Document:

American Bonanza Gold Corp.: Exhibit 4.5 - Filed by newsfilecorp.com

UNDERWRITING AGREEMENT 

	September 14, 2011 
	  
	American Bonanza Gold Corp. 
	200 Granville Street, Suite 1238 
	Vancouver, British Columbia 
	V6C 1S4 

	Attention: 	Brian Kirwin, Chief Executive Officer
  

Dear Sir: 

In furtherance of a letter agreement dated September 7, 2011
between American Bonanza Gold Corp. (the “Corporation”) and National Bank
Financial Inc. (the “Underwriter” or “NBF”), upon and subject to
the terms and conditions set forth herein, agrees to act as underwriter and
purchase from the Corporation, and by its acceptance hereof, the Corporation
agrees to sell to NBF, 11,500,000 common shares of the Corporation (the
“Offered Shares”) on the Closing Date (as hereinafter
defined) at a price of $0.53 per Offered Share (the ”Offering
Price”) for an aggregate purchase price of $6,095,000 (the
“Aggregate Purchase Price”).

The Underwriter understands that the Corporation has prepared
and, concurrently with or immediately after the execution hereof, will file a
preliminary short form prospectus and all necessary documents relating thereto
and will take all additional steps to qualify the Securities (as defined below)
and the Broker Warrants (as defined below) for distribution in each of the
provinces of Canada other than Quebec, Prince Edward Island and Nova Scotia
(collectively, the “Qualifying Jurisdictions”) and to
permit the sale of the Securities on a private placement basis to Qualified
Institutional Buyers and Institutional Accredited Investors (as defined below)
in the United States in accordance with the terms of Schedule “A” hereto. 

In addition, the Corporation hereby grants an option (the
“Over-Allotment Option”) to the Underwriter
entitling the Underwriter to acquire from the Corporation, on and subject to the
terms contained herein, up to 1,725,000 additional common shares of the
Corporation (the “Optioned Shares”). The purchase price
payable by the Underwriter for each Optioned Share shall be $0.53 per share. The
Over-Allotment Option is exercisable in whole or in part for a period of 30 days
after and including the date of the Closing (as defined below). If NBF elects to
exercise such Over-Allotment Option, NBF shall notify the Corporation of its
election in writing, which notice shall specify the number of Optioned Shares to
be purchased by NBF and the date (the “Option Closing
Date”) on which such Optioned Shares are to be purchased. Such Option
Closing Date may be the same as the Closing Date but not earlier than the later
of (i) the Closing Date, and (ii) five (5) Business Days after the date of such
notice (provided that if the Option Closing Date is to be the same as the
Closing Date, such five (5) Business Day period may be reduced to 48 hours after
the time of delivery of such notice). The Over-Allotment Option may be exercised
solely for the purpose of covering the over-allocation position (as such concept
is defined in NI 41-101 as defined below) of the Underwriter
created in connection with the offering of the Offered Shares and for market
stabilization purposes.

- 2 - 

The Underwriter intends to make a public offering of the
Securities (as defined below) in the Qualifying Jurisdictions upon the terms set
forth herein and in the Prospectus (as defined below). The Corporation
acknowledges and agrees that the Underwriter may offer and sell the Securities
to or through any affiliate of the Underwriter and that any such affiliate may
offer and sell the Securities purchased by it to or through the Underwriter. The
Underwriter also proposes to distribute the Securities, on a private placement
basis, in the United States and other offshore jurisdictions, all in the manner
contemplated by this Agreement, including the schedules hereto.

To the extent that substituted purchasers purchase at the
Closing Time (as defined below), the obligations of the Underwriter to do so
will be reduced by the number of Offered Shares purchased from the Corporation
directly by such substituted purchasers. Any reference in this Agreement to “the
purchasers” shall be taken to be a reference to the Underwriter, as the initial
committed purchasers, and to the substituted purchasers, if any. 

The Corporation understands that although this Agreement is
presented on behalf of the Underwriter as the purchaser, the Underwriter,
through its U.S. broker-dealer affiliate, NBF Securities (USA) Corp., will have
the right to solicit orders and obtain substituted purchasers (the
“Substituted Purchasers”) in the United States for the
Securities on behalf of the Corporation and the obligation of the Underwriter to
purchase the Securities from the Corporation shall be reduced by the number of
Securities purchased by the Substituted Purchasers. The Underwriter, through its
U.S. broker-dealer affiliate, shall have the exclusive right to offer for sale
the Securities in the United States pursuant to exemptions under the U.S.
Securities Act (as defined below) to Institutional Accredited Investors and
Qualified Institutional Buyers in accordance with the terms hereof. With respect
to Securities to be sold to Qualified Institutional Buyers in the United States
pursuant to Rule 144A (as defined below), the Underwriter, through its U.S.
broker-dealer affiliates, will purchase such Securities from the Corporation for
resale in compliance with Rule 144A. 

The Underwriter shall be entitled to appoint a soliciting
dealer group consisting of other registered dealers acceptable to the
Corporation for the purposes of arranging for purchasers of the Securities. 

In consideration of the Underwriter’s services to be rendered
in connection with the Offering (as defined below), including the agreement of
the Underwriter to: (a) purchase the Offered Shares and to offer them to the
public in the Qualifying Jurisdictions pursuant to the Prospectus; (b) arrange
for substituted purchasers; or (c) act as placement agent for the Securities in
the United States and other offshore jurisdictions, the Corporation shall pay to
the Underwriter at the Closing Time and the Option Closing Time (each as defined
below), as the case may be, a cash commission (the “Commission”) equal to 6.0%
of the gross proceeds realized by the Corporation in respect of the sale of the
Securities (including, for greater certainty, any Optioned Shares issued and
sold by the Corporation on the exercise of the Over-Allotment Option) to be paid to the Underwriter. The obligation of the
Corporation to pay the Commission and issue the Broker Warrants (as defined
below) shall arise at the Closing Time and the Option Closing Time (each as
defined below), as the case may be, against payment for the Securities and the
Commission shall be fully earned by the Underwriter at that time. As additional
consideration, the Underwriter will be issued such number of non-assignable
broker warrants (the “Broker Warrants”) exercisable to
acquire that number of Common Shares (the “Broker Shares”)
as is equal to 6.0% of the aggregate number of Securities issued pursuant to the
Offering (including, for greater certainty, any Optioned Shares issued and sold
by the Corporation on the exercise of the Over-Allotment Option). Each Broker
Warrant shall entitle the holder thereof to purchase one Common Share (each, a
“Broker Share”) at a price equal to $0.61 per Broker Share,
at any time until 5:00 p.m. (Vancouver time) on the date which is 18 months
after the Closing Date.

- 3 - 

DEFINITIONS AND
INTERPRETATION 

(1) In this Agreement, in addition to the terms defined above
or elsewhere in this Agreement, the following terms shall have the following
meanings: 

“Agreement” means the agreement resulting from the
acceptance by the Corporation of the offer made hereby; 

“Annual Information Form”
means the annual report of the Corporation on Form 20-F for the financial year
ended December 31, 2010 dated March 31, 2011. 

“Business Day” means a day which is not a
Saturday, Sunday or statutory or civic holiday in the city of Vancouver, British
Columbia, unless provided to the contrary; 

“Canadian GAAP” means generally accepted
accounting principles determined with reference to the Handbook of the Canadian
Institute of Chartered Accountants or a successor entity, as amended from time
to time, applicable to public enterprises; 

“Canadian GAAP –
Part V” means generally accepted accounting principles
determined with reference to Part V of the Handbook of the Canadian Institute of
Chartered Accountants or a successor entity, as amended from time to time,
applicable to public enterprises; 

“Canadian Securities
Regulators” means the applicable securities commission or securities
regulatory authority in each of the Qualifying Jurisdictions; 

“Claim” has the meaning ascribed thereto in subparagraph
17(c) hereto; 

“Closing” means the purchase and sale of the
Securities;

“Closing Date” means September 29, 2011 or
such other date as the Corporation and NBF may agree in writing; 

- 4 - 

“Closing Time” means 8:00 a.m. (Toronto
time) on the Closing Date or such other time on the Closing Date as the
Corporation and NBF may agree in writing; 

“Collective Bargaining
Agreement” means any collective bargaining agreement, labor union
contract, trade union agreement or foreign works council contract to which the
Corporation or the Subsidiary is a party to or bound by; 

“Commission” has the meaning ascribed thereto on the
second page hereof; 

“Common Shares” means the common shares of
the Corporation; 

“Contaminant” has the meaning ascribed thereto in
subsection subparagraph 1.1(uu)(i) hereto; 

“Copperstone Project” means the project of
the Corporation known as the Copperstone Project located in La Paz County,
Arizona, United States and described in the Copperstone Technical Reports; 

“Copperstone Technical
Report” means the technical report dated February 2, 2010 and revised
January 10, 2011, entitled “NI 43-101 Technical Feasibility Report, Copperstone
Project, La Paz County, Arizona”, prepared pursuant to NI 43-101 by Dr. Corby G.
Anderson, Christopher L. Pratt, Thomas F. Buchholz and Jonathan M. Brown and
filed on SEDAR at www.sedar.com on January 10, 2011; 

“Corporation’s Auditors” means such firm
of chartered accountants as the Corporation may have appointed or may from time
to time appoint as auditors of the Corporation; 

“Disclosure Documents” means,
collectively, all of the documentation which has been filed by or on behalf of
the Corporation with the relevant Canadian Securities Regulators pursuant to the
requirements of applicable Securities Laws, including, but not limited to all
material change reports, technical reports, press releases and financial
statements of the Corporation;

“Documents Incorporated
by Reference” means all financial statements,
management’s discussion and analysis of results of operations and financial
condition, management proxy circulars, annual information forms, material change
reports or other documents issued by the Corporation, whether before or after
the date of this Agreement, that were incorporated by reference into the
Preliminary Prospectus and which are required to be incorporated by reference in
the Final Prospectus, as applicable;

“Due Diligence Session”
means the due diligence session held on September 13, 2011; 

“Environmental Activity” has the meaning
ascribed thereto in subparagraph 1.1(uu)(i) hereof;

“Final Prospectus” means the final
short form prospectus, including all of the Documents Incorporated by Reference,
to be prepared by the Corporation relating to the distribution of the Securities
and for which a receipt will have been issued by the British Columbia Securities
Commission on its own behalf and on behalf of each of the other Canadian
Securities Regulators, other than the Ontario Securities Commission, which
will be deemed to have issued a receipt upon the issue of such receipt by the
British Columbia Securities Commission; 

- 5 - 

“Financial Statements” means the financial
statements of the Corporation included in the Documents Incorporated by
Reference, including the notes to such statements and the related auditors’
report on such statements, as applicable; 

“Governmental Authority” means any (a)
multinational, federal, provincial, state, regional, municipal, local or other
government, governmental or public department, ministry, court, tribunal,
arbitral body, bureau or agency, domestic or foreign, (b) any subdivision,
agent, commission, board, or authority of any of the foregoing, or (c) any
quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any foregoing, and any stock
exchange or self-regulatory authority and, for greater certainty, includes the
Securities Regulators; 

“Indemnified Party” has the meaning
ascribed thereto in subparagraph 17(c) hereof; 

“Institutional Accredited
Investor” has the meaning set forth in Schedule “A” hereto; 

“Listing Conditions” has the meaning
ascribed thereto in subparagraph 4(a)(iv) hereof; 

“Material Adverse Effect”
when used in connection with an entity means any change, event, violation,
circumstance or effect that is materially adverse to the business, assets
(including intangible assets), capitalization, financial condition or results of
operations of such entity and its direct or indirect parent (if applicable) or
subsidiaries taken as a whole; 

“MES” means Mining and Environmental Services LLC of
Idaho Springs, Colorado; 

“MES Mining Contract” means
the mining contract dated March 18, 2011 between the Corporation and MES; 

“MI 11-102” means
Multilateral Instrument 11-102 – Passport System adopted by
certain members of the Canadian Securities Regulators and its related memorandum
of understanding; 

“misrepresentation”, “material
fact”, “material change”,
“affiliate”, “associate”, and “distribution” have
the respective meanings ascribed thereto in the Securities
Act (Ontario); 

“Mutual Reliance Procedures”
means the mutual reliance review system procedures provided for under NP 11-202
and MI 11-102; 

“NI 41-101” means National
Instrument 41-101 – General Prospectus Requirements adopted by the Canadian
Securities Regulators; 

“NI 43-101” means National
Instrument 43-101 – Standards of
Disclosure for Mineral
Projects adopted by the Canadian Securities Regulators;

- 6 - 

“NI 44-101” means National
Instrument 44-101 – Short Form Prospectus
Distributions adopted by the Canadian Securities Regulators;

“NP 11-202” means National
Policy 11-202 – Process for Prospectus
Reviews in Multiple
Jurisdictions adopted by the Canadian Securities Regulators and its
related memorandum of understanding; 

