bancroft8k092807ex10-2.htm


    
      

      

    

    


    ELLIOT
      LAKE SOUTH PROJECT AGREEMENT

     

     

    THIS
      AGREEMENT is dated effective the 27th day of August, 2007.

     

    BETWEEN:

     

    2060014
      ONTARIO LTD.

     

    (hereinafter
      called “Owner”)

     

    AND:

     

    2146281
      ONTARIO , INC., an Ontario corporation

     

    (hereinafter
      called “2146281 Ontario”)

     

    WHEREAS:

     

    
      	
              A.

            	
              Owner
                owns certain Claims located in the Province of Ontario,
                Canada.

            


    

     

    
      	
              B.

            	
              2146281
                Ontario wishes to acquire an undivided one hundred (100%) per cent
                interest in such Claims.

            


    

     

    
      	
              C.

            	
              Owner
                is prepared to sell 2146281 Ontario an undivided one hundred (100%)
                per
                cent interest in such Claims on the terms and conditions hereinafter
                set
                forth.

            


    

     

    NOW
      THEREFORE, in consideration of the premises and the mutual obligations
      hereinafter described, and intending to be legally bound, the parties agree
      as
      follows:

     

    ARTICLE 1

    INTERPRETATION
      AND DEFINITIONS

     

    
      	
              1.1

            	
              Definitions

            


    

     

    As
      used
      in this Agreement, the following words and phrases have the following
      meanings:

     

    
      	
               

            	
              (a)

            	
              “Affiliate”
                means any person, partnership, limited liability company, joint venture,
                corporation, or other form of enterprise which controls, is controlled
                by,
                or is under common control with a party to this
                Agreement.

            


    

     

    
      	
               

            	
              (b)

            	
              “Agreement”
                means this agreement as the term is defined in Section 1.3
                hereof.

            


    

     

    
      	
               

            	
              (c)

            	
              “Force
                Majeure” means any event beyond a party’s reasonable control
                including laws which prohibit a party’s ability to comply with its
                obligations; action or inaction of civil or military authority; mining
                casualty; damage to or destruction of mine, plant or facility; fire;
                explosion; flood; insurrection; riot; labour disputes; and acts of
                God,
                but does not include a party’s inability to make any payments required
                under this Agreement.

            


    

     

     

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (d)

            	
              “Claims”
                means all mineral rights constituting the claim units marked as such
                on
                Schedule A attached to this
                Agreement.

            


    

     

    
      	
               

            	
              (e)

            	
              “Payments”
                has the meaning given that term by Section
                2.1. 

            


    

     

    
      	
               

            	
              (f)

            	
              “Purchase”
                has the meaning given that term by Section 2.1.


            


    

     

    
      	
               

            	
              (g)

            	
              “Purchase
                Period” means the period of time from the execution of this
                Agreement to the exercise, abandonment or termination of the Purchase
                in
                accordance with the terms and conditions of this
                Agreement.

            


    

     

    
      	
              1.2

            	
              Schedules

            


    

     

    The
      following schedules are attached to and form part of this
      Agreement:

     

    
      	
              Schedule A

            	
              -

            	
              List
                of Claims

            
	
              Schedule B

            	
              -

            	
              Calculation
                of NMR

            


    

     

    
      	
              1.3

            	
              Entire
                Agreement

            


    

     

    This
      agreement and the attached schedules and all properly executed amendments are
      hereinafter collectively referred to as this
“Agreement”.  This Agreement constitutes the entire
      agreement between the parties and supersedes all previous agreements and
      undertakings relating to the subject matter.  The parties acknowledge
      that there are no agreements, undertakings, representations, warranties or
      conditions collateral to this Agreement except as specifically stated otherwise
      in this Agreement.

     

    
      	
              1.4

            	
              Caption
                and Headings

            


    

     

    The
      division of this Agreement into articles and sections and the insertion of
      headings is for convenience of reference only and shall not affect the
      interpretation of this Agreement.  Any reference to a section or
      article shall be a reference to a section or article of this Agreement unless
      specifically stated otherwise.

     

    
      	
              1.5

            	
              Extended
                Meanings

            


    

     

    In
      this
      Agreement, where the context so requires or permits, the masculine gender shall
      include the feminine and neuter genders, the plural shall include the singular
      and vice versa, and the words “person” and “persons” shall include corporations,
      partnerships, and all other entities of whatever description.

