| To: | Western Mesquite Mines,      Inc., |
|-----|------------------------------------|

| 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 | Further      to our discussions concerning syndication of the Facility, the Agent, the      Banks and the Hedging Banks hereby      propose the following amendments to the Credit Agreement (the      "Amendments"): |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.1 | the      definition of "Additional Drawing Conditions" shall be amended as      follows: |
|-----|------------------------------------------------------------------------------------------|

| 2.1.1 | the      words "Agent is satisfied, acting reasonably,      that the"shall be added to      sub­paragraph (a) after the words "Development Plan) the";      and |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.1.2 | the      words "by the Agent"shall be added to sub-paragraph      (d) after the words "has beenamended"; |
|-------|----------------------------------------------------------------------------------------------------------|

| 2.2 | the      figure "20,000,000" in sub-paragraph (a) of the definition of "Approved      Committed Equity" shall be replaced by"17,700,000"; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | the      figure "85,000,000" in sub-paragraph (a) of the definition of      "Availability Period" shall be replaced by"87,300,000"; |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| 2.4 | the      definition of "Base Case Model" shall be amended as    follows: |
|-----|--------------------------------------------------------------------------|

| 2.5 | The      definition of "Excess Cashflow" shall be amended to read as      follows: |
|-----|------------------------------------------------------------------------------------|

|   | A | is the amount (asestimated by the Borrower on      the Business Day falling 2 Business Days before the relevant Repayment      Date) that will be standing to the credit of the Proceeds Account on that      Repayment Date following the payments or transfers referred to in Clauses      12.5.2(a) to 12.5.2(e) less the amount, if any, actually standing to the      credit of the Proceeds Account on the previous Repayment Date following      the payments or transfers made on that previous Repayment Date in      accordance with Clauses 12.5.2(a) to 12.5.2(e), that was retained in the      Proceeds Account (excluding, for the avoidance of doubt, the minimum      retained working capital amounts) ;and |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B | is      the minimum retained working capital amount of    US$4,000,000." |
|--------|---|--------------------------------------------------------------------------|

----

| 2.6 | the      word "of" after the word "with" and before the word "the" at Schedule 2,      Part 1, paragraph 3(f)(i) shall bedeleted; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| 2.7 | the      definition of "Majority Banks" shall be amended as  follows: |
|-----|-----------------------------------------------------------------------|

| 2.7.1 | the      words "(x)at any time there are only      three Banks and/or Hedging Banks, 75% or (y) at all other times," shall be      inserted after the words "together exceed:" and before the words "662/3 per      cent"; |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.7.2 | the      words",at anytime whilst the Bank Liabilities      are outstanding"shall be      inserted after the words "PROVIDED THAT" and before the words ", for      purposes of making"; |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.7.3 | the      word "and" at the      end of sub-paragraph (B) shall bedeleted; |
|-------|---------------------------------------------------------------------------|

| 2.7.4 | the      full stop at the end of sub-paragraph (C) shall be replaced by "; and"; |
|-------|----------------------------------------------------------------------------------|

| 2.7.5 | a new sub-paragraph      (D) shall be inserted as follows: |
|-------|------------------------------------------------------------|

| 2.8 | sub-paragraph      (e) of Clause 4.2 shall be deleted and replaced with a new      sub­paragraph (e) as follows: |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| 2.9 | the      words "and Schedule 6 shall be amended by the Agent accordingly" at the      end of Clause 6.1.3 shall bedeleted; |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| 2.10 | a      new Clause 6.4.4      shall be inserted as follows: |
|------|------------------------------------------------------------|

----

| 2.11 | the      words "and any commitment fees"shall be added to Clause      9.1.1(b) after the word "interest" and before the word    "due"; |
|------|----------------------------------------------------------------------------------------------------------------------------------------|

| 2.12 | the      words "and an amount not lessthan      US$4,000,000 is standing to the credit of the Proceeds Account" shall      be added after words "complied with in full" at Clause      11.4(i)(iv); |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.13 | the      references to      Clauses 12.5.2(c) and 12.5.2(d) in Clause 12.6 shall be replaced with      references to Clauses 12.5.2(d) and 12.5.2(e)  respectively; |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.14 | the      words"or prior to"      shall be inserted after the word "on" at Clause    12.6.2; |
|------|---------------------------------------------------------------------------------------------|

| 2.15 | the      lettering at      paragraph 2 of Schedule 2, Part 1 shall be amended so as to be (a), (b)      and (c) instead of (h), (i) and(j); |
|------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 2.16 | the      lettering at      paragraph 3 of Schedule 2, Part 1 shall be amended so as to be (a), (b),      (c), (d), (e), (f) and (g) instead of (k), (l), (m), (n), (o), (f) and      (g); |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.17 | Schedule 9 shall be      amended as follows: |
|------|----------------------------------------------|

| 2.17.1 | paragraph 4 shall be      replaced by the following: |
|--------|------------------------------------------------------|

|   | E      x 0.01       per cent per      annum |
|--------|---------------------------------------------------------------------------|

|   |         300 |
|--------|-----------------------|

| 2.17.2 | paragraph 5(a) shall be      amended as follows: |
|--------|--------------------------------------------------|

|   | (a) | the      words      "Eligible Liabilities and" shall bedeleted; |
|--------|-----|-----------------------------------------------------------------|

|   | (b) | the word"have"      after "Special Deposits" shall be replaced by the word "has"; |
|--------|-----|-----------------------------------------------------------------------------------|

|   | (c) | the      word      "meanings" shall be replaced by the word "meaning";and |
|--------|-----|---------------------------------------------------------------------------|