“Off-Balance Sheet
Arrangement” means with respect to any Person, any securitization
transaction to which that Person or its subsidiaries is party and any other
transaction, agreement or other contractual arrangement to which an entity
unconsolidated with that Person is a party, under which that Person or its
subsidiaries, whether or not a party to the arrangement, has, or in the future
may have (a) any obligation under a direct or indirect guarantee or similar
arrangement, (b) a retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement, (c) derivatives to the extent that
the fair value thereof is not fully reflected as a liability or asset in the
financial statements, or (d) any obligation or liability, including a contingent
obligation or liability, to the extent that it is not fully reflected in the
financial statements (excluding the footnotes thereto) (for this purpose,
obligations or liabilities that are not fully reflected in the financial
statements (excluding the footnotes thereto) include, without limitation (i)
obligations that are not classified as a liability according to Canadian or
United States generally accepted accounting principles, as applicable (ii)
contingent liabilities as to which, as of the date of the financial statements,
it is not probable that a loss has been incurred or, if probable, is not
reasonably estimable, or (iii) liabilities as to which the amount recognized in
the financial statements is less than the reasonably possible maximum exposure
to loss under the obligation as of the date of the financial statements, but, in
each case, exclude contingent liabilities arising out of litigation, arbitration
or regulatory actions (not otherwise related to off-balance sheet
arrangements)); 

“Offering” means the issuance and sale of the Offered
Shares and, if applicable, the Optioned Shares issued on the exercise of the
Over-Allotment Option pursuant to this Agreement; 

“Offering Documents” has the meaning
ascribed thereto in subparagraph 5(a)(iii) hereof; 

“Option Closing Time” means
8:00 a.m. (Toronto time) on the Option Closing Date or such other time on the
Option Closing Date as the Corporation and NBF may agree; 

“Person” shall include any individual, corporation,
partnership, joint venture, association, trust or other legal entity; 

“Preliminary Prospectus” means the short
form preliminary prospectus dated September 14, 2011 prepared by the Corporation
relating to the distribution of the Securities, including all of the Documents
Incorporated by Reference; 

“Proceedings” has the meaning ascribed thereto in
paragraph 30 hereof; 

“Prospectus” means, collectively, the Preliminary
Prospectus and the Final Prospectus; 

- 7 - 

“Purchasers” means the purchasers of the Securities,
collectively; 

“Qualified Institutional
Buyer” has the meaning set forth in Schedule “A”
hereto; 

“Qualifying Jurisdictions” has the
meaning ascribed thereto on the first page hereof; 

“Regulation D” has the meaning set forth
in Schedule “A” hereto; 

“Reporting Provinces” means the provinces
of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and New
Brunswick, collectively; 

“Rule 144A” means Rule 144A under the U.S.
Securities Act; 

“Securities” means the Offered Shares and the Optioned
Shares, collectively; 

“Securities Laws” means, unless the
context otherwise requires, all applicable securities laws in each of the
Qualifying Jurisdictions and the United States and the respective regulations
made thereunder, together with applicable published fee schedules, prescribed
forms, policy statements, orders, blanket rulings and other regulatory
instruments of the securities regulatory authorities in such jurisdictions; 

“Securities Regulators” means,
collectively, the TSX and the securities commissions or other securities
regulatory authorities in the Qualifying Jurisdictions; 

“Selling Firm” has the meaning ascribed
thereto in subparagraph 3(a) hereof; 

“Subsidiary” means Bonanza Exploration Inc., a
corporation existing under the laws of the State of Nevada;

“subsidiary” has the meaning ascribed thereto in the
Business Corporations Act (British Columbia);

“Supplementary Material” means,
collectively, any amendment to the Final Prospectus, any amendment or
supplemental prospectus or ancillary materials that may be filed by or on behalf
of the Corporation under Securities Laws relating to the distribution of the
Securities thereunder; 

“TSX” means the Toronto Stock Exchange; 

“Underwriter” has the meaning ascribed thereto on the
first page hereof; 

“Underwriter’s Personnel” has the meaning
ascribed thereto in subparagraph 17(a) hereof 

“United States” means the United States of
America as defined in Rule 902(l) of Regulation S under the U.S. Securities Act;

“U.S. Affiliate” means a duly registered
U.S. broker-dealer affiliate of NBF;

- 8 - 

“U.S. GAAP” means United States generally
accepted accounting principles as established by the Financial Accounting
Standards Board and includes such other accounting principles generally accepted
in the United States at the relevant time, applied on a consistent basis; 

“U.S. Person” means a “U.S. Person” as
that term is defined in Rule 902(k) of Regulation S under the U.S. Securities
Act; 

“U.S. Placement Memorandum”
has the meaning ascribed thereto in subparagraph 4(a)(iv) hereof;

“U.S. Securities Act” means
the United States Securities Act of 1933, as amended; 

(2) In this Agreement, the phrase “to
the knowledge of the
Corporation” shall refer to the actual personal knowledge, without
personal liability, of Brian Kirwin, Chief Executive Officer or Joe Chan, Chief
Financial Officer.

TERMS AND CONDITIONS

	1. 	
      Compliance with Securities Laws.

	 	 	 
		(a) 	
      The Corporation represents, warrants and covenants to the
      Underwriter that the Corporation has prepared and will file concurrently
      with or immediately after the execution hereof the Preliminary Prospectus
      and will use its commercially reasonable efforts to obtain, pursuant to
      the Mutual Reliance Procedures, a receipt for the Preliminary Prospectus
      and other related documents in respect of the proposed distribution of the
      Securities prior to 5:00 p.m. (Toronto time) on September 14,
  2011.

	 	 	 
		(b) 	
      The Corporation hereby agrees to use commercially
      reasonable efforts to secure compliance with all securities regulatory
      requirements on a timely basis in connection with the distribution of the
      Securities, (except to the extent such requirements are the responsibility
      of the Underwriter by law), including by filing within the periods
      stipulated under Securities Laws and at the Corporation's expense, all
      forms required to be filed by the Corporation in connection with the
      Offering and paying all filing fees required to be paid by the Corporation
      in connection therewith. Subject to being notified by the Underwriter of
      the requirements thereof and upon request by the Underwriter, the
      Corporation also agrees to use commercially reasonable efforts to file
      within the periods stipulated under Securities Laws and at the
      Corporation's expense, all private placement forms required to be filed by
      them in connection with the Offering and agrees to pay all filing fees
      required to be paid by the Corporation in connection therewith so that the
      distribution of the Securities outside of the Qualifying Jurisdictions may
      lawfully occur without the necessity of filing a prospectus, offering
      memorandum or any similar disclosure document under applicable Securities
      Laws outside of the Qualifying Jurisdictions.
The Underwriter agrees to assist the Corporation in all
      reasonable respects to secure compliance with all regulatory requirements
  in connection with the Offering.

- 9 - 

	 	(c) 	
      The Corporation shall use commercially reasonable efforts
      to fulfill all legal requirements to enable the distribution of the
      Securities and to file the Final Prospectus in each of the Qualifying
      Jurisdictions and obtain, pursuant to the Mutual Reliance Procedures, a
      receipt for the Final Prospectus and other related documents in respect of
      the proposed distribution of the Securities on or prior to 5:00 p.m.
      (Toronto time) on September 22, 2011 or such later date as NBF and the
      Corporation may agree.

2.          
Due Diligence. Prior to the filing of the Final Prospectus,
Documents Incorporated by Reference which are not already filed on SEDAR as of
the date of the Agreement and any Supplemental Materials, the Corporation shall
permit the Underwriter to review each of the Final Prospectus, any Documents
Incorporated by Reference which is not already filed on SEDAR as of the date of
the Agreement and any Supplementary Materials and shall allow the Underwriter to
continue to conduct any due diligence investigations which any of them
reasonably requires in order to fulfill its obligations as an underwriter under
Securities Laws of the Qualifying Jurisdictions and in order to enable it to
responsibly execute the certificate in the Final Prospectus required to be
executed by it. The Corporation shall provide the Underwriter with full and free
access to, and on request of the Underwriter (acting reasonably), copies of all
materials and documents used or created in connection with the due diligence
investigations or the Offering, and must maintain those materials and documents
for at least seven years from the Closing Date for that purpose. 

3.          
Distribution and Certain
Obligations of the
Underwriter. 

	 	(a) 	
      The Underwriter shall, and shall require any investment
      dealer or broker (other than the Underwriter) with which the Underwriter
      have a contractual relationship in respect of the distribution of the
      Securities, including any affiliate (each, a “Selling Firm”), to
      agree to comply with Securities Laws in connection with the distribution
      of the Securities and shall offer the Securities for sale to the public
      directly and through duly registered Selling Firms upon the terms and
      conditions set out in the Final Prospectus and this Agreement. The
      Underwriter shall, and shall require any Selling Firm to, offer for sale
      to the public and sell the Securities only in those jurisdictions where
      they may be lawfully offered for sale or sold. The Underwriter shall: (i)
      use all reasonable efforts to complete and cause each Selling Firm to
      complete the distribution of the Securities as soon as reasonably
      practicable; (ii) promptly notify the Corporation when, in their opinion,
      the Underwriter and the Selling Firms have ceased distribution of the
      Securities; and (iii) provide a breakdown of the number of Securities
      distributed in each of the Qualifying Jurisdictions where such breakdown
      is required for the purpose of calculating fees payable to the Securities
      Regulators.

- 10 - 

	 	(b) 	
      The Underwriter shall, and shall require any Selling Firm
      to agree to, distribute the Securities in a manner which complies with and
      observes all applicable laws and regulations in each jurisdiction into and
      from which they may offer to sell the Securities or distribute the
      Prospectus or any Supplementary Material in connection with the
      distribution of the Securities and will not, directly or indirectly,
      offer, sell or deliver any Securities or deliver the Prospectus or any
      Supplementary Material to any person in any jurisdiction other than in the
      Qualifying Jurisdictions except in a manner which will not require the
      Corporation to comply with the registration, prospectus, offering
      memorandum, filing, continuous disclosure or other similar requirements
      under the applicable Securities Laws of such other jurisdictions or pay
      any additional governmental filing fees which relate to such other
      jurisdictions. Subject to the foregoing, the Underwriter and any Selling
      Firm shall be entitled to offer and sell the Securities:

	 	 	 	 
	 		(i) 	
      in the United States, solely pursuant to an applicable
      exemption or exemptions from the registration requirements of the U.S.
      Securities Act and applicable state securities laws. Any offer or sale of
      the Securities in the United States will be made in accordance with
      Schedule “A” which forms part of this Agreement; and

	 	 	 	 
	 		(ii) 	
      in such other jurisdictions in accordance with any
      applicable securities and other laws in such jurisdictions in which the
      Underwriter and/or Selling Firms offer the Securities provided that the
      Corporation is not required to file a prospectus, offering memorandum or
      other disclosure document or become subject to continuing obligations in
      such other jurisdictions,

	 	 	 	 
	 		
      in each case in accordance with the provisions of this
      Agreement.

	 	 	 	 
	 	(c) 	
      For the purposes of this paragraph 3, the Underwriter
      shall be entitled to assume that the Securities are qualified for
      distribution in any Qualifying Jurisdiction where a receipt or similar
      document for the Final Prospectus shall have been obtained from the
      applicable Securities Regulators (including a decision document for the
      Final Prospectus issued under the Mutual Reliance Procedures) following
      the filing of the Final Prospectus unless otherwise notified in
      writing.

	 	 	 	 
	 	(d) 	
      The Corporation and the Underwriter agree that Schedule
      “A” to this Agreement is incorporated by reference in and shall form part
      of this Agreement.

	 	 	 	 
	 	(e) 	
      The Underwriter will not be in breach of this paragraph 3
      to the extent that its failure to comply with this paragraph is caused by
      the acts or omissions of the Corporation or its directors, officers or
      employees, or reliance by the Underwriter on information or advice
provided to them by the Corporation or its advisers or on representations made
by investors.

- 11 - 

4.           Deliveries
on Filing and Related
Matters. 

	 	(a) 	
      The Corporation shall deliver to the
  Underwriter:

	 	 	 	 
	 		(i) 	
      at the Closing Time, a copy of the Preliminary Prospectus
      and the Final Prospectus signed and certified by the Corporation as
      required by Securities Laws;

	 	 	 	 
	 		(ii) 	
      at the Closing Time, a copy of any Supplementary Material
      required to be filed by the Corporation in compliance with Securities
      Laws;

	 	 	 	 
	 		(iii) 	
      concurrently with the filing of the Final Prospectus with
      the Canadian Securities Regulators, “long form” comfort letters dated the
      date of the Final Prospectus, in form and substance satisfactory to the
      Underwriter, acting reasonably, addressed to the Underwriter and the
      directors of the Corporation from the Corporation’s Auditors with respect
      to financial and accounting information contained in or incorporated by
      reference into the Final Prospectus, which letter shall be based on a
      review by the Corporation’s Auditors within a cut-off date of not more
      than two Business Days prior to the date of the letter, which letter shall
      be in addition to the auditors’ consent letter required to be delivered by
      such auditors and addressed to the Canadian Securities
  Regulators;

	 	 	 	 
	 		(iv) 	
      as soon as practicable after the Preliminary Prospectus,
      Final Prospectus and any Supplementary Material are prepared, the private
      placement memorandum incorporating the Preliminary Prospectus, Final
      Prospectus or any Supplementary Material, as the case may be, prepared for
      use in connection with the offering for sale of the Securities in the
      United States (the “U.S. Placement Memorandum”), and, forthwith
      after preparation, any amendment to the U.S. Placement Memorandum;
    and

	 	 	 	 
	 		(v) 	
      prior to the filing of the Final Prospectus with the
      Canadian Securities Regulators, copies of correspondence indicating that
      the application for the listing and posting for trading on the TSX of the
      Common Shares issuable in connection with the Offering has been approved
      for listing subject only to satisfaction by the Corporation of conditions
      imposed by the TSX (the “Listing Conditions”).

