Securities Purchase Agreement


    Exhibit
      10.1

    
 

    The
      securities sold hereunder have been issued pursuant to an exemption from
      registration under the Securities Act of 1933, as amended, pursuant to
      Regulation S thereunder. The securities sold hereunder cannot be transferred,
      offered, or sold in the United States or to U.S. Persons (as that term is
      defined in Regulation S) except pursuant to registration under the Securities
      Act of 1933, or pursuant to an available exemption from
      registration.

    


    


    SECURITIES
      PURCHASE AGREEMENT

    


    


    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of August
      3,
      2006
      among Bullion River Gold Corp., a Nevada corporation (the “Company”),
      and
      Elton Participation Corp., a British Virgin Islands corporation (including
      its
      successors and assigns, a “Purchaser” and collectively the “Purchasers”).

    


    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Regulation S of the Securities Act of 1933, as amended (the “Securities
      Act”),
      the
      Company desires to issue and sell to the Purchaser, and the Purchaser, severally
      and not jointly, desires to purchase from the Company, securities of the Company
      as more fully described in this Agreement.

    


    NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and the Purchaser agree as
      follows:

    


    ARTICLE
      I -DEFINITIONS

    


    1.1
      Definitions.
      In
      addition to the terms defined elsewhere in this Agreement: (a) capitalized
      terms
      that are not otherwise defined herein have the meanings given to such terms
      in
      the Debentures (as defined herein), and (b) the following terms have the
      meanings indicated in this Section 1.1:

    


    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

    


    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to Section
      2.1.

    


    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

    


    “Commission”
means
      the Securities and Exchange Commission.

    


    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any other
      class
      of securities into which such securities may hereafter have been reclassified
      or
      changed into.

    


    “Common
      Stock Equivalents”
means
      any securities of the Company or the Subsidiaries (excluding any securities
      purchasable or issuable pursuant to this Agreement), which would entitle the
      holder thereof to acquire at any time Common Stock, including, without
      limitation, any debt, preferred stock, rights, options, warrants or other
      instrument that is at any time convertible into or exercisable or exchangeable
      for, or otherwise entitles the holder thereof to receive, Common
      Stock.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Debentures”
means,
      the 10% Secured Convertible Debentures due, subject to the terms therein, on
      August 3, 2008, issued by the Company to the Purchasers hereunder, in the form
      of Exhibit
      A.

    


    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

    


    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    


    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      by a
      majority of the non-employee members of the Board of Directors of the Company
      or
      a majority of the members of a committee of non-employee directors established
      for such purpose, (b) securities upon the exercise or exchange of or conversion
      of any Securities issued hereunder and/or other securities exercisable or
      exchangeable for or convertible into shares of Common Stock issued and
      outstanding on the date of this Agreement, provided that such securities have
      not been amended since the date of this Agreement to increase the number of
      such
      securities or to decrease the exercise, exchange or conversion price of any
      such
      securities, (c) securities issued upon the conversion of the Debentures,
      provided that the terms of such Debentures shall not have been amended since
      the
      date of this Agreement to reduce the conversion price below $0.05 (subject
      to
      adjustment for forward and reverse stock splits, recapitalizations and the
      like)
      and (d) securities issued pursuant to acquisitions or strategic transactions
      approved by a majority of the disinterested directors, provided that (i) any
      such issuance shall only be to a Person which is, itself or through its
      subsidiaries, an operating company in a business synergistic with the business
      of the Company and in which the Company receives benefits in addition to the
      investment of funds, but shall not include a transaction in which the Company
      is
      issuing securities primarily for the purpose of raising capital or to an entity
      whose primary business is investing in securities and (ii) no registration
      rights shall be granted in connection with such issuance.

    


    “French
      Gulch” means French Gulch (Nevada) Mining Corp., a Nevada
      corporation.

    


    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction.

    


    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b).

    


    “Maximum
      Rate”
shall
      have the meaning ascribed to such term in Section 5.15.

    


    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

    


    “Pledge
      Agreement”
      means
      the Pledge Agreement in the form of the attached Exhibit C.

    


    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened.

    


    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

    


    
      
        
        

      

      
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    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchasers, in the form of Exhibit
      D
      attached
      hereto.

    


    “Regulation
      S”
means
      Regulation S promulgated by the Commission pursuant to the Securities Act,
      as
      such Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.

    


    “Securities”
means
      the Debentures, the Underlying Shares, the Warrants and the Warrant
      Shares.

    


    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

    


    “Short
      Sales”
shall
      include all “short sales” as defined in Rule 200 of Regulation SHO under the
      Exchange Act (but shall not be deemed to include the location and/or reservation
      of borrowable shares of Common Stock).

    


    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Debentures purchased
      hereunder as specified below such Purchaser’s name on the signature page of this
      Agreement and next to the heading “Subscription Amount”, in United States
      Dollars and in immediately available funds.

    


    “Subsidiary”
means
      any subsidiary of the Company.

    


    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

    


    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: OTC Bulletin Board, the Nasdaq Capital
      Market, the American Stock Exchange, the New York Stock Exchange or the Nasdaq
      National Market. 

    


    “Transaction
      Documents”
means
      this Agreement, the Debentures, the Warrants,
      the
      Pledge Agreement,
      and any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder.

    


    “Underlying
      Shares”
means
      the shares of Common Stock issued and issuable upon conversion of the Debentures
      and issued and issuable in lieu of the cash payment of interest on the
      Debentures in accordance with the terms of the Debentures.

