JOINT
      OPERATIONS for six (6) months in accordance to the WORK SCHEDULE and
      BUDGET approved by the corresponding SUB-COMMITTEE for each PROSPECT plus
      any amount required for the sinking fund as provided in Section
      5.6.

            


    

    


    
      	
              5.3.2.

            	
              On
      a quarterly basis, the OPERATOR will withhold fifty percent (50%) of
      FOMICRUZ’s share of NET PROCEEDS available for DISTRIBUTION from the
      EXPLOITATION of the BAHÍA LAURA AREA and/or CERRO MORO AREA and will pay
      such amount to ESTELAR until FOMICRUZ has repaid all amounts, plus
      interest, as required under clauses 5.1 and
5.2.

            


    


    
      
         


      

      
        Page 11
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              5.4

            	
              Operating
      Expense and Capital Expenditure
recovery

            


    

    


    The
OPERATOR shall propose reasonable, industry-standard methods of allocating
operating costs between the AREAS, and where applicable for, calculating capital
recovery charges for the use of plant and equipment where such plant and
equipment is acquired for use in one AREA but is used in another AREA, for
approval by the appropriate OPERATING SUBCOMMITTEE.

     

    
      	
              5.5

            	
              Entitlement

            


    

     

    Unless
provided otherwise:

    


    
      	
               
      

            	
              (a)

            	
              All
      liabilities, costs, expenses, damages, loss, duties or claims arising from
      JOINT OPERATIONS, to the extent not covered by any insurance purchased by
      the OPERATOR, shall be borne by the OPERATOR for the benefit of the UTE
      and shall be reimbursed to OPERATOR by each PARTY in proportion to their
      respective PARTICIPATION.

            


    

    


    
      	
               
      

            	
              (b)

            	
              All
      rights and interests acquired under this AGREEMENT shall be owned by the
      OPERATOR for the benefit of the UTE PARTIES in proportion to their
      respective PARTICIPATION in the UTE with respect to each
      PROSPECT.

            


    

    


    
      	
               
      

            	
              (c)

            	
              The
      OPERATOR shall own all the JOINT PROPERTY for the benefit of the UTE
      PARTIES until the liquidation of such JOINT PROPERTY in accordance to the
      provisions of this AGREEMENT.

            


    

    


    It is
hereby expressly agreed and acknowledged that under no circumstance will there
exist any joint property or mining company under the terms of Section 286 of the
Mining Code, in connection with the exploration permit(s) or mining claims
and/or mining concession(s), the foregoing being the exclusive property of the
respective party as per the APPLICABLE AUTHORITY’s records.

    


    
      	
              5.6.

            	
              Sinking Fund and
      Abandonment

            


    

    


    The
OPERATOR on behalf of UTE shall be responsible for the closure and
rehabilitation of all mines in the PROSPECTS.

    


    In
accordance to Section 23 of the Law 24.196, the OPERATOR shall, prior to any
DISTRIBUTION to a PARTY, retain from NET PROCEEDS and constitute a special fund
to be used to remedy any environmental alteration and provide for the closure
and abandonment of the mines in each PROSPECT in accordance with the applicable
law and good mining practice. Such provision shall not exceed an amount equal to
five percent (5%) of the annual EXPLOITAITON costs unless increased by any
SUBCOMMITTEE as set out below.


    
      
         


      

      
        Page 12
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    Any
SUB-COMMITTEE may increase such retention if it forecasts that the abandonment
and rehabilitation programs shall not be fully funded at the time of
commencement of abandonment/rehabilitation. The PARTIES acknowledge that the
SUB-COMMITTEES will evaluate such abandonment and rehabilitation requirements on
an annual basis and determine the need to increase the annual
contribution.

    


    SECTION
6. COMMON OPERATING FUND AND CONTRIBUTIONS.

     

    
      	
              6.1

            	
              Common Operating
      Fund

            


    

    


    A common
operating fund in the amount of UNITED STATES DOLLARS TEN THOUSAND (US$10,000)
will be constituted for the CERRO MORO PROSPECT, and UNITED STATES DOLLARS TEN
THOUSAND (US$ 10,000) will be constituted for the BAHÍA LAURA
PROSPECT.

    


    The
PARTIES may increase the common operating fund at any time during the term of
this AGREEMENT.

    


    The
constitution of this COMMON OPERATING FUND does not imply any limitation to the
powers of the OPERATOR to request funds or to the PARTIES obligations to comply
with any contributions, required in proportion to their PARTICIPATION in each
PROSPECT, however FOMICRUZ will not be required to contribute any amount
exceeding its share of NET PROCEEDS and ESTELAR will fund such amount which will
be recoverable as set out in sections 5.1 and 5.2 respectively.

    


    SECTION 7. REGULATIONS AND REQUIREMENTS
COMPLIANCE.

    


    
      	
              7.1

            	
              The
      PARTIES
      hereby agree, without limitation, to the following common
      obligations:

            


    

    


    
      	
               
      

            	
              7.1.1

            	
              To
      comply with all national, provincial, and municipal laws and regulations
      applicable to JOINT OPERATIONS and to this
  AGREEMENT;

            


    

    


    
      	
               
      

            	
              7.1.2

            	
              To
      allow access to the applicable AUTHORITY to the AREA in order to perform
      any inspections and audits necessary to comply with any regulation in
      force; and

            


    

    


    
      	
            	
              7.1.3

            	
              To
      apply any and all modifications, additions and amendments to this
      AGREEMENT or regarding each one of the PROSPECTS that may be required by a
      LENDER for the purposes of executing a LOAN AGREEMENT, provided always
      that such modifications, additions and amendments do not modify or alter,
      in any manner whatsoever, FOMICRUZ’s rights to its
    PROPERTY.

            


    


    
      
         


      

      
        Page 13
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              7.2

            	
              Moreover,
      FOMICRUZ:

            


    

     

    7.2.1
Hereby grants the OPERATOR for the benefit of the UTE, without loss of ownership
and regardless of any change or decrease in its PARTICIPATION in the UTE, the
rights to EXPLORATION and EXPLOITATION, including but not limited, to the right
to mine in accordance to good mining practices and to access any and all work
and studies performed to date in connection with the BAHÍA LAURA PROSPECT. The foregoing shall
include the right to extract, treat, benefit, transport and commercialize any
PRODUCT obtained from the BAHÍA LAURA AREA, as well as all other rights such as
the creation of easements and services, that FOMICRUZ has under the Mining Code,
in its capacity as owner of such PROSPECT.

    


    7.2.2
Hereby represents and warrants that it is the exclusive owner of the mining
properties comprising the BAHÍA LAURA PROSPECT and that said PROSPECT is free of
any and all mortgages, attachments, ownership restrictions or legal limitations
under any lease agreements or mining equipment supply agreement (contratos
de avía)
or any other kind of covenant that might affect its free availability for
the purposes of complying with this AGREEMENT. A certificate issued by the
Mining Authority of the Province of Santa Cruz evidencing the ownership of
FOMICRUZ and the absence of recorded mortgages, attachments, ownership
restrictions, lease agreements, mining equipment supply agreements (contratos
de avío), or any other kind of covenant that might affect its ownership
or its free availability shall be enacted upon request of the other
PARTY.

    


    7.2.3
Hereby acknowledges the UTE’s right, to be exercised by the OPERATOR, to perform
any and all tasks that may be necessary for the EXPLORATION and EXPLOITATION of
the BAHÍA LAURA PROSPECT and for the commercialization of the PRODUCTS according
to good mining practices. The UTE shall adopt the appropriate regulations for
the commercialization of the PRODUCT.

    


    7.2.4
Notwithstanding that any cost that it may required shall be in charge of the
UTE, it shall request from and use its best effort to secure from the applicable
authority any and all services, rights, concessions, permits and easements that
the OPERATOR may deem necessary for the EXPLORATION and EXPLOITATION of the
BAHÍA LAURA PROSPECT including but not limited to, any and all concessions and
easements provided for in the Mining Code and where applicable any approvals
required under any environmental law and regulation, either federal or
municipal, as well as any permit, easement and / or acceptance that may be
required by any community or aboriginal authority.


    
      
         


      

      
        Page 14
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    7.2.5
Notwithstanding that any cost that it may required shall be in charge of the
UTE, shall collaborate and assist the OPERATOR in obtaining any and all
services, rights, concessions, permits and easements that it may deem necessary
for the EXPLORATION and EXPLOITATION of CERRO MORO and BAHIA LAURA PROSPECTS,
including but not limited to, any and all concessions and easements provided for
in the Mining Code.

    


    7.2.6 Notwithstanding that any mining fees
shall be in charge of the UTE, it represents that in its capacity as the
concession holder of the mining properties comprising the BAHÍA LAURA
PROSPECT, that it shall comply with, or as the case may be, to verify compliance
with any and all obligations provided for in the Mining Code related
to the terms and conditions of amparo
minero.

    


    7.2.7
Shall collaborate, advise and assist the OPERATOR on any institutional, social,
local, corporate responsibility and/or related issue that might arise during the
EXPLORATION or EXPLOITATION of the PROSPECTS.

    


    7.2.8.
For such effects, FOMICRUZ hereby gives to the OPERATOR the exclusive possession
of the BAHIA LAURA PROSPECT in order to aloud him to carry on with the
EXPLORATION and EXPLOTAITION and to exercise all the rights under this
AGREEMENT.

    


    7.2.9.
Without the aforementioned implies a limitation to the FOMICRUZ obligation of
doing himself those actions, FOMICRUZ hereby appoint the OPERATOR as his
representative in order to carry all the administrative acts necessaries to
accomplish with the terms of this AGREEMENT, including the right to make the
payments for FOMICRUZ and those the OPERATOR considers necessary to pay in order
to maintain the validity of its rights and the right of FOMICRUZ in the BAHIA
LAURA PROSPECT.

    


    7.2.10 to
grant, for the purposes aforementioned and in favour of the OPERATOR, with
substitution faculties in favour of the representatives that FOMICRUZ considers
convenient, an administrative, judicial and mining power for the OPERATOR to
carry on with all the presentations needed or convenient with the Mining
Authority or third parties, to accomplish with the legal and regulatory
obligations related to BAHIA LAURA PROSPECT and this AGREEMENT.


