Document:

EXHIBIT 10.7

 

NORTHSTAR REAL ESTATE INCOME II, INC.

 

FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the            day of                               , 201      , by and between NorthStar Real Estate Income II, Inc., a Maryland corporation (the “Company”), and                                                    (“Indemnitee”).

 

WHEREAS, at the request of the Company, Indemnitee currently serves as [a director] [and] [an officer] of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of such service; and

 

WHEREAS, as an inducement to Indemnitee to serve or continue to serve in such capacity, the Company has agreed to indemnify Indemnitee and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and

 

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.              Definitions.  For purposes of this Agreement:

 

(a)           “Applicable Legal Rate” means a fixed rate of interest equal to the applicable federal rate for mid-term debt instruments as of the day that it is determined that Indemnitee must repay any advanced expenses.

 

(b)           “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.

 

 

(c)           “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company.  As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company:  (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise (1) of which a majority of the voting power or equity interest is owned directly or indirectly by the Company or (2) the management of which is controlled directly or indirectly by the Company and (ii) if, as a result of Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as deemed fiduciary thereof.

 

(d)           “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.

 

(e)           “Effective Date” means the date set forth in the first paragraph of this Agreement.

 

(f)            “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding.  Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

 

(g)           “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(h)           “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by

 

 

the Company and Indemnitee.  If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

 

Section 2.                 Services by Indemnitee.  Indemnitee will serve in the capacity or capacities set forth in the first WHEREAS clause above.  However, this Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company.  This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.

 

Section 3.                 General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the “MGCL”).

 

Section 4.                 Standard for Indemnification.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any such Proceeding unless it is established that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

Section 5.              Certain Limits on Indemnification.  Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:

 

(a)           indemnification for any loss or liability unless all of the following conditions are met:  (i) Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company; (ii) Indemnitee was acting on behalf of or performing services for the Company; (iii) such loss or liability was not the result of negligence or misconduct, or, if Indemnitee is an independent director, gross negligence or willful misconduct; and (iv) such indemnification is recoverable only out of the Company’s net assets and not from the Company’s stockholders;

 

(b)           indemnification for any loss or liability arising from an alleged violation of federal or state securities laws unless one or more of the following conditions are met:  (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws;

 

 

(c)           indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company;

 

(d)           indemnification hereunder if Indemnitee is adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status; or

 

(e)           indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee, unless:  (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.

 

Section 6.              Court-Ordered Indemnification.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:

 

(a)           if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

 

(b)           if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper without regard to any limitation on such court-ordered indemnification contemplated by Section 2-418(d)(2)(ii) of the MGCL.

 

Section 7.                 Indemnification for Expenses of an Indemnitee Who is Wholly or Partially Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, the Company shall indemnify Indemnitee for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each such claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 7 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 8.                 Advance of Expenses for Indemnitee.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder,

 

 

advance all Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding. Which is initiated by a third party who is not a stockholder of the Company, or (b) such Proceeding which is initiated by a stockholder of the Company acting in his or her capacity as such and for which a court of competent jurisdiction specifically approves such advancement, and which relates to acts or omissions with respect to the performance of duties or services on behalf of the Company. Such advance or advances shall be made within ten days after the receipt by the Company of a statement or statements requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding and may be in the form of, in the reasonable discretion of the Indemnitee (but without duplication) (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advance of funds to Indemnitee in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee, together with the Applicable Legal Rate of interest thereon, relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established, by clear and convincing evidence, that the standard of conduct has not been met by Indemnitee and which have not been successfully resolved as described in Section 7 of this Agreement.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.

 

Section 9.              Indemnification and Advance of Expenses as a Witness or Other Participant.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of Indemnitee’s Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, Indemnitee shall be advanced and indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting any such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee.  In connection with any such advance of Expenses, the Company may require Indemnitee to provide an undertaking and affirmation substantially in the form attached hereto as Exhibit A.

 

Section 10.            Procedure for Determination of Entitlement to Indemnification.

 

(a)           To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in Indemnitee’s sole discretion.  The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control has occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board

 

 

of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval shall not be unreasonably withheld; or (ii) if a Change in Control has not occurred, (A) by a majority vote of the Disinterested Directors or, by the majority vote of a group of Disinterested Directors designated by the Disinterested Directors to make the determination, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld or delayed, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by the Board of Directors, by the stockholders of the Company, provided, however, that shares held by directors or officers who are parties to the Proceeding shall not be voted.  If it is so determined that Indemnitee is entitled to indemnification, the Company shall make payment to Indemnitee within ten days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary or appropriate to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b).  Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

 

(c)           The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed.

 

Section 11.            Presumptions and Effect of Certain Proceedings.

 

(a)           In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of overcoming that presumption in connection with the making of any determination contrary to that presumption.

 

(b)           The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo  contendere or its equivalent, or entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

 

(c)           The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.

 

Section 12.            Remedies of Indemnitee.

 

(a)           If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Sections 8 or 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after

 

 

receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Sections 7 or 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction or arbitration conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association, of Indemnitee’s entitlement to indemnification or advance of Expenses.  Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 7 of this Agreement.  Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)           In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).  The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

 

(c)           If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification that was not introduced into evidence in connection with the determination.

 

(d)           In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce Indemnitee’s rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

 

(e)           Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance

 

 

Expenses in accordance with Sections 8 or 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

 

Section 13.            Defense of the Underlying Proceeding.

 

(a)           Indemnitee shall notify the Company promptly in writing upon being served with any summons, citation, subpoena, complaint, indictment, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding.  The failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

 

(b)           Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above.  The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee, or (iii) would impose any Expense, judgment, fine, penalty or limitation on Indemnitee.  This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

 

(c)           Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that Indemnitee may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld or delayed, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld or delayed, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.

 

 

Section 14.            Non-Exclusivity; Survival of Rights; Subrogation.

 

(a)           The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement entered into after the date hereof or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise.  Unless consented to in writing by Indemnitee, no amendment, alteration or repeal of the charter or Bylaws of the Company, this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

 

(b)           In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

Section 15.            Insurance.

 

(a)           The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of Indemnitee’s Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of Indemnitee’s Corporate Status.  In the event of a Change in Control, the Company shall maintain in force any and all directors and officers liability insurance policies that were maintained by the Company immediately prior to the Change in Control for a period of six years with the insurance carrier or carriers and through the insurance broker in place at the time of the Change of Control; provided, however, (i) if the carriers will not offer the same policy and an expiring policy needs to be replaced, a policy substantially comparable in scope and amount shall be obtained and (ii) if any replacement insurance carrier is necessary to obtain a policy substantially comparable in scope and amount, such insurance carrier shall have an AM Best rating that is the same or better than the AM Best rating of the existing insurance carrier; provided, further, however, in no event shall the Company be required to expend in the aggregate in excess of 250% of the annual premium or premiums paid by the Company for directors and officers liability insurance in effect on the date of the Change in Control.  In the event that 250% of the annual premium paid by the Company for such existing directors and officers liability insurance is insufficient for such coverage, the Company shall spend up to that amount to purchase such lesser coverage as may be obtained with such amount.

 

(b)           Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee that would otherwise be indemnifiable hereunder arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in Section 15(a).  The purchase, establishment and maintenance of any such insurance shall not in any way limit or

 

 

affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies.  If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

 

(c)           The Indemnitee shall cooperate with the Company or any insurance carrier of the Company with respect to any investigation or Proceeding.

 

Section 16.            Coordination of Payments.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

Section 17.            Contribution.  If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu or indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, penalties, and/or amounts paid or to be paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

Section 18.            Reports to Stockholders.  To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

 

Section 19.            Duration of Agreement; Binding Effect.

 

(a)           This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).

 

(b)           The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director,

 

 

trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(c)           The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(d)           The Company and Indemnitee agree that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm.  Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled.  Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith.  The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.

 

Section 20.            Severability.  If any provision or provisions of this Agreement shall be held to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 21.            Counterparts.  This Agreement may be executed in two (2) or more counterparts (delivery of which may be by facsimile, or via email as a portable document format (.pdf), each of which will be deemed an original, and it will not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one (1) of such counterparts.

 

Section 22.            Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

Section 23.            Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions

 

 

hereof (whether or not similar) nor, unless otherwise expressly stated, shall such waiver constitute a continuing waiver.

 

Section 24.            Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, on the day of such delivery, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(a)           If to Indemnitee, to the address set forth on the signature page hereto.

 

(b)           If to the Company, to:

 

NorthStar Real Estate Income II, Inc.

399 Park Avenue, 18th Floor

New York, New York 10022

Attn:  Chief Financial Officer and Treasurer

 

or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

Section 25.            Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

	
 
    	
NorthStar   Real Estate Income II, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INDEMNITEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Address:
    

 

 

EXHIBIT A

 

AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

 

To:  The Board of Directors of NorthStar Real Estate Income II, Inc.

 

Re:  Affirmation and Undertaking

 

Ladies and Gentlemen:

 

This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement, dated the            day of                               , 201      , by and between NorthStar Real Estate Income II, Inc., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).

 

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

 

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity.  I hereby affirm my good faith belief that at all times, insofar as I was involved as a director or officer  of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

 

In consideration of the advance by the Company for Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses, together with the Applicable Legal Rate of interest thereon, relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.

 

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this            day of                               , 201      .

 

 

	
 
    	
 
    
	
 
    	
Name:Canyon Copper Corp.: Exhibit 10.1 - Filed by newsfilecorp.com

EARN-IN AGREEMENT 

THIS AGREEMENT is made as of the 24th day of January,
2013. 

AMONG: 

  
    
      
        CANYON COPPER CORP., a company incorporated
          under the laws of Nevada, with an address of Suite 408, 1199 West Pender
          Street, Vancouver, British Columbia V6E 2R1. 

        ("Canyon") 

      

    

  

OF THE FIRST PART 

AND: 

  
    
      
        SANDFIELD RESOURCES (USA) INC., a company
          incorporated under the laws of Nevada with an address of Suite 408,
          1199 West Pender Street, Vancouver, British Columbia V6E 2R1. 

        ("Sandfield Sub") 

      

    

  

OF THE SECOND PART 

AND: 

  
    
      
        SANDFIELD RESOURCES LTD., a company incorporated
          under the laws of British Columbia with an address of Suite 408, 1199
          West Pender Street, Vancouver, British Columbia V6E 2R1. 

        ("Sandfield") 

      

    

  

OF THE THIRD PART 

WHEREAS: 

A.         Canyon
entered into an assignment agreement dated November 25, 2011 (the “Assignment
Agreement”) with Metamin Enterprises Inc. (“Metamin”) and Metamin Enterprises
USA Inc. (“Metamin Sub”) whereby Metamin and Metamin Sub assigned to Canyon all
of their right, title and interest in and to: 

	 	(i) 	
      an option agreement dated September 20, 2010, as amended
      February 18, 2011 and October 31, 2011, (the “Underlying Agreement”)
      between Metamin and Lester Storey (“Storey”) whereby Storey granted
      Metamin an option to acquire a 100% undivided interest in eight mineral
      claims located in Plumas County, California (the “Dianne Claims”) as
      described in Schedule “A” to the Underlying Agreement (the “Option
      Rights”), and

	 	 	 
	 	(ii) 	
      those mineral claims held by Metamin Sub as set forth in
      Schedule “B” to the Underlying Agreement (together with the Dianne Claims,
      the “Property”).

B.         Subject
to the exercise of the Option Rights, Canyon has agreed to transfer to Sandfield
Sub up to a seventy percent (70%) interest in and to the Property on the terms
and conditions set out in this Agreement. 

NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the sum of $10.00 now paid by Sandfield Sub to Canyon (the
receipt of which is hereby acknowledged), the parties agree as follows: 

1.        
DEFINITIONS 

1.1       For the purposes
of this Agreement the following words and phrases shall have the following
meanings, namely: 

	 	(a) 	
      "Agreement" means this agreement and all schedule hereto,
      as may be amended from time to time;

	 	 	 
	 	(b) 	
      "Assignment Agreement" has the meaning as set forth in
      Recital A of this Agreement;

	 	 	 
	 	(c) 	
      "Encumbrance" means any privilege, mortgage, hypothec,
      lien, charge, pledge, security interest or adverse claim;

	 	 	 
	 	(d) 	
      "Environmental Liability" means any claim, demand, loss,
      liability, damage, cost or expense (including legal fees) suffered or
      incurred in respect of environmental cleanup and remediation obligations
      and liabilities arising directly or indirectly from operations or
      activities conducted in or on the Property;

	 	 	 
	 	(e) 	
      "Exchange" means the TSX Venture Exchange;

	 	 	 
	 	(f) 	
      "Exploration Expenditures" means all expenditures and
      costs incurred by Sandfield Sub relating directly or indirectly to the
      Property, including all expenditures and costs incurred: (a) in doing
      geophysical, geochemical, land, airborne, environmental and geological
      examinations, assessments, assays, audits and surveys; (b) in line
      cutting, mapping, trenching and staking; (c) in searching for, digging,
      trucking, sampling, working, developing, mining and extracting ores,
      minerals and metals; (d) in conducting diamond and other drilling; (e) in
      obtaining, providing, installing and erecting mining, milling and other
      treatment, plant, ancillary facilities, buildings, machinery, tools,
      appliances and equipment; (f) in construction of access roads and other
      facilities on or for the benefit of the Property or any part thereof; (g)
      in transporting personnel, supplies, mining, milling and other treatment
      plant, ancillary facilities, buildings, machinery, tools, appliances and
      equipment in, to or from the Property or any part thereof; (h) in paying
      reasonable wages and salaries (including “fringe benefits”, but excluding
      home office costs) of personnel directly engaged in performing work on the
      Property; (i) in paying assessments and contributions under applicable
      employment legislation relating to workers’ compensation and unemployment
      insurance and other applicable legislation related to such personnel; (j)
      in supplying food, lodging and other reasonable needs for such personnel;
      (k) in obtaining and maintaining insurance; (l) in obtaining legal,
      accounting, consulting and other contract and professional services or
      facilities related to work performed or to be performed hereunder; (m) in
      paying any taxes, fees, charges, payments and rentals (including payments
      made in lieu of assessment work) or otherwise incurred to transfer the
      Property or any part thereof in good standing; (n) in paying goods and
      services tax and social service tax and other taxes charged on
      expenditures made or incurred by Sandfield Sub relating directly or
      indirectly to the Property; (o) in acquiring access and surface rights to
      the Property; (p) in carrying out any negotiations and preparing, settling
      and executing any Agreements and other documents relating to environmental
      or indigenous peoples’ claims, requirements or matters; (q) in obtaining
      all necessary or appropriate approvals, permits, consents and permissions
      relating to carrying out of work, including environmental permits,
      approvals and consents; (r) in carrying out reclamation and remediation; (s) in improving, protecting
      and perfecting title to the Property or any part thereof; (t) in carrying
      out mineral, soil, water, air and other testing; and (u) in preparing
      engineering, geological, financing, marketing and environmental studies
  and reports and test work related thereto.