    


    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time); (b)  if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
      are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a
      similar organization or agency succeeding to its functions of reporting prices),
      the most recent bid price per share of the Common Stock so reported; or
      (d) in all other cases, the fair market value of a share of Common Stock as
      determined by an independent appraiser selected in good faith by the Holder
      and
      reasonably acceptable to the Company, the fees and expenses of which shall
      be
      paid by the Company.

     

    
      
        
        

      

      
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    “Warrants”
      means
      the Common Stock Purchase Warrants in the form of the attached Exhibit
      B.

     

    “Warrant
      Shares”
      means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    


    ARTICLE
      II - PURCHASE AND SALE

    


    2.1 Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and the Purchaser agrees to purchase
      $2,000,000 in principal amount of the Debentures. The Purchaser shall deliver
      to
      the Company via wire transfer or a certified check immediately available funds
      equal to the Subscription Amount and the Company shall deliver to the Purchaser
      the Debenture as determined pursuant to Section 2.2(a) issuable at the Closing.
      Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the
      Closing shall occur at the offices of the Company, or such other location as
      the
      parties shall mutually agree.

    


    2.2 Deliveries.

    


    (a) On
      the
      Closing Date, the Company shall deliver or cause to be delivered to the
      Purchaser the following:

    


    (i) this
      Agreement duly executed by the Company;

    


    (ii) a
      Debenture duly
      executed by the Company with
      a
      principal amount equal to such Purchaser’s Subscription Amount, registered in
      the name of such Purchaser;

    


    (iii) the
      Common
      Stock Purchase Warrant,
      duly
      executed by the Company
      in the
      form of Exhibit B attached hereto;
      

    


    (iv) the
      Pledge Agreement, duly executed by the Company, in the form of Exhibit C
      attached hereto, and the certificates representing the Pledged Stock
      thereunder;
      and


    


    (v)
      the
      Registration Rights Agreement duly executed by the Company.

    


    (b) On
      the
      Closing Date, the Purchaser shall deliver or cause to be delivered to the
      Company the following:

    


    (i) this
      Agreement duly executed by such Purchaser; 

    


    (ii) the
      Registration Rights Agreement duly executed by such Purchaser; and

    


    (ii) such
      Purchaser’s Subscription Amount by wire transfer to the account as specified in
      writing by the Company

    


    2.3 Closing
      Conditions.

    


    (a) The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

    


    
      
        
        

      

      
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    (i) the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained herein;

    


    (ii) all
      obligations, covenants and agreements of the Purchasers required to be performed
      at or prior to the Closing Date shall have been performed; and

    


    (iii) the
      delivery by the Purchasers of the items set forth in Section 2.2(b) of this
      Agreement.

    


    (b) The
      respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being met:

    


    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

    


    (ii) all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date, as applicable, shall have been
      performed;

    


    (iii) the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; and

    


    (iv) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof.

    


    ARTICLE
      III- REPRESENTATIONS AND WARRANTIES

    


    3.1 Representations
      and Warranties of the Company.
      The
      Company hereby makes the representations and warranties set forth below to
      the
      Purchaser.

    


    (a) Subsidiaries.
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities. 

    


    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

    


    
      
        
        

      

      
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    (c) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      action is required by the Company, its board of directors or its stockholders
      in
      connection therewith other than in connection with the Required Approvals.
      Each
      Transaction Document has been (or upon delivery will have been) duly executed
      by
      the Company and, when delivered in accordance with the terms hereof and thereof,
      will constitute the valid and binding obligation of the Company enforceable
      against the Company in accordance with its terms except (i) as limited by
      applicable bankruptcy, insolvency, reorganization, moratorium and other laws
      of
      general application affecting enforcement of creditors’ rights generally, (ii)
      as limited by laws relating to the availability of specific performance,
      injunctive relief or other equitable remedies, and (iii) insofar as
      indemnification and contribution provisions may be limited by applicable law
      .

    


    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the other transactions contemplated
      hereby and thereby do not and will not: (i) conflict with or violate any
      provision of the Company’s or any Subsidiary’s certificate or articles of
      incorporation, bylaws or other organizational or charter documents, or (ii)
      conflict with, or constitute a default (or an event that with notice or lapse
      of
      time or both would become a default) under, result in the creation of any Lien
      upon any of the properties or assets of the Company or any Subsidiary, or give
      to others any rights of termination, amendment, acceleration or cancellation
      (with or without notice, lapse of time or both) of, any agreement, credit
      facility, debt or other instrument (evidencing a Company or Subsidiary debt
      or
      otherwise) or other understanding to which the Company or any Subsidiary is
      a
      party or by which any property or asset of the Company or any Subsidiary is
      bound or affected, or (iii) subject to the Required Approvals, conflict with
      or
      result in a violation of any law, rule, regulation, order, judgment, injunction,
      decree or other restriction of any court or governmental authority to which
      the
      Company or a Subsidiary is subject (including federal and state securities
      laws
      and regulations), or by which any property or asset of the Company or a
      Subsidiary is bound or affected; except in the case of each of clauses (ii)
      and
      (iii), such as could not have or reasonably be expected to result in a Material
      Adverse Effect. 

    


    (e) Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Form 8-K
      promulgated under the Exchange Act and (ii) the filing with the Commission
      of
      the Registration Statement, (collectively, the “Required
      Approvals”).

    


    (f) Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company
      other
      than restrictions on transfer provided for in the Transaction Documents. The
      Underlying Shares, when issued in accordance with the terms of the Transaction
      Documents, will be validly issued, fully paid and nonassessable, free and clear
      of all Liens imposed by the Company. The Company has reserved from its duly
      authorized capital stock a number of shares of Common Stock for issuance of
      the
      Underlying Shares.