	 	 	 	 
	 	(b) 	
      Supplementary Material: The Corporation shall also
      prepare and deliver promptly to the Underwriter signed copies of all
      Supplementary Material.

	 	 	 	 
	 	(c) 	
      Representations as to Prospectus and Supplementary
      Material: Delivery of the Preliminary Prospectus, the Final Prospectus
      and any Supplementary Material by the Corporation shall constitute
the representation and warranty of the Corporation to the Underwriter that, as
at their respective dates of filing: 

- 12 - 

	 	(i) 	
      all information and statements (except information and
      statements relating solely to the Underwriter and provided by the
      Underwriter) contained in the Prospectus or any Supplementary Material, as
      the case may be, are true and correct, in all material respects, and
      contain no misrepresentation and constitute full, true and plain
      disclosure of all material facts relating to the Corporation and the
      Securities;

	 	 	 
	 	(ii) 	
      no material fact or information has been omitted
      therefrom (except facts or information relating solely to the Underwriter
      and provided by the Underwriter) which is required to be stated in such
      disclosure or is necessary to make the statements or information contained
      in such disclosure not misleading in light of the circumstances under
      which they were made; and

	 	 	 
	 	(iii) 	
      except with respect to any information relating solely to
      the Underwriter and provided by the Underwriter, such documents comply in
      all material respects with the requirements of Securities Laws in the
      Qualifying Jurisdictions.

Such deliveries shall also constitute
the Corporation’s consent to the Underwriter’s use of the Preliminary
Prospectus, the Final Prospectus and any Supplementary Material in connection
with the distribution of the Securities in the Qualifying Jurisdictions in
compliance with this Agreement and Securities Laws unless otherwise advised in
writing. 

	 	(d) 	
      Commercial Copies: The Corporation
shall:

	 	 	 	 
	 		(i) 	
      cause commercial copies of the Preliminary Prospectus,
      the Final Prospectus and any Supplementary Material to be delivered to the
      Underwriter without charge, in such numbers and in such locations as the
      Underwriter may reasonably request by written instructions to the
      Corporation’s financial printer of the Final Prospectus given forthwith
      after the Underwriter has been advised that a receipt has been issued
      pursuant to the Mutual Reliance Review Procedures for the Final Prospectus
      or Supplementary Material, as the case may be (or such other date or time
      as the Underwriter and the Corporation may agree). Such delivery shall be
      effected as soon as possible and, in any event, on or before a date which
      is two Business Days following the date of the issuance of a receipt for
      the Preliminary Prospectus or Final Prospectus, as the case may be, or
      after the filing of any Supplementary Material in the Qualifying
      Jurisdictions; and

- 13 - 

	 	(ii) 	
      cause to be delivered to the Underwriter, as soon as
      practicable after preparation thereof, without charge, in such numbers and
      at such locations as the Underwriter may reasonably request, commercial
      copies of the U.S. Placement Memorandum and any amendments
  thereto.

	 	(e) 	
      Press Releases: During the period commencing on
      the date hereof and until NBF advises the Corporation that the completion
      of the primary distribution of the Securities has terminated, the
      Corporation will not, without first obtaining the approval of NBF, which
      approval shall not be unreasonably withheld, issue any press release,
      including with respect to the Offering, except where required by law. The
      following legend concerning United States sales shall be included on each
      page of any such press release: “Not for distribution to United
      States newswire services or for dissemination in the United
      States” and the following disclaimer shall be placed on the last
      page of the press release: ”The securities described herein have not
      been, and will not be, registered under the United States Securities Act
      of 1933, as amended (the "U.S. Securities
      Act"), or any state securities laws, and
      accordingly, may not be offered or sold within the United States except in
      compliance with the registration requirements of the U.S. Securities Act
      and applicable state securities requirements or pursuant to exemptions
      therefrom. This press release does not constitute an offer to sell or a
      solicitation of an offer to buy any of the Corporation’s securities in the
      United States.”

5.          
Material Changes. 

	 	(a) 	
      During the period prior to the Underwriter notifying the
      Corporation of the completion of the distribution of the Securities, the
      Corporation shall promptly inform the Underwriter (and if requested by the
      Underwriter, confirm such notification in writing) of the full particulars
      of:

	 	 	 	 
	 		(i) 	
      any material change (actual, anticipated, contemplated,
      threatened, financial or otherwise) in the assets, liabilities (contingent
      or otherwise), business, affairs, operations or capital of the Corporation
      and its Subsidiary taken as a whole;

	 	 	 	 
	 		(ii) 	
      any material fact which has arisen or has been discovered
      and would have been required to have been stated in the Prospectus had the
      fact arisen or been discovered on, or prior to, the date of such
      documents;

	 	 	 	 
	 		(iii) 	
      any change in any material fact contained in the
      Prospectus or any Supplementary Material (collectively, the “Offering
      Documents”) or whether any event or state of facts has occurred after
      the date hereof, which, in any case, is, or may be, of such a nature as to
      render any of the Offering Documents untrue or misleading in any material
      respect or to result in any misrepresentation in any of the Offering
      Documents, or which would result in the Final Prospectus or any
      Supplementary Material not complying (to the extent that such compliance
      is required) with the Securities Laws of any Qualifying Jurisdiction;
  and

- 14 - 

	 		(iv) 	
      any material breach or potential material breach of any
      of the representations and warranties in subparagraph 4(c) and paragraph 7
      hereof.

	 	 	 	 
	 	(b) 	
      The Corporation will comply with section 57 of the
      Securities Act (Ontario) and with the comparable provisions of the
      other Securities Laws, and the Corporation will prepare and file promptly
      any Supplementary Material which may be necessary and will otherwise
      comply with all legal requirements necessary to continue to qualify the
      Securities for distribution in each of the Qualifying
  Jurisdictions.

	 	 	 	 
	 	(c) 	
      In addition to the provisions of subparagraphs 5(a) and
      5(b) hereof, the Corporation shall in good faith discuss with the
      Underwriter any change, event or fact contemplated in subparagraphs 5(a)
      and 5(b) which is of such a nature that there is or could be reasonable
      doubt as to whether notice should be given to the Underwriter under
      subparagraph 5(a) hereof and shall consult with the Underwriter with
      respect to the form and content of any amendment or other Supplementary
      Material proposed to be filed by the Corporation, it being understood and
      agreed that no such amendment or other Supplementary Material shall be
      filed with any Securities Regulator prior to the review thereof by the
      Underwriter and the Underwriter’s counsel, acting reasonably.

	 	 	 	 
	 	(d) 	
      If during the period of distribution of the Securities
      there shall be any change in Securities Laws which, in the opinion of the
      Underwriter, acting reasonably, requires the filing of any Supplementary
      Material, upon written notice from the Underwriter, the Corporation shall,
      to the satisfaction of the Underwriter, acting reasonably, promptly
      prepare and file any such Supplementary Material with the appropriate
      Securities Regulators where such filing is
required.

6.          
Additional Covenants of the
Corporation. The Corporation hereby covenants to the Underwriter that
the Corporation: 

	 	(a) 	
      will advise the Underwriter, promptly after receiving
      notice thereof, of the time when the Final Prospectus and any
      Supplementary Material have been filed and receipts therefor have been
      obtained pursuant to the Mutual Reliance Procedures and will provide
      evidence reasonably satisfactory to the Underwriter of each such filing
      and copies of such receipts;

	 	 	 
	 	(b) 	
      will advise the Underwriter, promptly after receiving
      notice or obtaining knowledge thereof, of:

- 15 - 

	 	(i) 	
      the issuance by any Canadian Securities Regulators of any
      order suspending or preventing the use in connection with the Offering of
      the Preliminary Prospectus, the Final Prospectus or any Supplementary
      Material;

	 	 	 
	 	(ii) 	
      the institution, threatening or contemplation of any
      proceeding for any purposes contemplated in subparagraph (b)(i);

	 	 	 
	 	(iii) 	
      any order, ruling, or determination having the effect of
      suspending the sale or ceasing the trading in any securities of the
      Corporation (including the Securities) that has been issued by any
      Securities Regulator or the institution, threatening or contemplation of
      any proceeding for any such purposes; or

	 	 	 
	 	(iv) 	
      any requests made by any Canadian Securities Regulators
      for amending or supplementing the Preliminary Prospectus or the Final
      Prospectus or for additional information, and will use its commercially
      reasonable efforts to prevent the issuance of any order referred to in
      subparagraph (b) (i) above and, if any such order is issued, use its
      commercially reasonable efforts to obtain the withdrawal thereof as soon
      as practicable;

	 	(c) 	
      except to the extent the Corporation participates in a
      merger, amalgamation or other form of business combination transaction
      which results in the Corporation ceasing to be a “reporting issuer”, will
      use its reasonable best efforts to maintain its status as a “reporting
      issuer” (or the equivalent thereof) not in default of the requirements of
      Securities Laws in each of the Qualifying Jurisdictions which have such a
      concept until the date which is two years following the Closing
    Date;

	 	 	 
	 	(d) 	
      except to the extent the Corporation participates in a
      merger, amalgamation or other form of business combination transaction
      which results in the Corporation ceasing to be listed on the TSXV or the
      TSX, will use its reasonable best efforts to maintain the listing of the
      Common Shares on the TSXV or the TSX or such other recognized stock
      exchange or quotation system as the Underwriter may approve, acting
      reasonably, to the date that is two years following the Closing Date so
      long as the Corporation meets the minimum listing requirements of the
      TSXV, the TSX or such other exchange or quotation system; and

	 	 	 
	 	(e) 	
      will use the net proceeds of the offering of Securities
      contemplated herein in the manner and subject to the qualifications
      described in the Prospectus under the heading “Use of
  Proceeds”.

- 16 - 

	7. 	
      Representations and Warranties of the Corporation.
      The Corporation represents and warrants to the Underwriter that each
      of the following representations and warranties is true and correct on the
      date of this Agreement:

	 	 	 
		(a) 	
      Incorporation and Organization: Each of the
      Corporation and the Subsidiary has been duly incorporated, continued or
      formed, as the case may be, is organized and is a valid and subsisting
      corporation under the laws of its jurisdiction of existence and has all
      requisite corporate power and capacity to carry on its business as now
      conducted and to own or lease and operate the property and assets
      thereof.

	 	 	 
		(b) 	
      Extra-provincial Registration: Each
      of the Corporation and the Subsidiary is licensed, registered or qualified
      as an extra-provincial, foreign corporation or an extra-provincial
      partnership, as the case may be, in all jurisdictions where the character
      of the property or assets thereof owned or leased or the nature of the
      activities conducted by it make such licensing, registration or
      qualification necessary and is carrying on the business thereof in
      material compliance with all applicable laws, rules and regulations of
      each such jurisdiction.

	 	 	 
		(c) 	
      Directors and Officers: To the knowledge of the
      Corporation, none of its directors or officers are currently, or have been
      in the past, subject to any order or ruling of any securities regulatory
      authority or stock exchange that currently prohibits, or has prohibited,
      such individual from acting as a director or officer of a public company
      or any company listed on a stock exchange.

	 	 	 
		(d) 	
      Authorized Capital: The Corporation is authorized
      to issue an unlimited number of Common Shares of which, as of the close of
      business on September 13, 2011, 185,283,272 Common Shares were issued and
      outstanding as fully paid and non-assessable shares.

	 	 	 
		(e) 	
      Capitalization: The Corporation has the duly
      authorized and validly issued outstanding capitalization as of June 30,
      2011 as set forth under the heading “Consolidated Capitalization” in the
      Final Prospectus.

	 	 	 
		(f) 	
      Listing: The Common Shares are listed and posted
      for trading on the TSX and the Corporation has made or will make, prior to
      the filing of the Final Prospectus, application so that at the time of
      issue of the Securities, the Securities will have been conditionally
      approved for listing on the TSX, subject only to the Listing
      Conditions.

	 	 	 
		(g) 	
      Certain Securities Law Matters: The Corporation is
      a reporting issuer or the equivalent only in the Reporting Provinces and
      is not currently in default of any material requirement of the Securities
      Laws of any of such provinces.

- 17 - 

	 	(h) 	
      Market Stabilization: Neither the Corporation nor
      any affiliate of the Corporation has taken, nor will they take, directly
      or indirectly, any action designed to or which might reasonably be
      expected to cause or result in, or which has constituted or which might
      reasonably be expected to constitute, the stabilization or manipulation of
      the price of the Securities, the Common Shares or any security of the
      Corporation to facilitate the sale or resale of any of the
    Securities.

	 	 	 
	 	(i) 	
      Rights to Acquire Common Shares: As at September
      14, 2011, no Person has any agreement, option, right or privilege (whether
      pre-emptive, contractual or otherwise) capable of becoming an agreement
      for the purchase, acquisition, subscription for or issue of any of the
      unissued shares or other securities of the Corporation, except as
      disclosed in Schedule “B” hereto.

	 	 	 
	 	(j) 	
      Rights Plan: The directors of the Corporation have
      not adopted a shareholder rights plan or a similar plan and the
      Corporation is not party to what is commonly referred to as a shareholder
      rights plan agreement.

	 	 	 
	 	(k) 	
      No Pre-emptive Rights: The issue of
      the Securities, the Broker Warrants and, if applicable, the Broker Shares
      will not be subject to any pre-emptive right or other contractual right to
      purchase securities granted by the Corporation or to which the Corporation
      is subject.

	 	 	 
	 	(l) 	
      Transfer Agent: Computershare Investor Services
      Inc. has been appointed by the Corporation as the registrar and transfer
      agent for the Common Shares.