    
      
         


      

      
        Page 15
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              7.3 

            	
              Moreover;
      ESTELAR:

            


    

    


    7.3.1
Hereby grants the OPERATOR for the benefit of the UTE, without loss of
ownership, the right to EXPLORATION and EXPLOITATION, including access to any
and all work and studies performed up to date in connection with the CERRO MORO
PROSPECT. The foregoing shall include the right to extract, treat, benefit,
transport and commercialize any PRODUCT obtained from the CERRO MORO AREA, as
well as all other rights such as the constitution of easements and services,
that ESTELAR has under the Mining Code in its capacity as owner of such
PROSPECT.

    


    7.3.2
Hereby represents and warrants that, with the exception of only the two percent
(2%) net smelter return royalty granted to Cerro Vanguardia S.A. (the “NSR”), it
is the exclusive owner of the mining properties comprising CERRO MORO PROSPECT
and that said PROSPECT is free of any and all mortgages, attachments, ownership
restrictions or legal limitations under any lease agreements or mining equipment
supply agreement (contratos
de
avio)
or any other kind of covenant that might affect its free availability for
the purposes of complying with this AGREEMENT. A certificate issued by the
Mining Authority of the Province of Santa Cruz evidencing the ownership of
ESTELAR and the absence of recorded mortgages, attachments, ownership
restrictions, lease agreements, mining equipment supply agreements (contratos
de avío),
or any other kind of covenant except for the NSR that might affect its
ownership or its free availability shall be enacted upon request of the other
PARTY.

    


    7.3.3
Hereby acknowledges the UTE’s right, to be exercised by the OPERATOR, to perform
any and all tasks that may be necessary for the purposes of the EXPLORATION and
EXPLOITATION of the CERRO MORO PROSPECT and for the commercialization of the
PRODUCTS.

    


    7.3.4
Notwithstanding that any cost that it may required shall be in charge of the
UTE, shall request from the applicable authority, any and all services, rights,
concessions, permits and easements that the OPERATOR may deem necessary for the
EXPLORATION and EXPLOITATION of the CERRO MORO PROSPECT, including but not
limited to, any and all concessions and easements provided for in the Mining
Code

    


    7.3.5
Notwithstanding that any cost that it may required shall be in charge of the
UTE, if required, shall collaborate with and assist the OPERATOR in obtaining
any and all services, rights, concessions, permits and easements that it may
deem necessary for the EXPLORATION and EXPLOITATION of the CERRO MORO and BAHIA
LAURA PROSPECTS, including but not limited to, any and all concessions and
easements provided for in the Mining Code.


    
      
         


      

      
        Page 16
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    7.3.6
Notwithstanding that any mining fees shall be in charge of the UTE, it
represents that in its capacity as the concession holder of the mining
properties comprising the CERRO MORO PROSPECT, it shall be bound to pay the
mining fees (cannon) and to comply with, or as the case may be, to verify
compliance with any and all obligations provided for in the Mining Code
related to the terms and conditions of amparo
ininero.

    


    7.3.7.
For such effects, ESTELAR hereby gives to the OPERATOR the exclusive possession
of the CERRO MORO PROSPECT in order to aloud him to carry on with the
EXPLORATION and EXPLOTAITION and to exercise all the rights under this
AGREEMENT.

     

    7.3.8.
Without the aforementioned implies a limitation to the ESTELAR obligation of
doing himself those actions, ESTELAR hereby appoint the OPERATOR as his
representative in order to carry all the administrative acts necessaries to
accomplish with the terms of this AGREEMENT, including the right to make the
payments for ESTELAR and those the OPERATOR considers necessary to pay in order
to maintain the validity of its rights and the right of ESTELAR in the CERRO
MORO PROSPECT.

    


    7.3.9. to
grant, for the pourposes aforementioned and in favour of the OPERATOR, with
substitution faculties in favour of the representatives that ESTELAR considers
convenient, an administrative, judicial and mining power for the OPERATOR to
carry on with all the presentations needed or convenient with the Mining
Authority or third parties, to accomplish with the legal and regulatory
obligations related to CERRO MORO and this AGREEMENT.

     


    SECTION
8. OPERATOR.

     

    
      	
              8.1

            	
              Appointment

            


    

     

    ESTELAR
shall be the OPERATOR of each one of the PROSPECTS, subject to the provisions
herein set forth.

     

    
      	
              8.2

            	
              Removal
      or Resignation of the OPERATOR

            


    

     

    
      	
               
      

            	
              8.2.1

            	
              The
      OPERATOR of each AREA may be removed by the QUALIFIED VOTE of the applicable SUB-COMMITTEE,
      exclusively for the following reasons: in the event of liquidation,
      dissolution or bankruptcy of the OPERATOR or if ESTELAR ceases to be a
      PARTY to this AGREEMENT.

            


    


    
      
         


      

      
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              8.2.2

            	
              The
      SUB-COMMITTEE responsible for removing the OPERATOR shall set the
      effective date for such removal, which shall not exceed ninety (90) days
      following the date of removal. The OPERATOR shall continue working until
      said effective date or, in the event that the SUBCOMMiTTEE fails to set
      such effective date, for a maximum term of ninety (90) days from the date
      that the OPERATOR is advised of its removal. The OPERATOR shall not be
      relieved of any liability arising from a breach of this AGREEMENT which
      occurred prior to the effective date of its
  removal.

            


    

    


    
      	
               
      

            	
              8.2.3

            	
              The
      OPERATOR will have the right to resign at any time by providing at least
      ninety (90) days written notice to the
PARTIES.

            


    

    


    
      	
               
      

            	
              8.2.4

            	
              In
      the event that the OPERATOR resigns or is removed, the SUBCOMMITTEES shall
      immediately appoint a succeeding
OPERATOR.

            


    

    


    
      	
               
      

            	
              8.2.5

            	
              The
      SUB-COMMITTEES shall be entitled to appoint an OPERATOR who may or may not
      be a PARTY hereto, under contractual terms provided that such appointee is
      technically fit and financially
solvent.

            


    

    


    
      	
               
      

            	
              8.2.6

            	
              Immediately
      after, the effective date set by the SUB-COMMITTEES for the removal of the
      OPERATOR, the outgoing OPERATOR shall transfer, by means of records or
      proper documents, responsibility for all the operations performed within
      the AREA(S), including possession and custody of all PROPERTY and all the
      books, records and inventories with regards to the JOINT OPERATION(S) held
      by the outgoing OPERATOR to the incoming
  OPERATOR.

            


    

    


    
      	
               
      

            	
              8.2.7

            	
              The
      outgoing OPERATOR shall use its best efforts to transfer to the incoming
      OPERATOR, on the effective date, or as soon as practicable after said
      date, any and all rights that the outgoing OPERATOR may hold pursuant to
      its appointment as OPERATOR

            


    

    


    
      	
               
      

            	
              8.2.8

            	
              As
      soon as possible following the removal or resignation of the outgoing
      OPERATOR, the PARTIES shall perform an audit of the JOINT PROPERTY and
      finalize all accounting with the outgoing OPERATOR and transfer same to
      the incoming OPERATOR.

            


    

     

    
      	
              8.3

            	
              OPERATOR’s
      Performance

            


    

     

    
      	
               
      

            	
              8.3.1

            	
              Exclusive Right: Subject
      to the provisions herein set forth and under the direction, general
      supervision and control of the corresponding SUB-COMMITTEE, the OPERATOR
      shall be exclusively in charge of managing JOINT OPERATIONS in each
      PROSPECT, with the rights, powers, proceedings and obligations as set out
      in this AGREEMENT and as is expected of a good operator operating under
      generally accepted practices in the mining
  industry.

            


    


    
      
         


      

      
        Page 18
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              8.3.2

            	
              Rights and
      Obligations of the
      OPERATOR: The OPERATOR, under this AGREEMENT,
  shall:

            


    

    


    
      	
               
      

            	
              i)

            	
              Conduct
      and perform JOINT OPERATIONS pursuant to the terms of this AGREEMENT and
      under the general supervision, direction and control of the appropriate
      SUB-COMMITTEE.

            


    

    


    
      	
               
      

            	
              Such
      operations shall be conducted by the OPERATOR under his responsibility and
      authority in a competent and professional manner in accordance with the
      methods and practices usually applied under sound EXPLORATION practices
      and, where applicable, the EXPLOITATION of the AREAS with the level of
      diligence and caution of an experienced operator performing similar
      activities under comparable conditions and
  circumstances.

            


    

     

    
      	
               
      

            	
              ii)

            	
              While
      conducting JOINT OPERATIONS and in representing the PARTIES, the OPERATOR
      shall comply with the obligations arising under this AGREEMENT and
      pursuant to all applicable laws and
regulations.

            


    

     

    
      	
               
      

            	
              iii)

            	
              Acquire,
      for the benefit of the UTE, any equipment, materials and supplies
      necessary to carry out JOINT
OPERATIONS.

            


    

    


    
      	
               
      

            	
              iv)

            	
              Prepare
      and keep in the Argentine Republic all accounting records, as appropriate,
      with regards to the JOINT OPERATIONS, and keep such accounting records in
      compliance with the ACCOUNTING PROCEDURE and this
    AGREEMENT.

            


    

    


    
      	
               
      

            	
              v)

            	
              Recruit,
      as his own and for the benefit of the UTE, the necessary employees for the
      JOINT OPERATIONS. It is hereby expressly stated that the OPERATOR will
      preferably recruit its employees from the PROVINCE provided suitably
      qualified people are available at competitive
  costs.

            


    

    


    
      	
               
      

            	
              vi)

            	
              Be
      in charge of the exclusive management of all works and services necessary
      for the development of JOINT
OPERATIONS.

            


    

    


    
      	
               
      

            	
              vii)

            	
              Coordinate,
      represent and act in the name, place and stead of the PARTIES before any
      corresponding authority(ies) regarding any matter arising with regards to
      JOINT OPERATIONS.

            


    


    
      
         


      

      
        Page 19
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              viii)

            	
              Provide,
      where possible with reasonable advance notice, an agenda including the
      matters significantly affecting or that may affect the PARTIES to be discussed at any meeting of
      the SUB-COMMITTEE and the OPERATOR shall inform the PARTIES of the
      position that it will be supporting. Where possible the PARTIES shall
      consult on matters to be discussed and shall inform the OPERATOR of their
      respective positions on the
matters.

            


    

    


    
      	
               
      

            	
              ix)

            	
              For
      the benefit of the UTE, shall prepare, submit and process before the
      appropriate authorities, any and all reports, requests and affidavits
      required under any applicable law or regulation or under this AGREEMENT,
      and shall submit a copy thereof to the PARTIES, except when the foregoing
      are notes and/or mere procedural submissions or tax
      affidavits.