    


    
      
        
        

      

      
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    (g) Capitalization.
      The
      capitalization of the Company is as set forth in its most recently filed
      periodic
      reports under the Exchange Act. The Company has not issued any capital stock
      since its most recently filed periodic report under the Exchange Act, except
      as
      specified in Schedule 3.1(g) and other than pursuant to the exercise of employee
      stock options under the Company’s stock option plans, exercise of options by
      consultants, the issuance of shares of Common Stock to employees under
      employment agreements or pursuant to the Company’s employee stock purchase plan
      and pursuant to the conversion or exercise of outstanding Common Stock
      Equivalents. All of the outstanding shares of capital stock of the Company
      are
      validly issued, fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, and none of such outstanding shares
      was issued in violation of any preemptive rights or similar rights to subscribe
      for or purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required for
      the
      issuance and sale of the Securities. There are no stockholders agreements,
      voting agreements or other similar agreements with respect to the Company’s
      capital stock to which the Company is a party or, to the knowledge of the
      Company, between or among any of the Company’s stockholders. 

    


    The
      shares of Common Stock currently issuable upon conversion of the Debentures
      and
      the Warrant Shares constitute two and seventy eight one-hundredth percent (2.78
      %) and two and seventy eight one-hundredth percent (2.78 %), respectively,
      of
      the fully-diluted equity capital of the Company (assuming the grant of all
      shares authorized for grant and issuance under the Company’s incentive plans and
      the exercise thereof).

    


    (h) Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Securities, will not be or be an Affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as amended.
      The Company shall conduct its business in a manner so that it will not become
      subject to the Investment Company Act.

    


    (i) Disclosure.
      The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any of the Purchasers or their agents or counsel with any information
      that constitutes or might constitute material, nonpublic information. The
      Company understands and confirms that the Purchasers will rely on the foregoing
      representations and covenants in effecting transactions in securities of the
      Company. All disclosure provided to the Purchasers regarding the Company, its
      business and the transactions contemplated hereby furnished by or on behalf
      of
      the Company with respect to the representations
      and warranties
      made
      herein are true and do not contain any untrue statement of a material fact
      or
      omit to state any material fact necessary in order to make the statements made
      therein, in light of the circumstances under which they were made, not
      misleading
      and to
      the best knowledge, after due inquiry, of its directors and officers.
       

    


    (j) General
      Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities
      by any
      form of general solicitation or general advertising. The Company has offered
      the
Securities
      for sale
      only to the Purchasers and certain other “accredited investors” within the
      meaning of Rule 501 under the Securities Act.

    


    (k)
       Material
      Changes or Liabilities.
      Since
      the date of the latest financial statements included within the Company’s
      filings with the Securities and Exchange Commission (“SEC Reports”), except as
      set forth on Schedule
      3.1 (k)
      or
      specifically disclosed in a subsequent SEC Report filed prior to the date
      hereof, (i) there has been no event, occurrence or development that has had
      or
      that could reasonably be expected to result in a Material Adverse Effect, (ii)
      the Company has not incurred any liabilities (contingent or otherwise) other
      than (A) trade payables and accrued expenses incurred in the ordinary course
      of
      business consistent with past practice and (B) liabilities not required to
      be
      reflected in the Company’s financial statements pursuant to GAAP or disclosed in
      filings made with the Commission, (iii) the Company has not altered its method
      of accounting, and (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock.

     

    
      
        
        

      

      
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    (l) 
      The
      Company owns all of the issued and outstanding shares of capital stock of French
      Gulch free and clear with no Liens. Other than its common stock, French Gulch
      has no other authorized classes of securities and no Common Stock Equivalents
      outstanding. French Gulch is in the process of exercising an option agreement
      with Washington Niagra Mining Partnership to purchase 28 patented and 27
      unpatented claims. See schedule 3.1 (l) for current payment status. The option
      is paid current to date. In addition the French Gulch owns 66 staked unpatented
      claims. All claim filing fees are current.

    


    Purchaser
      acknowledges that the Company does not make or has not made any representations
      or warranties with respect to the transactions contemplated other than those
      specifically set forth in this Section 3.1.

    


    3.2 Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

    


    (a) Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The execution, delivery and
      performance by such Purchaser of the transactions contemplated by this Agreement
      have been duly authorized by all necessary corporate or similar action on the
      part of such Purchaser. Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in
      accordance with the terms hereof, will constitute the valid and legally binding
      obligation of such Purchaser, enforceable against it in accordance with its
      terms, except (i) as limited by general equitable principles and applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors’ rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law.

    


    (b) Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      such Purchaser’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws) in violation of the Securities Act or any applicable state
      securities law. Such Purchaser is acquiring the Securities hereunder in the
      ordinary course of its business. Such Purchaser does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

    


    
      
        
        

      

      
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    (c) Disclosure
      of Information.
      Purchaser carefully reviewed all filings made by the Company with the Commission
      as of the date of this Agreement and has received and carefully reviewed any
      information Purchaser has requested from the Company that Purchaser considers
      necessary or appropriate for deciding whether to acquire the Securities,
      including, without limitation, all material risk factors relating to the
      Company. Purchaser further represents that Purchaser has had ample opportunity
      to ask questions and receive answers from the Company concerning the information
      and the terms and conditions of the offering of the Securities and to obtain
      any
      additional information necessary to verify the accuracy of the information
      given
      to Purchaser. Purchaser is making its investment in the Company after having
      reviewed, analyzed, sought professional advice regarding, and fully
      understanding the risk, uncertainties, and liabilities associated with the
      Company. 