	 	 	 
	 	(m) 	
      Subsidiary: The Subsidiary is the only subsidiary
      of the Corporation. The Corporation does not beneficially own or exercise
      control or direction over 10% or more of the outstanding voting shares of
      any company that holds any assets or conducts any operations other than
      the Subsidiary.

	 	 	 
	 	(n) 	
      Ownership of Subsidiary: The Corporation is the
      recorded and beneficial owner of all of the equity interests of the
      Subsidiary, free and clear of any lien. All outstanding equity interests
      in the Subsidiary have been duly authorized and are validly issued, fully
      paid and non-assessable and are not subject to any pre- emptive rights. As
      of the date of this Agreement, there are no outstanding (i) securities of
      the Corporation or its Subsidiary convertible into or exchangeable for
      common shares or other voting securities or ownership interests in the
      Subsidiary, (ii) options, subscriptions, restricted shares, appreciation
      rights, “profits interests,” “phantom” units, warrants, calls, claims,
      rights of first refusal, rights (including pre-emptive rights),
      arrangements or other agreements or commitments to acquire from the
      Corporation or its Subsidiary, or obligations of the Corporation or its
      Subsidiary to issue, any equity interests, common shares, voting
      securities or other ownership interests in (or securities convertible into
      or exchangeable for common shares or voting securities or other
      ownership interests in) the Subsidiary, (iii) obligations of the
      Corporation or its Subsidiary to grant, extend or enter into any
      subscription, warrant, right, convertible or exchangeable security or
      other similar agreement or commitment relating to the issuance of any
      common shares, equity interest, voting securities or other ownership
      interests in the Subsidiary (the items in clauses (i), (ii) and (iii),
      together with the equity securities of such Subsidiary, being referred to
      collectively as “Subsidiary Securities”), or (iv) obligations of
      the Corporation or its Subsidiary to make any payment directly or
      indirectly based (in whole or in part) on the value of any equity
      securities of the Subsidiary. There are no outstanding obligations,
      commitments or arrangements, contingent or otherwise, of the Corporation
      or its Subsidiary to purchase, redeem or otherwise acquire any outstanding
      Subsidiary Securities. There are no voting trusts or shareholder
      agreements, proxies or other agreements or understandings to which the
      Corporation is a party with respect to the voting of equity securities or
      any ownership interests in the Subsidiary or agreements or understandings
      relating to the sale or transfer (including agreements imposing transfer
  restrictions) of the ownership interests in the Subsidiary.

- 18 - 

	 	(o) 	
      Issue of Securities: All necessary corporate
      action has been taken to authorize the issue and sale of, and if
      applicable, the delivery of certificates representing, the Securities and
      the Broker Warrants and, upon payment of the requisite consideration
      therefor, the Securities and the Broker Shares will be validly issued as
      fully paid and non-assessable shares of the Corporation.

	 	 	 
	 	(p) 	
      Consents, Approvals and Conflicts: None of the
      offering and sale of the Securities, the creation and issuance of the
      Broker Warrants, the execution and delivery of this Agreement or the
      Prospectus, the compliance by the Corporation with the provisions of this
      Agreement or the consummation of the transactions contemplated herein and
      therein including, without limitation, the issue of the Securities and the
      Broker Warrants to the Underwriter for the consideration and upon the
      terms and conditions as set forth herein, does not (i) subject to
      compliance by the Underwriter with the provisions of this Agreement,
      require the consent, approval, authorization, order or agreement of, or
      registration or qualification with, any governmental agency, body or
      authority, court, stock exchange, securities regulatory authority or other
      Person, except (A) such as have been, or will by the Closing Date, be
      obtained, or (B) such as may be required under the Securities Laws of any
      of the Qualifying Jurisdictions and the policies of the TSX and will be
      obtained by the Closing Date, or (ii) conflict with or result in any
      breach or violation of any of the provisions of, or constitute a default
      under, any indenture, mortgage, deed of trust, lease or other agreement or
      instrument to which the Corporation or the Subsidiary is a party or by
      which any of them or any of the properties or assets thereof is bound, or
      the articles or by- laws or any other constating document of the
      Corporation or the Subsidiary or any resolution passed by the directors
      (or any committee thereof) or shareholders of the Corporation or the Subsidiary, or any statute or
      any judgment, decree, order, rule, policy or regulation of any court,
      governmental authority, arbitrator, stock exchange or securities
      regulatory authority applicable to the Corporation or the Subsidiary or
      any of the properties or assets thereof which would reasonably be expected
      to have a Material Adverse Effect on the Corporation or the
    Subsidiary.

- 19 - 

	 	(q) 	
      Authority and Authorization: The Corporation has
      all requisite corporate power and capacity to enter into this Agreement
      and to do all acts and things and execute and deliver all documents as are
      required hereunder and thereunder to be done, observed, performed or
      executed and delivered by it in accordance with the terms hereof and
      thereunder and the Corporation has taken all necessary corporate action to
      authorize the execution, and delivery of, and performance of its
      obligations under this Agreement and to observe and perform its
      obligations under this Agreement in accordance with the provisions hereof
      and thereof including, without limitation, the issue of the Securities and
      the Broker Warrants and, if applicable, the Broker Shares, for the
      consideration and upon the terms and conditions set forth in the
      certificates(s) representing the Broker Warrants.

	 	 	 
	 	(r) 	
      Validity and Enforceability: This Agreement has
      been or will be authorized, executed and delivered by the Corporation and
      constitutes or will constitute a valid and legally binding obligation of
      the Corporation enforceable against the Corporation in accordance with the
      terms hereof or thereof, except in any case as enforcement hereof may be
      limited by bankruptcy, insolvency, reorganization, moratorium and other
      laws relating to or affecting the rights of creditors generally and except
      as limited by the application of equitable principles when equitable
      remedies are sought, and by the fact that rights to indemnity,
      contribution and waiver, and the ability to sever unenforceable terms, may
      be limited by applicable law.

	 	 	 
	 	(s) 	
      Public Disclosure: The Corporation is in
      compliance in all material respects with all its disclosure obligations
      under the Securities Laws of the Reporting Provinces (including, without
      limitation, all of its disclosure obligations pursuant to National
      Instrument 51-102 – Continuous Disclosure Obligations of the
      Canadian Securities Administrators and pursuant to National Instrument
      58-101 –

	 	 	 
	 		
      Disclosure of Corporate Governance Practices of
      the Canadian Securities Administrators). Except as has been disclosed to
      the Underwriter, each of the Disclosure Documents was, as of the date
      thereof, in compliance in all material respects with the Securities Laws
      of the Reporting Provinces and did not contain any untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading and such
      documents collectively constitute full, true and plain disclosure of all
      material facts relating to the Corporation and did not as at the date
      thereof contain any untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading, as of the date hereof. There is no fact known to the
      Corporation which the Corporation has not publicly disclosed which
      materially adversely affects, or so far as the Corporation can reasonably
      foresee, will materially adversely affect, the assets, liabilities
      (contingent or otherwise), capital, affairs, business, prospects,
      operations or condition (financial or otherwise) of the Corporation or the
      ability of the Corporation to perform its obligations under this
      Agreement.

- 20 - 

	 	(t) 	
      Timely Disclosure: The Corporation is in
      compliance in all material respects with all timely disclosure obligations
      under the Securities Laws of the Reporting Provinces and, without limiting
      the generality of the foregoing, there has not occurred any material
      adverse change in the assets, liabilities (contingent or otherwise),
      capital, affairs, business, prospects, operations or condition (financial
      or otherwise) of the Corporation and the Subsidiary taken as a whole which
      has not been publicly disclosed and none of the documents filed by or on
      behalf of the Corporation pursuant to the Securities Laws of the Reporting
      Provinces contain a misrepresentation at the date of the filing
      thereof.

	 	 	 
	 	(u) 	
      Disclosure of Relationships: No relationship,
      direct or indirect, exists between or among the Corporation, on the one
      hand, and the current or prior directors, officers, shareholders,
      customers or suppliers of the Corporation, on the other hand, which is
      required to be described in the Prospectus that is not so
  described.

	 	 	 
	 	(v) 	
      No Cease Trade Order: No order preventing, ceasing
      or suspending trading in any securities of the Corporation or prohibiting
      the issue and sale of securities by the Corporation has been issued and no
      proceedings for either of such purposes have been instituted and are
      currently outstanding or, to the knowledge of the Corporation, are
      pending, contemplated or threatened.

	 	 	 
	 	(w) 	
      Accounting Controls: The Corporation maintains a
      system of internal accounting controls sufficient to provide reasonable
      assurance: (i) that transactions are completed in accordance with the
      general or a specific authorization of management and directors of the
      Corporation; (ii) that transactions are recorded as necessary to permit
      the preparation of consolidated financial statements for the Corporation
      in conformity with Canadian GAAP and to maintain asset accountability;
      (iii) that access to assets of the Corporation and the Subsidiary is
      permitted only in accordance with the general or a specific authorization
      of management and directors of the Corporation; (iv) that the recorded
      accountability for assets of the Corporation and the Subsidiary is
      compared with the existing assets of the Corporation and the Subsidiary at
      reasonable intervals and appropriate action is taken with respect to any
      differences therein; and (v) regarding the prevention or timely detection
      of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a
      material effect on its Financial Statements.

- 21 - 

	 	(x) 	
      Financial Statements: Each of the Corporation’s
      audited financial statements for the fiscal year ended December 31, 2010
      (the “Audited Financial Statements”) and all notes thereto, the
      unaudited interim financial statements of the Corporation for the three
      and six month period ended June 30, 2011 and the notes thereto, to the
      knowledge of the Corporation, (i) comply as to form in all material
      respects with the requirements of the applicable Securities Laws of each
      of the Reporting Provinces, (ii) present fairly, in all material respects,
      the financial position, the results of operations and cash flows and the
      shareholders’ equity and other information purported to be shown therein
      at the respective dates and for the respective periods to which they
      apply, (iii) such Financial Statements have been prepared in conformity
      with Canadian GAAP or Canadian GAAP – Part V, as the case may be, or U.S.
      GAAP, consistently applied throughout the period covered thereby, and all
      adjustments necessary for a fair presentation of the results for such
      periods have been made in all material respects, and (iv) contain and
      reflect adequate provision or allowance for all reasonably anticipated
      liabilities, expenses and losses of the Corporation and, except as
      disclosed in the Disclosure Documents, there has been no change in
      accounting policies or practices of the Corporation since June 30,
      2011.

	 	 	 	 
	 	(y) 	
      Auditors: The Corporation’s Auditors who audited
      the Audited Financial Statements and who provided their audit report
      thereon are independent public accountants as required under applicable
      Securities Laws of the Reporting Provinces and there has not, during the
      last two financial years, been a reportable disagreement (within the
      meaning of National Instrument 51-102 – Continuous Disclosure
      Obligations) between the Corporation and any such auditor.

	 	 	 	 
	 	(z) 	
      Audit Committee: The audit committee of the
      Corporation is comprised and operates in accordance with the requirements
      of National Instrument 52-110 – Audit Committees of the Canadian
      Securities Administrators.

	 	 	 	 
	 	(aa) 	
      Off-Balance Sheet Arrangements: The
      Corporation has no Off-Balance Sheet Arrangements.

	 	 	 	 
	 	(bb) 	
      Changes in Financial Position: Since June 30,
      2011, none of:

	 	 	 	 
	 		(i) 	
      the Corporation or the Subsidiary has paid or declared
      any dividend or incurred any material capital expenditure or made any
      commitment therefor other than in accordance with the feasibility study
      contained in the Copperstone Technical Report;

	 	 	 	 
	 		(ii) 	
      the Corporation or the Subsidiary has incurred any
      obligation or liability, direct or indirect, contingent or otherwise which
      would reasonably be expected to have a Material Adverse Effect on the
      Corporation or the Subsidiary; and

- 22 - 

	 		(iii) 	
      the Corporation or the Subsidiary has entered into any
      material transaction other than the sale of approximately 4.5 million
      common shares of Balmoral Resources Inc. on September 8, 2011.

	 	 	 	 
	 	(cc) 	
      Insolvency: Neither the Corporation nor the
      Subsidiary has committed an act of bankruptcy or sought protection from
      the creditors thereof before any court or pursuant to any legislation,
      proposed a compromise or arrangement to the creditors thereof generally,
      taken any proceeding with respect to a compromise or arrangement, taken
      any proceeding to be declared bankrupt or wound up, taken any proceeding
      to have a receiver appointed of any of the assets thereof or, to the
      knowledge of the Corporation, had any Person holding any encumbrance,
      lien, charge, hypothec, pledge, mortgage, title retention agreement or
      other security interest or receiver take possession of any of the property
      thereof or had any petition for a receiving order in bankruptcy filed
      against it.

	 	 	 	 
	 	(dd) 	
      No Contemplated Changes: Except as disclosed in
      the Disclosure Documents, none of the Corporation or the Subsidiary has
      approved or has entered into any agreement in respect of:

	 	 	 	 
	 		(i) 	
      other than in the ordinary course of business, the
      purchase of any material property or assets or any interest therein or,
      other than as disclosed in the Disclosure Documents, the sale, transfer or
      other disposition of any property or assets or any interest therein
      currently owned, directly or indirectly, by the Corporation or the
      Subsidiary whether by asset sale, transfer of shares or otherwise;
    or

	 	 	 	 
	 		(ii) 	
      the change of control (by sale or transfer of shares or
      sale of all or substantially all of the property and assets of the
      Corporation or the Subsidiary or otherwise) of the Corporation or the
      Subsidiary.