    


    
      
        
          
          

        

        
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            2 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
              1.6

            	
              Currency

            


    

     

    In
      this
      Agreement all statements of and references to dollar amounts shall mean Canadian
      dollars.

     

    
      	
              1.7

            	
              Governing
                Law

            


    

     

    This
      Agreement shall be interpreted in accordance with the laws of the Province
      of
      Ontario, Canada, and the federal laws of Canada as applicable
      therein.

     

    
      	
              1.8

            	
              Severability

            


    

     

    If
      any
      provision of this Agreement is found invalid, illegal, or incapable of
      enforcement by any court of competent jurisdiction, such provision and the
      remaining provisions of the Agreement shall continue to be enforceable to the
      extent permitted by such court against any person(s) and in any circumstance(s)
      other than those to whom it has been found invalid, illegal or incapable of
      enforcement.

     

    
      	
              1.9

            	
              Amendments

            


    

     

    No
      amendments to this Agreement shall be of any force and effect unless executed
      in
      writing by all the parties to this Agreement.

     

    ARTICLE 2

    PURCHASE

     

    
      	
              2.1

            	
              Consideration

            


    

     

    Owner
      hereby agrees to sell 2146281 Ontario and 2146281 Ontario hereby agrees to
      Purchase (the “Purchase”) an undivided one hundred (100%) per
      cent interest in the Claims by making the following payments (the
“Payments”) to Owner:

     

    
      	
               

            	
              (a)

            	
              $3,750
                will be paid to Owner concurrently with the execution of this Agreement;
                and

            


    

     

    
      	
               

            	
              (b)

            	
              Considering
                that 2146281 Ontario intends to go public 375,000 common shares (the
                “Shares”) of 2146281 Ontario or whichever entity that is
                public being either 2146281 Ontario or a parent corporation will
                be issued
                to Owner on or before September 30,
                2007;

            


    

     

    
      	
              2.2

            	
              Completion
                of Purchase

            


    

     

    
      	
               

            	
              (a)

            	
              The
                Purchase shall be automatically completed and the Claims vested in
                2146281
                Ontario upon 2146281 Ontario making all the Payments set forth in
                Section
                2.1.  Upon the completion of the Purchase in accordance with
                that Section, 2146281 Ontario shall have purchased and acquired an
                undivided hundred (100%) per cent ownership interest in and to the
                Claims
                free and clear of any mortgages, liens, charges, pledges, security
                interests, encumbrances and any other claims of any description,
                but
                subject to a 3% NMR, determined and paid in accordance Schedule B
                hereto.

            


    

     

    
 

    
      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (b)

            	
              The
                3% NMR may be partially purchased (the “Buyout”) by
                2146281 Ontario at any time (as to 50% thereof – leaving Owner with an NMR
                equal to 1.5%) by 2146281 Ontario  paying to Owner
                $1,000,000.  This purchase will not affect the NMR that is
                otherwise due to Owner at the date of the
                Buyout.

            


    

     

    
      	
              2.3

            	
              Results
                of Prior Exploration Work

            


    

     

    
      	
               

            	
              (a)

            	
              Immediately
                following the execution of this Agreement, Owner shall deliver to
                2146281
                Ontario all technical data for the Claims in its possession including,
                but
                without limitation, drilling, geophysics and geological information
                held
                by Owner.

            


    

     

    
      	
               

            	
              (b)

            	
              Should
                this Agreement be terminated, for whatever reason, prior to vesting,
                then
                2146281 Ontario will return and forward to Owner copies of data and
                information received from Owner but 2146281 Ontario will not be obliged
                to
                return any Claims data otherwise acquired by 2146281 Ontario during
                the
                Option Period.

            


    

     

    
      	
              2.4

            	
              Title

            


    

     

    Within
      sixty (60) days following the completion of the Purchase pursuant to Section
      2.2, Owner will provide 2146281 Ontario with executed transfers of an undivided
      hundred (100%) percent interest in the Claims and will provide any additional
      assistance required by 2146281 Ontario or its nominee to legally record the
      transfers.