            


    

    


    
      	
               
      

            	
              x)

            	
              Request
      and keep in good standing, as applicable, all permits, easements,
      licenses, authorizations and any other rights required to manage and
      perform the JOINT OPERATIONS as required by any applicable laws and
      regulations, notwithstanding the provisions stated in Subsection 5.5. The
      PARTIES shall be bound to cooperate and use their best efforts to assist
      the OPERATOR to obtain all permits, easements, licenses, authorizations
      and any other approval necessary to carry out the JOINT
      OPERATIONS.

            


    

    


    
      	
               
      

            	
              xi)

            	
              Allow
      the representatives of any of the PARTIES, with reasonable notice, to have
      access to the AREAS during any DAY at the sole risk and cost of such
      PARTY, providing it does not interfere with the JOINT OPERATIONS or impose
      an improper burden to the OPERATOR’s
personnel,

            


    

    


    
      	
               
      

            	
              xii)

            	
              Prepare
      and submit to the corresponding SUB-COMMITTEE the WORK SCHEDULES and
      BUDGETS as required.

            


    

     

    
      	
               
      

            	
              8.3.3

            	
              Insurance

            


    

     

    
      	
               
      

            	
              8.3.3.1

            	
              The
      OPERATOR shall purchase and maintain as its own and for the benefit of the
      UTE any and all insurances as required by any applicable laws, regulations
      or rules, regarding JOINT
OPERATIONS.

            


    

     

    
      	
               
      

            	
              8.3.3.2.

            	
              In
      relation to any insurance purchased by the OPERATOR, the OPERATOR
      shall:

            


    


    
      
         


      

      
        Page 20
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              (a)

            	
              inform
      the PARTIES as to when such insurance was purchased and any other relevant
      information required by the PARTIES;
and

            


    

    


    
      	
               
      

            	
              (b)

            	
              duly
      submit all claims, with notice to the PARTIES regarding any claim
      exceeding the amount of United States Dollars Seventy Five Thousand (US$
      75,000) and take all the necessary and appropriate measures to collect the
      compensation and record them in the CERRO MORO ACCOUNT or BAHIA LAURA
      ACCOUNT, as applicable.

            


    

    


    
      	
               
      

            	
              8.3.3.3

            	
              Unless
      otherwise authorized by the appropriate SUB-COMMITTEE in specific cases,
      the OPERATOR shall require all contractors in connection with the JOINT
      OPERATIONS to obtain any insurance that may be required under this
      AGREEMENT, or any applicable laws and regulations, as well as any other
      insurance that the OPERATOR may deem necessary in accordance with good
      mining practices such that where possible the PARTIES are adequately
      protected against loss.

            


    

     

    
      	
               
      

            	
              8.3.4

            	
              Operator’s Liability for
      Damages

            


    

     

    The
OPERATOR shall only be responsible to the PARTIES for direct losses or damages
effectively suffered by such PARTY arising from:

    


    
      	
               
      

            	
              (a)

            	
              Failure
      to obtain or maintain in force any insurance that the OPERATOR is
      obligated to obtain or maintain pursuant to this AGREEMENT, unless the
      OPERATOR has made all reasonable efforts to obtain and maintain such
      insurances and, even so, has found it impossible or uneconomical to do so,
      and has given due notice of these circumstances to the PARTIES,
      or

            


    

    


    
      	
               
      

            	
              (b)

            	
              GROSS
      NEGLIGENCE on the part of the
OPERATOR.

            


    

    


    However,
the OPERATOR shall, under no circumstance, be liable for: (i) damages inherent
in the activities involved or those arising as an immediate or indirect
consequence of, including, without limitation, production loss, impossibility to
produce or lack of production, and particularly but not limited to, loss of
profit; or (ii) any loss or damages covered by any other insurance policy
contracted by the PARTIES under this AGREEMENT or otherwise covered or
provisioned.


    
      
         


      

      
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              8.3.5

            	
              Independent, Emergency and
      Excessive Expenses

            


    

    


    The
OPERATOR shall carry out the JOINT OPERATIONS without performing any operation
or incurring any material expense or investment unless duly authorized under a
WORK SCHEDULE and/or BUDGET, duly approved by the corresponding SUB-COMMITTEE,
except solely for the following cases:

    


    
      	
               
      

            	
              (a)

            	
              Where
      such expense or investment is incurred by ESTELAR in the BAHIA LAURA
      PROSPECT for the purpose of earning its PARTICIPATION in such PROSPECT
      according to Section 5.2.1 of this
AGREEMENT;

            


    

    


    
      	
               
      

            	
              (b)

            	
              Where
      such expense or investment is incurred by ESTELAR in the CERRO MORO
      PROSPECT prior to FOMICRUZ earning its PARTICIPATION in such PROSPECT
      according to Section 5.1.1 of this
AGREEMENT;

            


    

    


    
      	
               
      

            	
              (c)

            	
              Where
      it is necessary to incur an expense or investment approved under the
      corresponding WORK SCHEDULE and BUDGET, the OPERATOR is hereby authorized
      to incur any expenses exceeding the budget, or any other approved expense,
      for an amount not exceeding fifteen percent (15%) per YEAR of the
      corresponding approved budget plus any increase in the cost of living
      index without the approval of the appropriate
    SUB-COMMITTEE;

            


    

    


    
      	
               
      

            	
              (d)

            	
              OPERATOR
      shall be entitled to incur in any expense or investment that is not
      included in the WORK SCHEDULE and BUDGET up to the total amount of US$
      500,000 (UNITED STATES DOLLARS FIVE HUNDRED THOUSAND) per YEAR. A detailed
      report of such expenses or investment shall be submitted to the
      appropriate SUBCOMITTE with explanation for such expenditure;
      or

            


    

    


    
      	
               
      

            	
              (e)

            	
              In
      the event of an emergency, the OPERATOR shall be entitled to incur such
      immediate expenses that are necessary for the protection of lives,
      property, assets and the environment. The OPERATOR shall immediately
      notify the PARTIES of such emergency, its nature, the steps taken to deal
      with the situation and the expenses
incurred.

            


    


    
      	
              8.4

            	
              Representation at
      Trial

            


    

     

    The
OPERATOR shall immediately notify the PARTIES of any lawsuit, trial, arbitration
or proceedings in connection with the JOINT OPERATIONS in excess of seventy five
thousand United States Dollars (US$ 75,000) and, unless the appropriate
SUB-COMMITTEE rules otherwise, shall adopt the measures required to represent
and defend the PARTIES affected, complying with the directives of the
appropriate SUB-COMMITTEE.


    
      
         


      

      
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    The
PARTIES shall be entitled to be present at the proceedings, at their own cost
and expense, provided that, according to the appropriate SUB-COMMITTEE’s
understanding, such actions do not harm the OPERATOR’s management and such
presence is in compliance with the directives of the SUB-COMMITTEE.

     

    No PARTY
(including the OPERATOR) shall accept, dismiss or settle any arbitration,
lawsuit or proceedings in connection with the JOINT OPERATIONS in excess of
US$50,000 without the consent of the appropriate SUB-COMMITTEE.

     

    
      	
              8.5

            	
              Employees and
      Contractors

            


    

     

    
      
        	
              	
                8.5.1

              	
                The
      OPERATOR shall determine the number of employees that will be working in
      the JOINT OPERATIONS, approve their selection and set their working
      schedules and rate of pay.

              


      

    

     

    
      	
               
      

            	
              8.5.2

            	
              The
      OPERATOR shall select all employees engaged in the JOINT OPERATIONS as
      provided herein, defining the terms and conditions applicable to said
      hiring the OPERATOR shall be entitled to engage employees of the PARTIES
      and/or its AFFILIATES, where required, taking into consideration prices,
      quality, quantity or volume, terms and other relevant business
      conditions.

            


    

     

    
      	
               
      

            	
              8.5.3

            	
              Additionally,
      and pursuant to the Letter of Intent, the OPERATOR shall, preferably hire
      employees resident in Santa Cruz Province, including graduates from
      technical schools within the Province. Moreover, it is hereby expressly
      stated that the OPERATOR will preferably recruit properly qualified
      employees from the PROVINCE and that FOMICRUZ will promote training by
      government for people within the
PROVINCE.

            


    

     

    
      	
              8.6

            	
              Technical
      Information

            


    

     

    The
OPERATOR shall inform, every six (6) months, during the EXPLORATION stage, and
monthly during the EXPLOITATION stage, the appropriate SUB-COMMITTEE regarding
the development of the JOINT OPERATIONS and provide any information deemed
relevant, as well as any other information that the PARTIES may reasonably
request.

     

    
      	
              8.7

            	
              Separate Accounting
      Records

            


    

     

    The
OPERATOR shall keep separate appropriate financial and accounting records,
regarding the JOINT OPERATIONS, such that the records adequately segregate the
JOINT OPERATIONS from any other operations conducted under any other mining
agreements, or any other activities of the OPERATOR, in such a way that where
applicable the PARTIES’s PARTICIPATION in disbursements for investments, costs
and expenses incurred under this AGREEMENT may be clearly
determined.


    
      
         


      

      
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    SECTION
9. OPERATING COMMITTEE & SUB-COMMITTEES.

     

    
      	
              9.1

            	
              Constitution and
      Powers

            


    

     

    The
PARTIES hereby constitute an OPERATING COMMITTEE, comprised by the CERRO MORO
SUB-COMMITTEE and the BAHIA LAURA SUBCOMMITTEE, both of which shall be in charge
of the authorization, general supervision and control of the JOINT OPERATIONS in
their respective AREAS.

     

    It is
specifically agreed that while ESTELAR is funding expenditure on CERRO MORO and
BAHIA LAURA up until FOMICRUZ has earned its PARTICIPATION in the CERRO MORO
PROSPECT and ESTELAR has earned its PARTICIPATION in the BAHIA LAURA PROSPECT
that it will retain the right to amend any WORK SCHEDULE and BUDGET with notice
to the respective SUB-COMMITTEE.