     

    (d) Regulation
      S.

     

    (i) Purchaser
      either has been duly formed and is validly existing as a corporation or other
      legal entity in good standing under the laws of its jurisdiction of
      incorporation set forth on the signature page to this Agreement or is an
      individual who is not a citizen or resident of the United States. Purchaser
      is
      not organized under the laws of the United States and is not a “U.S. Person” as
      that term is defined in Rule 902(o) of Regulation S.

     

    (ii) Purchaser
      was not formed for the purpose of investing in Regulation S securities or for
      the purpose of investing in the Securities sold under this Agreement. Purchaser
      is not registered as an issuer under the Securities Act and is not required
      to
      be registered with the SEC under the Investment Company Act of 1940, as amended.
      Purchaser is entering into this Agreement and is participating in the offering
      of the Shares for its own account, and not on behalf of any U.S. Person as
      defined in Rule 902(o) of Regulation S.

     

    (iii) The
      Company has not made an offer to enter into this Agreement to Purchaser in
      the
      United States other than as permitted in the case of an account managed by
      a
      professional fiduciary resident in the United States within the meaning of
      Section 902(o)(2) of Regulation S. At the times of the offer and execution
      of
      this Agreement and, to the best knowledge of Purchaser, at the time the offering
      originated, Purchaser was located and resident outside the United States, other
      than as permitted in the case of an account managed by a professional fiduciary
      resident in the United States within the meaning of Section 902(o)(2) of
      Regulation S.

     

    (iv) Neither
      Purchaser, nor any of its Affiliates, nor any person acting on its behalf or
      on
      behalf of any Affiliate has engaged or will engage in any activity undertaken
      for the purpose of, or that reasonably could be expected to have the effect
      of,
      conditioning the markets in the United States for the Shares or for any
      securities that are convertible into or exercisable for the common stock of
      the
      Company, including, but not limited to, effecting any sale or short sale of
      the
      Company’s securities through Purchaser or any of its Affiliates before the
      expiration of any restricted period contained in Regulation S. To the best
      knowledge of Purchaser, this Agreement and the transactions contemplated by
      it
      are not part of a plan or scheme to evade the registration provisions of the
      Securities Act, and Purchaser is purchasing the Shares for investment purposes.
      Purchaser and, to the best knowledge of Purchaser, each distributor, if any,
      participating in this offering of the Securities have agreed that they will
      neither offer nor sell any Securities before the date hereof and through the
      expiration of the any
      restricted period set forth in Rule 903 of Regulation S
      (as
      amended from time to time) to U.S. Persons or for the account or benefit of
      U.S.
      Persons, and they will offer or sell any of the Securities only in compliance
      with the provisions of Regulation S and any other applicable provisions of
      the
      Securities Act. Purchaser and its representatives have not conducted any
      Directed Selling Effort as that term is used and defined in Rule 902 of
      Regulation S and will not engage in any Directed Selling Effort within the
      United States through the expiration of any restricted period set forth in
      Rule
      903 of Regulation S.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (v) Purchaser
      acknowledges that following the expiration of any restricted period provided
      by
      Rule 903 of Regulation S, any interest in this Agreement or in the Securities
      sold may be resold within the jurisdiction of the United States or to U.S.
      Persons as defined in Rule 902(o) of Regulation S by or for the account of
      the
      parties only (i) pursuant to a registration statement under the Securities
      Act,
      or (ii) if applicable, pursuant to an exemption from registration for sales
      by a
      person other than an issuer, underwriter, or dealer as those terms are used
      in
      Section 4(1) and related provisions of the Securities Act and regulations or
      pursuant to another exemption from registration, only following the expiration
      of any restricted period (if applicable) required by Regulation S. Purchaser
      acknowledges that this Agreement and the Securities have not been registered
      under the Securities Act or qualified under state securities laws of the United
      States and that their transferability within the jurisdiction of the United
      States is restricted by the Securities Act as well as state laws. Purchaser
      acknowledges it has received a copy of Regulation S, is familiar with and
      understands its terms, and has had the opportunity to consult with its legal
      counsel concerning this Agreement and Regulation S.

     

    (e) Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment.

    


    (f) General
      Solicitation.
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

    


    (g) Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than the transaction contemplated hereunder, such Purchaser has not directly
      or
      indirectly, nor has any Person acting on behalf of or pursuant to any
      understanding with such Purchaser, executed any disposition, including Short
      Sales, in the securities of the Company during the period commencing from the
      time that such Purchaser first received a term sheet from the Company or any
      other Person setting forth the material terms of the transactions contemplated
      hereunder until the date hereof. Notwithstanding the foregoing, in the case
      of a
      Purchaser that is a multi-managed investment vehicle whereby separate portfolio
      managers manage separate portions of such Purchaser's assets and the portfolio
      managers have no direct knowledge of the investment decisions made by the
      portfolio managers managing other portions of such Purchaser's assets, the
      representation set forth above shall only apply with respect to the portion
      of
      assets managed by the portfolio manager that made the investment decision to
      purchase the Securities covered by this Agreement. Other than to other Persons
      party to this Agreement, such Purchaser has maintained the confidentiality
      of
      all disclosures made to it in connection with this transaction (including the
      existence and terms of this transaction).

    


    The
      Company acknowledges and agrees that each Purchaser does not make or has not
      made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in this Section
      3.2.