     

    ARTICLE 3

    REPRESENTATIONS
      AND WARRANTIES

     

    
      	
              3.1

            	
              Representations
                and Warranties by Owner

            


    

     

    Owner
      acknowledges, represents and warrants that:

     

    
      	
               

            	
              (a)

            	
              Owner
                has all requisite power and authority to perform its obligations
                under
                this Agreement;

            


    

     

    
      	
               

            	
              (b)

            	
              all
                necessary action has been taken by Owner to execute and allow the
                proper
                performance of the terms of this Agreement, and this Agreement constitutes
                a valid and binding obligation of Owner enforceable in accordance
                with its
                terms;

            


    

     

    
      	
               

            	
              (c)

            	
              to
                the best of Owner’s knowledge the location of each of the Claims on the
                ground conforms to the description appearing on records in the appropriate
                records office, and the Claims were properly located according to
                the laws
                of Ontario and will be in good standing for at least 180-days days
                after
                the execution of this Agreement;

            


    

     

    
 

    
      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (d)

            	
              Owner
                has not received notice of any violation of or investigation relating
                to
                any federal, provincial or local environmental or pollution law,
                regulation or ordinance with respect to the
                Claims;

            


    

     

    
      	
               

            	
              (e)

            	
              to
                the best of Owner’s knowledge there are no reclamation liabilities in
                connection with the Claims and, in particular, there are no obligations
                to
                monitor or clean up any preexisting mine sites or mine waste dumps
                or
                tailings;

            


    

     

    
      	
               

            	
              (f)

            	
              Owner’s
                interest in the Claims is free and clear of any mortgages, liens,
                charges,
                pledges, security interests, encumbrances or other claims of any
                description and, upon completion of the Purchase by 2146281 Ontario,
                2146281 Ontario will acquire an undivided one hundred (100%) interest
                in
                the Claims free and clear of any mortgages, liens, charges, pledges,
                security interests, encumbrances or other claims of any
                description;

            


    

     

    
      	
               

            	
              (g)

            	
              no
                person or other entity has any right or agreement, option, understanding,
                prior commitment or privilege capable of becoming an agreement for
                the
                purchase or acquisition from Owner of any interest in the
                Claims;

            


    

     

    
      	
               

            	
              (h)

            	
              all
                assessment work required to maintain the Claims in full force and
                effect
                has been performed as of the execution of this
                Agreement;

            


    

     

    
      	
               

            	
              (i)

            	
              there
                are no royalties or other latent interests in the Claims owing to
                any
                parties;

            


    

     

    
      	
               

            	
              (j)

            	
              none
                of the Shares have been registered under the 1933 Act, or under any
                state
                securities or “blue sky” laws of any state of the United States, and,
                unless so registered, may not be offered or sold in the United States
                or,
                directly or indirectly, to U.S. Persons, as that term is defined
                in
                Regulation S under the 1933 Act (“Regulation S”),
                except in accordance with the provisions of Regulation S, pursuant
                to an
                effective registration statement under the 1933 Act, or pursuant
                to an
                exemption from, or in a transaction not subject to, the registration
                requirements of the 1933 Act;

            


    

     

    
      	
               

            	
              (k)

            	
              the
                decision to execute this Agreement and acquire the Shares hereunder
                has
                not been based upon any oral or written representation as to fact
                or
                otherwise made by or on behalf of
                Owner;

            


    

     

    
      	
               

            	
              (l)

            	
              no
                securities commission or similar regulatory authority has reviewed
                or
                passed on the merits of the Shares;

            


    

     

    
      	
               

            	
              (m)

            	
              there
                is no government or other insurance covering the
                Shares;

            


    

     

    
      	
               

            	
              (n)

            	
              Owner
                has not acquired the Shares as a result of, and will not itself engage
                in,
                any “directed selling efforts” (as defined in Regulation S under the 1933
                Act) in the United States in respect of any of the Shares which would
                include any activities undertaken for the purpose of, or that could
                reasonably be expected to have the effect of, conditioning the market
                in
                the United States for the resale of any of the Shares; provided,
                however,
                that Owner may sell or otherwise dispose of any of the Shares pursuant
                to
                registration thereof under the 1933 Act and any applicable state
                securities laws or under an exemption from such registration
                requirements;

            


    

     

    
 

    
      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (o)

            	
              no
                representation has been made to Owner that any of the Shares will
                become
                listed on any stock exchange or automated dealer quotation system,
                except
                that certain market makers may maintain a quotation for the parent
                corporation’s shares of common stock on the NASD Inc.’s Over the Counter
                Bulletin Board;

            


    

     

    
      	
               

            	
              (p)