     

    The
SUB-COMMITTEE powers will, subject to this AGREEMENT, including the
following:

     

    
      	
               
      

            	
              (a)

            	
              To
      take into consideration, review, approve or reject any WORK SCHEDULE and
      BUDGET and any EXPENSE AUTHORIZATION
      or any amendment thereto corresponding to its respective AREA,
      notwithstanding any obligations before third parties that may have been
      incurred prior to said amendment;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Decide
      whether the OPERATOR is to refrain from representing the PARTIES regarding
      any matter or transaction with the authorities or any third party in
      connection with the JOINT OPERATIONS. This notwithstanding each PARTY
      shall at all times retain the unrestricted right to appear before the
      authorities or any third parties, regarding all matters exclusively in
      connection with said PARTY’s PARTICIPATION, provided that it does not
      interfere with or harm the interest of the other PARTIES;

            


    

     

    
      	
               
      

            	
              (c)

            	
              To
      take into consideration and decide on any matter referring to general
      policies, operating procedures and methods relating to JOINT OPERATIONS;
      and

            


    

     

    
      
        
        

      

      
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              (d)

            	
              To
      take into consideration and decide on any other matter in connection with
      the JOINT OPERATIONS that may be submitted by any of the
      PARTIES.

            


    

     

    None of
the SUB-COMMITTEES shall be entitled to amend or order the PARTIES to amend this
AGREEMENT, notwithstanding the right of the PARTIES to amend the
AGREEMENT.

     

    Each
PARTY shall be entitled to appoint a representative and a deputy representative
in the SUB-COMMITTEES.

     

    The
number of votes held by each PARTY represented in a SUB-COMMITTEE shall be
equivalent to its respective PARTICIPATION in the UTE with respect to the
applicable PROSPECT.

     

    
      	
              9.2

            	
              Representatives

            


    

     

    Within
ten (10) days following the EFFECTIVE DATE, the PARTIES shall appoint a
representative to the SUB-COMMITTEES, who will be entitled to vote in said
PARTY’s name in accordance with the PARTY’S respective PARTICIPATION. Said
appointment shall be made in writing and shall be submitted to the other PARTY,
indicating the name and address of the corresponding representative. Any PARTY
may replace its representative or appoint a deputy representative at any time,
with notice thereof to the other PARTIES.

     

    The
representative shall have full power and authority to represent and bind the
PARTY in all matters validly submitted to a vote by the corresponding
SUB-COMMITTEE, within its scope of powers as set out in this
AGREEMENT.

     

    Each
representative shall be entitled to be accompanied to any of the corresponding
SUB-COMMITTEE’s meetings by any advisors and assistants that he may deem fit.
Should a deputy representative be appointed, he/she may attend the meetings with
the representative, without the authority to speak or vote, or replace him/her
in case of absence, in which case said deputy representative will have the
authority to speak and vote.

     

    The
OPERATOR’s representative shall be the one presiding over the meetings of the
corresponding SUB-COMMITTEE. Should the OPERATOR not be a PARTY, then the
representative of the PARTY with a majority PARTICIPATION will preside over
meetings.


    
      
         


      

      
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              9.3

            	
              Commissions

            


    

     

    The
SUB-COMMITTEES may constitute commissions in charge of the analysis of any
financial, accounting, legal or any other kind of matter. Said commissions shall
be constituted by a representative appointed by each PARTY. The duties of said
commissions shall be determined by the SUB-COMMITTEE that may have created them.
If constituted, the commission shall make suggestions and prepare reports to be
submitted to the constituting SUB-COMMITTEE.

     

    
      	
              9.4

            	
              Meetings

            


    

     

    
      	
               
      

            	
              9.4.1

            	
              The
      OPERATOR or any PARTY shall be entitled to call a meeting of the
      corresponding SUB-COMMITTEE by means of written notice served to all
      PARTIES at least seven (7) DAYS in advance of such meeting. The notice
      shall indicate the matter or matters to be discussed at said meeting and
      shall provide relevant information available. Unless unanimously agreed
      otherwise by the PARTIES, the OPERATOR shall, during EXPLORATION call at
      least one meeting for the corresponding SUB-COMMITTEE every six (6) months
      and during EXPLOITATION call at least one quarterly meeting of the
      corresponding SUB-COMMITTEE.

            


    

     

    Any of
the PARTIES may add topics to the agenda so that they can be discussed in the
corresponding meeting. Details of such matters must be provided to the OPERATOR
and the remaining PARTIES at least two (2) DAYS prior to the meeting. In all of
the SUB-COMMITTEES’ meetings the matters discussed shall be those included in
the agenda of the meeting. However, during the meeting, a topic outside the
agenda may be discussed provided that the PARTIES agree to do so
unanimously.

     

    The
SUB-COMMITTEES shall meet at any time without prior notice provided that all of
the PARTIES are present at such meeting and shall discuss any topic with the
presence and unanimous agreement from the PARTIES’ representatives.

     

    
      	
               
      

            	
              9.4.2

            	
              Any
      PARTY not represented at a SUB-COMMITTEE’s meeting may, however, issue
      their vote and send it in writing to the OPERATOR prior to the meeting.
      Additionally, each PARTY may send a power of attorney empowering any of
      the other PARTIES to vote on its
behalf.

            


    

     

    
      	
              9.5

            	
              Decisions

            


    

     

    
      	
               
      

            	
              9.5.1

            	
              MAJORITY
      VOTE

            


    

     

    Unless
otherwise stipulated in this AGREEMENT, all the decisions of the SUB-COMMITTEES
shall be adopted by MAJORITY VOTE.


    
      
         


      

      
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              9.5.2

            	
              QUALIFIED
      VOTE

            


    

     

    The
following decisions shall be adopted exclusively by QUALIFIED VOTE:

     

    
      	
               
      

            	
              ·

            	
              Commencement
      of EXPLOITATION activities.

            


    

    
      	
               
      

            	
              ·

            	
              Abandonment
      of the PROSPECT AREAS.

            


    

    
      	
               
      

            	
              ·

            	
              A
      vote as required under section 18.1
(b).

            


    

     

    
      	
               
      

            	
              9.5.3

            	
              Mandatory
      Decisions

            


    

     

    Unless
expressly stated otherwise in this AGREEMENT, any and all decisions adopted by
the SUB-COMMITTEES in accordance with this AGREEMENT shall be regarded as the
decision of, and shall be mandatory for, all the PARTIES, who shall implement
said decisions in good faith. Unless specifically required in this AGREEMENT, no
unanimous vote shall be required to adopt a SUB-COMMITTEE decision.

     

    
      	
              9.6

            	
              Venue

            


    

     

    Except as
set forth in subsection 9.7 below all meetings of the SUB-COMMITTEES shall take
place in the city of Buenos Aires unless otherwise unanimously agreed upon by
the PARTIES.

     

    
      	
              9.7

            	
              Voting without
      meeting

            


    

     

    Any
matter in connection with the JOINT OPERATIONS may be submitted for the
consideration and approval of the appropriate SUB-COMMITTEE, without holding a
meeting. Where no meeting is proposed, matters to be considered shall be
notified by the OPERATOR to the PARTIES. Within five (5) DAYS after receipt of
such notice, should any of the PARTIES require a meeting to discuss the
proposal, it shall call such meeting pursuant to the terms provided for in this
Section.

     

    Should no
meeting be called, each PARTY’S REPRESENTATIVE of the appropriate SUB-COMMITTEE
shall vote on the matter by advice in writing to each of the remaining PARTIES
within ten (10) DAYS after receiving the notice requesting the
vote.

     

    Notwithstanding
the above, where in the OPERATOR’s justified opinion, an urgent vote is required
in order to avoid a possible loss or substantial expense and the matter is not
being dealt with as provided for under Section 8.3.5, the OPERATOR shall so
indicate this in its proposal and no PARTY shall be entitled to request a
meeting of the corresponding SUB-COMMITTEE to discuss said proposal, but shall
provide notice of its voting within three (3) DAYS.


    
      
         


      

      
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    Any
decision approved by means of this procedure shall bind the PARTIES as if
approved in a meeting held by the appropriate SUB-COMMITTEE. The OPERATOR shall
notify the results of the voting immediately to all the representatives and
shall keep a record of said voting results.

     

    
      	
              9.8

            	
              Minutes of
      Meetings

            


    

     

    The
results of all votes and the text of all resolutions voted on during the
SUB-COMMITTEES meetings shall be transcribed by the OPERATOR in a draft minute
that will be prepared before the meeting is adjourned and which shall be signed
by all representatives present, who shall be entitled to receive a copy
thereof.

     

    The
OPERATOR shall prepare the final minutes of the meeting within fifteen (15) days
of the meeting and send said final minutes to the PARTIES for approval and
sign-off. If no comments are received in connection therewith, within fifteen
(15) days after receiving the minutes, they will be considered approved. The
approval or disapproval of said minutes shall not affect the decisions made at
the meeting.

     

    It is
hereby agreed that any absence, silence and/or abstention to vote shall be
counted as a negative vote.

     

    SECTION
10. SCHEDULES, BUDGETS AND PLANS.

     

    
      	
              10.1

            	
              WORK SCHEDULES AND
      BUDGETS

            


    

     

    Each
year, on the last DAY of September, the OPERATOR shall suggest and submit for
the consideration of the members of the appropriate SUB-COMMITTEE a WORK
SCHEDULE and BUDGET, which shall include all activities, investments, costs and
expenses estimated for the operations to be conducted regarding the activities
under its responsibility during the following YEAR. Such WORK SCHEDULE and
BUDGET shall be discussed, reviewed and approved by the appropriate
SUB-COMMITTEE, within forty five (45) days following its receipt. Should the
SUB-COMMITTEE fail to approve the WORK SCHEDULE and BUDGET, the OPERATOR may
conduct, as if part of an approved WORK SCHEDULE and BUDGET the operations
necessary to continue work that cannot be postponed for the proper development
of the EXPLORATION and EXPLOITATION activities.


    
      
         


      

      
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              10.2

            	
              Review and changes to Schedules
      and Budgets

            


    

     

    An
approved WORK SCHEDULE and BUDGET can be modified at any time by the appropriate
SUB-COMMITTEE under the same requirements as required for its
approval.

     

    
      	
              10.3

            	
              Delays in Approving any
      Budget:

            


    

     

    Notwithstanding
Section 10.1, should the appropriate SUB-COMMITTEE fail to approve a WORK
SCHEDULE and BUDGET, the OPERATOR may continue making any disbursement necessary
to duly comply with the obligations undertaken by the OPERATOR and to maintain
the ongoing works in full operation in the AREAS, however it must operate within
the constraints of the WORK SCHEDULE and BUDGET corresponding to the prior YEAR
with a permitted increase in expenditure based on the consumer price
index.