    


    
      
        
        

      

      
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    ARTICLE
      IV- OTHER AGREEMENTS OF THE PARTIES

    


    4.1
      Transfer
      Restrictions.

    


    (a)
      The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement, Regulation S or Rule 144,
      to
      the Company or to an affiliate of a Purchaser, the Company may require the
      transferor thereof to provide to the Company an opinion of counsel selected
      by
      the transferor and reasonably acceptable to the Company, the form and substance
      of which opinion shall be reasonably satisfactory to the Company, to the effect
      that such transfer does not require registration of such transferred Securities
      under the Securities Act. As a condition of transfer, any such transferee shall
      agree in writing to be bound by the terms of this Agreement and shall have
      the
      rights of a Purchaser under this Agreement and the Registration Rights
      Agreement.

    


    (b)
      The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in the following form:

    


    This
      debenture has not been registered under the U.S. Securities Act of 1933, as
      amended (the “Securities Act”), and, accordingly, may not be offered or sold
      within the United States or to, or for the account or benefit of, U.S. Persons,
      except as set forth below. By its acquisition hereof, the holder (1) represents
      that it is not a U.S. Person and is acquiring this debenture in an offshore
      transaction, (2) agrees that it will not within two
      years
      after
      the original issuance of this debenture resell or otherwise transfer this
      debenture except (a) to the company or any subsidiary thereof, (b) pursuant
      to
      an effective registration statement under the Securities Act, (c) inside the
      United States to a qualified institutional buyer in compliance with Rule 144a
      under the Securities Act, (d) inside the United States to an accredited investor
      that, prior to such transfer, furnishes (or has furnished on its behalf by
      a
      United States broker-dealer) to the Company
      a signed
      letter containing certain representations and agreements relating to the
      restrictions on transfer of this debenture (the form of which letter can be
      obtained from the Company),
      (e)
      outside the United States in an offshore transaction in compliance with rule
      904
      under the Securities Act or (f) pursuant to any other exemption from
      registration under the Securities Act (if available) and (3) agrees that it
      will
      give to each person to whom this debenture is transferred a notice substantially
      to the effect of this legend. In connection with any transfer of this debenture
      within two years after original issuance of this debenture, if the proposed
      transferee is an accredited investor, the holder must, prior to such transfer,
      furnish to the company
      and the
      Company such certifications, legal opinions or other information as either
      of
      them may reasonably require to confirm that such transfer is being made pursuant
      to an exemption from or in a transaction not subject to the registration
      requirements of the Securities Act. As used herein, the terms “offshore
      transaction,” “United States” and “U.S. Person” have the meanings given to them
      by Regulation S under the Securities Act.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (c)
      Certificates evidencing the Underlying Shares shall not contain any legend
      (including the legend set forth in Section 4.1(b) hereof): (i) while a
      registration statement (including the Registration Statement) covering the
      resale of such security is effective under the Securities Act, or (ii) following
      any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
      Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such
      legend is not required under applicable requirements of the Securities Act
      (including judicial interpretations and pronouncements issued by the staff
      of
      the Commission). 

    


    If
      all or
      any portion of a Debenture is converted or exercised (as applicable) at a time
      when there is an effective registration statement to cover the resale of the
      Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k)
      or
      if such legend is not otherwise required under applicable requirements of the
      Securities Act (including judicial interpretations thereof) then such Underlying
      Shares shall be issued free of all legends. 

    


    The
      Company agrees that following the Effective Date or at such time as such legend
      is no longer required under this Section 4.1(c), it will, no later than three
      Trading Days following the delivery by a Purchaser to the Company or the
      Company’s transfer agent of a certificate representing Underlying Shares, as
      applicable, issued with a restrictive legend, deliver or cause to be delivered
      to such Purchaser a certificate representing such shares that is free from
      all
      restrictive and other legends. The Company may not make any notation on its
      records or give instructions to any transfer agent of the Company that enlarge
      the restrictions on transfer set forth in this Section.

    


    (d)
      Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 4.1 is predicated upon the Company’s reliance that the
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom.

    


    4.2 Conversion
      Procedures.
      The
      form of Notice of Conversion included in the Debentures set forth the totality
      of the procedures required of the Purchasers in order to convert the Debentures.
      No additional legal opinion or other information or instructions shall be
      required of the Purchasers to convert their Debentures. The Company shall honor
      conversions of the Debentures and shall deliver Underlying Shares in accordance
      with the terms, conditions and time periods set forth in the Transaction
      Documents.

    


    4.3 Non-Public
      Information.
      The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information. The Company understands and
      confirms that each Purchaser shall be relying on the foregoing representations
      in effecting transactions in securities of the Company.

    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    4.4 Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      substantially for the development of the French Gulch Mine.

    


    4.5 Reservation
      and Listing of Securities.
      The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may be
      required to fulfill its obligations in full under the Transaction
      Documents.

    


    4.6 Equal
      Treatment of Purchasers.
      No
      consideration shall be offered or paid to any person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. Further, the Company shall not make any payment of
      principal or interest on the Debentures in amounts which are disproportionate
      to
      the respective principal amounts outstanding on the Debentures at any applicable
      time. For clarification purposes, this provision constitutes a separate right
      granted to each Purchaser by the Company and negotiated separately by each
      Purchaser, and is intended for the Company to treat the Purchasers as a class
      and shall not in any way be construed as the Purchasers acting in concert or
      as
      a group with respect to the purchase, disposition or voting of Securities or
      otherwise.

    


    4.7 Delivery
      of Securities after Closing. The Company will deliver, or cause to be delivered,
      the respective Shares and Warrants purchased by each Purchaser to the Purchaser
      within 3 Trading Days of the Closing Date.