|   | (d) | the      word      "them" after the words "meanings given to" shall be replaced by the word      "it"; |
|--------|-----|--------------------------------------------------------------------------------------------------------|

| 2.17.3 | paragraph 6 shall be      deleted and the remaining paragraphs shall be renumbered accordingly;      and |
|--------|----------------------------------------------------------------------------------------------------------|

| 2.17.4 | the words "The percentages of      each Bank for the purpose of A and C above and the " at the beginning of paragraph 9 shall be replace      by the word "The"; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2.18 | the      reference to      paragraph 4 in Schedule 15, paragraph 3(a) shall be replaced with a      reference to paragraph 2; |
|------|-------------------------------------------------------------------------------------------------------------------------------|

| 2.19 | the      amendments agreed in paragraph 4(c) of the letter agreement relating to      the Credit Agreement      (the Letter Agreement)      dated 16 July 2007 shall be deleted and replaced as      follows: |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.1 | ",directly      or indirectly," shall be inserted into the third line of Clause      11.2.2 after "otherwise agrees own" and before "at least 50.1      %"; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.2 | "and      Western Goldfields (USA) Inc."      shall be inserted into the third line of Clause 13.1(a) after "the      Guarantor" and before "only"; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.3 | ",      in the case of the Guarantor" shall      be inserted into the fifth line of Clause 13.1(a) after "under" and before      "each of"; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.4 | "and, in the case of Western Goldfields      (USA) Inc., paragraph 4(b) of the Letter Agreement"shall be inserted into the      fifth line of Clause 13.1(a) after "Clause 11.2.2" and before "(which      shall be"; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.5 | "or Western Goldfields (USA) Inc."shall be inserted into the      first line of Clause 14.1(j)(i) after "the Guarantor" and before      "transfers"; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.6 | "direct      or indirect'      shall be inserted into the first line of Clause 14.1(j)(i) after      "any" and before "interest"; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| 2.19.7 | ",      in the case of the Guarantor, or paragraph 4(b) of the Letter Agreement,      in the case of Western Goldfields (USA) Inc." shall be inserted into the      second line of Clause 14.1 (j)(i) after "Clause 11.2" and before "); or";      and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.19.8 | the      words ",directly or      indirectly," shall be deleted from the undertaking in paragraph 4(b) of      the Letter Agreement. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

| 3 | By      the acceptance of      this letter you confirm that your respective certificates of incorporation      (and any relative certificate of incorporation on change of name) and your      respective memorandum and articles of association have not been amended or      varied since 16 July 2007. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | 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 the      date of this letter. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Without      prejudice to the rights of any Financing Party which have arisen on or      before the date of this letter, by the acceptance      of this letter you confirm that, on and after the date of this      letter: |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|   | (b) | the      Security Documents to which you are a party remain in full force and      effect as valid and binding continuing security in accordance with their      terms without impairment or novation thereof for all liabilities which are      expressed to be secured by them;and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | all      adjustments      or modifications, if any, to the obligations underlying the Security      Documents to which you are a party have been made and are permitted under      the terms and conditions of such Security  Documents. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Each      of you represent and      warrant that this letter has been duly authorised, executed and delivered      by you. |
|---|----------------------------------------------------------------------------------------------------------------------------|

| 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 | 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/      Anthony Rowe and /s/ Ian Wohlman                                                                                                                                                                     |
| Investec      Bank (UK) Limited                                                                                                                                                                               |
| (as      Agent, Bank and Hedging Bank)                                                                                                                                                                        |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Commonwealth Bank of Australia                                                                                                                                                                 |
| (as      Bank and Hedging Bank)                                                                                                                                                                               |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Accepted      and agreed,      on                               August 2007 |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Western      Mesquite Mines, Inc.                                                                                                                                                                             |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Western      Goldfields Inc.                                                                                                                                                                                  |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Western      Goldfields (USA)Inc.                                                                                                                                                                             |

----

|   | (b) | the      Security Documents to which you are a party remain in full force and      effect as valid and binding continuing security in accordance with their      terms without impairment or novation thereof for all liabilities which are      expressed to be secured by them;and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | all      adjustments      or modifications, if any, to the obligations underlying the Security      Documents to which you are a party have been made and are permitted under      the terms and conditions of such Security  Documents. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Each      of you represent and      warrant that this letter has been duly authorised, executed and delivered      by you. |
|---|----------------------------------------------------------------------------------------------------------------------------|

| 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 | 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                                                                                                                                                                                         |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Investec      Bank (UK) Limited                                                                                                                                                                               |
| (as      Agent, Bank and Hedging Bank)                                                                                                                                                                        |
|                                                                                                                                                                                                          |
| /s/      Jeff Heazlewood                                                                                                                                                                                      |
| Commonwealth Bank of Australia                                                                                                                                                                 |
| (as      Bank and Hedging Bank)                                                                                                                                                                               |
|                                                                                                                                                                                                          |
|                                                                                                                                                                                                          |
| Accepted      and agreed,      on                               August 2007 |
|                                                                                                                                                                                                          |
| /s/ Brian      Penny                                                                                                                                                                                          |
| Western      Mesquite Mines, Inc.                                                                                                                                                                             |
|                                                                                                                                                                                                          |
| /s/      Brian      Penny                                                                                                                                                                                     |
| Western      Goldfields Inc.                                                                                                                                                                                  |
|                                                                                                                                                                                                          |
| /s/      Brian      Penny                                                                                                                                                                                     |
| Western      Goldfields (USA)Inc.                                                                                                                                                                             |

----