	 	(g) 	
      "Initial Interest" means the transfer to Sandfield Sub of
      a sixty percent (60%) undivided interest in and to the Property by Canyon
      as provided in this Agreement;

	 	 	 
	 	(h) 	
      "Metamin" means Metamin Enterprises Inc.;

	 	 	 
	 	(i) 	
      "Metamin Sub" means Metamin Enterprises USA
  Inc.;

	 	 	 
	 	(j) 	
      "Option" means the option to acquire up to a seventy
      percent (70%) undivided interest in and to the Property as provided in
      this Agreement;

	 	 	 
	 	(k) 	
      "Option Period" means the period from the date of this
      Agreement to and including the date of exercise or termination of the
      Option;

	 	 	 
	 	(l) 	
      "Option Rights" means Canyon’s right to acquire a one
      hundred percent (100%) undivided interest in the Property in accordance
      with the term of the Underlying Agreement;

	 	 	 
	 	(m) 	
      "Property" means the unpatented mineral claims described
      in Schedule "A" to this Agreement and any replacement or successor claims,
      and all mining leases and other mining interests derived from any such
      claims. Any reference herein to any mineral claim comprising the Property
      includes any mineral leases or other interests into which such mineral
      claim may have been converted;

	 	 	 
	 	(n) 	
      "Property Rights" means all licenses, permits, easements,
      rights-of-way, certificates and other approvals obtained by either of the
      parties either before or after the date of this Agreement and necessary
      for the exploration of the Property, or for the purpose of placing the
      Property into production or continuing production therefrom;

	 	 	 
	 	(o) 	
      "Royalties" means the net smelter royalty and gross
      overriding royalty granted to Storey under the Underlying Agreement and to
      Metamin under the Assignment Agreement;

	 	 	 
	 	(p) 	
      "Secondary Interest" means the transfer to Sandfield Sub
      of an additional ten percent (10%) undivided interest in and to the
      Property as provided in this Agreement;

	 	 	 
	 	(q) 	
      "Shares" means the 4,000,000 common shares in the capital
      of Sandfield to be issued to Canyon pursuant to the exercise of the
      Option; and

	 	 	 
	 	(r) 	
      "Underlying Agreement" has the meaning as set forth in
      Recital A of this Agreement.

	2. 	
      REPRESENTATIONS AND WARRANTIES

	 	 
	2.1 	
      Canyon represents and warrants to Sandfield and Sandfield
      Sub that:

	 	(a) 	
      it is the legal and beneficial owner of the Option Rights
  and has the exclusive right to enter into this Agreement;

	 	(b) 	
      upon exercise of the Option Rights by Canyon, it will be
      the legal and beneficial owner of an undivided one hundred percent (100%)
      interest in the Property, subject to the Royalties;

	 	 	 
	 	(c) 	
      the Underlying Agreement is in good standing, full force
      and effect and no party to the Underlying Agreement has given notice, in
      writing or otherwise, to terminate the Underlying Agreement;

	 	 	 
	 	(d) 	
      there are no actions, suits, investigations or
      proceedings before any court, arbitrator, administrative agency or other
      tribunal or governmental authority, whether current, pending or
      threatened, which directly or indirectly relate to or affect the Property
      or the Option Rights;

	 	 	 
	 	(e) 	
      there are no outstanding Agreements or options to
      purchase or otherwise acquire the Option Rights or any portion thereof or
      any interest therein, and except for the Royalties, no person has any
      royalty or other interest whatsoever in the production from the or the
      profits earned from any of the unpatented mineral claims comprising the
      Property and Option Rights;

	 	 	 
	 	(f) 	
      upon exercise of the Option, Canyon will have the legal
      right and authority to transfer title to an undivided seventy percent
      (70%) legal and beneficial interest in the Property to Sandfield
    Sub;

	 	 	 
	 	(g) 	
      there are no obligations or commitments for reclamation,
      closure or other environmental corrective, clean-up or remediation action
      directly or indirectly relating to the Property;

	 	 	 
	 	(h) 	
      no environmental audit, assessment, study or test has
      been conducted on the Property by or on behalf of Canyon nor is Canyon
      aware after reasonable inquiry of any of the same having been conducted by
      or on behalf of any governmental authority or by any other
  person;

	 	 	 
	 	(i) 	
      no proceedings are pending for, and Canyon is unaware of
      any basis for the institution of any proceedings leading to, the
      dissolution or winding up of Canyon or the placing of Canyon in bankruptcy
      or subject to any other laws governing the affairs of insolvent
      corporations;

	 	 	 
	 	(j) 	
      it has been duly incorporated and is a valid and
      subsisting body corporate under the laws of Nevada and is duly qualified
      to carry on its business and to hold an interest in the Option Rights and,
      upon exercise of the Option Rights by Canyon, the Property; and

	 	 	 
	 	(k) 	
      it has duly obtained all necessary governmental,
      corporate and other authorizations for its execution and performance of
      this Agreement, and the consummation of the transactions contemplated
      herein will not, with the giving of notice or the passage of time, or
      both, result in a breach of, constitute a default under, or result in the
      creation of any Encumbrance on its assets under, the terms or provisions
      of any law applicable to it, its constating documents, any resolution of
      its directors or shareholders or any indenture, Agreement or other
      instrument to which it is a party or by which it or its assets may be
      bound.

	2.2 	
      Sandfield Sub represents and warrants to Canyon
    that:

	 	 	 
		(a) 	
      it is lawfully authorized to enter into this Agreement
      and to acquire an interest in the Property;

	 	 	 
		(b) 	
      it has been duly incorporated and is a valid and
      subsisting body corporate under the laws of Nevada and is duly qualified
      to carry on business in its jurisdiction of incorporation and to hold an
      interest in the Property;

	 	 	 
		(c) 	
      it has duly obtained all necessary governmental,
      corporate and other authorizations for its execution and performance of
      this Agreement, and the consummation of the transactions contemplated
      herein will not, with the giving of notice or the passage of time, or
      both, result in a breach of, constitute a default under, or result in the
      creation of any Encumbrance on its assets under, the terms or provisions
      of any law applicable to it, its constating documents, any resolution of
      its directors or shareholders or any indenture, Agreement or other
      instrument to which it is a party or by which it or its assets may be
      bound; and

	 	 	 
		(d) 	
      no proceedings are pending for, and Sandfield Sub is
      unaware of any basis for the institution of any proceedings leading to,
      the dissolution or winding up of Sandfield Sub or the placing of Sandfield
      Sub in bankruptcy or subject to any other laws governing the affairs of
      insolvent corporations.

	 	 	 
	2.3 	
      Sandfield represents and warrants to Canyon
  that:

	 	 	 
		(a) 	
      it has been duly incorporated and is a valid and
      subsisting body corporate under the laws of British Columbia and is duly
      qualified to carry on business in its jurisdiction of
  incorporation;

	 	 	 
		(b) 	
      it has duly obtained all necessary governmental,
      corporate and other authorizations for its execution and performance of
      this Agreement, and the consummation of the transactions contemplated
      herein will not, with the giving of notice or the passage of time, or
      both, result in a breach of, constitute a default under, or result in the
      creation of any Encumbrance on its assets under, the terms or provisions
      of any law applicable to it, its constating documents, any resolution of
      its directors or shareholders or any indenture, Agreement or other
      instrument to which it is a party or by which it or its assets may be
      bound;

	 	 	 
		(c) 	
      no proceedings are pending for, and Sandfield is unaware
      of any basis for the institution of any proceedings leading to, the
      dissolution or winding up of Sandfield or the placing of Sandfield in
      bankruptcy or subject to any other laws governing the affairs of insolvent
      corporations; and

	 	 	 
		(d) 	
      the Shares will, at the time of delivery to Canyon, be
      duly authorized and validly allotted and issued as fully paid and
      non-assessable free of any liens, charges or
  encumbrances.

2.4       The representations and
warranties of the parties set out herein are conditions upon which the parties
have relied in entering into this Agreement and shall survive the termination of
this Agreement and the acquisition of any interest in the Property by Sandfield
Sub hereunder, and each party shall indemnify and save harmless from all loss,
damage, costs and expenses which may be suffered or incurred by the other as a
result of or in connection with any breach or inaccuracy of any such representation and warranty made by such party. 

3.        
GRANT AND EXERCISE OF OPTION 

3.1       Canyon hereby grants to
Sandfield Sub the sole and exclusive right and option (the “Option”) to acquire
an undivided seventy percent (70%) interest in and to the Property free and
clear of all charges, encumbrances and claims. 

3.2       Canyon will
transfer to Sandfield Sub a sixty percent (60%) interest in and to the Property
(the “Initial Interest”) upon: 

	 	(a) 	
      Sandfield Sub paying to Canyon CDN $375,000 as
      follows:

	 	 	 	 
	 		(i) 	
      CDN $125,000 on the approval of the TSX Venture
      Exchange;

	 	 	 	 
	 		(ii) 	
      CDN $125,000 on or before the second anniversary date of
      this Agreement; and

	 	 	 	 
	 		(iii) 	
      CDN $125,000 on or before the third anniversary date of
      this Agreement.

	 	 	 	 
	 	(b) 	
      Sandfield Sub incurring Exploration Expenditures of CDN
      $1,600,000 on the Property as follows:

	 	 	 	 
	 		(i) 	
      CDN $100,000 on or before May 31, 2013;

	 	 	 	 
	 		(ii) 	
      CDN $500,000 on or before the second anniversary date of
      this Agreement; and

	 	 	 	 
	 		(iii) 	
      CDN $1,000,000 on or before the third anniversary date of
      this Agreement.

	 	 	 	 
	 	(c) 	
      Sandfield allotting and issuing to Canyon, as fully paid
      and non-assessable, 3,000,000 Shares as follows:

	 	 	 	 
	 		(i) 	
      500,000 common shares on the Listing Date;

	 	 	 	 
	 		(ii) 	
      2,500,000 common shares on or before the third
      anniversary of the Agreement.

3.3       Canyon will transfer an
additional ten percent (10%) interest in and to the Property (the “Secondary
Interest”) upon: 

	 	(a) 	
      Sandfield Sub incurring Exploration Expenditures of CDN
      $3,000,000 on or before the fifth anniversary of this Agreement;
  and

	 	 	 
	 	(b) 	
      Sandfield allotting and issuing to Canyon, as fully paid
      and non-assessable, 1,000,000 Shares on or before the fifth anniversary of
      this Agreement.

3.4       Exploration
Expenditures shall be deemed to have been incurred by Sandfield Sub when
Sandfield Sub has expended funds or has received goods or services from third
parties for which Sandfield Sub has an obligation to make payment, whether or
not payment has been made. Where Exploration Expenditures are charged to
Sandfield Sub by an affiliate of Sandfield Sub for services rendered by such
affiliate, such Exploration Expenditures shall not exceed the fair market value
of the services rendered.

3.5       Exploration
Expenditures incurred by Sandfield Sub exceeding the amount of Exploration
Expenditures required to be incurred within any period shall be carried forward
to the succeeding period and qualify as Exploration Expenditures. If the
Exploration Expenditures incurred are less than the amount of the Exploration
Expenditures required to be incurred in any period, Sandfield Sub may at its
option pay the deficiency to Canyon within sixty (60) days after the end of such
period in order to maintain the Option. Any such payment of cash in lieu shall
be deemed to be Exploration Expenditures incurred on the Property on or before
the relevant date for the purposes of this Part 3. 

3.6       Canyon shall have
the right to have its auditors audit the Exploration Expenditures claimed by
Sandfield Sub pursuant to this Agreement and Sandfield Sub shall make available
to such auditor, all of the records and accounts required by such auditor to
perform the audit. In the event the audit determines that the Exploration
Expenditures claimed have not been fully incurred pursuant to the terms of the
Option Agreement then any shortfall shall be dealt with by Sandfield Sub in the
manner set out in paragraph 3.7. 

3.7       If Sandfield Sub
reasonably believes that it has incurred Exploration Expenditures required to be
incurred by Sandfield Sub in any period in order to maintain the Option, but it
is subsequently determined upon examination or audit by either party that such
Exploration Expenditures were not incurred within such period, Sandfield Sub
shall not lose any of its rights hereunder and the Option shall not terminate,
provided that Sandfield Sub pays Canyon such deficiency in Exploration
Expenditures within thirty (30) days following such determination (if determined
by Sandfield Sub) or within thirty (30) days following notice to Sandfield Sub
of such deficiency (if determined by Canyon), and the payment of such deficiency
in Exploration Expenditures shall be deemed to be Exploration Expenditures
incurred by Sandfield Sub for purposes of this Agreement. 

3.8       Subject to
Sandfield Sub acquiring the Initial Interest, on the earlier of Sandfield Sub
acquiring the Secondary Interest or the fifth anniversary of this Agreement,
Canyon and Sandfield Sub shall enter into a joint venture agreement
substantially in the form attached hereto as Schedule “B”. 

4.       
 ASSUMPTION OF OBLIGATIONS 

4.1       On the date of Exchange
approval, Sandfield and Sandfield Sub agree to be bound by the provisions of the
Underlying Agreement and the Assignment Agreement, and to assume the obligations
thereunder, including all cash payments, share issuance and exploration work, as
if it had originally executed the same. 

4.2       In the event that
Canyon is unable to obtain Exchange acceptance prior to February 18, 2013 and
this Agreement has not been terminated by either party, Sandfield and Sandfield
Sub agree to make all cash payments and share issuances due to Storey and
Metamin pursuant to the Underlying Agreement and Assignment Agreement,
respectively, on February 18, 2013.

5.       
 TRANSFER OF PROPERTY 

5.1       Canyon shall,
forthwith after the exercise of the Initial Interest by Sandfield Sub, deliver
to Sandfield Sub duly executed transfers of the appropriate interest in the
Property which shall have been acquired by Sandfield Sub upon exercise of the
Initial Interest. 

6.        
RIGHT OF ENTRY 

6.1       For so long as the
Option is outstanding, Sandfield Sub and its employees, representatives, agents
and independent contractors shall have the right: 

	 	(a) 	
      to access all information in the possession or control of
      Canyon relating to the prior operations of Canyon, including all
      geological, geophysical and geochemical data and drill results;

	 	 	 
	 	(b) 	
      to enter upon the Property and carry out such exploration
      and development work thereon and thereunder as Sandfield Sub considers
      advisable, including removing material from the Property for the purpose
      of testing; and

	 	 	 
	 	(c) 	
      to bring upon and erect upon the Property such
      structures, machinery and equipment, facilities and supplies as Sandfield
      Sub considers advisable.

	7. 	
      OBLIGATIONS OF SANDFIELD SUB DURING OPTION
      PERIOD

	 	 	 
	7.1 	
      During the Option Period, Sandfield Sub shall:

	 	 	 
		(a) 	
      maintain in good standing those mineral claims comprising
      the Property by the doing and filing of assessment work or the making of
      payments in lieu thereof, by the payment of taxes and rentals, and the
      performance of all other actions which may be necessary in that regard and
      in order to keep such mineral claims free and clear of all liens and other
      charges arising from Sandfield Sub's activities thereon except those at
      the time contested in good faith by Sandfield Sub;

	 	 	 
		(b) 	
      if applicable, record all exploration work carried out on
      the Property by Sandfield Sub as assessment work;

	 	 	 
		(c) 	
      permit the directors, officers, employees and designated
      consultants of Canyon, at their own risk and expense, access to the
      Property at all reasonable times, and Canyon agrees to indemnify Sandfield
      Sub against and to save it harmless from all costs, claims, liabilities
      and expenses that Sandfield Sub may incur or suffer as a result of any
      injury (including injury causing death) to any director, officer, employee
      or designated consultant of Canyon while on the Property;

	 	 	 
		(d) 	
      do all work on the Property in a good and workmanlike
      fashion and in accordance with all applicable laws, regulations, orders
      and ordinances of any governmental authority;

	 	 	 
		(e) 	
      indemnify and save Canyon harmless in respect of any and
      all costs, claims, liabilities and expenses arising out of Sandfield Sub's
      activities on the Property, but Sandfield Sub shall incur no obligation
      hereunder in respect of claims arising or damages suffered after
      termination of the Option if upon termination of the Option any workings
      on or improvements to the Property made by Sandfield Sub are left in a
      safe condition;

	 	 	 
		(f) 	
      permit Canyon, at its own expense, reasonable access to
      the results of the work done on the Property during the last completed
      calendar year;

	 	 	 
		(g) 	
      prepare and deliver to Canyon, within 30 days following
      each fiscal quarter of Sandfield, a report (the “Report”) summarizing the
      Exploration Expenditures incurred by Sandfield Sub in the relevant
      quarter. The parties acknowledge that the report shall include a copy of
      all invoices related to the Exploration Expenditures in the relevant
      period; and

	 	 	 
		(h) 	
      deliver to Canyon, forthwith upon receipt thereof, copies
of all reports, maps, assay results and other technical data compiled by or prepared at the direction of Sandfield Sub with respect to the Property. 