	 	 	 	 
	 	(ee) 	
      Insurance: The assets of the Corporation and the
      business and operations thereof are insured against loss or damage with
      responsible insurers on a basis consistent with insurance obtained by
      reasonably prudent participants in a comparable business in comparable
      circumstances, such coverage is in full force and effect and the
      Corporation has not failed to promptly give any notice or present any
      material claim thereunder.

	 	 	 	 
	 	(ff) 	
      Taxes and Tax Returns: The Corporation and the
      Subsidiary has filed in a timely manner all necessary tax returns and
      notices and has paid all applicable taxes of whatsoever nature for all tax
      years prior to the date hereof to the extent that such taxes have become
      due or have been alleged to be due and none of the Corporation or the
      Subsidiary is aware of any tax deficiencies or interest
  or penalties accrued or accruing, or alleged to be accrued
      or accruing, thereon where, in any of the above cases, it would reasonably
      be expected to have a Material Adverse Effect on the Corporation or the
      Subsidiary and there are no agreements, waivers or other arrangements
      providing for an extension of time with respect to the filing of any tax
      return by any of them or the payment of any material tax, governmental
      charge, penalty, interest or fine against any of them. To the knowledge of
      the Corporation, there are no material actions, suits, proceedings,
      investigations or claims now threatened or, to the knowledge of the
      Corporation, pending against the Corporation or the Subsidiary which would
      reasonably be expected to result in a Material Adverse Effect on the
      Corporation or the Subsidiary or any matters under discussion with any
      Governmental Authority relating to taxes, governmental charges, penalties,
      interest, fines, assessments or reassessments asserted by any such
      authority and the Corporation and the Subsidiary has withheld (where
      applicable) from each payment to each of the present and former officers,
      directors, employees and consultants thereof the amount of all taxes and
      other amounts, including, but not limited to, income tax and other
      deductions, required to be withheld therefrom, and has paid the same or
      will pay the same when due to the proper tax or other receiving authority
  within the time required under applicable tax legislation.

- 23 - 

	 	(gg) 	
      Compliance with Laws, Licenses and Permits: The
      Corporation and the Subsidiary has conducted and is conducting the
      business thereof in compliance in all material respects with all
      applicable laws, rules, regulations, tariffs, orders and directives of
      each jurisdiction in which it carries on business and possesses all
      material approvals, consents, certificates, registrations, authorizations,
      permits and licenses issued by the appropriate provincial, state,
      municipal, federal or other regulatory agency or body necessary to carry
      on the business currently carried on by it, and proposed to be carried on
      by it in the near to intermediate term, as disclosed in the Prospectus, is
      in compliance in all material respects with the terms and conditions of
      all such approvals, consents, certificates, authorizations, permits and
      licenses and with all laws, regulations, tariffs, rules, orders and
      directives material to the operations thereof, and none of the Corporation
      or the Subsidiary has received any notice of the modification, revocation
      or cancellation of, or any intention to modify, revoke or cancel or any
      proceeding relating to the modification, revocation or cancellation of any
      such approval, consent, certificate, authorization, permit or license
      which, singly or in the aggregate, if the subject of an unfavourable
      decision, order, ruling or finding, would reasonably be expected to have a
      Material Adverse Effect on the Corporation or the Subsidiary.

	 	 	 
	 	(hh) 	
      Unlawful Use of Corporate Funds: None of the
      Corporation nor to the knowledge of the Corporation any other Person
      associated with or acting on behalf of the Corporation including, without
      limitation, any director, officer, or employee of the Corporation (i) used
      any corporate funds for unlawful contributions, gifts, entertainment or other unlawful
      expenses relating to political activity; (ii) made any unlawful payment to
      foreign or domestic government officials or employees or to foreign or
      domestic political parties or campaigns from corporate funds; (iii)
      violated any provision of the Corruption of Foreign Public Officials
      Act with respect to corporate funds; or (iv) made any other unlawful
      payment with respect to corporate funds.

- 24 - 

	 	(ii) 	
      No Violation of Constating Documents: None of the
      Corporation or any Subsidiary is in violation of any term of any
      constating document thereof. Neither the Corporation nor the Subsidiary is
      in violation of any term or provision of any agreement, indenture or other
      instrument applicable to it which would reasonably be expected to result
      in any Material Adverse Effect on the Corporation or the Subsidiary,
      neither the Corporation nor the Subsidiary is in default in the payment of
      any material obligation owed which is now due, if any, and there is no
      action, suit, proceeding or investigation commenced, threatened or, to the
      knowledge of the Corporation after due inquiry, pending which, either in
      any case or in the aggregate, would reasonably be expected to result in
      any Material Adverse Effect on the Corporation or the Subsidiary or in any
      of their respective properties or assets or in any material liability on
      the part of the Corporation or the Subsidiary or which places, or could
      reasonably be expected to place, in question the validity or
      enforceability of this Agreement or any document or instrument delivered,
      or to be delivered, by the Corporation pursuant hereto.

	 	 	 
	 	(jj) 	
      Owner of Property: Each of the Corporation and the
      Subsidiary, as applicable, is the absolute legal and beneficial owner of,
      and has good and marketable title to or a valid leasehold interest in the
      Copperstone Project and all of its other material properties or assets as
      described in the Disclosure Documents, free of all mortgages, liens,
      charges, pledges, security interests, encumbrances, claims or demands
      whatsoever, other than those described in the Disclosure Documents, and no
      other material property rights are necessary for the conduct of the
      business of the Corporation or the Subsidiary, as currently conducted;
      neither the Corporation nor the Subsidiary knows of any material claim or
      the basis for any material claim that could reasonably be expected to
      adversely affect the right thereof to use, transfer or otherwise exploit
      such property rights, except as disclosed in the Disclosure Documents; and
      neither the Corporation nor the Subsidiary has any current responsibility
      or obligation to pay any outstanding material commission, royalty, licence
      fee or similar payment to any Person with respect to the property rights
      thereof except pursuant to applicable legislation or as has been disclosed
      in the Disclosure Documents.

	 	 	 
	 	(kk) 	
      Mineral Rights: The Corporation or the Subsidiary
      holds freehold title, leases, licences, mining claims or other
      conventional property, proprietary or contractual interests or rights,
      recognized in the jurisdiction in which the Copperstone Project is located, under valid, subsisting
      and enforceable title documents or other recognized and enforceable
      agreements or instruments, sufficient to permit the Corporation or the
      Subsidiary to explore or exploit (as the case may be) the minerals
      relating thereto, the property, leases or claims and all property, leases
      or claims in which the Corporation or the Subsidiary has any interest or
      right have been validly applied for and, if issued, to the knowledge of
      the Corporation, issued in accordance with all applicable laws and are
      valid and subsisting, the Corporation and the Subsidiary have all
      necessary surface rights, access rights and other necessary rights and
      interests relating to the Copperstone Project, granting the Corporation
      and the Subsidiary the right and ability to explore, exploit and mine the
      mineral resources as are appropriate in view of the rights and interest
      therein of the Corporation or the Subsidiary and the current state of
      exploration, with only such exceptions as do not materially interfere with
      the use made by the Corporation or the Subsidiary of the rights or
      interests so held and each of the proprietary interests or rights and each
      of the documents, agreements, leases, instruments and obligations relating
      thereto referred to above is currently in good standing in the name of the
      Corporation or the Subsidiary.

- 25 - 

	 	(ll) 	
      Due Diligence Session: The responses provided by
      the Corporation at the Due Diligence Session were true and correct in all
      material respects as at the date thereof, and continue to be true and
      correct in all material respects as at the date hereof, and, to the
      knowledge of the Corporation, such responses taken as a whole did not, and
      do not now, omit any fact or information necessary to make any of the
      responses not misleading in light of the circumstances in which such
      responses were given to the extent that such responses reflect the opinion
      or view of the Corporation or its directors or officers, such opinions or
      views were honestly held at the time they were given.

	 	 	 
	 	(mm) 	
      Property Agreements: Any and all of the agreements
      and other documents and instruments pursuant to which the Corporation or
      the Subsidiary holds the Copperstone Project (including any interest in,
      or right to earn an interest therein), are valid and subsisting
      agreements, documents or instruments in full force and effect, enforceable
      in accordance with terms thereof (subject to customary qualifications and
      exceptions), neither the Corporation nor the Subsidiary is in default of
      any of the material provisions of any such agreements, documents or
      instruments nor, to the knowledge of the Corporation, is any such default
      currently being alleged, and such properties and assets are in good
      standing in all material respects under the applicable statutes and
      regulations of the jurisdictions in which they are situated, all leases,
      licences and claims pursuant to which the Corporation or the Subsidiary
      derives the interests thereof in such property and assets are in good
      standing and, to the knowledge of the Corporation, there has been no
      material default under any such lease, licence or claim and all taxes
      required to be paid with respect to such properties and assets to the date
      hereof have been paid. The Copperstone Project (or any
  interest therein, or right to earn an interest therein) is not
      subject to any right of first refusal or purchase or acquisition right
  which is not disclosed in the Disclosure Documents.

- 26 - 

	 	(nn) 	
      Legislation: The Corporation is not aware of any
      legislation, or proposed legislation published by a legislative body,
      which it anticipates would reasonably be expected to have a Material
      Adverse Effect on the Corporation or the Subsidiary.

	 	 	 	 
	 	(oo) 	
      Technical Disclosure:

	 	 	 	 
	 		(i) 	
      To the knowledge of the Corporation (i) the Copperstone
      Technical Report complies in all material respects with the requirements
      of NI 43- 101 at the time of filing thereof and the Copperstone Technical
      Report reasonably presented the quantity of mineral resources attributable
      to the properties evaluated therein as at the date stated therein based
      upon information available at the time the Copperstone Technical Report
      was prepared; and (ii) the Corporation made available to the authors of
      the Copperstone Technical Report, prior to the issuance thereof, for the
      purpose of preparing such report, all information requested by them, and
      none of such information contained any misrepresentation (as defined under
      Canadian Securities Laws) at the time such information was so
    provided;

	 	 	 	 
	 		(ii) 	
      All of the material assumptions underlying the resource
      estimates in the Copperstone Technical Report are, to the knowledge of the
      Corporation, reasonable and appropriate and the estimates of resources as
      described in the Disclosure Documents and the Prospectus comply in all
      material respects with Applicable Securities Laws, subject to current
      technical reports superceding prior reports. The information set forth in
      the Disclosure Documents and the Prospectus relating to mineral resources
      required to be disclosed therein pursuant to Applicable Securities Laws
      has been prepared by the Corporation and its consultants in accordance
      with methods generally applied in the mining industry and conforms, in all
      material respects, to the requirements of Applicable Securities Laws;
      and

	 	 	 	 
	 		(iii) 	
      The Corporation is in compliance in all material respects
      with the provisions of NI 43-101 and has filed all technical reports
      required thereby and there has been no change in respect thereof that
      would require the filing by the Corporation of a new technical report
      under NI 43-101.

	 	 	 	 
	 	(pp) 	
      No Defaults: Neither the Corporation nor the
      Subsidiary is in default of any material term, covenant or condition under
      or in respect of any judgement, order, agreement or instrument to which it is a party or
      to which it or any of the property or assets thereof are or may be
      subject, and no event has occurred and is continuing, and no circumstance
      exists which has not been waived, which constitutes a default in respect
      of any commitment, agreement, document or other instrument to which the
      Corporation or the Subsidiary is a party or by which it is otherwise bound
      entitling any other party thereto to accelerate the maturity of any
      material amount owing thereunder or which would reasonably be expected to
      have a Material Adverse Effect on the Corporation or the
  Subsidiary.

- 27 - 

	 	(qq) 	
      Compliance with Employment Laws: Each of the
      Corporation and the Subsidiary is in compliance in all material respects
      with all laws and regulations respecting employment and employment
      practices, terms and conditions of employment, pay equity and wages,
      except where such non-compliance would not constitute an adverse material
      fact concerning the Corporation or the Subsidiary or would reasonably be
      expected to have a Material Adverse Effect to the Corporation or the
      Subsidiary, and has not and is not engaged in any unfair labour practice,
      there is no labour strike, dispute, slowdown, stoppage, complaint or
      grievance pending or, to the knowledge of the Corporation, threatened
      against the Corporation or the Subsidiary, no union representation
      question exists respecting the employees of the Corporation or the
      Subsidiary and no collective bargaining agreement is in place or currently
      being negotiated by the Corporation or the Subsidiary, neither the
      Corporation nor the Subsidiary has received any notice of any unresolved
      matter and there are no outstanding orders under any employment or human
      rights legislation in any jurisdiction in which the Corporation or the
      Subsidiary carries on business or has employees, other than as disclosed
      in the Disclosure Documents, no employee has any agreement as to the
      length of notice required to terminate his or her employment with the
      Corporation or the Subsidiary in excess of 24 months or equivalent
      compensation and all benefit and pension plans of the Corporation or the
      Subsidiary are funded in accordance with applicable laws and no past
      service funding liability exist thereunder.

	 	 	 
	 	(rr) 	
      Employee Plans: Each material plan for retirement,
      bonus, stock purchase, profit sharing, stock option, deferred
      compensation, severance or termination pay, insurance, medical, hospital,
      dental, vision care, drug, sick leave, disability, salary continuation,
      legal benefits, unemployment benefits, vacation, pension, incentive or
      otherwise contributed to, or required to be contributed to, by the
      Corporation or the Subsidiary for the benefit of any current or former
      officer, director, employee or consultant of the Corporation has been
      maintained in material compliance with the terms thereof and with the
      requirements prescribed by any and all statutes, orders, rules, policies
      and regulations that are applicable to any such
plan.