            	
              Owner
                will refuse to register any transfer of the Shares not made in accordance
                with the provisions of Regulation S, pursuant to an effective registration
                statement under the 1933 Act or pursuant to an available exemption
                from
                the registration requirements of the 1933
                Act;

            


    

     

    
      	
               

            	
              (q)

            	
              the
                statutory and regulatory basis for the exemption claimed for the
                offer
                Shares, although in technical compliance with Regulation S, would
                not be
                available if the offering is part of a plan or scheme to evade the
                registration provisions of the 1933
                Act;

            


    

     

    
      	
               

            	
              (r)

            	
              Owner
                has been advised to consult Owner’s own legal, tax and other advisors with
                respect to the merits and risks of an investment in the Shares and
                with
                respect to applicable resale restrictions, and the
                Owner is solely responsible (and 2146281 Ontario is
                not in any way responsible) for compliance
                with:

            


    

     

    
      	
               

            	
              (i)

            	
              any
                applicable laws of the jurisdiction in which Owner is resident in
                connection with the distribution of the Shares hereunder,
                and

            


    

     

    
      	
               

            	
              (ii)

            	
              applicable
                resale restrictions;

            


    

     

    
      	
               

            	
              (s)

            	
              Owner
                is not a U.S. Person;

            


    

     

    
      	
               

            	
              (t)

            	
              Owner
                is not acquiring the Shares for the account or benefit of, directly
                or
                indirectly, any U.S. Person;

            


    

     

    
      	
               

            	
              (u)

            	
              Owner
                is acquiring the Shares for investment only and not with a view to
                resale
                or distribution and, in particular, Owner has no intention to distribute
                either directly or indirectly any of the Shares in the United States
                or to
                U.S. Persons;

            


    

     

    
      	
               

            	
              (v)

            	
              Owner
                is outside the United States when receiving and executing this
                Subscription Agreement and is acquiring the Shares as principal for
                its
                own account, for investment purposes only, and not with a view to,
                or for,
                resale, distribution or fractionalisation thereof, in whole or in
                part,
                and no other person has a direct or indirect beneficial interest
                in such
                Shares;

            


    

     

    
      	
               

            	
              (w)

            	
              Owner
                acknowledges that it has not acquired the Shares as a result of,
                and will
                not engage in, any “directed selling efforts” (as defined in
                Regulation  S under the 1933 Act) in the United States in respect of
                any of the Shares which would include any activities undertaken for
                the
                purpose of, or that could reasonably be expected to have the effect
                of,
                conditioning the market in the United States for the resale of any
                of the
                Shares; provided, however, that the Owner may sell or otherwise dispose
                of
                any of the Shares pursuant to registration of any of the Shares pursuant
                to the 1933 Act and any applicable state securities laws or under
                an
                exemption from such registration requirements and as otherwise provided
                herein;

            


    

     

    
 

    
      
        
          
          

        

        
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            6 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (x)

            	
              Owner
                is not aware of any advertisement of any of the Shares;
                and

            


    

     

    
      	
               

            	
              (y)

            	
              no
                person has made to Owner any written or oral
                representations:

            


    

     

    
      	
               

            	
              (i)

            	
              that
                any person will resell or repurchase any of the
                Shares;

            


    

     

    
      	
               

            	
              (ii)

            	
              that
                any person will refund the purchase price of any of the
                Shares;

            


    

     

    
      	
               

            	
              (iii)

            	
              as
                to the future price or value of any of the Shares;
                or

            


    

     

    
      	
               

            	
              (z)

            	
              that
                any of the Shares will be listed and posted for trading on any stock
                exchange or automated dealer quotation system or that application
                has been
                made to list and post any of the Shares of 2146281 Ontario on any
                stock
                exchange or automated dealer quotation
                system.

            


    

     

    
      	
              3.2

            	
              Survival

            


    

     

    Owner
      acknowledges that 2146281 Ontario is relying on the representations and
      warranties contained in Section 3.1 in entering into this Agreement and that
      such representations and warranties are continuing and survive the execution
      of
      this Agreement.

     

    
      	
              3.3

            	
              Representations
                and Warranties by 2146281
                Ontario

            


    

     

    2146281
      Ontario represents and warrants that:

     

    
      	
               

            	
              (a)

            	
              it
                has been duly incorporated and is a validly subsisting corporation
                under
                the laws of the State of Nevada and has all corporate power and authority
                to perform its obligations under this Agreement;
                and

            


    

     

    
      	
               

            	
              (b)

            	
              all
                necessary corporate action has been taken by 2146281 Ontario to authorize
                the execution, delivery and performance of this Agreement, and this
                Agreement constitutes a valid and binding obligation of 2146281 Ontario
                enforceable in accordance with its
                terms.