	8. 	
      TERMINATION OF OPTION

	 	 	 
	8.1 	
      The Option shall terminate:

	 	 	 
		(a) 	
      automatically and without notice from Canyon, upon
      Sandfield Sub failing to incur or make, in accordance with the terms of
      this Agreement, any expenditure, payment or issuance of shares on the date
      specified for such occurrence which must be incurred, made or issued in
      exercise of the Option; or

	 	 	 
		(b) 	
      at any other time, by Sandfield Sub giving notice of such
      termination to Canyon.

8.2       Sandfield Sub shall
remain liable for any payments, share issuances or expenditures that were due to
be paid by Sandfield Sub at the time of termination. 

8.3       If the Option is
terminated, Sandfield Sub shall deliver or make available at no cost to Canyon
within 90 days of such termination, all drill core, copies of all reports, maps,
assay results and other relevant technical data compiled by, prepared at the
direction of, or in the possession of Sandfield Subwith respect to the Property
and not theretofore furnished to Canyon. 

8.4       Notwithstanding the
termination of the Option, Sandfield Sub, not being in default of the terms and
conditions of this Agreement, shall have the right, within a period of 180 days
following the end of the Option Period, to remove from the Property all
buildings, plant, equipment, machinery, tools, appliances and supplies which
have been brought upon the Property by or on behalf of Sandfield Sub, and any
such property not removed within such 180 day period shall thereafter become the
property of Canyon. 

9.        
ASSIGNMENT 

9.1       Sandfield Sub may
at any time, either during the Option Period or thereafter, sell, transfer or
otherwise dispose of all or any portion of its interest in and to the Option
Rights and, upon exercise of the Option Rights by Canyon, the Property and this
Agreement provided that any purchaser, grantee or transferee, other than a
wholly owned subsidiary of Sandfield Sub, of any such interest shall have first
delivered to Canyon its agreement relating to this Agreement and to the Option
Rights and, upon exercise of the Option Rights by Canyon, the Property,
containing: 

	 	(a) 	
      a covenant to perform all the obligations of Sandfield
      Sub to be performed under this Agreement in respect of the interest to be
      acquired by it from Sandfield Sub to the same extent as if this Agreement
      had been originally executed by such purchaser, grantee or transferee;
      and

	 	 	 
	 	(b) 	
      a provision subjecting any further sale, transfer or
      other disposition of such interest in the Option Rights and, upon exercise
      of the Option Rights by Canyon, the Property and this Agreement or any
      portion thereof to the restrictions contained in this paragraph
  9.1.

9.2       No assignment by
Sandfield Sub of any interest less than its entire interest in this Agreement
and in the Property shall, as between Sandfield Sub and Canyon, discharge it
from any of its obligations hereunder, but upon the transfer by Sandfield Sub of
the entire interest at the time held by it in this Agreement, whether to one or
more transferees and whether in one or in a number of successive transfers, Sandfield Sub shall be deemed to be discharged from all
obligations hereunder save and except for other fulfillment of contractual
commitments accrued due prior to the date on which Sandfield Sub shall have no
further interest in this Agreement. 

9.3       If Canyon should
receive a bona fide offer from an independent third party (the "Proposed
Purchaser") dealing at arm's length with Canyon to purchase all or a part of its
interest in the Property, which offer Canyon desires to accept, or if Canyon
intends to sell all or a part of its interest in the Property: 

	 	(a) 	
      Canyon shall first offer (the "Offer") such interest in
      writing to Sandfield Sub upon terms no less favourable than those offered
      by the Proposed Purchaser or intended to be offered by Canyon, as the case
      may be.

	 	 	 
	 	(b) 	
      The Offer shall specify the price, terms and conditions
      of such sale, the name of the Proposed Purchaser and shall, in the case of
      an intended offer by Canyon, disclose the person or persons to whom Canyon
      intends to offer its interest and, if the offer received by Canyon from
      the Proposed Purchaser provides for any consideration payable to Canyon
      otherwise than in cash, the Offer shall include Canyon's good faith
      estimate of the cash equivalent of the non-cash consideration.

	 	 	 
	 	(c) 	
      If within a period of 21 days of the receipt of the Offer
      Sandfield Sub notifies Canyon in writing that it will accept the Offer,
      Canyon shall be bound to sell such interest to Sandfield Sub on the terms
      and conditions of the Offer. If the Offer so accepted by Sandfield Sub
      contains Canyon's good faith estimate of the cash equivalent of the non-
      cash consideration as aforesaid, and if Sandfield Sub disagrees with
      Canyon's best estimate, Sandfield Sub shall so notify Canyon at the time
      of acceptance and Sandfield Sub shall, in such notice, specify what it
      considers, in good faith, the fair cash equivalent to be and the resulting
      total purchase price. If Sandfield Sub so notifies Canyon, the acceptance
      by Sandfield Sub shall be effective and binding upon Canyon and Sandfield
      Sub, and the cash equivalent of any such non-cash consideration shall be
      determined by binding arbitration and shall be payable by Sandfield Sub,
      subject to prepayment as hereinafter provided, within 21 days following
      its determination by arbitration. Sandfield Sub shall in such case pay to
      Canyon, against receipt of an absolute transfer of clear and unencumbered
      title to the interest of Canyon being sold, the total purchase price which
      is specified in its notice to Canyon and such amount shall be credited to
      the amount determined following arbitration of the cash equivalent of any
      non-cash consideration.

	 	 	 
	 	(d) 	
      If Sandfield Sub fails to notify Canyon before the
      expiration of the time limited therefor that it will purchase the interest
      offered, Canyon may sell and transfer such interest to the Proposed
      Purchaser at the price and on the terms and conditions specified in the
      Offer for a period of 21 days, but the terms of this paragraph shall again
      apply to such interest if the sale to the Proposed Purchaser is not
      completed within such 21 days. 

	 	 	 
	 	(e) 	
      Any sale hereunder shall be conditional upon the Proposed
      Purchaser delivering a written undertaking to Sandfield Sub, in form and
      substance satisfactory to its counsel, to be bound by the terms and
      conditions of this Agreement.

10.      
AREA OF INTEREST 

10.1      If either party or any of its
affiliates stakes or otherwise acquires any interest in mineral claims or any
other form of mineral tenure (the “AOI Tenure”) located wholly or party in an
area (the “Area of Interest”) within 5 kilometres from any portion of the Property
as it exists at the date of execution of this Agreement, the acquiring party
shall forthwith give notice to the other party of such staking or acquisition,
the costs thereof and all details in its possession with respect to the nature
of the AOI Tenure and the known mineralization thereon. Upon deliver of such
notice: 

	 	(a) 	
      if such notice is delivered prior to the formation of the
      Joint Venture, Sandfield Sub may elect by notice to Canyon to require that
      such AOI Tenure be included in and thereafter form part of the Property.
      If Sandfield Sub so elects and if such AOI Tenure was staked or acquired
      by Sandfield Sub or any of its affiliates, the staking or acquisition
      costs shall constitute Exploration Expenditures. If Sandfield Sub so
      elects and if such AOI Tenure was staked or acquired by Canyon or any of
      its affiliates, Sandfield Sub shall reimburse Canyon for the staking or
      acquisition costs, which reimbursed costs shall also constitute
      Exploration Expenditures; and

	 	 	 
	 	(b) 	
      if such notice is delivered after formation of the Joint
      Venture, the other party may elect, by notice to the acquiring party, to
      require that such AOI Tenure be included in and thereafter form part of
      the Property, provided that the other party then holds a participating
      interest in the Property. If such AOI Tenure becomes part of the Property,
      the party from whom or from whose affiliate such AOI Tenure was acquired
      shall be reimbursed its staking or acquisition costs, and such
      reimbursement shall be deemed a cost of the Joint
  Venture.

11.      
 FORCE MAJEURE 

11.1      If Sandfield Sub is at any
time either during the Option Period or thereafter prevented or delayed in
complying with any provisions of this Agreement by reason of strikes, lock-outs,
labour shortages, power shortages, fuel shortages, fires, wars, acts of God,
governmental regulations restricting normal operations, shipping delays or any
other reason or reasons, other than lack of funds, beyond the control of
Sandfield Sub, the time limited for the performance by Sandfield Sub of its
obligations hereunder shall be extended by a period of time equal in length to
the period of each such prevention or delay, but nothing herein shall discharge
Sandfield Sub from its obligations hereunder to maintain the Property in good
standing. 

11.2      Sandfield Sub shall give
prompt notice to Canyon of each event of force majeure and upon cessation of
such event shall furnish to Canyon with notice to that effect together with
particulars of the number of days by which the obligations of Sandfield Sub
hereunder have been extended by virtue of such event of force majeure and all
preceding events of force majeure. 

12.      
 CONFIDENTIAL INFORMATION 

12.1      All information concerning
this Agreement and any matters arising from or in connection herewith (including
all information relating to the Property received by Sandfield Sub and Sandfield
from Canyon) shall be treated as confidential by the parties and shall not be
disclosed by either party to any other person (other than to an affiliate or to
the directors, officer or employees of the disclosing party or its affiliate or
to any legal, accounting, financial or other professional advisor of the
disclosing party or its affiliate, provided that such persons are under
obligation to maintain confidentiality with respect to such information) without
the prior written consent of the other party, such consent not to be
unreasonably withheld, except to the extent that such disclosure may be
necessary for observance of applicable laws or stock exchange listing
requirements or for the accomplishment of the purposes of this Agreement. 

13.      
 ARBITRATION 

13.1      All questions or matters in
dispute under this Agreement shall be submitted to arbitration pursuant to the
terms hereof. 

13.2      It shall be a condition
precedent to the right of any party to submit any matter to arbitration pursuant
to the provisions hereof, that any party intending to refer any matter to
arbitration shall have given not less than 10 days prior notice of its intention
to do so to the other party, together with particulars of the matter in dispute.
On the expiration of such 10 days, the party who gave such notice may proceed to
refer the dispute to arbitration as provided in paragraph 13.3. 

13.3      The party desiring
arbitration shall appoint one arbitrator, and shall notify the other party of
such appointment, and the other party shall, within 15 days after receiving such
notice, either consent to the appointment of such arbitrator which shall then
carry out the arbitration or appoint an arbitrator, and the two arbitrators so
named, before proceeding to act, shall, within 30 days of the appointment of the
last appointed arbitrator, unanimously agree on the appointment of a third
arbitrator to act with them and be chairman of the arbitration herein provided
for. If the other party shall fail to appoint an arbitrator within 15 days after
receiving notice of the appointment of the first arbitrator, the first
arbitrator shall be the only arbitrator. If the two arbitrators appointed by the
parties shall be unable to agree on the appointment of the chairman, the
chairman shall be appointed under the provisions of the Commercial
Arbitration Act of British Columbia. Except as specifically otherwise
provided in this section, the arbitration herein provided for shall be conducted
in accordance with such Act. The chairman, or in the case where only one
arbitrator is appointed, the single arbitrator, shall fix a time and place in
Vancouver, British Columbia, for the purpose of hearing the evidence and
representations of the parties, and he shall preside over the arbitration and
determine all questions of procedure not provided for under such Act or this
section. After hearing any evidence and representations that the parties may
submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the parties. The expense of the arbitration shall be paid as specified
in the award. 

13.4      The parties agree that the
award of a majority of the arbitrators, or in the case of a single arbitrator,
of such arbitrator, shall be final and binding upon each of them. 

14.      
 NOTICES 

14.1      Each notice, demand or other
communication required or permitted to be given under this Agreement shall be in
writing and shall be delivered, emailed or faxed to such party at the address
for such party specified below. The date of receipt of such notice, demand or
other communication shall be the date of delivery thereof if delivered or, if
given by email or fax, shall be deemed conclusively to be the next business day.
Either party may at any time and from time to time notify the other party in
writing of a change of address and the new address to which notice shall be
given to it thereafter until further change. 

The address for service for each of the parties hereto shall be
as follows: 

	 	(a) 	
      if to Canyon: 
Canyon Copper Corp.

	 		
      Suite 408, 1199 West Pender Street 
Vancouver, British
      Columbia 
V6E 2R1 
Attention: Benjamin Ainsworth 
Fax:
      
Email:

	 	 	 
	 	(b) 	
      if to Sandfield Sub:

	 		
      Sandfield Resources (USA) Inc. 
Suite 408, 1199 West
      Pender Street 
Vancouver, British Columbia 
V6E 2R1 
Attention:
      Kurt Bordian 
Fax: (604) 681-2577 
Email:

	 	 	 
	 	(c) 	
      if to Sandfield: 
Sandfield Resources Ltd.

	 		
      Suite 408, 1199 West Pender Street 
Vancouver, British
      Columbia 
V6E 2R1 
Attention: Kurt Bordian 
Fax: (604) 681-2577
      
Email:

15.       
CONDITIONS 

15.1      The obligations of Canyon
are subject to the acceptance of the Exchange of any and all filings required to
be made with the Exchange in respect of this Agreement and/or the subject matter
hereof. Canyon shall use commercially reasonable efforts to seek and obtain any
required acceptance under this section. 

15.2      The obligations of Sandfield
Sub are subject to the consent, in writing, of Storey to this Agreement and the
subject matter thereof. 

16.      
 GENERAL 

16.1      This Agreement shall
supersede and replace any other agreement or arrangement, whether oral or
written, heretofore existing between the parties in respect of the subject
matter of this Agreement. 

16.2      No consent or waiver
expressed or implied by either party in respect of any breach or default by the
other in the performance by such other of its obligations hereunder shall be
deemed or construed to be a consent to or a waiver of any other breach or
default. 

16.3      The parties shall promptly
execute or cause to be executed all documents, deeds, conveyances and other
instruments of further assurance and do such further and other acts which may be
reasonably necessary or advisable to carry out fully the intent of this
Agreement or to record wherever appropriate the respective interest from time to
time of the parties in the Option Rights and, upon exercise of the Option Rights by Canyon, the Property. 

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

16.5      This Agreement shall be
governed by and construed in accordance with the laws of British Columbia and
shall be subject to the approval of all securities regulatory authorities having
jurisdiction. 

16.6      If any provision of this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, such provision may be severed from this Agreement, and the
validity, legality and enforceability of the remaining provisions hereof shall
not be affected or impaired by reasons thereof. 

16.7      Time shall be of the essence
in this Agreement. 

16.8      Wherever the neuter and
singular is used in this Agreement it shall be deemed to include the plural,
masculine and feminine, as the case may be. 