- 28 - 

	 	(ss) 	
      Accruals: All material accruals for unpaid
      vacation pay, premiums for unemployment insurance, health premiums,
      federal or provincial pension plan premiums, accrued wages, salaries and
      commissions and payments for any plan for any officer, director, employee
      or consultant of the Corporation or the Subsidiary have been accurately
      reflected in the books and records of the Corporation.

	 	 	 	 
	 	(tt) 	
      Work Stoppage: There has not been, and there is
      not currently, any labour stoppage which is having a Material Adverse
      Effect or would reasonably be expected to have a Material Adverse Effect
      on the conduct of the business of the Corporation or the
  Subsidiary.

	 	 	 	 
	 	(uu) 	
      Environmental Compliance: Except as disclosed in
      the Disclosure Documents:

	 	 	 	 
	 		(i) 	
      to the knowledge of the Corporation, the property, assets
      and operations of the Corporation and the Subsidiary comply in all
      material respects with all applicable Environmental Laws (which term means
      and includes, without limitation, any and all applicable federal,
      provincial, municipal or local laws, statutes, regulations, treaties,
      orders, judgments, decrees, ordinances, official directives and all
      authorizations relating to the environment, occupational health and
      safety, or any Environmental Activity (which term means and includes,
      without limitation, any past or present activity, event or circumstance in
      respect of a Contaminant (which term means and includes, without
      limitation, any pollutants, dangerous substances, liquid wastes, hazardous
      wastes, hazardous materials, hazardous substances or contaminants or any
      other matter including any of the foregoing, as defined or described as
      such pursuant to any Environmental Law), including, without limitation,
      the storage, use, holding, collection, purchase, accumulation, assessment,
      generation, manufacture, construction, processing, treatment,
      stabilization, disposition, handling or transportation thereof, or the
      release, escape, leaching, dispersal or migration thereof into the natural
      environment, including the movement through or in the air, soil, surface
      water or groundwater);

	 	 	 	 
	 		(ii) 	
      each of the Corporation and the Subsidiary have obtained
      all material licences, permits, approvals, consents, certificates,
      registrations and other authorizations under all applicable Environmental
      Laws (the “Environmental Permits”) necessary as at the date hereof
      for the operation of the businesses carried on by the Corporation and the
      Subsidiary, and each Environmental Permit is valid, subsisting and in good
      standing and, to the knowledge of the Corporation, neither the Corporation
      nor the Subsidiary is in material default or breach of any Environmental
      Permit and, to the knowledge of the Corporation,
no proceeding is pending or threatened to revoke or limit
  any Environmental Permit;

- 29 - 

	 		(iii) 	
      the Corporation and the Subsidiary do not have any
      knowledge of, and have not received any notice of, any material claim,
      judicial or administrative proceeding, pending or threatened against, or
      which may affect, either the Corporation or the Subsidiary or any of the
      property, assets or operations thereof, relating to, or alleging any
      violation of any Environmental Laws, the Corporation is not aware of any
      facts which could give rise to any such claim or judicial or
      administrative proceeding and to the knowledge of the Corporation, neither
      the Corporation nor the Subsidiary nor any of the property, assets or
      operations thereof is the subject of any investigation, evaluation, audit
      or review by any Governmental Authority to determine whether any violation
      of any Environmental Laws has occurred or is occurring or whether any
      remedial action is needed in connection with a release of any Contaminant
      into the environment, except for compliance investigations conducted in
      the normal course by any Governmental Authority;

	 	 	 	 
	 		(iv) 	
      none of the Corporation or the Subsidiary has any
      material liability (whether contingent or otherwise) in connection with
      any Environmental Activity and, to the knowledge of the Corporation, no
      notice has been given under any federal, state, provincial or local law or
      of any material liability (whether contingent or otherwise) with respect
      to any Environmental Activity relating to or affecting the Corporation or
      the Subsidiary or the property, assets, business or operations
    thereof;

	 	 	 	 
	 		(v) 	
      except in the ordinary course of business and in
      compliance with applicable regulations, the Corporation and the Subsidiary
      do not knowingly store any hazardous or toxic waste or substance on the
      property comprising the Copperstone Project and have not disposed of any
      hazardous or toxic waste on such property, in each case in a manner
      contrary to any Environmental Laws, and there are no Contaminants on any
      of the premises at which the Corporation or the Subsidiary carries on
      business, in each case other than in compliance with Environmental Laws;
      and

	 	 	 	 
	 		(vi) 	
      to the knowledge of the Corporation, the Corporation and
      the Subsidiary are not subject to any material contingent or other
      material liability relating to non-compliance with Environmental
    Law.

	 	 	 	 
	 	(vv) 	
      Review of Environmental Laws: In the ordinary
      course of its business, the Corporation periodically reviews the effect of
      Environmental Laws on the business, operations and properties of the
      Corporation, in the course of which the Corporation identifies and
      evaluates associated costs and liabilities (including, without limitation, any capital or operating
      expenditures required for clean-up, closure of properties or compliance
      with Environmental Laws, or any permit, license or approval, any related
      constraints on operating activities and any potential liabilities to third
      parties).

- 30 - 

	 	(ww) 	
      No Litigation: There are no actions, suits,
      proceedings, inquiries or investigations existing, pending or, to the
      knowledge of the Corporation after due inquiry, threatened against any of
      the property or assets thereof, at law or equity, or before or by any
      court, federal, provincial, state, municipal or other governmental
      department, commission, board, bureau, agency or instrumentality, domestic
      or foreign, which may in any way materially adversely affect the condition
      (financial or otherwise), capital, property, assets, operations or
      business of the Corporation or the Subsidiary or the ability of any of
      them to perform the obligations thereof and none of the Corporation or the
      Subsidiary is subject to any judgement, order, writ, injunction, decree,
      award, rule, policy or regulation of any Governmental Authority, which,
      either separately or in the aggregate, would reasonably be expected to
      result in a Material Adverse Effect on the Corporation or the Subsidiary
      operations or business of the Corporation or the Subsidiary or the ability
      of the Corporation to perform its obligations under this
  Agreement.

	 	 	 
	 	(xx) 	
      Intellectual Property: The Corporation or the
      Subsidiary owns or possesses adequate enforceable rights to use all
      trademarks, copyrights and trade secrets used in the conduct of the
      business thereof and, to the knowledge of the Corporation neither the
      Corporation nor the Subsidiary is infringing upon the rights of any other
      Person with respect to any such trademarks, copyrights or trade secrets
      and no other Person has infringed any such trademarks, copyrights or trade
      secrets.

	 	 	 
	 	(yy) 	
      Non-Arm's Length
      Transactions: Neither the Corporation nor the Subsidiary owes any
      amount to, nor has the Corporation or the Subsidiary any present loans to,
      or borrowed any amount from or is otherwise indebted to, any officer,
      director, employee or securityholder of any of them or any Person not
      dealing at "arm's length" (as such term is defined in the Income Tax
      Act (Canada)) with any of them except for employee reimbursements and
      compensation paid or other advances of funds in the ordinary and normal
      course of the business of the Corporation or the Subsidiary. Except
      employee or consulting arrangements made in the ordinary and normal course
      of business, neither the Corporation nor the Subsidiary is a party to any
      contract, agreement or understanding with any officer, director, employee
      or securityholder of any of them or any other Person not dealing at arm's
      length with the Corporation and the Subsidiary. No officer or employee of
      the Corporation or the Subsidiary and no Person which is an affiliate or
      associate of any of the foregoing Persons, owns, directly or indirectly,
      any interest (except for shares representing less than 5% of the
      outstanding shares of any class or series of any publicly traded
      company) in, or is an officer, director, employee or consultant of, any
      Person which is, or is engaged in, a business competitive with the
      business of the Corporation or the Subsidiary which would reasonably be
      expected to have a Material Adverse Effect on the ability to properly
      perform the services to be performed by such Person for the Corporation or
      the Subsidiary. To the knowledge of the Corporation, no officer, director,
      employee or securityholder of the Corporation or the Subsidiary has any
      cause of action or other claim whatsoever against, or owes any amount to,
      the Corporation or the Subsidiary except for claims in the ordinary and
      normal course of the business of the Corporation or the Subsidiary such as
      for accrued vacation pay or other amounts or matters which would not be
      material to the Corporation.

- 31 - 

	 	(zz) 	
      Debt: The Corporation is not a party to any
      material loan, bond, debenture, promissory note or other instrument
      evidencing indebtedness (demand or otherwise) for borrowed money or any
      agreement, contract or commitment to create, assume or issue any debt
      instrument.

	 	 	 	 
	 	(aaa) 	
      Minute Books: Since December 1, 2009, and, to the
      knowledge of the Corporation for the period from inception to such date,
      the minute books of the Corporation and the Subsidiary, all of which have
      been or will be made available to the Underwriter or counsel to the
      Underwriter, are complete and accurate in all material respects, except
      for minutes of board meetings that have not been formally approved by the
      board of directors or items in the minute book that are not current, but
      which are not material in the context of the Corporation and the
      Subsidiary on a consolidated basis.

	 	 	 	 
	 	(bbb) 	
      No Withholding of Information: The Corporation has
      not withheld from the Underwriter any material fact or material
      information relating to the Corporation, the Subsidiary or to the Offering
      that would be material to the Underwriter or to a prospective purchaser of
      Securities.

	 	 	 	 
	 	(ccc) 	
      Material Contracts: The Prospectus describes and
      the Corporation has made available to the Underwriter true, correct and
      complete copies of (including all amendments or modifications to) each
      contract, agreement, commitment, arrangement, lease (including with
      respect to personal property) and other instruments to which the
      Corporation or its Subsidiary is a party or by which the Corporation, its
      Subsidiary or any of their respective properties or assets is bound, as of
      the date hereof, that, individually or together in a series of related
      instruments:

	 	 	 	 
	 		(i) 	
      are required to be filed by the Corporation as a
      “material contract” pursuant to section 12.2 of the National Instrument
      51-102 – Continuous Disclosure Obligations of the Canadian
      Securities Administrators;

- 32 - 

	 	(ii) 	
      contain covenants that limit in anything other than in a
      de minimis respect the ability of the Corporation or its Subsidiary
      to compete in any business or with any person or in any geographic area,
      or to sell any mineral or other product or to acquire any
Person;

	 	 	 
	 	(iii) 	
      relates to the formation, creation, operation, management
      or control of any partnership or joint venture with a third
  party;

	 	 	 
	 	(iv) 	
      relate to (A) indebtedness for borrowed money or the
      deferred purchase price of property, or (B) conditional sale arrangements,
      the sale, securitization or servicing of loans or loan portfolios, in each
      case in connection with which the aggregate actual or contingent
      obligations of the Corporation and its Subsidiary under such contract are
      greater than $500,000;

	 	 	 
	 	(v) 	
      that involve the acquisition, disposition or issuance,
      directly or indirectly, of assets (including the purchase, sale or lease
      of a mineral property) or equity interests of another Person or the
      Corporation or its Subsidiary for aggregate consideration under such
      contract in excess of $500,000 (other than acquisitions or dispositions of
      assets in the ordinary course of business);

	 	 	 
	 	(vi) 	
      provide for aggregate payment or receipt by the
      Corporation and its Subsidiary under such contract of more than $500,000
      over the remaining term of such contract, other than supply contracts
      entered into in the ordinary course;

	 	 	 
	 	(vii) 	
      obligate the Corporation or its Subsidiary to provide
      indemnification that would reasonably be expected to result in payments in
      excess of $1,000,000 other than ordinary course commercial agreements
      entered into consistent with past practice;

	 	 	 
	 	(viii) 	
      obligate the Corporation to make any capital commitment
      or expenditure (including pursuant to any exploration or development
      project or joint venture) outside of the expenditures set out in the
      Prospectus under the heading “Use of Proceeds”;

	 	 	 
	 	(ix) 	
      that contain restrictions with respect to the issue of
      securities of the Corporation or its Subsidiary;

	 	 	 
	 	(x) 	
      relate to any guarantee or assumption of other
      obligations or reimbursement of any maker of a letter of credit (with
      respect to any environmental bond or otherwise) or obligate the
      Corporation or its Subsidiary with respect to any of the foregoing;
    or

	 	 	 
	 	(xi) 	
      is or relates to a Collective Bargaining
  Agreement.

- 33 - 

	 	(ddd) 	
      MES Mining Contract: There are no restrictions on
      the Corporation to be able to terminate the MES Mining Contract provided
      that the Corporation gives 30 days notice to MES and there is no material
      termination fee or penalty associated with such termination that is
      required to be disclosed in the Prospectus.

8.          
Representations and Warranties
of the Underwriter. The Underwriter
represents and warranties to the Corporation that each of the following
representations and warranties is true and correct on the date of this Agreement
and as at the Closing Time: 

	 	(a) 	
      Incorporation and organization: The Underwriter is
      a valid and subsisting corporation under the law of the jurisdiction in
      which it was incorporated and has good and sufficient power and authority
      to enter into this Agreement and complete the transactions under this
      Agreement on the terms and conditions set forth herein.