     

    
      	
              10.4

            	
              EXPENSES or INVESTMENT
      AUTHORIZATION

            


    

     

    The
OPERATOR shall need no additional authorizations to incur expenses or costs, or
to make investments already considered in the WORK SCHEDULE AND BUDGET as
approved by the appropriate SUB-COMMITTEE plus any expenditure as may be
required under Section 8.3.5.

     

    SECTION
11. EASEMENT AND DAMAGES.

     

    
      	
              11.1.

            	
              The
      OPERATOR shall pay, for the benefit of the UTE and with regards to the
      JOINT OPERATIONS under its responsibility and in accordance with the
      procedures herein set forth, any compensation required under the
      regulations in force for easements constituted or to be constituted,
      rights of way and/or transit, or for damages caused to the AREA owners or
      to any third parties affected, provided said damage was caused or
      originated after the EFFECTIVE
DATE.

            


    

     

    SECTION
12. TAXES.

     

    
      	
              12.1

            	
              Each
      PARTY shall be responsible for calculating and paying separately its own
      taxes, otherwise it shall be bound to indemnify and hold harmless all the
      remaining PARTIES regarding any loss, duty, claim, lawsuit or damage
      suffered by the PARTIES, or which the PARTIES may face as a result of any
      failure on the part of said PARTY to fully pay taxes in a timely
      manner.

            


    

     

    
      	
              12.2

            	
              The
      OPERATOR shall pay, for the benefit of the UTE, and pursuant to the
      provisions set forth under this AGREEMENT each and all of the Argentine
      taxes, other liens and governmental levy’s, whether national, provincial
      or municipal, validly imposed upon any JOINT PROPERTY or JOINT OPERATIONS
      under its responsibility.

            


    

     

    
      
        
        

      

      
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              12.3

            	
              After
      notifying the appropriate SUB-COMMITTEE at least twenty (20) days in
      advance and unless there is a decision from the appropriate SUB-COMMITTEE
      instructing otherwise, the OPERATOR shall have the right to object (even
      by means of the corresponding administrative and legal filings) to the
      validity or to the requirement to pay any tax, levies, or encumbrances,
      whenever said OPERATOR regards said taxes as inadmissible. The cost for
      said objection (including all legal fees) shall be borne for the benefit
      of the UTE and at the cost of the UTE. Additionally, the OPERATOR shall
      object to any payment, or to its validity, if so instructed by the
      appropriate SUB-COMMITTEE.

            


    

     

    
      	
              12.4

            	
              Should
      this AGREEMENT or any other document executed as a consequence thereof
      have to pay stamp duty, the PARTIES hereby agree to pay said duty in equal
      amounts.

            


    

     

    SECTION
13. FORCE MAJEURE.

     

    
      	
              13.1

            	
              The
      rights and obligations of the PARTIES and the OPERATOR under this
      AGREEMENT shall be suspended by reason of FORCE MAJEURE. The PARTY unable
      to fulfill its obligations due to FORCE MAJEURE shall immediately notify
      the remaining PARTIES in writing, with a reasonable level of detail of the
      events invoked, and shall employ its best efforts in order to overcome the
      FORCE MAJEURE events as soon as
possible.

            


    

     

    
      	
              13.2.

            	
              Any
      of the PARTIES whose obligations have
      been suspended pursuant to a declaration of FORCE MAJEURE, shall, by
      operation of law, be bound to comply with said obligations as soon as the
      FORCE MAJEURE event ceases to exist, without being entitled to any
      compensation by the other PARTY for the period of inactivity, and shall
      serve notice to the PARTIES
accordingly.

            


    

     

    SECTION
14. ASSIGNMENT.

     

    
      	
              14.1

            	
              ESTELAR
      shall be entitled, at any time during the term of this AGREEMENT, to the
      ASSIGNMENT of its PARTICIPATION, in whole or in part, to an
      AFFILIATE.

            


    

     

    
      	
              14.2

            	
              ESTELAR
      shall be entitled, at any time during the term of this AGREEMENT, to the
      ASSIGNMENT of its PARTICIPATION, in whole or in part, to another PARTY, or
      to any third party other than an AFFILIATE with notice to FOMICRUZ and
      unless FOMICRUZ provides written notice within 10 DAYS objecting to the
      assignment with reasons therefor, the assignment will automatically be
      approved. In all circumstances consent to such assignment shall not be
      unreasonably denied.

            


    

     

    
      
         


      

      
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    Notwithstanding
the above, ESTELAR may assign in trust or as a security, its PARTICIPATION, in
whole or in part, with the purpose of concluding a LOAN AGREEMENT or at the
request from a LENDER.

     

    
      	
              14.3

            	
              FOMICRUZ
      shall not assign its PARTICIPATION, in whole or in part, without prior
      written consent from ESTELAR.

            


    

     

    
      	
              14.4.

            	
              The
      PARTIES acknowledge that it is ESTELAR’s express and exclusive purpose to
      partner with FOMICRUZ, the PROVINCE mining state company. In the event
      that FOMICRUZ is privatized or, by any means, FOMICRUZ’ PARTICIPATION is
      ASSIGNED to, mortgaged, has a lien registered or is controlled by, in
      whole or in part, any private entity or individual and/or any state entity
      that is not 100% owned by the PROVINCE (hereinafter, the PARTICIPATION
      PRIVATIZATION DATE) without ESTELAR’s prior written consent, ESTELAR shall
      have the irrevocable option for a period of two years as from the
      PARTICIPATION PRIVATIZATION DATE to purchase all of the FOMICRUZ
      PARTICIPATION in either the CERRO MORO PROSPECT or the BAHIA LAURA
      PROSPECT for an amount equal to US$ 1 (United States one dollar) for each
      PROSPECT. Nothing in this clause will imply or be an indication of value
      in the event of expropriation of Estelar’s rights for any reason and in
      the event of such expropriation it will be entitled to claim full
      compensation.

            


    

     

    
      	
              14.5

            	
              No
      ASSIGNMENT or transfer of rights shall occur under this AGREEMENT that may
      result in the assignor or assignee having an PARTICIPATION of less than
      five percent (5%) in any PROSPECT.

            


    

     

    SECTION
15. APPLICABLE LAW.

     

    
      	
              15.1

            	
              This
      AGREEMENT shall be governed and construed by the laws of the Argentine
      Republic.

            


    

     

    
      	
              15.2

            	
              In
      the event that any disagreement, controversy or conflict arises regarding
      the interpretation or compliance of this AGREEMENT, the Parties shall
      resolve in good faith, by mutual consent, any controversy or dispute
      arising out of or in relation to this AGREEMENT and shall try to reach a
      satisfactory agreement on such controversies or
  disputes.

            


    

     

    
      	
              15.3

            	
              For
      this purpose, the PARTY that considers that a controversy has arise
      between the PARTIES with respect to this AGREEMENT, shall notify such
      controversy to the other PARTY, appointing in such notification a
      representative to participate in the negotiations that will take place
      with respect to the controversy, who shall be duly empowered to settle the
      terms of the controversy. The PARTY that receives the notification shall
      respond within ten (10) DAYS as of the reception of the notification with
      similar faculties.

            


    

     

    
      
        
        

      

      
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              15.4

            	
              The
      appointed representatives shall make their best effort in order to solve
      the controversy within thirty (30) DAYS as of the last designation
      mentioned in the last paragraph. Any exchange of documentation,
      information, or proposal of an agreement, shall be considered as being
      offered “for sole purpose of conciliation”, notwithstanding of the
      Arbitration that according with the agreed in this clause the PARTIES
      decide for the resolution of the controversy, and without infringe the
      rights and the later acts of the
PARTIES.

            


    

     

    
      	
              15.5

            	
              If
      the controversy is not resolve within the term indicated in 15.4 or the
      larger terms that jointly the PARTIES representatives agreed, any of the
      PARTIES shall exclusively carry out the controversy to Arbitration, in
      order to be decided by an Arbitral Tribunal composed by three (3) members,
      which constitution and procedure shall be governed pursuant to the Rules
      of Commercial Arbitration of the International Chamber of Commerce then in
      effect. Each PARTY shall select a member of the Arbitral Tribunal and the
      President of such Tribunal shall be jointly appointed by the selected
      arbitrors. If the selected arbitrors could not agree on the appointment of
      the third arbitror within thirty (30) DAYS as of the last designation,
      such third arbitror shall be designated by the Dean of the School of
      Engineering of the Province of San Juan in case the
      controversy refers to mining- technicalities or by the Director of the
      University of Buenos Aires for any other matters that the controversies
      refers to. The arbitration shall be conducted in the Spanish
      language in the city of Buenos Aires, Argentina, and if necessary will be
      ancillary applicable the National Civil and Commercial Procedural Coder
      (Código Procesal Civil y
      Comercial de la Nación).

            


    

    The
members of the Arbitral Tribunal shall decide the controversy “et aequo et bono”
acting as amigables
componedores. While the award is not defined, the PARTIES shall, as
reasonable as possible, continue exercise y complying with their obligations and
rights under this AGREEMENT.

    The
arbitrator’s tribunal award shall be final, binding and
enforceable.

     

    
      	
              15.6

            	
              The
      Parties submit themselves to the Federal Courts in the jurisdiction of the
      city of Río Gallegos for any other matter that exceed the scope of the
      arbitral procedure.

            


    

     

    SECTION
16. TRANSFER OF EQUIPMENT.

     

    
      	
              16.1.

            	
              Upon
      termination of this AGREEMENT, the ownership or the use, as the case may
      be, of the facilities and equipment that are part of BAHÍA LAURA JOINT PROPERTY or CERRO MORO JOINT PROPERTY shall
      be liquidated and the proceeds from such liquidation shall be distributed
      among the PARTIES on a pro rata basis in relation to
      their PARTICIPATION in the UTE with respect to each of the PROSPECTS after
      all liabilities or other obligations have been
  settled.

            


    

     

    
      
        
        

      

      
        Page 32
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    SECTION
17. CONFIDENTIALITY.