16.9      This Agreement may be
executed in one or more counterparts, each of which so signed, whether in
original or facsimile form, shall be deemed to be an original and bear the dates
as set out above and all of which together will constitute one and the same
instrument. 

IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written. 

CANYON COPPER CORP. 

	/s/ Benjamin
      Ainsworth 	 
	Name:    Benjamin Ainsworth 	 
	Title:      CEO and President 	 

SANDFIELD RESOURCES (USA) INC. 

	/s/ Mark
      Lawson 	 
	Name:    Mark Lawson 	 
	Title:      President 	 

SANDFIELD RESOURCES LTD. 

	/s/ Mark
      Lawson 	 
	Name:    Mark Lawson 	 
	Title:      President 	 

SCHEDULE "A" 

The Property is located in Plumas County, California USA 

List of Claims of the Property 

Claims Registered in the Name of Storey 

	Claim Name 	CAMC No. 	Original Recordation 	Recording Date 
	Diane 1 	264419 	Plumas County
      Book 58, page 463 	10/14/94 
	Diane 2 	264420 	Plumas County Book 58, page 464
    	10/14/94 
	Diane 3 	264421 	Plumas County
      Book 58, page 465 	10/14/94 
	Diane 4 	264422 	Plumas County Book 58, page 466
    	10/14/94 
	Diane 5 	264423 	Plumas County
      Book 58, page 467 	10/14/94 
	Diane 6 	264424 	Plumas County Book 58, page 468
    	10/14/94 
	Diane 7 	264425 	Plumas County
      Book 58, page 469 	10/14/94 
	Diane 8 	264426 	Plumas County Book 58, page 470
    	10/14/94 

Claims Registered in the Name of Canyon 

(See Attached) 

SCHEDULE “B” 

Form of Joint Venture Agreement 

(See Attached) 

JOINT VENTURE AGREEMENT 

THIS AGREEMENT made as of the _____day of ___________,
________. 

BETWEEN: 

  
    
      
        CANYON COPPER CORP., a company incorporated
          under the laws of Nevada, with an address of Suite 408, 1199 West Pender
          Street, Vancouver, British Columbia V6E 2R1. 

        ("Canyon") 

      

    

  

OF THE FIRST PART 

AND: 

  
    
      
        SANDFIELD RESOURCES (USA) INC., a company
          incorporated under the laws of Nevada with an address of Suite 408,
          1199 West Pender Street, Vancouver, British Columbia V6E 2R1. 

        ("Sandfield") 

      

    

  

OF THE SECOND PART 

WHEREAS: 

A.         Canyon owns
an undivided <>% interest and Sandfield owns an undivided <>%
interest in and to the Property; and 

B.         The parties
have agreed to create a joint venture to carry out the continued exploration and
development of the Property on the terms and conditions hereinafter set forth.

NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the premises and of the mutual covenants and agreements herein
contained the parties hereto have agreed and do hereby agree as follows: 

	1. 	
      INTERPRETATION

	 	 	 
	1.1 	
      In this Agreement the following words, phrases and
      expressions shall have the following meanings:

	 	 	 
		(a) 	
      "Accounting Procedure" means the procedure attached to
      this Agreement as Appendix I by which the Joint Operation shall be
      accounted for.

	 	 	 
		(b) 	
      "Affiliate" shall have the meaning attributed to it in
      the British Columbia Business Corporations Act.

	 	 	 
		(c) 	
      "Agreement" means this Joint Venture Agreement, as
      amended from time to time.

	 	 	 
		(d) 	
      "Assets" means all tangible and intangible goods,
      chattels, improvements or other items including, without limiting the
      generality of the foregoing, land, buildings, and equipment, excluding the
      Property, acquired for or made to the Property under this Agreement or the
      cost of which is included in Prior Exploration Costs.

	 	 	 
		(e) 	
      "Commercial Production"
means:

	 	(i) 	
      if a mill is located on the Property, the last day of a
      period of forty (40) consecutive days in which, for not less than thirty
      (30) days, the mill processed ore from the Property at not less than sixty
      percent (60%) of its rated capacity; or

	 	 	 
	 	(ii) 	
      if no mill is located on the Property, the last day of a
      period of thirty (30) consecutive days during which ore has been shipped
      from the Property on a reasonably regular basis for the purpose of earning
      revenues,

	 		
      but no period of time during which ore is shipped from
      the Property for testing purposes, and no period of time during which
      milling operations are undertaken as initial tune-up, shall be taken into
      account in determining the date of the commencement of Commercial
      Production.

	 	 	 	 
	 	(f) 	
      "Completion Date" means the date on which it is
      demonstrated to the satisfaction of the Management Committee that the
      preparing and equipping of the Mine for Commercial Production is
      complete.

	 	 	 	 
	 	(g) 	
      "Construction" means every kind of work carried out
      during the Construction Period by the Operator in accordance with the
      Feasibility Report approved by the Management Committee.

	 	 	 	 
	 	(h) 	
      "Construction Period" means, unless the Production Notice
      is subsequently withdrawn, the period beginning on the date a Production
      Notice is given and ending on the Completion Date.

	 	 	 	 
	 	(i) 	
      "Costs" means all items of outlay and expense whatsoever,
      direct or indirect, with respect to Mining Operations in accordance with
      this Agreement. Without limiting the generality of the foregoing, the
      following categories of Costs shall have the following meanings:

	 	 	 	 
	 		(i) 	
      "Construction Costs" means those Costs incurred by the
      Participants during the Construction Period including, without limiting
      the generality of the foregoing, the Operator's fee;

	 	 	 	 
	 		(ii) 	
      “Exploration Costs" means those Costs incurred by the
      Participants during the Exploration Period including, without limiting the
      generality of the foregoing, the Operator's fee;

	 	 	 	 
	 		(iii) 	
      "Mine Costs" means Construction Costs and Operating
      Costs; and

	 	 	 	 
	 		(iv) 	
      "Operating Costs" means those Costs incurred by the
      Participants subsequent to the Completion Date including, without limiting
      the generality of the foregoing, the Operator's fee.

	 	 	 	 
	 	(j) 	
      "Exploration Period" means the period beginning on the
      date of this Agreement and ending on the date an effective Production
      Notice is given. "Prior Exploration Costs" means the expenditures and
      deemed expenditures of the parties as determined in accordance with
      Appendix III.

	 	 	 	 
	 	(k) 	
      "Feasibility Report" means a detailed report
      demonstrating the feasibility of placing any part of the Property into
      Commercial Production at an acceptable rate of return on capital in such
      form and detail as is customarily required by institutional lenders of
      major financing for mining projects and shall include a reasonably
      assessment of the mineable ore reserves and their amenability to
      metallurgical treatment, a complete description of the work, equipment and
      supplies required to bring such part of the Property into Commercial
Production and the estimated cost thereof, a description of the mining methods to be employed and a financial appraisal of the proposed operations supported by explanations of the following information: 

	 	-	
      a description of that part of the Property to be covered
      by the proposed mine; 

	 	 	 
	 	- 	
      the estimated recoverable reserves of minerals and the
      estimated composition and content thereof; 

	 	 	 
	 	-	
      the proposed procedure for development, mining and
      production; 

	 	 	 
	 	-	
      results of ore amenability tests; 

	 	 	 
	 	- 	
      the nature and extent of the facilities proposed to be
      acquired which may include mill facilities, if the size, extent and
      location of the ore body makes such mill facilities feasible, in which
      event the study shall also include a preliminary design for such mill;
    

	 	 	 
	 	- 	
      the total costs, including capital budget, which are
      reasonably required to purchase, construct and install all structures,
      machinery and equipment required for the proposed mine including a
      schedule of timing of such requirements; 

	 	 	 
	 	-	
      all environmental impact studies and costs; 

	 	 	 
	 	-	
      the period in which it is proposed the Property be put
      into Commercial Production; 

	 	 	 
	 	- 	
      such other data and information as are reasonably
      necessary to substantiate the existence of an ore deposit of sufficient
      size and grade to justify development of a mine, taking into account all
      relevant business, tax and other economic considerations; and 

	 	 	 
	 	- 	
      working capital requirements for the initial four month
      operation of the Property as a mine or such longer period as may be
      reasonably justified in the circumstances. 

	 	(l) 	
      "Interest" means the undivided beneficial percentage
      interest in the Property, the Assets and any Mine which is subject to
      adjustment during the Exploration Period according to Article 8, and
      subsequent to the Exploration Period according to Article 11.

	 	 	 
	 	(m) 	
      "Joint Operation" means the joint venture formed pursuant
      to Article 2 for the purpose of exploring and developing the Property and
      operating it as a Mine.

	 	 	 
	 	(n) 	
      "Management Committee" means the committee established
      pursuant to Article 4.

	 	 	 
	 	(o) 	
      "Mine" means the workings established and Assets acquired
      including, without limiting the generality of the foregoing, development
      headings, plant and concentrator installations, infrastructure, housing,
      roads, airport and other facilities in order to bring the Property into
      Commercial Production.

	 	 	 
	 	(p) 	
      "Minerals" means all ores, and concentrates derived
      therefrom, and all minerals, precious and base, metallic and non-metallic,
      in, on or under the Property which may lawfully be explored for, mined and
      sold.

	 	 	 
	 	(q) 	
      "Mining Operations" means every kind of work done by or
      on behalf of the Operator:

	 	(i) 	
      on or in respect of the Property in accordance with a
      Program or Production Notice; or

	 	(ii) 	
      if not provided for in a Program or Production Notice,
      unilaterally and in good faith to maintain the Property in good standing,
      to prevent waste or to otherwise discharge any obligation which is imposed
      upon it pursuant to this Agreement and in respect of which the Management
      Committee has not given it directions;

	 		
      including, without limiting the generality of the
      foregoing, investigating, prospecting, exploring, developing, property
      maintenance, preparing reports, estimates and studies, designing,
      equipping, improving, surveying, Construction and mining, milling
      concentrating, rehabilitation, reclamation, and environmental
      protection.

	 	 	 
	 	(r) 	
      "Operating Plan" shall mean a plan prepared in accordance
      with Article 14 for the operation of the Mine.

	 	 	 
	 	(s) 	
      "Operating Year" shall mean a 12 month period, the first
      Operating Year to commence on the day after the Completion Date and each
      succeeding Operating Year commencing immediately after the expiration of
      the preceding Operating Year.

	 	 	 
	 	(t) 	
      "Operator" means the party or other person appointed as
      the Operator in accordance with Article 5.

	 	 	 
	 	(u) 	
      "Participant" means a party that has elected to
      contribute to Exploration Costs or Mine Costs, as the case may
  be.

	 	 	 
	 	(v) 	
      "Party" or "Parties" means the parties to this Agreement
      and their respective successors and permitted assigns which become parties
      pursuant to this Agreement.

	 	 	 
	 	(w) 	
      "Prime Rate" means the rate of interest from time to time
      stated by the Royal Bank of Canada at its main branch in Vancouver,
      British Columbia, as being its prime rate on Canadian dollar demand
      loans.

	 	 	 
	 	(x) 	
      "Production Notice" means a notice which is given to each
      of the Parties pursuant to Article 10 respecting the establishment of a
      Mine on and Commercial Production from the Property.

	 	 	 
	 	(y) 	
      "Program" means the work plan and budget of Mining
      Operations conducted during the Exploration Period and adopted pursuant to
      Article 8.

	 	 	 
	 	(z) 	
      "Property" means the mineral properties described in
      Appendix IV and any additional mineral properties that become part of the
      Property pursuant to this Agreement, the Minerals therein, all information
      obtained from Mining Operations and those rights and benefits appurtenant
      to the Property that are acquired for the purpose of conducting Mining
      Operations. A reference to Property shall include a reference to any
      portion thereof.

	 	 	 
	 	(aa) 	
      "Proportionate Share" means the share which is equal to a
      Party's Interest.

	 	 	 
	 	(bb) 	
      "Simple Majority" means a decision made by the Management
      Committee by greater than 50% of the votes entitled to be
  cast.

1.2       The words
"Article", "Section", "Subsection", "Paragraph", "Subparagraph", "Clause",
"herein" and "hereunder" refer to this Agreement. The words "this Agreement"
include every Schedule or Appendix attached hereto. 

1.3       The captions and
the emphases of the defined terms have been inserted for convenience and do not
define the scope of any provision. 

2.       
 FORMATION OF THE JOINT VENTURE 

2.1       The Parties hereby
agree, subject to Article 23, to associate and participate in a joint venture
for the sole purpose of exploring the Property and, if deemed warranted,
bringing the Property or a portion thereof into Commercial Production by
establishing and operating a Mine. 

2.2       Except as expressly
provided in this Agreement each party shall have the right independently to
engage in and receive full benefits from business activities whether or not
competitive with the Joint Operation without consulting any other party. The
doctrines of "corporate opportunity" or "business opportunity" shall not be
applied to any other activity, venture or operation of any party with respect to
any opportunity to acquire any assets outside of the Property at any time, or
within the Property after the termination of this Agreement. Unless otherwise
agreed in writing no Party shall have any obligation to mill, beneficiate or
otherwise treat any Minerals or any other Party's share of Minerals in any
facility owned or controlled by such Party. 

3.        
INTERESTS 

3.1       Except as otherwise
provided herein the parties shall bear all Costs and all liabilities arising
under this Agreement and shall own the Property, the Assets and any Mine all in
proportion to their respective Interests. 

3.2       The respective initial
Interests shall be as follows: 

	 	(a) 	
      Sandfield Resources (USA) Inc. - <>%

	 	 	 
	 	(b) 	
      Canyon Copper Corp. - <>%

4.       
 MANAGEMENT COMMITTEE 

4.1       A Management Committee
shall be established on or forthwith after the date of this Agreement. Except as
herein otherwise provided the Management Committee shall make all decisions in
respect of Mining Operations. 

4.2       The Management
Committee shall be comprised of three (3) nominees of Sandfield and two (2)
nominees of Canyon. 

4.3       The Operator shall call
a Management Committee meeting at least once every 12 months and, in any event,
within 14 days of being requested to do so by any representative. 

4.4       The Operator shall
give notice specifying the time, place of and the agenda for the meeting to all
representatives at least seven days before the time appointed for the meeting.

4.5       Notice of a
meeting shall not be required if all representatives are present and unanimously
agree upon the agenda. 

4.6       A quorum for any
Management Committee meeting shall be present if the representatives of Parties
holding Interests totalling over 51% are present. If a quorum is present at the
meeting the Management Committee shall be competent to exercise all of the
authority, power and discretion herein bestowed upon it. The Management
Committee shall not transact any business at a meeting unless a quorum is
present at the commencement of the meeting but the quorum need not be present
throughout the meeting. A meeting at which a quorum is not present shall be
adjourned to the same time and place one week later at which adjourned meeting
a quorum shall be one representative of a Party. 

4.7       The Management
Committee shall decide every question submitted to it by a vote with each
Party's representative being entitled to cast that number of votes which is
equal to its Party's Interest. Unless otherwise specifically required the
Management Committee shall make decisions by Simple Majority. In the event of a
deadlock the Operator's representative or the representative of a party who is
Operator shall have a second or casting vote shall not have a second or casting
vote and the matter shall be submitted to arbitration pursuant to Article 27.

4.8       The representative of
the Operator shall be the chairman of Management Committee meetings. 

4.9       The secretary of
the Management Committee shall be appointed by the chairman and shall take
minutes of that meeting and circulate copies thereof to each representative.

