**DRC
RESOURCES CORPORATION**
  
 
 
 
 
  **Afton
Copper-Gold Project**
  
 
 
 
 
 
  **PART
4**
  
 
 
 
 
 
 **CONTRACT
AGREEMENT**
 
 
  
  **CONTRACT
AGREEMENT**
  
  **THIS
AGREEMENT** made to
have effect the 23rd day of October, 2004
  **BETWEEN:**  **DRC
RESOURCES CORPORATION**
 601 - 595
Howe Street
 Vancouver,
B.C. V6C 2T5
 (herein
referred to as “the Owner”)
 
 OF THE
FIRST PART
  **AND** :
  **PROCON
MINING AND TUNNELLING LTD.**
 108 -
4664 Lougheed Highway
 Burnaby,
BC V5C 5T5
 
 (herein
referred to as “the Contractor”)
  OF THE
SECOND PART
  **WHEREAS:**
  A.
    The
      Owner requires the collaring of a decline portal, installation of an ARMCO
      culvert type portal collar, and excavation of 2,000 m (plus or minus 20%)
      of tunnel (herein referred to as “the Work”) to be carried out on the
      Afton Open Pit Site (“the Site” or “the Work Site”) near Kamloops, BC as
      described in Parts 8 and 9 hereto, the work to be done during the period
      October 15, 2004 to November 15, 2005;
  B.
    The
      Contractor desires to perform the Work and represents, warrants and
      certifies that:
  B-1
    it
      and its principals, employees, agents and subcontractors have the required
      training and qualifications to carry out the work in a sound, safe and
      workman-like manner in conformity with Schedule “A” and the other Contract
      Documents.
  B-2
    it
      has been duly incorporated under the laws of the Province of British
      Columbia, does now exist and has been engaged in the contracting business
      under its present business name for twelve
years.
  B-3
    it
      has experience in work of a nature similar in type and magnitude to the
      work.
  B-4
    as
      per verbal discussion with Ed Yurkowski on October 14, 2004, Procon have
      completed all contracts awarded to them to
date.
  B-5
    it
      has discussed the work required to be done and examined the plans and
      engineering description of the work and is fully familiar with all of the
      requirements for conduct of the work and has determined all the equipment,
      material and labour required to carry out and complete the work within the
      time limited therefor by this Contract Agreement (herein also referred to
      as “this Contract”, “the Contract”, “the Contract Documents” and “this
      Agreement”).
   DRC
Resources Corporation
 Afton
Site Work Contract
 Rev.
10/04
 2
  B-6
    it
      has by careful examination of the actual site conditions, satisfied itself
      as to the nature and location of the work, the general and local
      conditions to be encountered in the performance of the work, the
      requirements of the Contract and all other matters which can in any way
      affect the work or the cost thereof and any failure to fully investigate
      the site of the work or the foregoing conditions shall not relieve the
      Contractor from responsibility for estimating properly the difficulty or
      cost of successfully performing the work and acknowledges that neither the
      Owner, nor any of its representatives or agents, accepts any
      responsibility for any understanding created or representation made by or
      in the course of discussions, either before or after the execution of this
      Agreement.
  B-7
    all
      equipment will be new or equivalent, in good operating condition, properly
      maintained and compliant in all respects with the requirements of the
      Mines Act (*British
      Columbia*)
      and Regulations thereunder.
  B-8
    all
      material and supplies will be new and of good
quality.
  B-9
    it
      is registered and in good standing with the Workers’ Compensation Board of
      British Columbia under WCB No. 455188-AQ(017) and will, prior to
      commencement of the work, provide the Owner with a letter of good standing
      from the said Workers’ Compensation Board.
  B-10
    it
      will ensure that there is no spillage of fuel or other contaminant on the
      work site, which on completion of the work will be cleaned up to original
      condition.
  B-11
    it
      will apply for exemption from social services taxes, which shall be
      Contractor’s expense, if not applied for.
  B-12
    the
      equipment, supplies and materials quantities described in the Contract
      Documents are approximations subject to variations and no claim shall be
      made against the Owner for deficiency or overrun
  therein.
  B-13
    the
      Work shall be commenced October 23, 2004 and completed November 15, 2005,
      subject to the Owner securing required access and surface user rights, it
      being understood that start time may be deferred by the Owner for up to
      180 days in the event of difficulty or delay in securing such access and
      rights.
  B-14
    the
      work shall be performed under the direction of the Owner’s
      representative(s) from time to time named by the
Owner.
  B-15
    the
      Contractor shall not leave the work site until the work has been inspected
      and declared satisfactory by the Owner and the Mines Inspector of the
      Ministry of Energy & Mines, until which time no final payment will be
      made by the Owner.
  B-16
    it
      carries an all-risk course of construction insurance policy providing
      insurance coverage against public liability, property damage and motor
      vehicle losses and injury for not less than $5 million per occurrence as
      provided in the General Conditions hereto attached and, prior to
      commencing any of the work on the work site, the Contractor will provide
      the Owner certificate(s) of such insurance policy or policies naming the
      Owner as insured for purposes of this
Agreement.
  B-17
    it
      has available to it the skilled manpower and equipment and can react
      quickly should shotcreting of bad ground conditions or grouting of water
      inflows be required.
  DRC