     

    4.8Resale
      by
      Purchaser. Each Purchaser understands and acknowledges, severally and not
      jointly with any other Purchaser, that the SEC takes the position that the
      coverage of short sales of shares of the Common Stock “against the box” before
      the Effective Date of the Registration Statement with the Shares is a violation
      of Section 5 of the Securities Act, as set forth in Item 65, Section 5 under
      Section A, of the Manual of Publicly Available Telephone Interpretations, dated
      July 1997, compiled by the Office of Chief Counsel, Division of Corporation
      Finance. Accordingly, no Purchaser will use any of the Shares to cover any
      short
      sales made before the Effective Date. Further, each Purchaser will comply with
      any obligations it may have under Regulation M with respect to the resale of
      the
      Securities.

     

    4.9
       Option
      to Increase Debenture.
      Within
      the first 120 days after the Closing Date, the Purchaser may, at its discretion,
      increase the debenture by up
      to
$1,000,000
      (but
      not
      less than $500,000) to
      a
      total of up
      to
$3,000,000
      under the same terms and conditions of the Transaction Documents
      herein
      (including without limitation, the issuance of an additional Warrant exercisable
      into a proportional number of additional Warrant Shares).
      

     

    4.10 Not
      Future Indebtedness.
      So long
      as any Debenture is outstanding, the Company shall not, and shall not permit
      any
      of its subsidiaries to, directly or indirectly, without the prior approval
      of
      Purchaser, other than in the ordinary course of businees or pursuant to existing
      obligations,
      enter
      into, create, incur, assume, guarantee or suffer to exist any indebtedness
      for
      borrowed money of any kind, including but not limited to, a guarantee, on or
      with respect to any of its property or assets now owned or hereafter acquired
      or
      any interest therein or any income or profits therefrom;

     

    ARTICLE
      V - MISCELLANEOUS

     

    5.1 Termination.
      This
      Agreement may be terminated only
      by
      mutual written agreement of the parties or by
      any
      Purchaser, as to such Purchaser’s obligations hereunder only and without any
      effect whatsoever on the obligations between the Company and the other
      Purchasers, by written notice to the other parties, if the Closing has not
      been
      consummated on or before August 31, 2006; provided,
      however, that no such termination will affect the right of any party to sue
      for
      any breach by the other party (or parties).

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    5.2 Entire
      Agreement.
      The
      Transaction Documents, together with the exhibits and schedules thereto, contain
      the entire understanding of the parties with respect to the subject matter
      hereof and supersede all prior agreements and understandings, oral or written,
      with respect to such matters, which the parties acknowledge have been merged
      into such documents, exhibits and schedules.

    


    5.3 Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile (with
      receipt of successful transmission) at
      the
      facsimile number set forth on the signature pages attached hereto prior to
      5:30
      p.m. (Nevada time) on a Trading Day, (b) the next Trading Day after the date
      of
      transmission, if such notice or communication is delivered via
      facsimile
      (with
      receipt of successful transmission)
      at the
      facsimile number set forth on the signature pages attached hereto on a day
      that
      is not a Trading Day or later than 5:30 p.m. (Nevada time) on any Trading Day,
      (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
      nationally recognized overnight courier service, or (d) upon actual receipt
      by
      the party to whom such notice is required to be given. The address for such
      notices and communications shall be as set forth on the signature pages attached
      hereto.

    


    5.4 Amendments;
      Waivers.
      No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each
      Purchaser or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right.

    


    5.5 Headings.
      The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.

    


    5.6 Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser. Any Purchaser may assign any or all of its rights
      under this Agreement to any Person to whom such Purchaser assigns or transfers
      any Securities, provided such transferee agrees in writing to be bound, with
      respect to the transferred Securities, by the provisions hereof that apply
      to
      the “Purchasers”.

    


    5.7 No
      Third-Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Persons.

    


    5.8 Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of Nevada, without regard to
      the
      principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state and federal courts sitting in the City of Reno. Each party hereby
      irrevocably submits to the exclusive jurisdiction of the state and federal
      courts sitting in the City of Reno, State of Nevada for the adjudication of
      any
      dispute hereunder or in connection herewith or with any transaction contemplated
      hereby or discussed herein (including with respect to the enforcement of any
      of
      the Transaction Documents), and hereby irrevocably waives, and agrees not to
      assert in any suit, action or proceeding, any claim that it is not personally
      subject to the jurisdiction of any such court, that such suit, action or
      proceeding is improper or inconvenient venue for such proceeding. 

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    Each
      party hereby irrevocably waives personal service of process and consents to
      process being served in any such suit, action or proceeding by mailing a copy
      thereof via registered or certified mail or overnight delivery (with evidence
      of
      delivery) to such party at the address in effect for notices to it under this
      Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      The parties hereby waive all rights to a trial by jury. If either party shall
      commence an action or proceeding to enforce any provisions of the Transaction
      Documents, then the prevailing party in such action or proceeding shall be
      reimbursed by the other party for its attorneys’ fees and other costs and
      expenses incurred with the investigation, preparation and prosecution of such
      action or proceeding.

    


    5.9 Survival.
      The
covenants
      and other agreements of the parties shall survive the Closing. The representations
      and warranties contained herein shall survive the Closing and the delivery,
      exercise and/or conversion of the Securities for two
      years.

     

    5.10 Execution.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original
      thereof.

    


    5.11 Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

    


    5.12 Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested. The applicants for a new
      certificate or instrument under such circumstances shall also pay any reasonable
      third-party costs associated with the issuance of such replacement
      Securities.