4.10       The Management
Committee may make decisions by obtaining the consent in writing of the
representatives of all Parties which consent may be in one or more counterparts
which together shall be deemed to constitute one consent. Any decision so made
shall be as valid as a decision made at a duly called and held meeting of the
Management Committee. 

4.11       Management Committee
decisions made in accordance with this Agreement shall be binding upon all of
the parties. 

4.12       Each party shall
bear the expenses incurred by its representatives and alternate representatives
in attending meetings of the Management Committee. 

4.13       The Management
Committee may establish such other rules of procedure, not inconsistent with
this Agreement, as the Management Committee deems fit. 

5.        
OPERATOR 

5.1       Sandfield shall be
the Operator until it resigns or is removed by the Management Committee. 

5.2       The Operator may
resign as Operator by giving notice to all the parties at least 90 days before
its resignation. The Management Committee shall thereupon select another
Operator not later than the 90th day after receipt of the previous Operator's
notice of resignation. 

5.3       The Management
Committee may remove an Operator by six months notice in writing and shall
appoint a new Operator. If the Operator has failed to perform in a manner that
is consistent with good mineral exploration and development practice or is in
default of its duties and responsibilities under this Agreement, and the
Management Committee or another Party has given to the Operator written notice
setting forth particulars of the Operator's default and the Operator has not
within 30 days of such notice commenced to remedy the default and thereafter to
proceed continuously and diligently to complete all required remedial action the
other Party, and if there is more than one, the one with the greatest Interest,
shall become the Operator. 

5.4       Upon the Operator
making a voluntary or involuntary assignment into bankruptcy or taking advantage
of any legislation for the winding-up or liquidation of the affairs of insolvent
or bankrupt companies the Operator shall automatically cease to be the Operator
and the other Party or, if there is more than one, the one with the greatest
Interest, shall be appointed as Operator. 

5.5       The new Operator
shall assume all of the rights, duties, liabilities and status of Operator as
provided in this Agreement. The new Operator shall have no obligation to hire
any employees of the former Operator. 

5.6       Upon ceasing to be
Operator the former Operator shall forthwith deliver to the person nominated for
that purpose by the Management Committee, the custody of all Assets, Property,
books, records, and other property both real and personal relating to this
Agreement. 

5.7       If the Operator resigns
or is removed and no other person consents to act as Operator the Joint
Operation shall terminate and the provisions of Article 18 shall apply
mutatis mutandis. 

6.       
 OPERATOR'S FEE 

6.1       The Operator may charge
the following sums in satisfaction of its general overhead costs which are not
charged directly as provided in the Accounting Procedure: 

	 	(a) 	
      with respect to Programs:

	 	 	 	 
	 		(i) 	
      2% for each individual contract which includes an
      overhead charge by the person contracted;

	 	 	 	 
	 		(ii) 	
      5% for each individual contract which exceeds $100,000
      and does not include an overhead charge by the person
contracted;

	 	 	 	 
	 		(iii) 	
      10% of all other Exploration Costs;

	 	 	 	 
	 	(b) 	
      with respect to Construction, 1% of all Construction
      Costs; and

	 	 	 	 
	 	(c) 	
      subsequent to the Completion Date, 5% of all Operating
      Costs.

7.        
RIGHTS, DUTIES AND STATUS OF OPERATOR 

7.1       The Operator in its
operations hereunder shall be deemed to be an independent contractor and shall
be entitled to charge for its services hereunder in accordance with the
provisions of this Agreement and the Accounting Procedure relative thereto. The
Operator shall not act or hold itself out as agent for any of the Parties nor
make any commitments on their individual behalf unless specifically permitted by
this Agreement or directed in writing by such Party. 

7.2       Subject to any specific
provision of this Agreement and subject to it having the right to reject any
direction on reasonable grounds by virtue of its status as an independent
contractor, the Operator shall perform its duties hereunder in accordance with
the directions of the Management Committee and in accordance with this
Agreement. 

7.3       The Operator shall
manage and carry out such Mining Operations as the Management Committee may
direct and in connection therewith shall, in advance if reasonably possible,
notify the Management Committee of any change in Mining Operations which the
Operator considers material and, if it is not reasonably possible, the Operator
shall notify the Management Committee so soon thereafter as is reasonably
possible. 

7.4       The Operator shall
have the sole and exclusive right and authority to manage and carry out all
Mining Operations and to enter into contracts and sub-contracts on behalf of the
Joint Operation with third parties in respect thereof and incur the Costs
required for that purpose. In so doing the Operator shall, unless it obtains the
approval of the Management Committee: 

	 	(a) 	
      comply with the provisions of all agreements or
      instruments of title under which the Property or Assets are
  held;

	 	(b) 	
      pay all Costs properly incurred promptly as and when
      due;

	 	 	 
	 	(c) 	
      keep the Property and Assets free of all liens and
      encumbrances other than those, if any, in effect on the date of this
      Agreement, those the creation of which is permitted pursuant to this
      Agreement, or builder's or mechanic's liens arising out of the Mining
      Operations and, in the event of any lien being filed as aforesaid, proceed
      with diligence to contest or discharge the same;

	 	 	 
	 	(d) 	
      prosecute claims or, where a defence is available, defend
      litigation arising out of the Mining Operations provided that any
      Participant may join in the prosecution or defence at its own
    expense;

	 	 	 
	 	(e) 	
      subject to section 19.2, perform such assessment work or
      make payments in lieu thereof and pay such rentals, taxes or other
      payments and do all such other things as may be necessary to maintain the
      Property in good standing including, without limiting the generality of
      the foregoing, staking and restaking mining claims, and applying for
      licenses, leases, grants, concessions, permits, patents and other rights
      to and interests in the Minerals;

	 	 	 
	 	(f) 	
      maintain accounts in accordance with the Accounting
      Procedure provided that the judgement of the Operator as to matters
      related to the accounting for which provision is not made in the
      Accounting Procedure shall govern if the Operator's accounting practices
      are in accordance with accounting principles generally accepted in the
      mining industry in Canada;

	 	 	 
	 	(g) 	
      perform its duties and obligations hereunder in a sound
      and workmanlike manner in accordance with sound mining and engineering
      practices and in substantial compliance with all applicable federal,
      state, provincial, territorial and municipal laws, by-laws, ordinances,
      rules and regulations and this Agreement; and

	 	 	 
	 	(h) 	
      prepare and submit draft Programs for each calendar year
      for consideration by the Management Committee by the December 31st
      preceding such calendar year.

8.       
EXPLORATION PROGRAMS 

8.1       Draft Programs
submitted by the Operator to the Management Committee shall contain a statement
in reasonable detail of the proposed Program and estimates of all Exploration
Costs to be incurred. 

8.2       The Management
Committee shall review the draft Program prepared and, if it deems fit, adopt
the same with such modifications, if any, as the Management Committee deems
necessary. The Operator shall be entitled to an allowance for a Cost overrun of
10% of a Program budget (the “Overrun”)and any Costs so incurred shall be deemed
to be included in the Program. In the event of a Cost overrun of greater than
10% of the Program budget, the Operator shall pay all Costs in excess of the
Overrun unless such Costs are unanimously approved by the Management Committee.

8.3       The Operator shall
forthwith submit the approved Program to the Parties. Each Party may, within 60
days of receipt of the Program, give notice to the Operator committing to
contribute its Proportionate Share of the Exploration Costs on that Program. A
Party which fails to give notice within the 60 day period shall be deemed to
have elected not to contribute. 

8.4       If any party elects or
is deemed to have elected not to contribute to an approved Program the amounts
to be contributed by the Participants who elected to contribute to that Program
shall be increased pro rata, subject to the right of any of them
to elect not to contribute more than the amount initially committed by them. If
a Participant elects not to contribute more than the amount initially committed
the Operator may elect not to proceed with the approved Program or may prepare an amended
Program and the provisions of this Article shall apply to such amended Program.

8.5       The Operator shall
be entitled to invoice each Participant: 

	 	(a) 	
      no more frequently than monthly for its Proportionate
      Share of Exploration Costs incurred and paid by the Operator; or

	 	 	 
	 	(b) 	
      in advance of requirements but not more than 30 days for
      an advance of that Participant's Proportionate Share of Exploration
      Costs.

Each invoice shall be signed by some responsible official of
the Operator. Each Participant shall pay to the Operator the amount invoiced
within 30 days of receipt of the invoice. If a Participant protests the
correctness of an invoice it shall nevertheless be required to make the payment
subject to later adjustment if such protest is sustained. 

8.6       If after electing to
participate any Participant (the "Defaulting Party") fails to pay its
Proportionate Share within the 30 day period referred to in Paragraph 8.5 the
Operator may by notice demand payment. If no payment is made within the period
of 30 days next succeeding the receipt of the demand notice the Interest of the
Defaulting Party shall be deemed to be less than 20% and that interest will be
converted to a 5% Net Profits Royalty to be calculated and paid in accordance
with Appendix II hereto, and that Party shall have no further Interest. The
Interests of the other Parties shall be increased pro rata. 

8.7       The Operator shall
expend all monies advanced by a Participant ratably with the advances of the
other Participants. If the Operator suspends or prematurely terminates a Program
any funds advanced by a Participant in excess of that Participant's
Proportionate Share of Exploration Costs incurred prior to the suspension or
premature termination shall be refunded forthwith. 

8.8       If any Program is
altered, suspended or terminated prematurely so that the Exploration Costs
incurred on that Program as altered, suspended or terminated are less than 80%
of the Exploration Costs originally proposed, any Party which elected or which
is deemed to have elected not to contribute its Proportionate Share of the
Exploration Costs incurred on that Program shall be given notice of the
alteration, suspension or termination by the Operator and shall be entitled to
contribute its Proportionate Share of the Exploration Costs incurred on that
Program by payment thereof to the Operator within 30 days after receipt of the
notice. If payment is not made by that Party within the 30 days aforesaid it
shall, without a demand for payment being required to be made thereafter by the
Management Committee, forfeit its right to contribute to that Program. 

8.9       If a Party elects or is
deemed to have elected not to contribute to the Exploration Costs of any Program
the Interest of that Party shall be decreased and the Interest of each
Participant contributing in excess of its Proportionate Share of the Exploration
Costs shall be increased so that at all times during the Exploration Period the
Interest of each Party will be equal to its Exploration Costs and Prior
Exploration Costs expressed as a percentage of the Exploration Costs and Prior
Exploration Costs of all Parties. The party whose Interest has been reduced
shall be entitled to receive details of and to contribute to future Programs to
the extent of its then Interest. 

8.10       If a Party's Interest
is reduced to 20% or less, that Interest will be converted to a 5% Net Profits
Royalty to be calculated and paid in accordance with Appendix II hereto, and
that Party shall have no further Interest. The Interests of the other Parties
shall be increased pro rata. 

8.11       If the Operator
fails to submit a draft Program for an Operating Year by December 31 of the year
preceding such Operating Year: 

	 	(a) 	
      the Operator shall not be entitled to submit a draft
      Program for the Operating Year;

	 	(b) 	
      the other Party, and if there is more than one, the Party
      with the greatest Interest, may submit a draft Program (the
      "Non-Operator's Program") for the Operating Year for consideration by the
      Management Committee;

	 	 	 
	 	(c) 	
      the Management Committee shall review the Non-Operator's
      draft Program and, if it deems fit (the Operator not being entitled to
      vote with respect thereto), adopt the Program with such modifications, if
      any, as the Management Committee deems necessary and the adopted Program
      shall then be submitted to the parties according to this
Article;

	 	 	 
	 	(d) 	
      if the Operator is a Party and elects not to contribute
      to the Program it shall cease to be the Operator and the Management
      Committee shall appoint a new Operator (the former Operator not being
      entitled to vote with respect thereto).

8.12       If the Management
Committee for any reason fails to adopt a Program for an Operating Year by
December 31 of the preceding year, the Operator shall, subject to direction to
the contrary by the Management Committee and the receipt of the necessary funds,
carry out such work and make such disbursements as to meet the minimum
requirements to maintain the Property in good standing. 

9.       
 FEASIBILITY REPORT 

9.1       A Feasibility
Report shall only be prepared with the approval of the Management Committee. The
Operator shall provide copies of the completed Feasibility Report to each of the
Parties forthwith upon receipt. 

9.2       The Management
Committee shall meet at reasonable intervals and times to review the Feasibility
Report and discuss whether the establishing of a Mine and bringing the Property
into Commercial Production in accordance with the Feasibility Report is feasible
or desirable. 

9.3       If the Operator has not
provided copies of a completed Feasibility Report to each of the Parties with an
Interest by the fifth anniversary of this Agreement, any Party whose Interest is
not less than 20% and if there is more than one, the Party with the greatest
Interest, may prepare a Feasibility Report at its own expense (the
"Non-Operator's Feasibility Report") and submit it to the Management Committee.

10.       PRODUCTION
NOTICE 

10.1     The Operator shall call a meeting
of the Management Committee to consider the Feasibility Report for a date no
sooner than six months after the Feasibility Report was provided to each of the
Parties. 

10.2     The Management Committee shall
consider each Feasibility Report prepared and may approve any Feasibility Report
with such modifications, if any, as it considers necessary or desirable. Such
approval by the Management Committee must be given by Participants holding
aggregate Interests of not less than 51%. If the Feasibility Report is a
Non-Operator's Feasibility Report the Operator is not entitled to vote with
respect to the approval thereof. If a Feasibility Report is approved as
aforesaid the Management Committee shall forthwith cause a Production Notice to
be given to each of the Parties with an Interest by the Operator stating that
the Management Committee intends to establish and bring a Mine into production
pursuant to the Feasibility Report as so approved. 

11.     
 ELECTION TO CONTRIBUTE 

11.1     Each Party with an Interest may,
within 120 days of receipt of the Production Notice, give the Operator notice
committing to contribute its Proportionate Share of the Mine Costs. A Party
which fails to give notice within the 120 day period shall be deemed to have
elected not to contribute. 

11.2     If any such Party fails to give
such notice, that Party (a "non-Participant") shall forfeit the right to
contribute to Mine Costs and shall suffer dilution and conversion of its
Interest as provided in this paragraph. Those Parties which elected to
contribute as aforesaid may thereupon elect to increase their contribution to
the Mine Costs, if more than one Party then in proportion to their respective
Interests, by the amount which any Party has declined to contribute. If
elections are made so that Mine Costs are fully committed the Interest of each
Participant shall be increased and that of each non-Participant shall be
decreased so that the Interest of each Party at all times is equal to: 

	 	(a) 	
      the sum of its Exploration Costs, its Prior Exploration
      Costs and its contribution to Mine Costs;

	 	 	 
	 		
      divided by

	 	 	 
	 	(b) 	
      the sum of the total Exploration Costs, total Prior
      Exploration Costs and the total Mine Costs of all the Parties;

	 	 	 
	 		
      multiplied by

	 	 	 
	 	(c) 	
      100.

If any Party's Interest is thereby less than 20% it shall
forfeit its Interest to the Participants, if more than one then in proportion to
their respective Interests, and that Party shall be entitled to receive as its
sole remuneration and benefit in consideration of that assignment and
conveyance, a 5% Net Profits Royalty calculated in accordance with Appendix II.
Each Participant shall severally cause to be paid to each non-Participant any
Net Profits Royalty derived from the Property in the manner provided in Appendix
II. 

