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|  | 1 | We      refer to the Credit Agreement. Terms and expressions defined in the Credit      Agreement      shall have the same meaning when used herein unless otherwise      defined. |
|--|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2 | The      Agent (acting on the instructions of the Majority Banks) hereby      approves the alterations to the Development Plan proposed by      the Borrower reflecting: |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |        (a) | an      amended leach curve; and |
|--|-----------------|----------------------------------|

|  |        (b) | updated      operating cost figures, |
|--|-----------------|--------------------------------------|

|   | 3 | In      addition, the Agent, the Banks and the Hedging Banks hereby propose that      the Repayment Schedule in Schedule 6 of the Credit Agreement be deleted      and replaced with the following (the  “Amendment”): |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Repayment Date     |   | RepaymentInstalment |   |
|-------------------------|--------|---------------------|--------|
|                    |   |                |   |
| 31      December 2008   |   |                | 11.50% |   |
|  30      June 2009 |   |                | 6.00%  |   |
| 31      December 2009   |   |                | 9.00%  |   |
|  30      June 2010 |   |                | 7.00%  |   |
| 31      December 2010   |   |                | 6.50%  |   |
|  30      June 2011 |   |                | 6.75%  |   |
| 31      December 2011   |   |                | 5.50%  |   |
|  30      June 2012 |   |                | 5.75%  |   |
| 31      December 2012   |   |                | 6.25%  |   |
|  30      June 2013 |   |                | 6.50%  |   |
| 31      December 2013   |   |                | 5.75%  |   |
|  30      June 2014 |   |                | 7.25%  |   |
| 31      December 2014   |   |                | 16.25% |   |

|   | 4 | The      approval given in paragraph 2 above and the Amendment will not come into      effect until the Agent notifies the Borrower that it has received all of      the following documents in form and substance satisfactory to it (the      “Effective Date”): |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | board      minutes of the Borrower, Western Goldfields (USA) Inc. and the Guarantor      approving and authorizing: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------|

|   | (b) | a      report from the Independent Technical Consultant on the alterations to the      Development Plan; and |
|--------|-----|--------------------------------------------------------------------------------------------------------------|

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|  | (c) | evidence      that an amount representing US$9,700,000 of additional Equity has been      deposited into the Proceeds Account since 1 April 2008 and applied against      approved Operating Costs or FinancingCosts. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 5  | By      the acceptance of this letter you agree to the repetition of the Repeating      Representations by yourselves by reference to the facts and circumstances      existing on: |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (a) | the      date of this letter; and |
|--|-----|-----------------------------------|

|  | (b) | the      Effective Date. |
|--|-----|--------------------------|

|  | 6 | Without      prejudice to the rights of any Financing Party which have arisen on or      before the date of this letter or the Effective Date, by the acceptance of      this letter you confirm that, on and after the Effective    Date: |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (a) | the      Credit Agreement as amended by this letter, and the other Financing      Documents, will remain in full force and effect;  and |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | (b) | the      Security Documents to which you are a party will continue to secure all      liabilities which are expressed to be secured by  them. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|  | 7 | This      letter is hereby designated as a Financing  Document. |
|--|---|-----------------------------------------------------------------|

|  | 8 | This      letter shall be governed by and construed in accordance with English      law. |
|--|---|------------------------------------------------------------------------------------------|

|  | 9 | The      courts of England have exclusive jurisdiction to settle any dispute      arising out of or in connection with this letter (including a dispute      regarding the existence, validity or termination of this      letter). |
|--|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10 | This      letter may be signed in any number of counterparts, and this has the same      effect as if the signatures on the counterparts were on a single copy of      this letter. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Yours      faithfully                                                                            |    |                                                                                             |
|--------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------|
| /s/      Serena Smulansky                                                                        |         | /s/      John Barbour                                                                            |
| Investec      Bank (UK) Limited                                                                  |         | Investec      Bank (UK) Limited                                                                  |
| (as Agent on behalf of the Banks and Hedging Banks) |    | (as Agent on behalf of the Banks and Hedging Banks) |
| Serena      Smulansky                                                                            |         | John      Barbour                                                                                |
| Authorised      Signatory                                                                        |         | Authorised      Signatory                                                                        |

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| Accepted      and agreed, on 14 August 2008 |
|---------------------------------------------|
|                                        |
| /s/Brian      Penny                         |     |
| Western      Mesquite Mines, Inc.           |
|                                        |
| /s/Brian      Penny                         |     |
| Western      Goldfields Inc.                |
|                                        |
| /s/Brian      Penny                         |     |
| Western      Goldfields (USA)Inc.           |

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