     

    
      	
              17.1

            	
              The
      PARTIES agree hereby to maintain any geological or technical data,
      including maps, reports and blueprints, programs and any other information
      in connection with the JOINT OPERATIONS as confidential and to not
      disclose said information to any third party,
  except:

            


    

     

    
      	
               
      

            	
              -

            	
              in
      the case such third party is an AFFILIATE of one of the PARTIES and the
      appropriate PARTY warrants that said AFFILIATE will keep the information
      confidential;

            


    

     

    
      	
               
      

            	
              -

            	
              in
      the case said information is required to be submitted to arbitration or
      any other legal proceeding under this
AGREEMENT;

            


    

    
      	
            	
              -

            	
              for any information
      that must be disclosed by a PARTY to a contractor, consultant, financial
      or banking institution, in connection with the JOINT OPERATIONS under this
      AGREEMENT or with the financing from any of the PARTIES, provided that
      said third party enters into a confidentiality
  agreement;

            


    

     

    
      	
               
      

            	
              -

            	
              in
      the case such information must be disclosed to a third party in order to
      negotiate an PARTICIPATION transfer, provided that such third party enters
      into a confidentiality agreement;

            


    

     

    
      	
               
      

            	
              -

            	
              in
      the case such information must be disclosed to any governmental body,
      public or judicial authority, stock exchange or regulatory entity pursuant
      to any laws or regulations to which said PARTY or its AFFILIATE may be
      subject;

            


    

     

    
      	
               
      

            	
              -

            	
              in
      the case any of the PARTIES were to disclose the information in any
      regular annual report to shareholders or governmental
    bodies.

            


    

     

    In all of
the cases above, the PARTY making the disclosure shall use its best efforts to
limit the information to be disclosed to what is strictly
necessary.

     

    The
PARTY’s obligation of confidentiality shall be an ongoing during the term of
this AGREEMENT and will continue for a period of two (2) years following to the
termination hereof or where the PARTY ceases to be a PARTY to this
AGREEMENT.

     

    
      	
              17.2

            	
              The
      PARTIES shall take all necessary measures to ensure that their employees,
      representatives, agents and subcontractors observe the same
      confidentiality obligations as set forth under this
    Section.

            


    

     

    
      
         


      

      
        Page 33
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    SECTION
18. TERMINATION AND WINDING UP.

     

    
      	
              18.1

            	
              Termination of this
      AGREEMENT

            


    

     

    This
AGREEMENT shall be terminated for the following reasons:

     

    
      	
               
      

            	
              (a)

            	
              Expiration
      of the term as set forth in Sections 1 and
  3;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Failure
      to achieve its purpose, where expressly declared by a QUALIFIED VOTE of
      both OPERATING SUB-COMMITTEES;

            


    

     

    
      	
               
      

            	
              (c)

            	
              Reduction
      to one (1) of the number of PARTIES,
      without the addition of any new party or parties within one (1) month
      after such situation occurs.

            


    

     

    SECTION
19. NOTICES – GENERAL.

     

    
      	
              19.1

            	
              Unless
      otherwise stated in this AGREEMENT, any and all notices or voting to be
      delivered as per these presents, shall be made in writing and may be
      delivered personally against acknowledgement of receipt or via facsimile
      and/or email with answer back to the corresponding address indicated below
      or to any other address that the PARTY may notify to the other PARTIES, requiring in the event of facsimile
      notice an original acknowledgement of reception of such facsimile in
      writing within three (3) days. Any notice served as stipulated above shall
      be regarded as delivered or received upon delivery (if delivered
      personally) and as received upon the first business day following the
      delivery date (if sent via
facsimile).

            


    

     

    By FOMENTO MINERO DE SANTA CRUZ SOCIEDAD DEL
ESTADO

     

    
      
        
          
            	
                    By: 

                  	 
      	 
      
	
                    Name:
      Miguel Ferro

                  
	
                    Title:  
      President

                  


          

        

      

    

     

    By ESTELAR RESOURCES LTD (ARGENTINA
BRANCH)

     

    
      
        
          	
                  By: 

                	 
      	 
      
	
                  Name:
      Matt Williams

                
	
                  Title:
      Attorney in Fact

                


        

      

    

    


    IN WITNESS WHEREOF, this
AGREEMENT is executed by the PARTIES in three (3) counterparts


    
      
         


      

      
        Page 34
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    EXHIBIT
2.28

     

    ACCOUNTING
PROCEDURE

     

    SECTION
I

     

    GENERAL
DISPOSITIONS

     

    
      	
              1.1.

            	
              Purpose

            


    

     

    
      	
               
      

            	
              1.1.1.

            	
              The
      aim of this ACCOUNTING PROCEDURE is to establish the accounting principles
      that govern the OPERATOR’S recording of all transactions including
      revenues, expenditures, investments, assets, liabilities, inventories and
      other financial data relating to JOINT OPERATIONS so that the intention of
      the PARTIES to the UTE AGREEMENT are met by the OPERATOR who should
      maintain adequate records to ensure that the PARTIES rights and
      obligations are properly recorded and that the OPERATOR is neither
      advantaged nor disadvantaged. More particularly, the OPERATOR will ensure
      that adequate separate records are maintained so that the PARTIES
      different INTERSTS in the CERRO MORO and BAHIA LAURA AREAS are properly
      recognized.

            


    

     

    
      	
               
      

            	
              1.1.2.

            	
              If
      any method or procedure established in this ACCOUNTING PROCEDURE results
      in the incorrect or unfair treatment of any PARTY or the OPERATOR, the
      PARTIES will meet and will in good faith negotiate amendments to this
      ACCOUNTING PROCEDURE or any method applied in determining NET PROCEEDS or
      any component thereof so that the intent of the UTE AGREEMENT is complied
      with. It is specifically agreed that all costs and expenses incurred for
      JOINT OPERATIONS, in accordance with the UTE AGREEMENT and/or in
      accordance with this ACCOUNTING PROCEDURE, will form part of and be
      included as expenditures allocated to JOINT OPERATIONS irrespective of
      whether or not such costs or expenditures are accepted by any government
      authority or agency. It is the PARTIES intention that there should be no
      duplication of any costs, charges, expenditures, revenues, receipts or
      credits recorded to JOINT
OPERATIONS.

            


    

     

    
      	
               
      

            	
              1.1
      3

            	
              If
      at any time the OPERATOR proposes to make a substantial change to its
      standard accounting procedures regarding JOINT OPERATIONS, it will first
      consult with the PARTIES and will obtain their approval before
      implementation, such approval cannot be unreasonably
    withheld.

            


    

     

    
      	
               
      

            	
              1.1.4

            	
              Approval
      for any changes to this ACCOUNTING PROCEDURE shall only be by MAJORITY
      VOTE and any change in the ACCOUNTING PROCEDURE will be applicable to both
      the CERRO MORO and BAHIA LAURA
AREAS.

            


    

     

    
      	
              1.2.

            	
              Conflict with the UTE
      AGREEMENT

            


    

     

    In the
event of any conflict between this ACCOUNTING PROCEDURE and the UTE AGREEMENT
the UTE AGREEMENT will prevail.

     

    
      	
              1.3.

            	
              Definitions

            


    

     

    The
definitions in Article 2 of the UTE AGREEMENT will be applicable to this
ACCOUNTING PROCEDURE and will have the same meaning when used in this procedure.
Certain terms used within this ACCOUNTING PROCEDURE are defined as
follows:

     

    
      
        
        

      

      
        Page 35
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    ACCOUNTING
RECORDS: include all documents, records including ledgers, cash books, journals
and other records, whether electronic or manual, as is required to meet any
legal requirement for the maintenance of such records in the Argentine Republic
and to give effect to the UTE AGREEMENT.

     

    ANNUAL
FINANCIAL STATEMENTS: are the special purpose financial statements prepared in
accordance with generally accepted accounting principles in the Argentine
Republic in Argentine currency together with an independent auditors report
thereto relating to JOINT OPERATIONS.

     

    FISCAL
YEAR: The 12 month period or part thereof ending on December 31 each
year.

     

    MATERIAL/MATERIALS:
are movable goods including, without restriction, equipment, new or used,
acquired and/or manufactured and supplies of any nature including chemicals or
other consumable materials to be used for JOINT OPERATIONS.

     

    NET
PROCEEDS: is the amount, calculated as set out in these ACCOUNTING PROCEDURES
for each of the CERRO MORO and BAHIA LAURA AREAS that is distributable to the
PARTIES, in proportion to their respective INTERESTS in either the CERRO MORO
AREA or BAHIA LAURA AREA.

     

    NET
INCOME: is the final net profit for the year or period ended on December 31 of
each year emerging from the Profit Loss Statement as set out in the ANNUAL
FINANCIAL STATEMENTS.

     

    
      	
              1.4.

            	
              JOINT OPERATIONS -
      Registers and conversion
rates

            


    

     

    
      	
               
      

            	
              1.4.1.

            	
              Each
      PARTY will be responsible for maintaining their own accounting records and
      complying with any and all legal and tax requirements as may be required
      by government and/or legal authorities regarding their participation in
      the UTE. The OPERATOR will use its best effort to provide the PARTIES with
      any accounting data or report that a PARTY may require to comply with all
      rules and regulations that they are subjected to by reason of them being a
      PARTY to the UTE, and the cost associated with providing such accounting
      data or report will be attributed to the JOINT
  OPERATIONS

            


    

     

    
      	
               
      

            	
              1.4.2.

            	
              The
      OPERATOR will maintain accurate records of all costs and expenses and
      other relevant records as may be required to fulfill the necessary
      financial reporting obligations so as to give effect to the intent of the
      terms and conditions of the UTE as they relate to JOINT OPERATIONS and any
      other necessary and appropriate data as may be required to record the
      financial obligations of one PARTY to the other
  PARTY.

            


    

     

    
      	
               
      

            	
              1.4.3.

            	
              The
      OPERATOR will open and keep identifiable and accurate accounting records
      to record all transactions with the
PARTIES.

            


    

     

    
      	
               
      

            	
              1.4.4.

            	
              The
      OPERATOR will maintain the ACCOUNTING RECORDS relating to JOINT OPERATIONS
      such that it will comply with accounting principles and rules generally
      accepted in the Argentine Republic and with the requirements of the UTE
      AGREEMENT

            


    

     

    
      	
               
      

            	
              1.4.5

            	
              The
      ACCOUNTING RECORDS, to be located at the OPERATOR’s registered place of
      business, will be kept in Spanish and in the current legal currency in the
      Argentine Republic In addition, the Operator will maintain adequate
      records converted to US dollars on a monthly basis, utilizing the rates of
      exchange as specified in this ACCOUNTING PROCEDURE and the AGREEMENT so
      that the PARTIES obligations to incur expenditures or repay their
      proportionate share of such expenditures as set out in the AGREEMENT is
      accurately recorded in US dollars. All transactions denominated in foreign
      currency will be converted to Argentine currency utilizing the closing
      selling rate for the DAY immediately prior to the transaction as published
      by the Banco de la Nación Argentina (“BNA”). If no such rate is published
      the rate published by the United States Federal
      Reserve (“USFR”) or the European Central Bank (“ECB”) for the applicable
      day will be used. All amounts receivable or owned in foreign currency
      relating to JOINT OPERATIONS will be converted to Argentine currency at
      the closing selling rate as published by the BNA or failing it the USFR at
      the end of every month. Nothing in this section will require or imply that
      the OPERATOR is required to convert all of the currency holdings
      attributable to JOINT OPERATIONS into Argentine
      currency.