11.3     If Mine Costs are not fully
committed the Production Notice shall be deemed to be withdrawn. 

11.4     If Mine Costs are fully committed,
the Operator shall diligently proceed to implement the Feasibility Report in
accordance with normal standards in the mining industry. If the Operator fails
to so implement the Feasibility Report within 12 months of the issuance of the
Production Notice for reasons other than general economic conditions in the
mining industry, any Party which forfeited the right to contribute to Mine Costs
pursuant to section 11.2 shall have the right, exercisable during the 30 days
following the expiration of such 12 month period, to re-acquire from the
Participants all of its Interest as last held, by paying its Proportionate Share
of Mine Costs together with interest at the Prime Rate plus 2% to the
Participants in proportion to their Interests. 

11.5     During the 12 month period
referred to in section 11.4 the Participants shall not be obligated to provide
any non-Participant with the results of any work carried out on the Property,
the Participants' sole obligation during such period being to provide any
non-Participant, on the written request of such non-Participant, but only once
during the said 12 months, with a summary of the nature of the work carried out
and the total Costs thereof. 

12.     
 MINE FINANCING 

12.1     The contributions of the
Participants toward the Mine Costs shall be individually and separately provided
by them. 

12.2     Any Party may pledge, mortgage,
charge or otherwise encumber its Interest in order to secure monies borrowed and
used by that Party for the sole purpose of enabling it to finance its
participation under this Agreement or in order to secure by way of a general
security interest as a part of the general corporate assets of that Party monies
borrowed for its general corporate purposes, provided that the pledgee,
mortgagee, holder of the charge or encumbrance (in this section called the
"Chargee") shall hold such interest subject to the provisions of this Agreement
and that if the Chargee realizes upon any of its security it will comply with
this Agreement.

The agreement between the Party, as borrower, and the Chargee
shall contain specific provisions to the same effect as the provisions of this
section. 

13.      
CONSTRUCTION 

13.1     Subject to Article 11, the
Management Committee shall cause the Operator to, and the Operator shall,
proceed with Construction with all reasonable dispatch after a Production Notice
has been given. Construction shall be substantially in accordance with the
Feasibility Report subject to any variations proposed in the Production Notice,
and subject also to the right of the Management Committee to cause such other
reasonable variations in Construction to be made as the Management Committee
deems advisable. 

14.     
 OPERATION OF THE MINE 

14.1     Commencing with the Completion
Date all Mining Operations shall be planned and conducted and all estimates,
reports and statements shall be prepared and made on the basis of an Operating
Year. 

14.2     With the exception of the first
Operating Year an operating plan for each Operating Year shall be submitted by
the Operator to the Participants not later than the end of the third quarter in
the year immediately preceding the Operating Year to which the Operating Plan
relates. Each Operating Plan shall contain the following: 

	 	(a) 	
      a plan for the proposed Mining Operation;

	 	 	 
	 	(b) 	
      a detailed estimate of all Mine Costs plus a reasonable
      allowance for contingencies;

	 	 	 
	 	(c) 	
      an estimate of the quantity and quality of the ore to be
      mined and the concentrates or metals to be produced; and

	 	 	 
	 	(d) 	
      such other facts as may be necessary to reasonably
      illustrate the results intended to be achieved by the Operating
    Plan,

and upon request of any Participant the Operator shall meet
with that Participant to discuss the Operating Plan and shall provide such
additional or supplemental information as that Participant may reasonably
require with respect thereto. 

14.3     The Management Committee shall
adopt each Operating Plan, with such changes as it deems necessary, at least
three months before the commencement of the Operating Year to which the
Operating Plan relates but the Management Committee may from time to time during
the Operating Year amend any Operating Plan as required. 

14.4     The Operator shall be entitled to
include in the estimate of Mine Costs referred to in paragraph 14.2(b) the
reasonably estimated costs of satisfying continuing obligations that may remain
after this Agreement terminates in excess of amounts actually expended. Such
continuing obligations are or will be incurred as a result of the Joint
Operation and shall include such things as monitoring, stabilization,
reclamation or restoration obligations, severance and other employee benefit
costs and all other obligations incurred or imposed as a result of the Joint
Operation which continue or arise after termination of this Agreement and
settlement of all accounts. The amount accrued from time to time for the
satisfaction of such continuing obligations shall be classified as Costs
hereunder but shall be segregated into a separate account. 

15.      
PAYMENT OF MINE COSTS 

15.1     The Operator may invoice each
Participant, from time to time, for that Participant's Proportionate Share of Mine Costs incurred to the date of the invoice, or at the
beginning of each month for an advance equal to that Participant's Proportionate
Share of the estimated cash disbursements to be made during the month. Each
Participant shall pay its Proportionate Share of the Mine Costs or the estimated
cash disbursements aforesaid to the Operator within 30 days after receipt of the
invoice. If the payment or advance requested is not so made the amount of the
payment or advance shall bear interest calculated monthly not in advance from
the 30th day after the date of receipt of the invoice thereof by that
Participant at a rate equivalent to the weighted average Prime Rate for the
month plus 2% per annum until paid. The Operator shall have a lien on each
Participant's Interest in order to secure that payment or advance together with
interest which has accrued thereon. 

15.2     If any Participant (in this
section 15.2 called a "Defaulting Participant") fails to pay an invoice within
the 30 day period as aforesaid, the Operator may, by notice, demand payment. If
no payment is made within 30 days of the Operator's demand notice the Operator
may, without limiting its other rights at law, enforce the lien created by
section 15.1 by taking possession of all or any part of the Defaulting
Participant's Interest. The Operator may sell and dispose of the Interest which
it has so taken into its possession by: 

	 	(a) 	
      first offering that Interest to the non-Defaulting
      Participants, and if there is more than one then in proportion to the
      respective Interests of the Participants who wish to accept that offer,
      for that price which is the fair market value stated in the lower of two
      appraisals obtained by the Operator from independent, well recognized
      appraisers competent in the appraisal of mining properties; and

	 	 	 
	 	(b) 	
      if the non-Defaulting Participants have not purchased all
      or part of that Interest as aforesaid, then by selling the balance, if
      any, either in whole or in part or in separate parcels at public auction
      or by private tender (neither the Participants nor the Defaulting
      Participant being entitled to bid) at a time and on whatever terms the
      Operator shall arrange, having first given notice to the Defaulting
      Participant of the time and place of the sale.

As a condition of the sale as contemplated in subsection
15.2(b) the purchaser shall agree to be bound by this Agreement and, prior to
acquiring the Interest, shall deliver notice to that effect to the parties in
form acceptable to the Operator. The proceeds of the sale shall be applied by
the Operator in payment of the amount due from the Defaulting Participant and
interest as aforesaid, and the balance remaining, if any, shall be paid to the
Defaulting Participant after deducting reasonable costs of the sale. Any sale or
disposal made as aforesaid shall be a perpetual bar both at law and in equity by
the Defaulting Participant and its successors and assigns against all other
Participants and the Operator. 

16.     
 DISTRIBUTION IN KIND 

16.1     It is expressly intended that,
upon implementation of any Production Notice hereunder, the association of the
parties shall be limited to the efficient production of Minerals from the
Property and that each of the parties shall be entitled to use, dispose of or
otherwise deal with its Proportionate Share of Minerals as it sees fit. Each
Participant shall take in kind, f.o.b. truck or railcar on the Property and
separately dispose of its Proportionate Share of the Minerals produced from the
Mine. Extra costs and expenses incurred by reason of the Participants taking in
kind and making separate dispositions shall be paid by each Participant directly
and not through the Operator or Management Committee. 

16.2     Each Participant shall construct,
operate and maintain, all at its own cost and expense, any and all facilities
which may be necessary to receive and store and dispose of its Proportionate
Share of the Minerals at the rate they are produced. 

16.3     If a Participant has not made the
necessary arrangements to take in kind and store its share of production as
aforesaid the Operator shall, at the sole cost and risk of that Participant
store, in any location where it will not interfere with Mining Operations, the
production owned by that Participant. The Operator and the other parties shall be under no responsibility with respect thereto. All of
the Costs involved in arranging and providing storage shall be billed directly
to, and be the sole responsibility of, the Participant whose share of production
is so stored. The Operator's charges for such assistance and any other related
matters shall be billed directly to an be the sole responsibility of the
Participant. All such billings shall be subject mutatis mutandis to the provisions of sections 15.1 and 15.2 thereof. 

17.     
 SURRENDER OF INTEREST 

17.1     Any Party may at any time upon
notice, surrender its entire Interest to the other Parties by giving those
Parties notice of surrender. 

The notice of surrender shall: 

	 	(a) 	
      indicate a date for surrender not less than three months
      after the date on which the notice is given; and

	 	 	 	 
	 	(b) 	
      contain an undertaking that the surrendering Party
      will:

	 	 	 	 
	 		(i) 	
      satisfy its Proportionate Share, based on its then
      Interest, of all obligations and liabilities which arose at any time prior
      to the date of surrender;

	 	 	 	 
	 		(ii) 	
      if the Operator has not included in Mine Costs the costs
      of continuing obligations as set out in section 14.4 hereof, pay its
      reasonably estimated Proportionate Share, based on the surrendering
      Party's then Interest, of the Costs of rehabilitating the Mine site and of
      reclamation as at the date of surrender; and

	 	 	 	 
	 		(iii) 	
      hold in confidence, for a period of two years from the
      date of surrender, all information and data which it acquired pursuant to
      this Agreement.

17.2     Upon the surrender of its entire
Interest as contemplated in section 17.1 and upon delivery of a release in
writing in form acceptable to counsel for the Operator releasing the other
parties from all claims and demand hereunder, the surrendering party shall be
relieved of all obligations or liabilities hereunder except for those which
arose or accrued or were accruing due on or before the date of the surrender.

17.3     A Party to whom a notice of
surrender has been given may elect, by notice within 90 days to the Party which
first gave the notice, to accept the surrender, in which case the provisions of
this Article shall apply, or to join in the surrender. If all of the Parties
join in the surrender the Joint Operation shall be terminated in accordance with
Article 18. 

18.      
TERMINATION OR SUSPENSION OF MINING OPERATIONS 

18.1     The Operator may at any time
subsequent to the Completion Date, on at least 30 days notice to all
Participants, recommend that the Management Committee approve the suspension of
Mining Operations. The Operator's recommendation shall include a plan and budget
(in this Article called the "Mining Maintenance Plan") in reasonable detail of
the activities to be performed to maintain the Assets and Property during the
period of suspension and the Costs to be incurred. The Management Committee may
at any time subsequent to the Completion Date, cause the Operator to suspend
Mining Operations in accordance with the Operator's recommendation with such
changes to the Mine Maintenance Plan as the Management Committee deems
necessary. The Participants shall be committed to contribute their Proportionate
Share of the Costs incurred in connection with the Mine Maintenance Plan. The
Management Committee may cause Mining Operations to be resumed at any time. 

18.2     The Operator may at any time
following a period of at least 90 days during which Mining Operations have been
suspended, upon at least 30 days notice to all Participants, or in the events
described in section 18.1, recommend that the Management Committee approve the
permanent termination of Mining Operations. The Operator's recommendation shall
include a plan and budget (in this Article called the "Mine Closure Plan") in
reasonable detail of the activities to be performed to close the Mine and
reclaim the Property. The Management Committee may, by unanimous approval of the
representatives of all Participants, approve the Operator's recommendation with
such changes to the Mine Closure Plan as the Management Committee deems
necessary. 

18.3     If the Management Committee
approves the Operator's recommendation to permanently terminate Mining
Operations it shall cause the Operator to: 

	 	(a) 	
      implement the Mine Closure Plan whereupon the
      Participants shall be committed to pay, in proportion to their respective
      Interests, such Costs as may be required to implement that Mine Closure
      Plan;

	 	 	 
	 	(b) 	
      remove, sell and dispose of such Assets as may reasonably
      be removed and disposed of profitably and such other Assets as the
      Operator may be required to remove pursuant to applicable environmental
      and mining laws; and

	 	 	 
	 	(c) 	
      sell, abandon or otherwise dispose of the
  Property.

The disposal price for the Assets and the Property shall be the
best price obtainable and the net revenues, if any, from the removal and sale
shall be credited to the Participants in proportion to their respective
Interests. 

18.4     If the Management Committee does
not approve the Operator's recommendation contemplated to permanently terminate
Mining Operations the Operator shall maintain Mining Operations in accordance
with the Mine Maintenance Plan. 

19.     
 THE PROPERTY 

19.1     Title to the Property shall be
held in the name of the Operator in trust for the Parties in proportion to their
respective Interests as adjusted from time to time. Each of the Parties shall
have the right to receive from the Operator, forthwith upon making demand
therefor, such documents as it may reasonably require to confirm its Interest.

19.2     Notwithstanding subsection 6.4(e),
the Operator shall be entitled, at any time and from time to time to surrender
all or any part of the Property or to permit the same to lapse, but only upon
first either obtaining the unanimous consent of the Management Committee, or
giving 60 days notice of its intention to do so to the other Parties with an
Interest. In this latter event the Parties, other than the Operator, shall be
entitled to receive from the Operator, on request prior to the date of the
surrender or lapse, a conveyance of that portion of the Property intended for
surrender or lapse, together with copies of any plans, assay maps, diamond drill
records and factual engineering data in the Operator's possession and relevant
thereto. Any part of the Property so acquired shall cease to be subject to this
Agreement. 

20.      
INFORMATION AND DATA 

20.1     At all times during the
subsistence of this Agreement the duly authorized representatives of each
Participant shall, at its and their sole risk and expense and at reasonable
intervals and times, have access to the Property and to all technical records
and other factual engineering data and information relating to the Property
which is in the possession of the Operator. 

20.2     During the Exploration Period
while Programs are being carried out the Operator shall furnish the Participants with monthly progress reports and with a final
report on conclusion of each Program. The final report shall show the Mining
Operations performed and the results obtained and shall be accompanied by a
statement of Costs and copies of pertinent plans, assay maps, diamond drill
records and other factual engineering data. During the Construction Period and
the Operating Year the Operator shall provide monthly progress reports to the
Participants which reports shall include information on any changes or
developments affecting the Mine that the Operator considers are material. 

20.3     All information and data
concerning or derived from the Mining Operations shall be kept confidential and,
except to the extent required by law or by regulation or policy of any
securities commission, stock exchange or other regulatory body, shall not be
disclosed to any person other than an Affiliate without the prior consent of all
the Participants, which consent shall not unreasonably be withheld. 

20.4     The text of any news release or
other public statements which a party desires to make with respect to the
Property shall be made available to the other parties prior to publication and
the other parties shall have the right to make suggestions for changes therein
within 24 hours of delivery. 

21.     
 LIABILITY OF THE OPERATOR 

21.1     Each party shall indemnify and
save the Operator harmless from and against any loss, liability, claim, demand,
damage, expense, injury or death, including, without limiting the generality of
the foregoing, legal fees, resulting from any acts or omissions of the Operator
or its officers, employees or agents. 

21.2     Notwithstanding the foregoing, the
Operator shall not be indemnified or held harmless by any of the Parties for any
loss, liability, claim, damage, expense, injury or death, including, without
limiting the generality of the foregoing, legal fees, resulting from the
negligence or wilful misconduct of the Operator or its officers, employees or
agents. 

21.3     An act or omission of the Operator
or its officers, employees or agents done or omitted to be done: 

	 	(a) 	
      at the direction or within the scope of the direction of
      the Management Committee;

	 	 	 
	 	(b) 	
      with the concurrence of the Management Committee;
    or

	 	 	 
	 	(c) 	
      unilaterally and in good faith by the Operator to protect
      life or property,

shall be deemed not to be negligence or wilful misconduct. 