            


    

     

    
      	
              3.4

            	
              Indemnity

            


    

     

    Each
      party will indemnify and save the other party and its directors, officers,
      employees, agents, representatives, subcontractors and Affiliates harmless
      from
      all losses, damages, costs, actions, and suits arising out of or in connection
      with any breach by that party of any representation,  warranty,
      covenant or agreement contained in this Agreement. This indemnity shall survive
      the termination of this Agreement.

     

    


    
      
        
          
          

        

        
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            7 -

          
            

          

        

        
          
          

        

      

    

     

    ARTICLE 4

    EXPLORATION
      AND DEVELOPMENT ACTIVITIES

     

    
      	
              4.1

            	
              Right
                to Explore and Develop

            


    

     

    Owner
      grants to 2146281 Ontario, its employees, directors, officers, agents,
      representatives and contractors, the exclusive right to enter upon the property
      comprising the Claims for the purpose of exploration, development, mining and
      such other operations as 2146281 Ontario considers necessary during the Purchase
      Period, the nature, manner and extent of which operations will be in 2146281
      Ontario’s sole discretion.

     

    
      	
              4.2

            	
              Conduct
                of Exploration and Development
                Work

            


    

     

    2146281
      Ontario shall perform its exploration and development work on the Property
      comprising the Claims in accordance with good mining practice and shall comply
      with all applicable laws and regulations.

     

    
      	
              4.3

            	
              Installation
                of Equipment

            


    

     

    2146281
      Ontario may install, maintain, replace and remove any and all mining machinery,
      equipment, tools, and facilities which it may desire to use in connection with
      its exploration and development activities on the property comprising the
      Claims.  Upon termination of this Agreement for any reason other than
      by 2146281 Ontario having completed the Purchase, 2146281 Ontario shall within
      a
      period of six (6) months following such termination remove its equipment at
      its
      sole cost and expense from the Claims, having Owner’s permission to enter onto
      the property comprising the Claims for such purpose.

     

    ARTICLE 5

    ASSIGNMENTS

     

    
      	
              5.1

            	
              Assignments

            


    

     

    2146281
      Ontario shall be entitled to assign its rights and obligations under this
      Agreement without the prior written consent of Owner.

     

    ARTICLE 6

    TERMINATION

     

    
      	
              6.1

            	
              2146281
                Ontario’s Right to
                Terminate

            


    

     

    2146281
      Ontario shall have the right to terminate this Agreement and its interest in
      the
      Claims at any time during the Purchase Period upon written notice to the Owner
      thirty (30) days prior to the contemplated termination date.

     

    
 

    
      
        
          
          

        

        
          -
            8 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
              6.2

            	
              Termination
                for Default

            


    

     

    If
      at any
      time during the Purchase Period, 2146281 Ontario fails to duly pay or cure
      any
      default in the performance of any obligation of this Agreement within a period
      of thirty (30) days after receipt of a default notice from Owner, Owner may
      terminate the Purchase.  Exercise of such right by Owner shall be
      without prejudice to any other rights or remedies Owner may have at law or
      in
      equity as a result of such default of this Agreement by 2146281
      Ontario.

     

    ARTICLE 7

    FORCE
      MAJEURE

     

    
      	
              7.1

            	
              Suspension
                of Obligation

            


    

     

    If
      2146281 Ontario is prevented by Force Majeure from timely performance of any
      of
      its obligations under this Agreement (other than the payment of any of the
      Purchase Payments), such failure shall be excused and the period for performance
      and the Purchase Period shall be extended for an additional period of time
      equal
      to the duration of such Force Majeure.  Upon the occurrence and upon
      the termination of a Force Majeure, 2146281 Ontario shall promptly notify Owner
      in writing.  2146281 Ontario shall use reasonable efforts to remedy
      any Force Majeure, but shall not hereunder be obligated to contest the validity
      of any law or regulation, nor any action or inaction of any civil or military
      authority.

