AGREEMENT

    


    


    EL
      CAPITAN PRECIOUS METALS, INC. & CLYDE L. SMITH, Ph.D.,
      P.Eng.

    


    


    This
      agreement is made and entered into this 22nd day of August, 2005 between El
      Capitan Precious Metals, Inc., with its principal office located at 14301 N.
      87th
      street,
      Suite 216, Scottsdale, AZ 85255, a mineral exploration company (hereinafter
      called “ECPN”) and Clyde L. Smith, Ph.D., P.Eng., Consulting Geologist, a sole
      proprietor with its principal office located at 106-1680 56th
      Street,
      Delta, British Columbia, Canada V4L2L6 (hereinafter called
“Smith”).

     

    WHEREAS,
      ECPN has ownership and control over the El Capitan Project located in New
      Mexico, and desires to enter into a transaction to sell some, or all of the
      project to a third party.

     

    WHEREAS,
      Smith has been the consulting geologist overseeing the recent drilling and
      assaying of the project.

     

    NOW
      THEREFORE, the parties agree that ECPN will provide a success fee to Smith
      upon
      the completion of a sales transaction involving the El Capitan project under
      the
      terms and conditions herein.

     

    TERMS
      AND CONDITIONS

     

    	1.  	
            DUTIES.
              Smith will have the following duties to ECPN for the duration of this
              agreement:

          


     

    	A.  	
            Smith
              will continue acting as ECPN’s consulting geologist, specifically for
              completion of a current report on the El Capitan resource, for directing
              an expanded drilling and assay project currently under way at the project,
              and for completion of a final report on the El Capitan resource, and
              assisting in all due diligence studies conducted by prospective
              purchasers. 

          


    	B.  	
            Should
              Smith decide that the El Capitan project is worthy of presentation
              to
              Newmont Mining, then Smith will put forth his best efforts to market
              the
              project to Newmont Mining.

          


    	C.  	
            Smith
              will make his services available to ECPN and Pavlich Associates in
              assisting to present the project to prospective purchasers other than
              Newmont.

          


    	D.  	
            It
              is understood that Smith may seek purchasers other than Newmont or
              those
              from Pavlich Associates.

          


    


    	2.  	
            COMPENSATION.
              ECPN will compensate Smith for the duties listed above in the following
              manner.

          


     

    	A.  	
            Smith
              will continue to receive his separately agreed rate of compensation
              for
              consulting on the items listed above.

          


    	B.  	
            ECPN
              will pay Smith a success fee of $250,000 for the successful sale of
              the
              project to Newmont Mining or any other company, entity or
              individual.

          



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    	C.  	
            Smith
              will bill his going rate of compensation for consulting while assisting
              Pavlich Associates to market the project. For a successful sale of
              the
              project to any company, entity, or individual, ECPN will pay Smith
              a
              success fee of $250,000.

          


    	D.  	
            It
              is understood that should Smith present a purchase proposal to ECPN,
              other
              than from Newmont or those presented by Pavlich Associates, that Smith
              may
              negotiate a compensation in addition to the $250,000 from ECPN to be
              paid
              either by ECPN or the incoming third
              party.

          


     

    	3.  	
            METHOD
              OF PAYMENT.

          


     

    	A.  	
            The
              success payment shall be deemed earned upon the closing of a transaction
              of the El Capitan project. The payment for success shall be made in
              accordance with the percentage and frequency made to ECPN for their
              transaction payment up to a maximum of twelve (12) months, at which
              time
              the unpaid portion of the success fee shall be due
              Smith.

          


    	B.  	
            Smith
              normally charges by the day. If while consulting for the expanded drilling
              and assay project Smith spends time consulting for the sale of the
              project, Smith will assign appropriate portions of that day to each
              of the
              separate duties.

          


     

    GENERAL

     

    	1.  	
            INTERPRETATION
              OF AGREEMENT. This Agreements hall be interpreted in accordance with,
              and
              in performance governed, as applicable by the laws of the State of
              Nevada.
              

          


     

    	2.  	
            ARBITRATION.
              In the event of a disagreement over any of the provisions or terms
              of this
              Agreement, all parties agree to seek binding arbitration from a Nevada
              State Arbitration Board pursuant to the laws of the State of Nevada.
              

          


     

    	3.  	
            TERM.
              The term of this agreement is two years. If, however, an agreement
              is
              concluded after the initial two years and prior to a total of four
              years
              from the inception of this agreement with any company, entity or
              individual with whom Smith has fulfilled any of the above functions,
              then
              the terms and conditions of this agreement shall
              apply.

          


     

    El
      Capitan Precious Metals, Inc.

     

    By: /s/
      Charles C. Mottley                      Date: 8/22/05 

      Charles
      C. Mottley,
      President 

     

    


     

    Clyde
      L.
      Smith, Ph.D., P. Eng (Sole Proprietor)

     

    By: /s/
      Clyde L. Smith                        Date: 8/25/05