21.4     The obligation of the other
parties to indemnify and save the Operator harmless shall be in proportion to
their Interests as at the date that the loss, liability, claim, demand, damage,
expense, injury or death occurred or arose. 

21.5     The Operator shall not be liable
to any other party nor shall any party be liable to the Operator in contract,
tort or otherwise for special or consequential damages, including, without
limiting the generality of the foregoing, loss of profits or revenues. 

22.     
 INSURANCE 

22.1     The Management Committee shall
cause the Operator to place and maintain with a reputable insurer or insurers
such insurance, if any, as the Management Committee in its discretion deems
advisable in order to protect the parties together with such other insurance as
any Participant may by notice reasonably request. The Operator shall, upon the
written request of any Participant, provide it with evidence of that insurance.

22.2     A party may place, for its own
account, insurance for greater or other coverage than that placed by the
Operator. 

23.      
RELATIONSHIP OF PARTIES 

23.1     The rights, duties, obligations
and liabilities of the Parties shall be several and not joint nor joint and
several, it being the express purpose and intention of the Parties that their
respective Interests shall be held as tenants in common. 

23.2     Nothing herein contained shall be
construed as creating a partnership of any kind or as imposing upon any Party
any partnership duty, obligation or liability to any other Party. 

23.3     No Party shall, except when
required by this Agreement or by any law, by-law, ordinance, rule, order or
regulation, use, suffer or permit to be used, directly or indirectly, the name
of any other Party for any purpose related to the Property. 

24.     
 PARTITION 

24.1     Each of the Parties waives, during
the term of this Agreement, any right to partition of the Property or the Assets
or any part thereof and no Party shall seek to be entitled to partition of the
Property or the Assets whether by way of physical partition, judicial sale or
otherwise during the term of this Agreement. 

25.     
 TAXATION 

25.1     All Costs incurred hereunder shall
be for the account of the Party or Parties making or incurring the same, if more
than one then in proportion to their respective Interests, and each Party on
whose behalf any Costs have been incurred shall be entitled to claim all tax
benefits, write-offs, and deductions with respect thereto. 

26.      
FORCE MAJEURE 

26.1     Notwithstanding anything herein
contained to the contrary, if any Party is prevented from or delayed in
performing any obligation under this Agreement, and such failure is occasioned
by any cause beyond its reasonable control, excluding only lack of finances,
then the time for the observance of the condition of performance of the
obligation in question shall be extended for a period equivalent to the total
period the cause of the prevention or delay persists or remains in effect
regardless of the length of such total period. 

26.2     Any Party claiming suspension of
its obligations as aforesaid shall promptly notify the other Parties to that
effect and shall take all reasonable steps to remove or remedy the cause and
effect of the force majeure described in the said notice insofar as it is
reasonably able so to do and as soon as possible but the terms of settlement of
any labour disturbance or dispute, strike or lockout shall be wholly in the
discretion of the Party claiming suspension of its obligations by reason
thereof, and that Party shall not be required to accede to the demands of its
opponents in any such labour disturbance or dispute, strike, or lockout solely
to remedy or remove the force majeure thereby constituted. 

26.3     The extension of time for the
observance of conditions or performance of obligations as a result of force
majeure shall not relieve the Operator from its obligations to keep the Property
in good standing. 

27.      
ARBITRATION 

27.1     If any question, difference or
dispute shall arise between the Parties or any of them in respect of any matter
arising under this Agreement or in relation to the construction hereof the same
shall be determined by the award of three arbitrators to be named as follows:

	 	(a) 	
      the Party or Parties sharing one side of this dispute
      shall name an arbitrator and give notice thereof to the Party or Parties
      sharing the other side of the dispute;

	 	 	 
	 	(b) 	
      the Party or Parties sharing the other side of the
      dispute shall, within 14 days of receipt of the notice, name an
      arbitrator; and

	 	 	 
	 	(c) 	
      the two arbitrators so named shall, within 15 days of the
      naming of the latter of them, select a third
arbitrator.

The decision of the majority of these arbitrators shall be made
within 30 days after the selection of the latter of them. The expense of the
arbitration shall be borne by the Parties to the dispute as determined by the
arbitrators. If the Parties on either side of the dispute fail to name their
arbitrator within the time limited or proceed with the arbitration, the
arbitrator named may decide the question. The arbitration shall be conducted in
accordance with the provisions of the Commercial Arbitration Act (British
Columbia) and the decision of the arbitrator or a majority of the arbitrators,
as the case may be, shall be conclusive and binding upon all the parties. 

28.     
 RIGHT OF FIRST REFUSAL 

28.1     Except as a result of the
reduction of its Interest, a Party shall not transfer, convey, assign, mortgage
or grant an option in respect of or grant a right to purchase or in any manner
transfer or alienate all or any portion of its Interest or rights under this
Agreement otherwise than in accordance with this Article. 

28.2     Nothing in this Article shall
prevent: 

	 	(a) 	
      a sale by a Party of all of its Interest or an assignment
      of all its rights under this Agreement to an Affiliate provided that such
      Affiliate first complies with the provisions of section 28.11 and agrees
      with the other Parties in writing to retransfer such Interest to the
      originally assigning Party before ceasing to be an Affiliate of such
      Party;

	 	 	 
	 	(b) 	
      a variation in a Party's Interest pursuant to Articles 8
      or 11; or

	 	 	 
	 	(c) 	
      a disposition pursuant to an amalgamation or corporate
      reorganization which will have the effect in law of the amalgamated or
      surviving company possessing all the property, rights and interests and
      being subject to all the debts, liabilities and obligations of each
      amalgamating or predecessor company.

28.3     Should a Party (the "Transferring
Party") intend to dispose of all or any portion of its Interest or rights under
this Agreement it shall first give notice in writing to the other parties (the
"Other Parties") of such intention together with the terms and conditions on
which the Transferring Party intends to dispose of its Interest or a portion
thereof or rights under this Agreement. 

28.4     If a Party (the "Transferring
Party") receives any offer to dispose of all or any portion of its Interest or
rights under this Agreement which it intends to accept, the Transferring Party
shall not accept the same unless and until it has first offered to sell such
Interest or rights to the other Parties (the "Other Parties") on the same terms
and conditions as in the offer received and the same has not been accepted by
the Other Parties in accordance with this Article. 

28.5     Any communication of an intention
to sell pursuant to sections 28.3 and (the "Offer") shall be in writing and
shall: 

	 	(a) 	
      set out in reasonable detail all of the terms and
      conditions of any intended sale;

	 	(b) 	
      if it is made pursuant to section 28.3, include a
      photocopy of the Offer; and

	 	 	 
	 	(c) 	
      if it is made pursuant to section 28.4, clearly identify
      the offering party and include such information as is known by the
      Transferring Party about such offering party;

and such communication will be deemed to constitute an Offer by
the Transferring Party to the Other Parties to sell the Transferring Party's
Interest or its rights (or a portion thereof as the case may be) under this
Agreement to the Other Parties on the terms and conditions set out in such
Offer. For greater certainty it is agreed and understood that any Offer
hereunder shall deal only with the disposition of the Interest or rights of the
Transferring Party hereunder and not with any other interest, right or property
of the Transferring Party and such disposition shall, if for consideration, in
whole or in part, other than for money, be converted to a monetary
consideration. 

28.6     Any Offer made as contemplated in
section 28.5 shall be open for acceptance by the Other Parties for a period of
60 days from the date of receipt of the Offer by the Other Parties. 

28.7     If the Other Parties accept the
Offer within the period provided for in section 28.6, such acceptance shall
constitute a binding agreement of purchase and sale between the Transferring
Party and the Other Parties, in proportion to their Interests, for the Interest
or its rights (or a portion thereof as the case may be) under this Agreement on
the terms and conditions set out in such Offer. 

28.8     If the Other Parties do not accept
the Offer within the period provided for in section 28.6, the Transferring Party
may complete a sale and purchase of its Interest or a portion thereof on terms
and conditions no less favorable to the Transferring Party than those set out in
the Offer and, in the case of an Offer under section 28.4, only to the party
making the original offer to the Transferring Party and in any event such sale
and purchase shall be completed within nine months from the expiration of the
right of the Other Parties to accept such Offer or the Transferring Party must
again comply with the provisions of this Article. 

28.9     If the Other Parties do accept the
Offer within the period provided for in section 28.6 but fail to close the
transaction contemplated thereby within 90 days following receipt of such Offer,
the Transferring Party may complete a sale and purchase of its Interest or a
portion thereof on any terms and conditions but in any event such sale and
purchase shall be completed within nine months from the expiration of the right
of the Other Parties to accept such Offer or the Transferring Party must again
comply with the provisions of this article. 

28.10     While any Offer is outstanding no
other Offer may be made until the first mentioned Offer is disposed of and any
sale resulting therefrom completed or abandoned in accordance with the
provisions of this Article. 

28.11     Before the completion of any sale
by the Transferring Party of its Interest or rights or any portion thereof under
this Agreement, the purchasing party shall enter into an agreement with the
parties agreeing not to sell except on the same terms and conditions as set out
in this Agreement. 

29.      
NOTICE 

29.1     Any notice, direction or other
instrument required or permitted to be given under this Agreement shall be in
writing and shall be given by the delivery of same or by sending it by
telecopier or other similar form of communication, in each case addressed to the
intended recipient at the address of the respective Party set out on the first
page hereof. 

29.2     Any notice, direction or other
instrument aforesaid will, if delivered, be deemed to have been given and
received on the day it was delivered, and, if sent by telecopier or other
similar form of communication, on the day it was actually received. 

29.3     Any Party may, at any time, give
notice in writing to the others of any change of address, and from and after the
giving of such notice, the address therein specified will be deemed to be the
address of such party for the purposes of giving notice hereunder. 

30.      
GENERAL 

30.1     No waiver of any breach of this
Agreement shall be binding unless evidenced in writing executed by the party
against whom waiver is claimed. Any waiver shall extend only to the particular
breach so waived and shall not limit any rights with respect to any future
breach. 

30.2     This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof.
An amendment or variation of this Agreement shall only be binding upon a Party
if evidenced in writing executed by that Party. 

30.3     Unless earlier terminated by
agreement of all Parties having an Interest or as a result of one Party
acquiring a 100% Interest and a 100% interest in any Net Profits Royalty
provided for herein, the Joint Operation and this Agreement shall remain in full
force and effect for so long as any Party has any right, title or interest in
the Property. Termination of this Agreement shall not, however, relieve any
Party from any obligations theretofore accrued but unsatisfied nor from its
obligations with respect to rehabilitation of the Mine site and reclamation.

30.4     Time is of the essence of this
Agreement. 

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

30.6     This Agreement shall be governed
by and interpreted in accordance with the laws of the Province of British
Columbia and the parties hereto irrevocably attorn to the jurisdiction of the
said Province. 

30.7     This Agreement may be executed in
several parts in the same form and such parts as so executed shall together
constitute one original agreement, and such parts, if more than one, shall be
read together and construed as if all the signing parties hereto had executed
one copy of this Agreement. 

IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.

CANYON COPPER CORP. 

_____________________________ 
Name:
Title: 

SANDFIELD RESOURCES (USA) INC. 

_____________________________ 
Name: 
Title: 

APPENDIX I 

to the Joint Venture Agreement between Canyon Copper Corp. and
Sandfield Resources (USA) Inc. made as of the _____day of _____________, _____.

ACCOUNTING PROCEDURE 

	1. 	
      INTERPRETATION

	 	 	 
	1.1 	
      In this Appendix the following words, phrases and
      expressions shall have the following meanings:

	 	 	 
		(a) 	
      "Agreement" means the Agreement to which this Accounting
      Procedure is attached as Appendix I.

	 	 	 
		(b) 	
      "Count" means a physical inventory count.

	 	 	 
		(c) 	
      "Employee" means those employees of the Operator who are
      assigned to and directly engaged in the conduct of Mining Operations,
      whether on a full-time or part-time basis.

	 	 	 
		(d) 	
      "Employee Benefits" means the Operator's cost of holiday,
      vacation, sickness, disability benefits, field bonuses, paid to and the
      Operator's cost of established plans for employees' group life insurance,
      hospitalization, pension, retirement and other customary plans maintained
      for the benefit of Employees and Personnel, as the case may be, which
      costs may be charged as a percentage assessment on the salaries and wages
      of Employees or Personnel, as the case may be, on a basis consistent with
      the Operator's cost experience.

	 	 	 
		(e) 	
      "Field Offices" means the necessary sub-office or
      sub-offices in each place where a Program or Construction is being
      conducted or a Mine is being operated.

	 	 	 
		(f) 	
      "Government Contributions" means the cost or
      contributions made by the Operator pursuant to assessments imposed by
      governmental authority which are applicable to the salaries or wages of
      Employees or Personnel, as the case may be.

	 	 	 
		(g) 	
      "Joint Account" means the books of account maintained by
      the Operator to record all costs, expenses, credits and other transactions
      arising out of or in connection with the Mining Operations.

	 	 	 
		(h) 	
      "Material" means the personal property, equipment and
      supplies acquired or held, at the direction or with the approval of the
      Management Committee, for use in the Mining Operations and, without
      limiting the generality of the foregoing, more particularly "Controllable
      Material" means such Material which is ordinarily classified as
      Controllable Material, as that classification is determined or approved by
      the Management Committee, and controlled in mining operations.

	 	 	 
		(i) 	
      "Personnel" means those management, supervisory,
      administrative, clerical or other personnel of the Operator normally
      associated with the Supervision Offices whose salaries and wages are
      charged directly to the Supervision Offices in question.

	 	 	 
		(j) 	
      "Reasonable Expenses" means the reasonable expenses of
      Employee or Personnel, as the case may be, for which those Employees or
      Personnel may be reimbursed under the Operator's usual expense account
      practice, including, without limiting the generality of the foregoing, any
      relocation expenses necessarily incurred in order to properly staff the
      Mining Operations if the relocation is approved by the
  Management Committee.

	 	(k) 	
      "Supervision Offices" means the Operator's offices or
      department within the Operator's offices from which the Mining Operations
      are generally supervised.

1.2       Other capitalized
words, phrases and expressions in this Appendix shall have the same meaning as
in the Agreement. 

2.       
 STATEMENTS AND BILLINGS 

2.1       The Operator
shall, by invoice, charge each Participant with its Proportionate Share of
Explorations Costs and Mine Costs in the manner provided in the Agreement. 

	2.2 	
      The Operator shall deliver, with each invoice rendered
      for Costs incurred, a statement indicating:

	 	 	 	 
		(a) 	
      all charges or credits to the Joint Account relating to
      Controllable Material in detail; and

	 	 	 	 
		(b) 	
      all other charges and credits to the Joint Account
      summarized by appropriate classification indicative of the nature of the
      charges and credits.

	 	 	 	 
	2.3 	
      The Operator shall delivery with each invoice for an
      advance of Costs a statement indicating:

	 	 	 	 
		(a) 	
      the estimated Exploration Costs or, in the case of Mine
      Costs, the estimated cash disbursements to be made during the next
      succeeding month;

	 	 	 	 
		(b) 	
      the addition thereto or subtraction therefrom, as the
      case may be, made in respect of Exploration Costs or Mine Costs actually
      having been incurred in an amount greater or lesser that the advance which
      was made by each Participant for the penultimate month preceding the month
      of the invoice; and

	 	 	 	 
		(c) 	
      the advances made by each Participant to date and the
      Exploration Costs or Mine Costs incurred to the end of the penultimate
      month preceding the month of the invoice.