     

    ARTICLE 8

    MISCELLANEOUS

     

    
      	
              8.1

            	
              Notices

            


    

     

    Any
      notice under this Agreement will be given in writing, by delivery in person
      to a
      named representative or by mail or facsimile, properly addressed to each
      party.  A notice given will be deemed given only when received by the
      party to whom such notice is directed; except that any notice given by facsimile
      properly addressed to the party, to whom given, shall be deemed given to and
      received by the party, to whom directed, 48 hours after such notice is
      successfully faxed or ten days after it is mailed, provided there is no postal
      disruption at the time.

     

    Each
      party’s address will be the following until such party specifies another address
      by written notice:

     

    To
      Owner:

     

    2060014
      ONTARIO LTD.

    1390
      Government Road North

    Timmins,
      Ontario, Canada P4N 7C3

     

    Tel.:                                               
      

    Facsimile:                                       
      

     

    Attention: 
                                           


    


    
      
        
          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

    

     

    To
      2146281 Ontario:

     

    2146281
      Ontario Inc.

    c/o
      Clark
      Wilson LLP

    HSBC
      Building

    800
–
885
      West Georgia Street

    Vancouver,
      B.C., V6C 3H1

    Canada

     

    Tel  (604)
      687-5700

    Fax
      (604)
      687-6314

     

    Attention:
      William L. Macdonald

     

    
      	
              8.2

            	
              Area
                of Influence

            


    

     

    Owner
      agrees that there shall be an area of influence (the “Area of
      Influence”) respecting any additional claims staked or recorded by
      Owner which are contiguous to the Claims and any such claims will fall under
      the
      terms of this Agreement.

     

    
      	
              8.3

            	
              Relationship
                of Parties

            


    

     

    This
      Agreement is not intended to create any partnership or agency relationship
      between the parties or fiduciary obligations of any description, and this
      Agreement shall not be construed so as to render the parties liable as partners
      or as creating a partnership, and no party shall be or shall be deemed to be,
      or
      shall hold itself out to be an agent of any other party.

     

    
      	
              8.4

            	
              Successors
                and Assigns

            


    

     

    This
      Agreement shall be binding upon and inure to the benefit of the respective
      successors and permitted assigns of the parties.

     

    
      	
              8.5

            	
              Regulatory
                Approval

            


    

     

    This
      Agreement and the obligations of 2146281 Ontario hereunder are subject to
      regulatory approval, as applicable.

     

    
      	
              8.6

            	
              Prior
                Agreements

            


    

     

    The
      Agreement contains the entire agreement and understanding of the parties and
      replaces all prior agreements bearing on the subject matter hereof.

    


    
      
        
          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

    

     

    
      	
              8.7

            	
              Counterparts

            


    

     

    This
      Agreement may be executed in counterparts, all of which taken together shall
      constitute one and the same instrument and any of the parties hereto may execute
      this Agreement by signing any such counterpart.

     

    IN
      WITNESS WHEREOF the parties make this Agreement effective as of the
      date first above written.

     

     

    2060014
      ONTARIO LTD.

     

    


    Per:       /s/
      Steve Anderson

    Authorized
      Signatory

     

     

    2146281
      ONTARIO INC.

     

     

    Per:       /s/
      Paul Leslie Hammond

    Paul
      Leslie Hammond,
      President

     

    


     

    


     

    


     

    


    


    
      
        
          
          

        

        
          -
            11 -

          
            

          

        

        
          
          

        

      

    

     

    Schedule A

     

    to

     

    ELLIOT
      LAKE SOUTH PROJECT AGREEMENT

     

    List
      of Claims

     

    Mining
      Claims Representing 30 units (Sault St. Marie Mining Division in Long Township,
      Ontario,
      Canada)

     

    4212575
      (8 units)

    4212576
      (2 units)

    4212577
      (16 units)

    4212578
      (4 units)

     

    


     

    


     

     

     

     

     

     

     

     

     

     

    
 

     

    


    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULE B

     

    to

     

    ELLIOTT
      LAKE AGREEMENT

     

    Net
      Mineral Royalty

     

    
      	
              1.

            	
              Definitions

            


    

     

    Where
      used herein:

     

    
      	
               

            	
              (a)

            	
              “Agreement”
                means the agreement to which this schedule is
                attached.

            


    

     

    
      	
               

            	
              (b)

            	
              “Claims”
                means those mineral claims set forth in Schedule A to the
                Agreement.