            


    

     

    
      
         


      

      
        Page 36
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              1.4.6

            	
              The
      exchange of legal Argentine currency and any foreign currency to DOLLARS
      will be recorded at the BNA closing selling rate at the closing rate as
      published by the BNA on the day prior to the transaction. In the event that such value does
      not exist, the equivalent rate as published by the USFR or ECB will be
      used.

            


    

     

    
      	
               
      

            	
              1.4.7

            	
              Any
      gain or loss resulting from the buying or selling of necessary foreign
      currency or recognized on the conversion of any transaction denominated in
      foreign currency will be included as income or as an expense charged to
      JOINT OPERATIONS.

            


    

     

    
      	
               
      

            	
              1.4.8

            	
              The
      OPERATOR will maintain records converted to United States Dollars on a
      monthly basis utilizing the rates of exchange as specified in this
      ACCOUNTING PROCEDURE or the AGREEMENT such that the PARTIES obligations to
      incur expenditures and repay their proportionate amount of such
      expenditures are fully and accurately
recorded.

            


    

     

    
      	
              1.5.

            	
              Reports

            


    

     

    The
OPERATOR will provide the PARTIES with the following reports at the times
specified below. Any further or additional reports that may reasonably be
required by a PARTY will be provided by the OPERATOR upon request providing that
the OPERATOR will at all times be given a reasonable amount of time to complete
such additional report.

     

    
      	
               
      

            	
              1.5.1.

            	
              ANNUAL
      FINANCIAL STATEMENTS and other annual
  information

            


    

     

    The
OPERATOR will provide ANNUAL FINANCIAL STATEMENTS within 120 days of the year
end.

     

    The
OPERATOR will, upon reasonable notice, prepare any additional information that
may be required by the PARTIES to comply with any legal or other requirements in
Argentine Republic.

     

    
      	
               
      

            	
              1.5.2.

            	
              Other
      reports

            


    

     

    Any of
the PARTIES will be able to request any other reasonable information that is not
foreseen or covered in the reports noted in 1.5.1 above. Where such other
information is provided, the cost of obtaining or preparing such information
will be paid by the PARTY requesting such information or report.

     

    
      	
              1.6.

            	
              Auditing

            


    

     

    
      	
               
      

            	
              1.6.1.

            	
              The
      OPERATOR will recommend the appointment of an independent auditor for
      approval by the OPERATING COMMITTEE to conduct an annual audit of the
      JOINT OPERATIONS records and ANNUAL FINANCIAL STATEMENTS. Should the
      OPERATING COMMITTEE fail to appoint an independent auditor the OPERATOR
      will appoint the independent auditor and that appointment will be accepted
      by the PARTIES. Until the commencement of EXPLOITATION the PARTIES accept
      that the independent auditor appointed by ESTELAR will be accepted for the
      conducting of any audit
requirements.

            


    

     

    
      
        
        

      

      
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              1.6.2

            	
              Any
      PARTY will have the right upon providing ninety (90) days advance notice
      in writing to the OPERATOR, to review the ACCOUNTING RECORDS maintained by
      the OPERATOR pertaining to JOINT OPERATIONS and to have the ACOUNTING
      RECORDS audited at its own cost provided that such request is received
      within five (5) months following the end of such FISCAL YEAR. Any material
      discrepancy or error discovered will be rectified provided that the
      OPERATOR is advised of such error or discrepancy. In the event that the
      error/s or discrepancies result in an adjustment to NET INCOME exceeding
      US$250,000, the cost associated with such audit will be recorded and paid
      as part of JOINT OPERATIONS. No PARTY will have the right to review or
      audit the records after 24 months following the end of a particular FISCAL
      YEAR.

            


    

     

    
      	
               
      

            	
              1.6.3.

            	
              All
      adjustments resulting from the audit will be recorded in the JOINT
      OPERATIONS records once the OPERATOR has reviewed and agreed to such
      adjustments. Where a dispute between the auditor and the OPERATOR arises
      and such dispute is not resolved within a reasonable time such that the
      ANNUAL FINNANCIAL STATEMENTS can be completed, the auditor will refer the
      dispute to the OPERATING COMMITTEE for resolution. The PARTIES will be
      advised of any such dispute and the resolution
  thereof.

            


    

     

    
      	
              1.7.

            	
              Transactions with the
      PARTIES

            


    

     

    The
OPERATOR will maintain adequate separate accounting records which reflect
details of the following transactions with the PARTIES:

     

    
      	
              (a)

            	
              Any
      contribution of funds by the PARTIES to satisfy the requirements of the
      JOINT OPERATIONS; and

            


    

     

    
      	
              (b)

            	
              Any
      payments or distribution to the PARTIES or payments made on their
      behalf.

            


    

     

    SECTION II

     

    ATTRIBUTABLE COSTS AND
EXPENSES

     

    The
OPERATOR will record, in records maintained separately for the CERRO MORO AREA
and the BAHIA LAURA AREA, all costs and expenses related to the JOINT
OPERATIONS, These costs amongst other costs will include without restriction the
following:

     

    
      	
              2.1.

            	
              Licenses, permits,
      etc.

            


    

     

    All costs
related to the acquisition, maintenance, renewal and withdrawal of any necessary
license grants, permits, contract and/or surface rights acquired for JOINT
OPERATIONS.

     

    
      	
              2.2.

            	
              Corresponding
      salaries, journals and
costs.

            


    

     

    
      	
               
      

            	
              2.2.1.

            	
              The
      cost of temporary or permanent staff engaged in the JOINT
      OPERATIONS.

            


    

     

    
      	
               
      

            	
              2.2.2.

            	
              Such
      costs will include

            


    

     

    -    
 Salaries and wages including associated costs related to the employee’s
remuneration.

     

    -   
  Costs associated with public holidays, vacation, sick leave, and
other time off as is legally required, disability benefits, any cost of living
and other benefits, transfer benefits, educational benefits for under age
children, language courses and general training, cars provided by the company,
remote location benefits and any other habitual benefits and/or established by
collective labor collective agreements as well as the cost of any other benefits
for employees including group insurance, compulsory life insurance, work risk
insurance, health insurance, hospital staying, retirement and leave and any
other benefit plans of similar kind.


    
      
         


      

      
        Page 38
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    -   
  Expenses or costs paid in compliance with determinations imposed by any government authority for
payments related to such employees.

     

    -    
 Expenses incurred by employees which are paid or reimbursed by the
OPERATOR in compliance with applicable personnel policies for travel expenses,
relocation and cost of living expenses and any other expenses necessarily
incurred related to the employees family.

     

    -    
  Training costs incurred by the OPERATOR in compliance with any
training policy or in compliance with Argentine Laws for employees.

     

    -    
  Any other cost related to personnel incurred in compliance with any
personnel policies or contract and / or agreements entered into between the
OPERATOR and the applicable employees.

     

    
      	
               
      

            	
              2.2.3.

            	
              Where
      employees are assigned to activities other than the JOINT OPERATIONS, only
      those costs relating to JOINT OPERATIONS will be assigned according to
      timesheets or other forms of time
keeping.

            


    

     

    
      	
              2.3.

            	
              Offices, Camps and
      various facilities

            


    

     

    The cost
of establishing, maintaining and operating any office, base camp, warehouse,
house, communications system and other services and facilities by the OPERATOR
which are directly related to the JOINT OPERATIONS in Santa Cruz Province and
elsewhere. If those facilities are utilized for other operations besides JOINT
OPERATIONS, the costs of such other operations will be recovered and apportioned
by the OPERATOR for the benefit of the UTE.

     

    
      	
              2.4.

            	
              Equipment and
      facilities exclusively owned by the OPERATOR and/or its
      Affiliates

            


    

     

    The use
of equipment, facilities, and services owned by the OPERATOR, which was not
acquired for the benefit of the UTE and the cost of which was not allocated to
JOINT OPERATIONS, or its AFFILIATES will be charged at rates according to usage
and including operating costs as long as the amounts charged are comparable to
those prevailing and available from outside or third parties for suitable
equipment and facilities that comply with the specifications and requirements
for conducting JOINT OPERATIONS. Reciprocally, where property acquired for the
benefit of the UTE for use in JOINT OPERATIONS is used by the OPERATOR, or its
affiliates or any other ute or association, the usage charges will be based on
similar third party rates and charged to such entity. Prior to the engagement of
any related party or use of related party equipment or the provision of
equipment as contemplated by this section, the OPERATING COMMITTEE will approve
the terms of such engagement.

     

    
      	
              2.5.

            	
              Services

            


    

     

    
      	
               
      

            	
              2.5.1.

            	
              The
      cost of any consultant or other services and facilities provided by third
      parties or any affiliate of any PARTY used in or for JOINT OPERATIONS. The
      cost of these services, where they are provided by an affiliate of a PARTY
      will not exceed the costs of such service or facility of a similar quality
      and availability as may be obtained from third
  parties.

            


    

     

    
      	
               
      

            	
              2.5.2.

            	
              The
      cost of services provided or executed by technicians and professionals
      resident outside of the Argentine Republic provided by the OPERATOR’S
      AFFILIATES. Costs for these services will not exceed the costs available
      from un-related third parties.

            


    

     

    
      
         


      

      
        Page 39
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              2.5.3.

            	
              Services
      include, without restriction, the
following:

            


    

     

    
      	
               
      

            	
              ·

            	
              Geological
      Studies and interpretation

            


    

    
      	
               
      

            	
              ·

            	
              Seismic
      processing data

            


    

    
      	
               
      

            	
              ·

            	
              Ecological
      and environmental Engineering

            


    

    
      	
               
      

            	
              ·

            	
              Project
      Engineering

            


    

    
      	
               
      

            	
              ·

            	
              Metallurgical
      Analysis

            


    

    
      	
               
      

            	
              ·

            	
              Assaying.