    


    5.13 Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of the Purchasers and the Company
      will
      be entitled to specific performance under the Transaction Documents. The parties
      agree that monetary damages may not be adequate compensation for any loss
      incurred by reason of any breach of obligations described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation the defense that a remedy at law would be
      adequate.

    


    5.14 Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or a Purchaser enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall be revived and continued in full
      force
      and effect as if such payment had not been made or such enforcement or setoff
      had not occurred.

    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    5.15 Usury.
      To the
      extent it may lawfully do so, the Company hereby agrees not to insist upon
      or
      plead or in any manner whatsoever claim, and will resist any and all efforts
      to
      be compelled to take the benefit or advantage of, usury laws wherever enacted,
      now or at any time hereafter in force, in connection with any claim, action
      or
      proceeding that may be brought by any Purchaser in order to enforce any right
      or
      remedy under any Transaction Document. Notwithstanding any provision to the
      contrary contained in any Transaction Document, it is expressly agreed and
      provided that the total liability of the Company under the Transaction Documents
      for payments in the nature of interest shall not exceed the maximum lawful
      rate
      authorized under applicable law (the “Maximum
      Rate”),
      and,
      without limiting the foregoing, in no event shall any rate of interest or
      default interest, or both of them, when aggregated with any other sums in the
      nature of interest that the Company may be obligated to pay under the
      Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
      contract rate of interest allowed by law and applicable to the Transaction
      Documents is increased or decreased by statute or any official governmental
      action subsequent to the date hereof, the new maximum contract rate of interest
      allowed by law will be the Maximum Rate applicable to the Transaction Documents
      from the effective date forward, unless such application is precluded by
      applicable law. If under any circumstances whatsoever, interest in excess of
      the
      Maximum Rate is paid by the Company to any Purchaser with respect to
      indebtedness evidenced by the Transaction Documents, such excess shall be
      applied by such Purchaser to the unpaid principal balance of any such
      indebtedness or be refunded to the Company, the manner of handling such excess
      to be at such Purchaser’s election.

    


    5.16 Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Documents.
      Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation the rights arising out of this Agreement or out
      of
      the other Transaction Documents, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose. Each Purchaser has been represented by its own separate legal counsel
      in their review and negotiation of the Transaction Documents. 

    


    5.17 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.   

     

    
      	
              BULLION
                RIVER GOLD CORP. INC.

               

               

              By:
                /s/
                Nancy B. Huber

              Name:
                Nancy B. Huber

              Title:
                Chief Financial Officer

            	
              Address
                for Notice:

               

              3500
                Lakeside Court, Suite 200

              Reno,
                Nevada 89509

              (775)
                324-4881

            


    

      

    With
      a
      copy to (which shall not constitute notice):

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    


    [PURCHASER
      SIGNATURE PAGES TO BULLION RIVER GOLD CORP., INC. SECURITIES PURCHASE
      AGREEMENT]

    


    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

    


    Name
      of
      Purchaser: Elton Participation Corp.

    


    


    Signature
      of Authorized Signatory of Purchaser:
      /s/
      Peter-Paul Stengel

     

    Name
      of
      Authorized Signatory: Peter-Paul Stengel

     

    Title
      of
      Authorized Signatory: Secretary

     

    Email
      Address of Purchaser:
      ________________________________________________________________ 

    


    Address
      for Notice of Purchaser:
      _____________________________________________________________

     

    _____________________________________________________________________________________________________

     

    Address
      for Delivery of Securities for Purchaser (if not same as above):
      ________________________________

     

    _____________________________________________________________________________________________________ 

     

    Principal
      Amount: $2,000,000.00

     

    Warrant
      Shares: 2,666,667

    


    


    
 

    [SIGNATURE
      PAGES CONTINUE]

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    
      	
              Schedule
                3.1.g

            	 	 
	
              Bullion
                River Gold Corp.

            	 	 
	
              Common
                Stock and Warrants

            	 	 
	
              As
                of July 31, 2006

            	 	 


    

     

    
      	 	 	
              Common
                

              Stock

            	 	
              Warrants
                

            	 
	
              As
                of March 31, 2006

            	 	 	
              48,853,875
                

            	 	 	
              27,030,136
                

            	 
	
              Granted
                or sold since March 31,2006

            	 	 	
              7,916,391
                

            	 	 	
              7,350,009
                

            	 
	
              Cancelled
                since March 31, 2006

            	 	 	
              (166,667

            	
              )

            	 	
              (383,333

            	
              )

            
	
              Exercised
                since March 31, 2006

            	 	 	
              1,173,960
                

            	 	 	
              (1,173,960

            	
              )

            
	
              Total

            	 	 	
              57,777,559
                

            	 	 	
              32,822,852
                

            	 


    

    


     

    


     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Schedule
      3.1.k

     

    Bullion
      River Gold Debt and Lease Obligations

     

    As
      of June 30, 2006

    


     

    Accounts
      Payable and accruals of $841,028

     

    Long
      Term
      Reclamation Obligations $106,070, changes as required by law


     

    On
      October 3, 2005, the Company entered into a third party agreement to lease
      (2)
      Caterpillar IT28G loaders for a period of 36 months in the amount of $5,736
      per
      month. This lease ends on October 3, 2008. 


     

    On
      December 21, 2005, the Company entered into a third party agreement to lease
      (1)
      Skid Loader for the North Fork property. The term is 36 months ending December
      2008 with a monthly payment of $938.