Resources Corporation
 Afton
Site Work Contract
 Rev.
10/04
 3
 **THIS
AGREEMENT WITNESSES** that in
consideration of the premises and mutual covenants and undertakings herein
contained the parties agree as follows:
  1.
    This
      Contract Agreement consists of several parts, including
    the:
  1.1
    Special
      Conditions,
  1.2
    General
      Conditions,
  1.3
    Contract
      Drawings,
  1.4
    Scope
      of the Work,
  1.5
    Schedule
      “A” and the Preliminary Construction Schedule,
and
  1.6
    Specifications
      and Design Standards,
  which
shall be read as one document, the several parts of which are to be taken
together to explain each other and to make the whole consistent, and are herein
variously referred as “the Contract”, “this Contract”, “the Contract Agreement”
and “the Contract Documents”. In the event of a conflict between parts of the
Contract, the Contract Agreement shall take precedence.
  2.
    The
      Contract Documents shall constitute the entire agreement between the
      parties for the Work to be performed, and shall supercede and replace in
      their entirety all previous understandings, agreements and correspondence
      between the parties in regard to the Work whether oral or in writing and
      whether contained in the Instruction to Tenderers by the Owner, or in the
      Tender for Contract, or in additional information issued by the Owner and
      included in the Contractor’s Tender, or
elsewhere.
  3.
    The
      Contractor undertakes and covenants to perform the Work as set forth in
      the Contract Documents and to do and fulfil everything to be done and
      performed by the Contractor hereunder. The Contractor hereby contracts to
      furnish all labour, supervision, materials, supplies and equipment as
      aforesaid, and to perform all operations necessary and required to carry
      out the Work for the Owner at the Afton Open Pit Site (“the work site”)
      located within 10 kilometers of the City of Kamloops, British Columbia in
      strict conformity with the terms and conditions of this
      Agreement.
  Variations
      and exceptions to the terms hereof, if any, shall be in writing signed by
      both parties hereto. Copies of all documents forming part of this
      Agreement shall be filed in the head office of the
  Owner.
  4.
    Relying
      upon the representations and warranties and certifications of the
      Contractor and in consideration of the Contractor’s performance in
      accordance with this Agreement, the Owner agrees to pay to the Contractor
      the sum of Ten Million Eight Hundred Eleven Thousand, Sixty-six Dollars
      ($10,811,066.00) hereinafter referred to as the Contract Price, to be
      based on bi-monthly invoices to be paid within 30 days of receipt subject
      to a 55 day, 15% statutory holdback. DRC will accept a holdback bond for
      $500,000 in lieu of withholding the statutory
holdback.
   DRC
Resources Corporation
 Afton
Site Work Contract
 Rev.
10/04
 4
  PROVIDED
that, in the event the Contractor does not complete the work or performs the
same in a manner that is unsatisfactory to the Owner and/or does not pass final
inspection and approval by the Ministry of Energy & Mines, and
notwithstanding any provision to the contrary in the General Conditions, the
work shall not be deemed complete and the Contractor shall not be entitled to
receive any payment beyond that which it has been paid nor will it receive any
payment for work undertaken to correct any deficiencies.
  5.
    No
      understanding, oral agreement or conversation with any representative or
      employee of the Owner, either before or after the execution of this
      Agreement, shall affect or modify any of the terms or obligations herein
      contained. This Agreement constitutes the entire agreement between the
      parties hereto and no changes, alterations or modifications hereof shall
      be effective unless in writing and signed by the parties
      hereto.
  6.
    The
      Owner may assign the benefit of this Agreement and permit the assumption
      of its obligations hereunder to any other person, without the consent of
      the Contractor and the Contractor shall accept such other person in the
      place of the Owner under this Agreement forthwith upon notice to do so. To
      the extent that such other person becomes bound to perform the obligations
      of the Owner under this Agreement, the Owner shall without further written
      agreement be freed and relieved of liability upon such covenants and
      agreements.
  7.
    Time
      shall be of the essence of this Contract.
  8.
    This
      agreement shall be interpreted and construed in accordance with the laws
      of the Province of British Columbia and the parties expressly attorn to
      the jurisdiction of the courts in the City of Vancouver of the said
      Province.
  9.
    This
      Contract shall enure to the benefit of and be binding upon the parties
      hereto and their successors and permitted assigns. In the event any
      provision or condition of the Contract Documents be found to be or become
      illegal or unenforceable by law, such provision and condition shall be
      considered severable from the Contract Documents and the remaining
      provisions and conditions shall remain in force and be binding upon the
      parties.
  **IN
WITNESS WHEREOF** the
parties have executed this Agreement the day and year first above
written.
 
 **DRC
      RESOURCES CORPORATION**
    
    **PROCON
      MINING AND TUNNELLING LTD.**BY:
      ________________________________
    
    BY:
      _______________________________Authorized
      Signatory of the Owner
    
    Authorized
      Signatory of the Contractor________________________________
    
    _______________________________Print
      Name and Title
    
    Print
      Name and Title
   DRC
Resources Corporation
 Afton
Site Work Contract
 Rev.
10/04
 5