	 	 	 
	 	(b) 	
      Registration: The Underwriter is duly registered
      under the Applicable Securities Laws under a category that permits it to
      sell the Securities in the Qualifying Jurisdictions.

	 	 	 
	 	(c) 	
      Representation and Warranty on behalf of the
      Corporation: The Underwriter has not made any representation or
      warranty on behalf of the Corporation.

9.          
Closing Deliveries. The purchase and sale of the Securities
shall be completed at the Closing Time and the Option Closing Time, if
applicable, at the offices of McMillan LLP, Vancouver, British Columbia, or at
such other place as NBF and the Corporation may agree. At or prior to the
Closing Time or the Option Closing Time, as the case may be, the Corporation
shall duly and validly deliver, or cause to be duly and validly delivered, to
CDS Clearing and Depository Services Inc. (“CDS”), one or more fully
registered global certificates representing the Securities, or an electronic
evidence of issuance of such, in any case registered in the name of “CDS &
Co.” as the nominee of CDS, to be held by CDS as a book-based security or an
non-certificated security (in the case of an electronic delivery), as the case
may be, in accordance with the rules and procedures of CDS, against payment by
the Underwriter to the Corporation, or as directed by the Corporation, in lawful
money of Canada by wire transfer or, if permitted by applicable law, by
certified cheque or bank draft payable at par in the City of Vancouver, British
Columbia, of an amount equal to the aggregate purchase price for the Securities
being issued and sold hereunder and all of the estimated out-of-pocket expenses
of the Underwriter payable by the Corporation to the Underwriter in accordance
with paragraph 19 hereof; provided, however, that certificates representing any
Securities that are sold pursuant to Rule 506 of Regulation D will be in
definitive form and will bear a legend to the effect that the Securities
represented thereby are not registered under the U.S. Securities Act or any
state securities laws, and may only be offered or sold pursuant to exemptions
from the registration requirements of the U.S. Securities Act and applicable
state securities laws; and further provided that the global certificate
representing any Securities which are sold in reliance on Rule 144A under the
U.S. Securities Act will also bear a legend to the effect that the Securities
represented thereby have not been registered under the U.S. Securities Act and
may only be offered for sale pursuant to certain exemptions from the
registration requirements of the U.S. Securities Act and applicable state
securities laws. Payment for any Optioned Shares shall be made to the
Corporation in immediately available funds in Vancouver against delivery of such
Securities for the respective accounts of the Underwriter or as the Underwriter
may otherwise direct at the Option Closing Time on the Option Closing Date. 

- 34 - 

10.          
Underwriter’s Obligation to
Purchase. The obligation of the Underwriter to purchase the
Securities at the Closing Time shall be subject to the satisfaction of each of
the following conditions (it being understood that the Underwriter may waive in
whole or in part or extend the time for compliance with any of such terms and
conditions without prejudice to their rights in respect of any other of the
following terms and conditions or any other or subsequent breach or
non-compliance, provided that to be binding on the Underwriter any such waiver
or extension must be in writing and signed by each of them):

	 	(a) 	
      the Underwriter shall have received an opinion, dated as
      of the Closing Date and subject to customary qualifications, of McMillan
      LLP and of local counsel in each of the Qualifying Jurisdictions other
      than Ontario, British Columbia and Alberta (it being understood that such
      counsel may rely to the extent appropriate in the circumstances, (i) as to
      matters of fact, on certificates of the Corporation executed on its behalf
      by a senior officer of the Corporation and on certificates of
      Computershare Investor Services Inc., the transfer agent and registrar for
      the Corporation, as to the issued capital of the Corporation and a letter
      from the TSX as to the listing of the Securities; and (ii) as to matters
      of fact not independently established, on certificates of an officer of
      the Corporation, the Corporation’s Auditors or a public official) with
      respect to the following matters:

	 	 	 	 
	 		(i) 	
      the incorporation and subsistence of the Corporation
      under the laws of British Columbia and as to the corporate power of the
      Corporation to carry out its obligations under this Agreement, and to
      issue the Securities;

	 	 	 	 
	 		(ii) 	
      the authorized and issued capital of the
    Corporation;

	 	 	 	 
	 		(iii) 	
      that the Corporation has taken all necessary corporate
      action to authorize the execution and delivery of this Agreement and the
      certificates representing the Securities, if necessary, and the Broker
      Warrants and that each of this Agreement and the certificates representing
      the Securities, if necessary, and the Broker Warrants constitutes a legal,
      valid and binding obligation of the Corporation enforceable against the
      Corporation in accordance with its terms;

	 	 	 	 
	 		(iv) 	
      that the execution and delivery of this Agreement and the
      performance by the Corporation of its obligations hereunder does not and
      will not conflict with, result in a breach of or create a state of facts
      which, whether with or without the giving of notice or lapse of time or
      both, will (i) result in a breach or violation of any of the terms, conditions
      or provisions of the notice of articles or articles of the Corporation, or
      (ii) violate the provisions of any securities law, statute, rule or
      regulation to which the Corporation or the property or assets thereof is
  subject;

- 35 - 

	 	(v) 	
      that the Securities and the Broker Shares issuable upon
      the due exercise of the Broker Warrants have been duly authorized and
      validly allotted for issuance by the Corporation and such Common Shares,
      when issued, will be outstanding as fully paid and non-assessable
      shares;

	 	 	 
	 	(vi) 	
      that the attributes of the Securities conform in all
      material respects with the description thereof contained in the Final
      Prospectus;

	 	 	 
	 	(vii) 	
      that all necessary corporate action has been taken by the
      Corporation to authorize the execution and delivery of the Preliminary
      Prospectus and the Final Prospectus and the filing of such documents as
      are required under Securities Laws in each of the Qualifying
      Jurisdictions;

	 	 	 
	 	(viii) 	
      that no consent, approval, authorization or order of or
      filing, registration or qualification with any court, governmental agency
      or body or regulatory authority having jurisdiction is required at this
      time for the execution and delivery by the Corporation of this Agreement
      and the performance of its obligations hereunder, except for such as have
      been made or obtained;

	 	 	 
	 	(ix) 	
      that all approvals, permits, consents, orders and
      authorizations have been obtained, all necessary documents have been filed
      and all other legal requirements have been fulfilled under Securities Laws
      of the Qualifying Jurisdictions to qualify the issuance or distribution
      and sale of the Securities to the public in each of the Qualifying
      Jurisdictions (and to qualify the distribution of the Broker Warrants to
      the Underwriter) and to permit the issuance, sale and delivery of such
      Securities to the public through dealers registered under the applicable
      laws of each of the Qualifying Jurisdictions who have complied with the
      relevant provisions of such laws and the terms of their
    registration;

	 	 	 
	 	(x) 	
      that the statements set forth in the Final Prospectus
      under the heading “Eligibility for Investment” in so far as they purport
      to describe the provisions of the laws referred to therein, are fair
      summaries of the matters discussed therein;

	 	 	 
	 	(xi) 	
      that the Common Shares issuable in connection with the
      Offering have been conditionally approved for listing on the TSX subject
      only to the Listing Conditions;

- 36 - 

	 		(xii) 	
      that the Corporation is a reporting issuer in the
      Reporting Provinces; and

	 	 	 	 
	 		(xiii) 	
      as to such other matters as the Underwriter’s legal
      counsel may reasonably request prior to the Closing Time;

	 	 	 	 
	 	(b) 	
      the Underwriter shall have received a legal opinion
      addressed to the Underwriter from McMillan LLP, United States counsel for
      the Corporation, dated as of the Closing Date, in form and substance
      satisfactory to the Underwriter, acting reasonably, to the effect that the
      offer and sale of the Securities are not required to be registered under
      the U.S. Securities Act. It being understood that such counsel need not
      express its opinion with respect to any subsequent resales;

	 	 	 	 
	 	(c) 	
      the Underwriter shall have received favourable legal
      opinions addressed to the Underwriter and the Underwriter’s counsel in
      form and substance satisfactory to the Underwriter’s counsel, acting
      reasonably, dated as of the Closing Date from counsel to the Corporation
      in Nevada as to the incorporation and subsistence of the Subsidiary, the
      corporate power and capacity of the Subsidiary to carry on its business as
      presently carried on and to own its assets and as to the registered
      ownership of the issued and outstanding securities of the
    Subsidiary;

	 	 	 	 
	 	(d) 	
      the Corporation will have caused a title opinion to be
      delivered by counsel satisfactory to the Underwriter, acting reasonably,
      in respect of the Copperstone Project in form and substance satisfactory
      to the Underwriter and Underwriter’s counsel, acting reasonably;

	 	 	 	 
	 	(e) 	
      the Underwriter shall have received an incumbency
      certificate, dated as of the Closing Date, including specimen signatures
      of the Chief Executive Officer, the Chief Financial Officer and any other
      officer of the Corporation signing this Agreement or any document
      delivered hereunder;

	 	 	 	 
	 	(f) 	
      the Underwriter shall have received a certificate, dated
      as of the Closing Date, of the Chief Executive Officer and the Chief
      Financial Officer of the Corporation (or such other officer or officers of
      the Corporation acceptable to the Underwriter, acting reasonably),
      addressed to the Underwriter and its legal counsel to the effect that, to
      the best of their knowledge, information and belief, after due enquiry and
      without personal liability:

	 	 	 	 
	 		(i) 	
      the representations and warranties of the Corporation in
      this Agreement, including those arising as a result of the delivery of the
      Final Prospectus and any Supplementary Material, are true and correct in
      all material respects as if made at and as of the Closing Time and the
      Corporation has performed all covenants and agreements and satisfied all
      conditions on its part to be performed or satisfied in all material
  respects at or prior to the Closing Time;

- 37 - 

	 	(ii) 	
      no order, ruling or determination having the effect of
      suspending the sale or ceasing, suspending or restricting the trading of
      Common Shares in the Qualifying Jurisdictions has been issued or made by
      any stock exchange, securities commission or regulatory authority and is
      continuing in effect and no proceedings, investigations or enquiries for
      that purpose have been instituted or are pending;

	 	 	 
	 	(iii) 	
      other than as set out in the Disclosure Documents, no
      action, suit, proceeding or enquiry is outstanding, pending or threatened
      against or affecting the Corporation or the Subsidiary or to which any
      property or assets of the Corporation or the Subsidiary is subject, at law
      or in equity, or before or by any federal, provincial, state, municipal or
      other governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, which would reasonably be expected
      to be a Material Adverse Effect on the Corporation or the
    Subsidiary.

	 	 	 
	 	(iv) 	
      the notice of articles and articles of the Corporation
      delivered at Closing are full, true and correct copies, unamended, and in
      effect on the date thereof;

	 	 	 
	 	(v) 	
      the minutes or other records of various proceedings and
      actions of the Corporation’s board of directors relating to the Offering
      and delivered at Closing are full, true and correct copies thereof and
      have not been modified or rescinded as of the date thereof; and

	 	 	 
	 	(vi) 	
      since the date of the Final Prospectus, there has been no
      Material Adverse Effect on the Corporation or the
  Subsidiary,

	 		
      and each such statement shall be true;

	 	 	 
	 	(g) 	
      the Underwriter shall have received a letter, dated as of
      the Closing Date, in form and substance satisfactory to the Underwriter,
      addressed to the Underwriter and the directors of the Corporation from the
      Corporation’s Auditors confirming the continued accuracy of the comfort
      letters to be delivered to the Underwriter pursuant to subparagraph
      4(a)(iii) hereof with such changes as may be necessary to bring the
      information in such letter forward to a date not more than two Business
      Days prior to the Closing Date, which changes shall be acceptable to the
      Underwriter;

- 38 - 

	 	(h) 	
      the Common Shares issuable in connection with the
      Offering shall have been approved for listing on the TSX, subject only to
      the official notices of issuance and fulfilment of the Listing
      Conditions;

	 	 	 
	 	(i) 	
      the Underwriter shall have conducted all due diligence
      inquiries and investigations and not identified any material adverse
      changes or misrepresentations or any items materially adversely affecting
      the Corporation’s affairs which exist as of the date hereof but which have
      not been widely disseminated to the public;

	 	 	 
	 	(j) 	
      the Underwriter shall have received a certificate of
      status in respect of the Corporation; and

	 	 	 
	 	(k) 	
      the Underwriter shall have received a certificate from
      Computershare Investor Services Inc. as to the number of Common Shares
      issued and outstanding as at a date no more than two Business Days prior
      to the Closing Date.

11.          
Purchases of Optioned Shares.
The Underwriter’s obligation to purchase the Optioned Shares on the Option
Closing Date (in the event that the Over-Allotment Option is exercised by NBF
shall be subject to the accuracy of the representations and warranties of the
Corporation contained in this Agreement as of the Option Closing Date and the
performance by the Corporation of its obligations under this Agreement. If the
Option Closing Date occurs more than two Business Days after the Closing Date,
the Corporation agrees to fulfill or cause to be fulfilled the following
conditions: 

	 	(a) 	
      the Underwriter shall have received a legal opinion from
      the Corporation’s counsel, McMillan LLP, dated the Option Closing Date, in
      form and substance satisfactory to the Underwriter acting
    reasonably;

	 	 	 
	 	(b) 	
      the Underwriter shall have received a letter dated as of
      the Option Closing Date, in form and substance satisfactory to the
      Underwriter, addressed to the Underwriter, and the directors of the
      Corporation, from the Corporation’s Auditors confirming the continued
      accuracy of the comfort letter to be delivered to the Underwriter pursuant
      to subparagraph 4(a)(iii) hereof with such changes as may be necessary to
      bring the information in such letter forward to a date not more than two
      Business Days prior to the Option Closing Date, which changes shall be
      acceptable to the Underwriter;

	 	 	 
	 	(c) 	
      the Underwriter shall have received a certificate dated
      as of the Option Closing Date, addressed to the Underwriter and signed by
      appropriate officers of the Corporation, with respect to the constating
      documents of the Corporation, all resolutions of the board of directors of
      the Corporation relating to this Agreement, the incumbency and specimen
      signatures of signing officers of the Corporation and such other matters
      as the Underwriter may reasonably request;

- 39 - 

	 	(d) 	
      the Underwriter shall have received a certificate in the
      form set out in subparagraph 10(f) dated as of the Option Closing Date;
      and

	 	 	 
	 	(e) 	
      the Underwriter shall have received such other
      certificates, agreements, materials or documents as they may reasonably
      request.