    


    On
      February 14, 2006, the Company entered into a third party agreement to lease
      office space which commenced on April 1, 2006 and will end on March 31, 2009.
      This agreement was sought out to accommodate the growing support needs of the
      company and to reduce the rental cost per square foot. Payments under this
      agreement are:

     

    
      	 	
              ·

            	
              $6,000
                per month from April 1 to June 30,
                2006

            


    

    
      	 	
              ·

            	
              $7,855
                per month from July 1, 2006 to March 31,
                2007

            


    

    
      	 	
              ·

            	
              $8,091
                per month from April 1, 2007 to March 31, 2008


            


    

    
      	 	
              ·

            	
              $8,333
                per month from April 1, 2008 to March 31,
                2009

            


    

     

    On
      February 15, 2006, the Company entered into a third party agreement to lease
      an
      Elphinstone R-1300 loader for a period of 36 months ending in February 2009
      in
      the amount of $6,776 per month. This equipment will be used at French Gulch.
      

    


    On
      April
      12, 2005, the Company entered into a lease agreement for a copier/printer for
      a
      48-month term ending April 30, 2009. Payment under this agreement is $221 per
      month.

    


    On
      April
      16, 2006, the Company entered a rental agreement for office/housing space for
      the French Gulch property whereby the Company is committed to pay $1,550 per
      month until April 15, 2007.

    


    On
      May 1,
      2006, the Company extended a rental agreement for office/housing space for
      the
      North Fork property whereby the Company is committed to pay $1,030 per month
      until October 2006.

    


    Additional
      leases up to $200,000 for leased vehicles

    


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    Schedule
      3.1.l

     

    
      	
              French
                Gulch Mine Purchase Schedule

            	 	 
	
              WASHINGTON-NIAGARA
                PURCHASE OPTION

            	 	 
	
              Date

            	
              7/31/2006

            	 	 
	 	 	 	 
	
              Statement

            	
              Total
                amount of Purchase

            	
              $
                1,500,000.00 

            	 
	 	
              Remaining
                Amount for purchase 

            	
              $
                896,084.00 

            	 
	 	 	 	 
	
              Date

            	
              Description

            	
              Amount

            	
              Balance
                Due

            
	 	 	 	 
	
              5/19/2005

            	
              French
                Gulch exercises Option to purchase the Washington-Niagara

            	 	 
	 	
              Property
                and receives the following credits to the purchase price

            	 	 
	 	
              for
                payments made on Washington-Niagara's behalf.

            	 	 
	 	 	 	 
	 	
              Purchase
                price

            	
              $
                1,500,000.00 

            	 
	 	
              Initial
                Purchase Option payment

            	
              (10,000.00)

            	 
	 	
              Advance
                for tax arrearages to Shasta County

            	
              (15,000.00)

            	 
	 	
              Additional
                overage of tax arrearages for Shasta County (paid
                10/12/04)

            	
              (27,588.07)

            	 
	 	
              Additional
                overage of tax arrearages for Trinity County (paid
                10/12/04)

            	
              (5,612.00)

            	 
	 	
              2004-2005
                claim maintenance fees paid to BLM and Counties

            	
              (3,416.00)

            	 
	 	
              State
                of CA Mining Operation Annual Reports for 2001, 2002, 2003 (paid
                12/7/04)

            	
              (3,238.00)

            	
              $
                1,435,145.93 

            
	 	 	 	 
	
              5/19/2005

            	
              June
                Option payment (less deductions), check #3075

            	
              (13,561.93)

            	
              1,421,584.00
                

            
	 	 	
               

            	 
	
              8/5/2005

            	
              August
                Option payment, check #3146

            	
              (50,000.00)

            	
              1,371,584.00
                

            
	 	 	 	 
	
              10/28/2005

            	
              October
                Option payment, check #3237

            	
              (50,000.00)

            	
              1,321,584.00
                

            
	 	 	 	 
	
              12/1/2006

            	
              December
                Option payment, check #3270

            	
              (50,000.00)

            	
              1,271,584.00
                

            
	 	 	 	 
	
              2/1/2006

            	
              February
                Option payment, check #3360

            	
              (50,000.00)

            	
              1,221,584.00
                

            
	 	 	 	 
	
              4/3/2006

            	
              April
                Option payment, check #1721

            	
              (50,000.00)

            	
              1,171,584.00
                

            
	 	 	 	 
	
              5/26/2006

            	
              June
                Option payment, check #2056

            	
              (50,000.00)

            	
              1,121,584.00
                

            
	 	 	 	 
	
              7/14/2006

            	
              Reduction
                of Purchase Price for Investment

            	
              (175,500.00)

            	
              946,084.00
                

            
	 	 	 	 
	
              7/27/2006

            	
              August
                Option payment, check #2508

            	
              (50,000.00)

            	
              896,084.00
                

            
	 	 	 	 
	
              Planned
                Schedule of Payments

            	 	 
	 	 	 	 
	
              9/27/2006

            	
              October
                Payment

            	
              (175,000.00)

            	
              721,084.00
                

            
	 	 	 	 
	
              11/27/2006

            	
              December
                Payment

            	
              (175,000.00)

            	
              546,084.00
                

            
	 	 	 	 
	
              1/27/2007

            	
              February
                Payment

            	
              (175,000.00)

            	
              371,084.00
                

            
	 	 	 	 
	
              3/28/2007

            	
              April
                Payment

            	
              (175,000.00)

            	
              196,084.00
                

            
	 	 	 	 
	
              5/27/2007

            	
              June
                Payment

            	
              (175,000.00)

            	
              21,084.00
                

            
	 	 	 	 
	
              7/27/2007

            	
              August
                Payment

            	
              (21,084.00)

            	
              -
                

            


    

     

     

    20