            


    

    
      	
               
      

            	
              ·

            	
              Financial
      modeling

            


    

    
      
        	 	
                ·

              	
                Development
      assessment

              
	 	 	
                Marketing
      

              


      

    

     

    
      	
              2.6.

            	
              Damage and
      loss

            


    

     

    All costs
and necessary expenses incurred for repairing or for the replacement of property
acquired for the benefit of the UTE and used in JOINT OPERATIONS, or where
incurred as required to repair or replace such property pursuant to legal
agreement, due to damage and loss from fire, flood, storm, robbery, accident or
any other cause. Where such loss or damage exceeds US$100,000,  the
OPERATOR must advise the PARTIES of such loss.

     

    
      	
              2.7.

            	
              Insurance and
      Claims

            


    

     

    
      	
               
      

            	
              2.7.1

            	
              The
      cost of all premiums for insurance required by law or by the
      AGREEMENT.

            


    

     

    
      	
               
      

            	
              2.7.2

            	
              Cost
      of any premiums for other insurance required by PARTIES where such
      insurance is for the benefit of all
PARTIES.

            


    

     

    
      	
              2.8.

            	
              Legal
      Costs

            


    

     

    
      	
               
      

            	
              2.8.1.

            	
              All
      fees for legal services including general corporate services, including
      labour and contractual matters, and for the litigation or defense of any
      matter relating to the UTE or JOINT
OPERATIONS.

            


    

     

    
      	
              2.9.

            	
              Customs
      duties, taxes and royalties

            


    

     

    
      	
               
      

            	
              2.9.1

            	
              All
      types of taxes, levies, penalties interest and other charges applied by
      any competentauthority having jurisdiction relating to the UTE and the
      JOINT OPERATIONS.

            


    

     

    
      	
               
      

            	
              2.9.2

            	
              Any
      royalty payable from production to third parties. The royalty payable to
      CVSA is specifically noted and included as an expense of JOINT
      OPERATIONS.

            


    

     

    
      	
              2.10.

            	
              Indirect
      Expenses

            


    

     

    
      	
            	
              2.10.1.

            	
              While
      Estelar is the OPERATOR, the OPERATOR will attribute general expenses
      charged by its parent company for consulting and general assistance not
      foreseen in the AGREEMENT to JOINT OPERATIONS where such charges have been
      included in the BUDGET approved by the OPERATING COMMITTEE. Such charges
      may include the following among others and will be charged to JOINT
      OPERATIONS on a monthly basis:

            


    

     

    
      	
               
      

            	
              ·

            	
              Executive
      and Administrative

            


    

    
      	
               
      

            	
              ·

            	
              Treasury
      and Financing

            


    

    
      	
               
      

            	
              ·

            	
              Tax
      and Legal

            


    

    
      	
               
      

            	
              ·

            	
              Human
      Resources

            


    

    
      	
               
      

            	
              ·

            	
              Safety

            


    

    
      	
               
      

            	
              ·

            	
              Accountancy
      and Internal Control

            


    

    
      	
               
      

            	
              ·

            	
              Budgets
      and Estimates

            


    

    
      	
               
      

            	
              ·

            	
              Health
      and Safety Measures

            


    

     

    
      
         


      

      
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              ·

            	
              Communication

            


    

    
      	
               
      

            	
              ·

            	
              Data
      processing

            


    

     

    
      	
            	
              2.10.2

            	
              In
      particular any expenditure incurred for EXPLORATION will include an
      overhead allocation added to expenses of JOINT OPERATIONS and will
      calculated as follows:

            


    

     

    
      	
               
      

            	
              (i)

            	
              seventeen
      and one half percent (17.5%) of all expenditures where the expenditure is
      less than US$100,000

            


    

     

    
      	
               
      

            	
              (ii)

            	
              twelve
      and one half percent (12.5%) of all expenditures exceeding US$100,000.
      

            


    

    
      In particular all drilling costs will incur a 12.5% overhead
component.

    

     

    
      2.10.3     
Any
expenditure incurred for EXPLOITATION will include an overhead allocation added
to expenses of JOINT OPERATIONS and will be calculated as
follows:

    

     

    (i) seven
and one half percent (7.5%) of all expenditures where the expenditure is less
than US$ 100,000.

     

    
      
        	
              	
                2.10.4.

              	
                Expenditures
      used for calculating the overhead allocation will not include interest
      charges, taxes loan repayments or any royalties charged to JOINT
      OPERATIONS.

              


      

    

     

    Indirect
charges (overhead) may be modified periodically by unanimous decision of the
PARTIES where the charges are either insufficient or excessive in recovering
reasonable overhead expenditures of Estelar’s parent company.

     

    
      	
              2.
      11.

            	
              Environmental and
      Ecological Expenses

            


    

     

    All costs
related to the JOINT OPERATIONS incurred as result of governmental requirements
or regulations in compliance of environmental laws including remediation
expenditures and provisions for remediation. These expenditures include the
costs of ecological and archeological surveys and pollution control proceedings
required by applicable laws and regulations or by environmental policies of the
OPERATOR.

     

    
      	
              2.12.

            	
              Financing
      Charges

            


    

     

    All
charges such as interest, bank charges, fees, commissions and other operative
expenses related to banking operations applicable to JOINT OPERATIONS but will
specifically exclude any interest that FOMICRUZ will pay to ESTELAR pursuant to
ESTELAR funding its share of EXPLORATION or EXPLOITATION expenses.

     

    
      	
              2.13.

            	
              Other
      expenses

            


    

     

    All other
types of expenses, related to the JOINT OPERATIONS incurred by the OPERATOR in
carrying out any and all activities approved in the WORK SCHEDULES AND BUDGETS,
which are not covered elsewhere in this ACCOUNTING PROCEDURE.

     

    SECTION
III

     

    MATERIAL

     

    
      	
              3.1.

            	
              Purchase from Third
      Parties

            


    

     

    The cost
of MATERIAL purchased by the OPERATOR from third parties for use in JOINT
OPERATIONS will include the purchase price and any import tax or levies,
insurance, transport, loading and unloading fees, storage costs, costs of
acquiring any import permits, permit fees, brokerage fees and taxes less any
discounts received. The OPERATOR will purchase MATERIAL in sufficient quantity
as would be acquired by a prudent and experienced operator so that excessive
MATERIAL holdings will be avoided but that adequate quantities are held to
ensure orderly operations.

     

    
      
        
        

      

      
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              3.2.

            	
              MATERIAL provided by
      the OPERATOR or its
AFFILIATES

            


    

     

    The
OPERATOR may purchase MATERIAL from any of its AFFILIATES or utilize its own
MATERIAL as long as the cost thereof is equivalent to the cost that would be
incurred if the MATERIAL were acquired from third parties.

     

    
      	
              3.3.

            	
              MATERIAL
      disposition

            


    

     

    
      	
               
      

            	
              3.3.1

            	
              The
      OPERATOR may at any time dispose of excess MATERIAL as it deems fit except
      that where it wishes to dispose of items not included for disposal in the
      BUDGET and which were acquired at a cost exceeding US$100,000 or where the
      book (accounting value) exceeds US$50,000 it will first obtain approval
      for such disposal from the relevant
  SUB-COMMITTE.

            


    

     

    
      	
               
      

            	
              3.3.2.

            	
              Proceeds
      from the disposal of MATERIAL sold by the OPERATOR will be attributed to
      JOINT OPERATIONS of either the CERRO MORO AREA or BAHIA LAURA AREA
      respectively depending on where the cost of such MATERIAL was allocated
      upon acquisition.

            


    

     

    
      	
              3.4.

            	
              Inventories

            


    

     

    The
OPERATOR will maintain an inventory of all MATERIAL and will at least on an
annual basis conduct a physical count of such MATERIAL.

     

    SECTION
IV

     

    TAXES AND
LEVIES

     

    
      	
              4.1.

            	
              General
      Conditions

            


    

     

    The
OPERATOR will be responsible to maintain adequate records to provide any
information requested by tax authorities in compliance with legislation in the
Argentine Republic as such information may relate to JOINT
OPERATIONS.

     

    The
OPERATOR will comply with all laws including taxation laws as such affect JOINT
OPERATIONS but will not enroll the Union Transitoria de Empresas (UTE) for tax
purposes as it will take advantage of an interpretation of the tax authorities
which permits the OPERATOR to record all transactions as its own in
circumstances where only one PARTY is contributing to the UTE.

     

    
      	
              4.2.

            	
              VAT

            


    

     

    
      	
               
      

            	
              4.2.1.

            	
              Enrollment.

            


    

     

    Based on
the interpretation noted above the UTE will not register for VAT
purposes.

     

    
      	
              4.3

            	
              Registration
      demanded by the tax authority

            


    

     

    In the
event that the tax authorities require the UTE to register for VAT or any other
tax purposes the PARTIES agree to amend this ACCOUNTING PROCEDURE such that the
UTE complies with all relevant legislation and take such measures as may be
required to ensure that neither PARTY is advantaged or disadvantaged by such
requirement.


    
      
         


      

      
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    SECTION
V

     

    NET
PROCEEDS

     

    The
OPERATOR will calculate NET PROCEEDS, which is the amount that is distributable
to the PARTIES on a quarterly basis, within sixty (60) days of the end of each
quarter ending on March 31, June 30, September 30 and December 31 each year,
following the commencement of production from either the CERRO MORO AREA or
BAHIA LAURA AREA, in proportion to their respective INTEREST in the respective
AREA.

     

    It is
specifically agreed that at no time is it the intention of the PARTIES that
either the OPERATOR or any PARTY will be required to borrow or make funds
available from borrowings in order to pay a PARTY any share of NET
PROCEEDS.

     

    NET
PROCEEDS is defined and calculated as follows:

     

    Revenues
received during the applicable quarter

    
      	
              Less: 

            	
              All
      expenses paid or payable for the applicable
  quarter

            


    

    Any
amount required for working capital as set out in section
______________________

    Any
amounts required for contribution to the sinking fund
______________________________

    Any
amount required for the repayment of any loan and or interest on such
loan

    Any
shortfall in NET PROCEEDS from prior quarters

     

    
      	
              Add:

            	
              Any
      net amount received from the disposal of any MATERIAL or any other asset
      except where such MATERIAL or asset was acquired with funds provided by
      ESTELAR in which case the proceeds will be used to repay such
      amount.

            


    

     

    Any
amortization of EXPLORATION, EXPLOITATION or development expenditures will not
be included as an expense for the purposes of calculating NET
PROCEEDS.
 

    
      
         


      

      
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