            


    

     

    
      	
               

            	
              (c)

            	
              “Fiscal
                Period” means a three month period ending on the last day of
                March, June, September and December of each calendar
                year;

            


    

     

    
      	
               

            	
              (d)

            	
              “Net
                Mineral Royalty” or “NMR” means the Revenue
                received by 2146281 Ontario from the sale of Product from mining
                operations on the Claims.

            


    

     

    
      	
               

            	
              (e)

            	
              “Ore”
                means any material containing a mineral or minerals of commercial
                economic
                value mined from the Claims;

            


    

     

    
      	
               

            	
              (f)

            	
              “Product”
                means Ore mined from the Claims and any concentrates or other materials
                or
                products derived therefrom; provided that if any such Ore, concentrates
                or
                other materials or products are further treated as part of the mining
                operation in respect of the Claims, such Ore, concentrates or other
                materials or products shall not be considered to be
                “Product” until after they have been so
                treated.

            


    

     

    
      	
               

            	
              (g)

            	
              “Revenue”
                means gross revenues during each Fiscal Period received by the Royalty
                Payer from the sale of Product by the Royalty Payer to the smelter,
                refiner or other purchaser, plus any bonuses and subsidies less all
                penalties, umpire assaying, assaying, transportation costs from mine
                site,
                sampling charges, and insurance costs, whether deducted by such purchaser
                or otherwise paid or incurred by Royalty Payer.  Where revenue
                otherwise to be included under this subsection is received by Royalty
                Payer in a transaction with a party with whom it is not dealing at
                arm’s
                length, the revenue to be included shall be based on the fair market
                value
                under the circumstances and at the time of the
                transaction.

            


    

     

    
      	
               

            	
              (h)

            	
              “Royalty
                Interest” means the NMR payable to Royalty Holder pursuant to the
                Agreement;

            


    

     

    
      	
               

            	
              (i)

            	
              “Royalty
                Holder” means “Owner”, as defined in the
                Agreement, his heirs, executors and
                assigns;

            


    

     

    
 

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (j)

            	
              “Royalty
                Payer” means “2146281 Ontario”, as defined in
                the Agreement, its successors and
                assigns.

            


    

     

    Capitalized
      terms which are not specifically defined in this Schedule shall have the meaning
      given to them in the Agreement.

     

    
      	
              2.

            	
              Net
                Mineral Royalty

            


    

     

    For
      each
      Fiscal Period, Royalty Payer shall pay Royalty Holder the Royalty Interest
      specified by the Agreement, calculated and paid in accordance with this
      Schedule.

     

    
      	
              3.

            	
              Calculation
                of Net Mineral Royalty

            


    

     

    The
      NMR
      shall be computed at the end of each Fiscal Quarter.  On or before the
      last day of the first month following each Fiscal Quarter, a statement shall
      be
      furnished setting forth in reasonable detail the computation of the NMR for
      the
      previous Fiscal Quarter and the Royalty Interest due to the Royalty Holder,
      if
      any.  Payment for the Royalty Interest due, if any, shall be enclosed
      with such statement.

     

    
      	
              4.

            	
              Audit

            


    

     

    The
      Royalty Holder, upon written notice to the Royalty Payer shall have the right
      to
      have an independent firm of chartered accountants audit the records that relate
      to the calculation of the Royalty Interest within twenty-four (24) months after
      receipt of each payment described in this Schedule.

     

    The
      Royalty Holder shall be deemed to have waived any right it may have had to
      object to a payment made for any calendar year unless it provides notice in
      writing of such an objection within twenty-four (24) months after receipt of
      each payment.  If the parties are unable to resolve any such dispute
      within sixty (60) days after receipt of such notice, the dispute shall be
      resolved by arbitration.

     

    
      	
              5.

            	
              Commingling
                of Ore

            


    

     

    Before
      any Products from the Claims are commingled with ores and minerals from other
      properties, the Products from the Claims shall be measured and sampled in
      accordance with sound mining and metallurgical practices for moisture, metal,
      commercial minerals and other appropriate content.  Representative
      samples of the Products shall be retained by the Royalty Payer and assays
      (including penalty substances) and other appropriate analyses of these samples
      shall be made before commingling to determine metal, commercial minerals and
      other appropriate content.  Detailed records shall be kept by Royalty
      Payer showing measures, moisture, assays of metal, commercial and other
      appropriate content and penalty substances, and gross metal content of the
      Products.  From this information, Royalty Payer shall determine the
      amount payable to Royalty Holder from Products from the Claims commingled with
      ores and minerals from other properties.