	 	 	 	 
	3. 	
      DIRECT CHARGES

	 	 	 	 
	3.1 	
      The Operator shall charge the Joint Account with the
      following items:

	 	 	 	 
		(a) 	
      Contractor's Charges:

	 	 	 	 
			
      All proper costs relative to the Mining Operations
      incurred under contracts entered into by the Operator with third
      parties.

	 	 	 	 
		(b) 	
      Labour Charges:

	 	 	 	 
			(i) 	
      The salaries and wages of Employees in an amount
      calculated by taking the full salary or wage of each Employee multiplied
      by that fraction which has as its numerator the total time for the month
      that the Employees were directly engaged in the conduct of Mining
      Operations and as its denominator the total normal working time for the
      month of the Employee.

	 	 	 	 
			(iii) 	
      The Reasonable Expenses of the
  Employees.

	 	(iv) 	
      Employee Benefits and Government Contributions in respect
      of the Employees in an amount proportionate to the charge made to the
      Joint Account in respect of their salaries and
wages.

	 	(c) 	
      Office Maintenance:

	 	 	 	 	 	 
	 		(i) 	
      The cost or a pro rata portion of the costs, as the case
      may be, of maintaining and operating the Offices. The basis for charging
      the Joint Account for Office maintenance costs shall be as
  follows:

	 	 	 	 	 	 
	 			(A) 	
      the expense of maintaining and operating Field Offices,
      less any revenue therefrom; and

	 	 	 	 	 	 
	 			(B) 	
      that portion of maintaining and operating the Supervision
      Offices which is equal to

	 	 	 	 	 	 
	 				(1) 	
      the anticipated total operating expenses of the
      Supervision Offices

divided by 

	 	(2) 	
      the anticipated total staff man-days for the Employees
      whether in connection with the Mining Operations or
not

multiplied by 

	 	(3) 	
      the actual total time spent on the Mining Operations by
      the Employee expressed in man-days.

	 	(ii) 	
      Without limiting the generality of the foregoing, the
      anticipated total operating expenses of the Supervision Offices shall
      include:

	 	 	 	 
	 		(A) 	
      the salaries and wages of the Operator's Personnel which
      have been directly charged to those offices;

	 	 	 	 
	 		(B) 	
      the Reasonable Expenses of the Personnel; and

	 	 	 	 
	 		(C) 	
      Employee Benefits.

	 	 	 	 
	 	(iii) 	
      The Operator shall make an adjustment in respect of the
      Office Maintenance cost forthwith after the end of each Operating Year
      upon having determined the actual operating expenses and actual total
      staff man-days referred to in clause 3.1(c)(i)(B) of this Appendix
    I.

	 	(d) 	
      Material:

The cost of Material purchased or furnished by the Operator.

	 	(e) 	
      Transportation
Charges:

	 		
      The cost of transporting Employees and Material necessary
      for the Mining Operations.

	 	 	 	 
	 	(f) 	
      Service Charges:

	 	 	 	 
	 		(i) 	
      The cost of services and utilities procured from outside
      sources other than services covered by paragraph 3.1(h). Subject to
      section 5.1 of the Agreement, the cost of consultant services shall not be
      charged to the Joint Account unless the retaining of the consultant is
      approved in advance by the Management Committee but if not so charged the
      cost of such services shall be included as Costs of the Participant
      retaining such consultant.

	 	 	 	 
	 		(ii) 	
      Use and service of equipment and facilities furnished by
      the Operator as provided in section 4.5 of this Appendix I.

	 	 	 	 
	 	(g) 	
      Damages and Losses to Joint Property:

	 	 	 	 
	 		
      All costs necessary for the repair or replacement of
      Assets made necessary because of damages or losses by fire, flood, storms,
      theft, accident or other cause. The Operator shall furnish each
      Participant in writing with particulars of the damages or losses incurred
      as soon as practicable after the damage or loss has been discovered. The
      proceeds, if any, received on claims against any policies of insurance in
      respect of those damages or losses shall be credited to the Joint
      Account.

	 	 	 	 
	 	(h) 	
      Legal Expense:

	 	 	 	 
	 		
      All costs of handling, investigating and settling
      litigation or recovering the Assets including, without limiting the
      generality of the foregoing, lawyer's fees, court costs, costs of
      investigation or procuring evidence and amounts paid in settlement or
      satisfaction of any litigation or claims but unless otherwise approved in
      advance by the Management Committee, no charge shall be made for the
      services of the Operator's legal staff or the fees and expenses of outside
      solicitors.

	 	 	 	 
	 	(i) 	
      Taxes:

	 	 	 	 
	 		
      All taxes, duties or assessments of every kind and
      nature, except income taxes, assessed or levied upon or in connection with
      a Property, the Mining Operations thereon, or the production therefrom,
      which have been paid by the Operator for the benefit of the
  parties.

	 	 	 	 
	 	(j) 	
      Insurance:

	 	 	 	 
	 		
      Net premiums paid for:

	 	 	 	 
	 		(i) 	
      such policies of insurance on or in Operations as may be
      required to be carried by law;

	 	 	 	 
	 		(ii) 	
      such other policies of insurance as the Operator may
      carry in accordance with the Agreement; and

	 	 	 	 
	 		(iii) 	
      the applicable deductibles in event of an insured
      loss.

	 	(k) 	
      Rentals:

	 	 	 
	 		
      Fees, rentals and other similar charges required to be
      paid for acquiring, recording and maintaining permits, mineral claims and
      mining leases and rentals and of the Mining Operations.

	 	 	 
	 	(l) 	
      Permits:

Permit costs, fees and other similar
charges which are assessed by various governmental agencies. 

	 	(m) 	
      Other Expenditures:

	 	 	 
	 		
      Such other costs and expenses which are not covered or
      dealt with in the foregoing provisions as are incurred with the approval
      of the Management Committee for Mining Operations or as may be
      contemplated in the Agreement.

4.         PURCHASE
OF MATERIAL 

4.1       The Operator shall
purchase all Materials for Mining Operations. 

4.2       Materials purchased and
services procured by the Operator directly for the Mining Operations shall be
charged to the Joint Account at the price paid by the Operator less all
discounts actually received. 

4.3       So far as it is
reasonably practical and consistent with efficient and economical operations the
Operator shall purchase, furnish or otherwise acquire only such Material and the
Operator shall attempt to minimize the accumulation of surplus stocks of
Material. 

4.4       Any Participant may
sell Material or services required in the Mining Operations to the Operator for
such price and upon such terms and conditions as the Management Committee may
approve. 

4.5       Notwithstanding the
foregoing provisions, the Operator shall be entitled to supply for use in
connection with the Mining Operations equipment and facilities which are owned
by the Operator and to charge the Joint Account with such reasonable costs as
are commensurate with the ownership and use thereof. 

5.         DISPOSAL
OF MATERIAL 

5.1       The Operator, with
the approval of the Management Committee, may, from time to time, sell any
Material which has become surplus to the foreseeable needs of the Mining
Operations for such price and upon such terms and conditions as are available.

5.2       Any Participant may
purchase from the Operator any Material which may from time to time become
surplus to the foreseeable need of the Mining Operations for such price and upon
such terms and conditions as the Management Committee may approve. 

5.3       Upon termination of the
Agreement the Management Committee may approve the division of any Material held
by the Operator at that date which may be taken by the Participants in kind or
be taken by a Participant in lieu of a portion of its Proportionate Share of the
net revenues received from the disposal of the Assets and Property. If such a
division to a Participant be in lieu of a portion of its Proportionate Share it
shall be for such price and on such terms and conditions as the Management
Committee may approve. 

5.4       The net revenues
received from the sale of any Material to third parties or to a Participant
shall be credited to the Joint Account. 

6.        
INVENTORIES 

6.1       The Operator shall
maintain records of Material in reasonable detail and records of Controllable
Material in detail. 

6.2       The Operator shall
perform Counts from time to time at reasonable intervals and in connection
therewith shall give notice of its intention to perform a Count to each
Participant at least 30 days in advance of the date set for performing of the
Count. Each Participant shall be entitled to be represented at the performing of
a Count upon giving notice thereof to the Operator within 20 days of the
Operator's notice. A Participant who is not represented at the performing of the
Count shall be deemed to have approved the Count as taken. 

6.3       Forthwith after
performing a Count the Operator shall reconcile the inventory with the Joint
Account and provide each Participant with a statement listing the overages and
shortages of inventory except such shortages as may have arisen due to a lack of
diligence on the part of the Operator. 

7.        
ADJUSTMENTS 

7.1       Payment of any invoice
by a Participant shall not prejudice the right of that Participant to protest
the correctness of the statement supporting the payment but all invoices and
statements presented to each Participant by the Operator during any Operating
Year shall conclusively be presumed to be true and correct upon the expiration
of 12 months following the end of the Operating Year to which the invoice or
statement relates, unless within that 12 month period that Participant gives
notice to the Operator making claim on the Operator for an adjustment to the
invoice or statement. 

7.2       The Operator shall
not adjust any invoice or statement in favour of itself after the expiration of
12 months following the end of the Operating Year to which the invoice or
statement relates. 

7.3       Notwithstanding
the foregoing, the Operator may make adjustments to an invoice or statement
which arise out of a Count. 

7.4       A Participant
shall be entitled upon notice to the Operator to request that the independent
external auditor of the Operator provide that Participant with its opinion that
any invoice or statement delivered pursuant to the Agreement in respect of the
period has been prepared in accordance with the Agreement. 

7.5       The time for giving the
audit opinion shall not extend the time for the taking of exception to any
statement or invoice and making claims on the Operator for adjustment thereto.

7.6       The cost of the
auditor's opinion shall be solely for the account of the Participant requesting
the auditor's opinion, unless the audit disclosed a material error adverse to
that Participant, in which case the cost shall be solely for the account of the
Operator. 

APPENDIX II 

to the Joint Venture Agreement between Canyon Copper Corp. and
Sandfield Resources (USA) Inc. made as of the _____day of _____________, _____.

NET PROFITS ROYALTY 

Pursuant to the attached Agreement, a party (the "Royalty
Holder") may be entitled to a royalty equal to a percentage of Net Profits (the
"Net Profits Royalty"). The Party or Parties who are not a Royalty Holder (the
"Owner") shall be entitled to a 100% beneficial interest in the Property subject
to the Net Profits Royalty. The Net Profits Royalty shall be calculated as
follows: 

1.         When a
Participant is first entitled to receive a Net Profits Royalty, the Operator
shall establish a Royalty Account to which it shall debit: 

	 	(a) 	
      Pre-production Expenditures;

	 	 	 
	 	(b) 	
      Working Capital;

	 	 	 
	 	(c) 	
      Operating Losses;

	 	 	 
	 	(d) 	
      Post-production Capital Expenditures;

	 	 	 
	 	(e) 	
      Interest Charges; and

	 	 	 
	 	(f) 	
      Reserve Charges.

2.         The Operator
shall apply Net Profits first to reduce the amounts debited to the Royalty
Account. While there is any debit balance in the Royalty Account, the Owner
shall retain all Product or Net Profits (in proportion to their Interests if
more than one Owner). Whenever the Royalty Account shows no debits, Net Profits
in an amount equal to the credit balance in the Royalty Account shall be
distributed to the Royalty Holder in an amount equal to the applicable Net
Profits Royalty, and the balance to the Owner. 

3.         The Operator
shall debit or credit amounts to the Royalty Account, whichever is applicable,
on a monthly basis and distribution of Net Profits shall be made on an interim
basis within 20 days of the end of each month. A final settlement of the
distribution of Net Profits shall be made within 90 days of the end of each
calendar year. The Owner shall be entitled to deduct any overpayment of Net
Profits as revealed in the annual calculation for purposes of the final
settlement from future payments due to the Royalty Holder. Any underpayment
shall be paid by the Owner to the Royalty Holder forthwith. 

4.         The Owner
shall at all times maintain adequate records which shall be made available to
the Royalty Holder in order that the Royalty Holder may verify the correctness
of any entries in the Royalty Account or in the determination of Net Profits.
The Owner shall utilize methods of weighing and sampling ore which are generally
accepted within the industry. 

5.         The terms
which are defined in the Agreement shall have the same defined meanings in this
Appendix, the provisions of this Appendix are subject to the provisions of the
Agreement and the following words, phrases and expressions shall have the
following meanings: 

	 	(a) 	
      Interest Charges means an amount obtained by
      applying the Prime Rate at the time the calculation is made plus 1% to the
      month end debit balance in the Royalty Account.
The amount so obtained shall be debited to the Royalty
  Account at the time of calculation.

	 	(b) 	
      Net Profits means, in any month after the
      Completion Date, the amount by which Revenue exceeds Operating
    Costs.

	 	 	 
	 	(c) 	
      Operating Costs means all costs of Commercial
      Production categorized as "operating" costs by generally accepted
      accounting practice including all taxes, royalties and other levies except
      for federal and provincial corporate income taxes but not including any
      charges for depreciation, depletion or amortization. Operating Costs shall
      also include a reasonable charge for administration and management not to
      exceed 10% of all other Operating Costs.

	 	 	 
	 	(d) 	
      Operating Losses means the amount by which
      Operating Costs exceed Revenue in any month after the commencement of
      Commercial Production.

	 	 	 
	 	(e) 	
      Post-production Capital Expenditures means all
      expenditures made by the Owner after the Completion Date to acquire or
      construct assets having a useful life of more than one year or on
      development or expansion of a mine or other production facilities the cost
      of which would be charged on a unit of production basis in accordance with
      generally accepted accounting principles.

	 	 	 
	 	(f) 	
      Pre-production Expenditures means all money
      provided and spent by the Owner on the Property prior to the commencement
      of Commercial Production including, without limiting the generality of the
      foregoing, all money provided and spent by the Owner exploring, developing
      and equipping the Property for production, completing Feasibility Reports,
      maintaining the Property in good standing, constructing all facilities
      necessary to commence Commercial Production on the Property, constructing
      or acquiring infrastructure or facilities off of the Property but required
      for Commercial Production, and on making any other expenditures related to
      the achievement of Commercial Production.

	 	 	 
	 	(g) 	
      Reserve Charges means an amount to be established
      by estimating the cost of rehabilitation which will have to be spent after
      Commercial Production has terminated and a portion of that cost will be
      charged monthly to the Royalty Account over a reasonable period of time
      commencing no sooner than five years prior to the termination of
      Commercial Production.

	 	 	 
	 	(h) 	
      Revenue means all money received by the Owner for
      the sale of Minerals or any Assets the cost of which has been previously
      charged to the Royalty Account.

	 	 	 
	 	(i) 	
      Royalty Account means the account to be
      established by the Operator for purposes of calculating the amount of the
      Royalty Holder's royalty.

	 	 	 
	 	(j) 	
      Working Capital means all monies spent by the
      Owner for working capital prior to the date when Commercial Production on
      the Property generates sufficient revenue to satisfy working capital
      requirements.

APPENDIX III 

to the Joint Venture Agreement between Canyon Copper Corp. and
Sandfield Resources (USA) Inc. made as of the _____day of _____________, _____.

CALCULATION OF PRIOR EXPLORATION COSTS 

	  	60 / 40 Joint Venture 	70 / 30 Joint Venture 
	Sandfield Resources (USA) Inc. 	$1,600,000 	$4,600,000 
	Canyon Copper Corp. 	$1,066,666 	$1,971,428

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