12.          
Restrictions on Further
Issues or Sales. The Corporation agrees
not to, directly or indirectly, issue, sell, offer, grant an option or right in
respect of, or otherwise dispose of, or agree to or announce any intention to,
issue, sell, offer, grant an option or right in respect of, or otherwise dispose
of, any additional Common Shares or any securities convertible or exchangeable
into Common Shares, other than (i) pursuant to this Agreement; (ii) to satisfy
existing contractual obligations and instruments already issued as of the date
hereof; or (iii) the issue of securities pursuant to the Corporation’s incentive
share option plan for a period of 90 days from the Closing Date without the
prior written consent of the Underwriter, such consent not to be unreasonably
withheld.

13.          
All Terms to be
Conditions. The Corporation agrees that the conditions contained in
paragraph 10 will be complied with insofar as the same relate to acts to be
performed or caused to be performed by the Corporation and that it will use its
commercially reasonable efforts to cause all such conditions to be complied
with. Any breach or failure to comply with any of the conditions set out in
paragraph 10 (except subparagraph 10(i)) shall entitle the Underwriter to
terminate its obligation to complete the Offering, by written notice to that
effect given to the Corporation at or prior to the Closing Time. It is
understood that the Underwriter may waive, in whole or in part, or extend the
time for compliance with, any of such terms and conditions without prejudice to
the rights of the Underwriter in respect of any such terms and conditions or any
other or subsequent breach or non-compliance, provided that to be binding on the
Underwriter any such waiver or extension must be in writing and signed by the
Underwriter. 

14.          
Termination Events. The Underwriter may terminate
its obligations on or before Closing if: 

	 	(a) 	
      there is, in the opinion of the Underwriter, acting
      reasonably, a material change or a change in any material fact or a new
      material fact shall arise which would be expected to have a Material
      Adverse Effect on the Corporation or on the market price or the value of
      the securities of the Corporation;

	 	 	 
	 	(b) 	
      there should develop, occur or come into effect or
      existence any event, action, state, condition or major financial
      occurrence of national or international consequence or any law or
      regulation which in the opinion of the Underwriter, acting reasonably,
      seriously adversely affects, or involves, or will seriously adversely
      affect, or involve, the financial markets or the business, operations or
      affairs of the Corporation and the Subsidiary taken as a whole;

	 	 	 
	 	(c) 	
      there is any inquiry, action, suit, investigation or
      other proceeding (whether formal or informal) that is commenced,
      announced, or threatened or any order made by any federal, provincial, state, municipal or
      other governmental department, commission, board, bureau, agency or
      instrumentality including, without limitation, the TSX or any securities
      regulatory authority or any law or regulation is enacted or changed which
      in the sole opinion of the Underwriter, acting reasonably, could operate
      to prevent or materially restrict the trading of equity securities or
      materially and adversely affects or will materially and adversely affect
      the market price or value of the equity securities of the
  Corporation;

- 40 - 

	 	(d) 	
      the Corporation is in breach of a material term,
      condition or covenant of this Agreement, or any representation or warranty
      given by the Corporation in this Agreement becomes or is false in a
      material respect;

	 	 	 
	 	(e) 	
      the Underwriter becomes aware of, as a result of its due
      diligence review or otherwise, of any material adverse change, or an
      adverse change in any material fact, with respect to the Corporation (in
      the sole opinion of the Underwriter, acting reasonably) which has not been
      disclosed to the Underwriter prior to the date hereof;

	 	 	 
	 	(f) 	
      the Corporation fails to obtain a receipt for the Final
      Prospectus and other related documents in respect of the proposed
      distribution of the Securities on or prior to 5:00 p.m. (Toronto time) on
      September 27, 2011; or

	 	 	 
	 	(g) 	
      both the Underwriter and the Corporation agree in writing
      to terminate this Agreement.

             
   Upon the occurrence of any of the foregoing events, the
Underwriter shall be entitled to terminate and cancel its obligations to the
Corporation hereunder by written notice to that effect given to the Corporation
and NBF prior to the Closing. 

15.          
Exercise of Termination Right.
If this Agreement is terminated by the Underwriter pursuant to paragraph 14,
there shall be no further liability to the Corporation on the part of the
Underwriter or of the Corporation to the Underwriter, except in respect of any
liability which may have arisen or may thereafter arise under paragraphs 17, 19
and 22. The right of the Underwriter to terminate its obligations under this
Agreement is in addition to such other remedies as it may have in respect of any
default, act or failure to act of the Corporation in respect of any of the
matters contemplated by this Agreement.

16.          
Survival of Representations
and Warranties. All terms, warranties, representations,
covenants and agreements herein contained or contained in any documents
delivered pursuant to this Agreement and in connection with the transactions
herein contemplated shall survive the purchase and sale of the Securities and
will continue in full force and effect for the benefit of the Underwriter and/or
the Corporation, as the case may be, regardless of any subsequent disposition of
the Securities or any investigation by or on behalf of the Underwriter with
respect thereto for a period ending on the later of: (a) the date that is two
years following the Closing Date, and (b) the latest date under applicable Securities Laws
(non-residents of Canada being deemed to be resident in the Province of British
Columbia for such purposes) that an action may be commenced or a right of
rescission may be exercised with respect to a misrepresentation contained in the
Final Prospectus or, if applicable, any Supplementary Material. The Underwriter
will be entitled to rely on the representations and warranties of the
Corporation contained in this Agreement or delivered pursuant to this Agreement
notwithstanding any investigation, which the Underwriter may undertake or which
may be undertaken on the Underwriter’s behalf. 

- 41 - 

17.          
Indemnity. 

	 	(a) 	
      The Corporation shall indemnify and save harmless the
      Underwriter, its affiliates and its directors, partners, officers and
      employees (the “Underwriter’s Personnel”), against all losses,
      claims, damages, liabilities, costs or expenses (other than loss of
      profits) (other than with respect to claims by the Corporation), whether
      joint or several, caused or incurred by reason of or in connection with
      the Offering including, without limitation, the following:

	 	 	 	 
	 		(i) 	
      any information or statement (except any information or
      statement relating solely to the Underwriter provided by the Underwriter)
      contained in the Offering Documents, which at the time and in light of the
      circumstances under which it was made contains or is alleged to contain a
      misrepresentation or any omission or any alleged omission to state therein
      any fact or information (except facts or information relating solely to
      the Underwriter provided by the Underwriter) required to be stated therein
      or necessary to make any of the statements therein not misleading in light
      of the circumstances in which they are made;

	 	 	 	 
	 		(ii) 	
      any order made or any inquiry, investigation or
      proceeding commenced or threatened by any securities regulatory authority,
      stock exchange or by any other competent authority, based upon any
      misrepresentation (as defined in the Securities Act (Ontario)) or
      alleged misrepresentation (except a misrepresentation relating solely to
      the Underwriter contained in information provided by the Underwriter) in
      the Offering Documents (except any document or material delivered or filed
      solely by the Underwriter) based upon any failure or alleged failure to
      comply with Securities Laws preventing and restricting the trading in or
      the sale of the Securities in the Qualifying Jurisdictions;

	 	 	 	 
	 		(iii) 	
      the non-compliance or alleged non-compliance by the
      Corporation with any requirement of applicable Securities Laws, including
      the Corporation’s non-compliance with any statutory requirement to make
      any document available for inspection; or

- 42 - 

	 	(iv) 	
      a material breach of any representation, warranty,
      undertaking or covenant of the Corporation contained in this Agreement or
      the failure of the Corporation to comply in all material respects with any
      of its obligations hereunder;

	 		
      and will reimburse the Underwriter promptly upon demand
      for any legal or other expenses reasonably incurred by them in connection
      with investigating or defending any such losses, claims, damages,
      liabilities or actions in respect thereof, as incurred, including, without
      limitation, expenses in connection with any regulatory procedures or
      investigations.

	 	 	 
	 	(b) 	
      The Corporation shall not, without the prior written
      consent of the Underwriter, which shall not be unreasonably withheld,
      settle or compromise or consent to the entry of any judgment in any
      pending or threatened claim, action, suit or proceeding in respect of
      which indemnification may be sought hereunder (whether or not the
      Underwriter or the Underwriter’s Personnel are a party to such claim,
      action, suit or proceeding), unless such settlement, compromise or consent
      includes an unconditional release of the Underwriter and the Indemnified
      Parties from all liability arising out of such claim, action, suit or
      proceeding (with no statement of any liability on the part of the
      Underwriter or any Indemnified Party, as defined below). Notwithstanding
      the foregoing, an Indemnifying Party shall not be liable for the
      settlement of any claim or action in respect of which indemnity may be
      sought hereunder effected without its written consent, which consent shall
      not be unreasonably withheld.

	 	 	 
	 	(c) 	
      Notification of Claims. If any matter or thing
      contemplated by subparagraph 17(a) (any such matter or thing being
      referred to as a “Claim”) is asserted against any party in respect
      of which indemnification is or might reasonably be considered to be
      provided (an “Indemnified Party”), such Indemnified Party will
      notify the Corporation in writing as soon as possible after becoming aware
      of the nature of such Claim (but the omission or delay so to notify the
      Corporation of any potential Claim shall not relieve the Corporation from
      any liability which it may have to any Indemnified Party and any omission
      or delay so to notify the Corporation of any actual Claim shall affect the
      Corporation’s liability only to the extent that it is prejudiced by that
      omission or delay) and the Corporation shall be entitled (but not
      required) to participate in and, to the extent that it shall wish, to
      assume the defence of any suit brought to enforce such Claim; provided,
      however, that the defence shall be conducted through legal counsel
      acceptable to the Indemnified Party, acting reasonably, and that no
      settlement of any such Claim may be made by the Corporation or the
      Indemnified Party without the prior written consent of the other party,
      such consent not to be unreasonably withheld or delayed, and the
      Corporation shall not be liable for any settlement of any such Claim
      unless it has consented in writing to such
settlement.

- 43 - 

	 	(d) 	
      Right of Indemnity in Favour of Others. With
      respect to any Indemnified Party who is not a party to this Agreement, the
      Underwriter shall obtain and hold the rights and benefits of this
      paragraph 17 and paragraph 18 in trust for and on behalf of such
      Indemnified Party.

	 	 	 
	 	(e) 	
      Retaining Counsel. In any such Claim, the
      Indemnified Party shall have the right to retain other counsel to act on
      his or its behalf and to participate in the defence thereof, provided that
      the fees and disbursements of such counsel shall be paid by the
      Indemnified Party unless: (i) the Corporation and the Indemnified Party
      shall have mutually agreed to the retention of the other counsel; (ii) the
      Corporation fails to assume the defence of such Claim on behalf of the
      Indemnified Party within a reasonable time of receiving written notice to
      assume the defence of such Claim; or (iii) the named parties to any such
      Claim (including any added third party) include both the Indemnified Party
      and the Corporation and the Indemnified Party shall have been advised by
      counsel that representation of the Indemnified Party by counsel for the
      Corporation is inappropriate as a result of potential or actual differing
      interests of those represented; in each of which cases the Corporation
      shall not have the right to assume the defence of such Claim on behalf of
      the Indemnified Party but the Corporation shall be liable to pay the
      reasonable fees and disbursements of counsel to the Indemnified
    Party.

	 	 	 
	 	(f) 	
      Applicability. The foregoing indemnity shall not
      apply to the extent that a court of competent jurisdiction in a final
      judgment that has become non-appealable shall determine that such losses,
      expenses, claims, damages or liabilities to which the Indemnified Party
      may be subject were caused by the fraud, dishonesty, negligence or wilful
      misconduct of the Indemnified Party or breach of applicable law by the
      Indemnified Party.

	
    18. 
	
    (a) 
	
      Contribution. In order to provide for a just and
      equitable contribution in circumstances in which the indemnity provided in
      paragraph 17 would otherwise be available in accordance with its terms but
      is, for any reason, held to be unavailable to or unenforceable by the
      Underwriter or enforceable otherwise than in accordance with its terms,
      the Corporation and the Underwriter shall contribute to the aggregate of
      all claims, expenses, costs and liabilities (including any legal expenses
      reasonably incurred by the Indemnified Party in connection with any Claim
      which is the subject of this paragraph) and all losses (other than loss of
      profits) of a nature contemplated in paragraph 17 in such proportions so
      that the Underwriter is responsible for the portion represented by the
      percentage that the aggregate fee payable by the Corporation to the
      Underwriter bears to the gross proceeds of the Offering of the Securities
      and the Corporation is responsible for the balance. The Underwriter shall
      not in any event be liable to contribute, in the aggregate, any amounts in
      excess of such aggregate fee or any portion of such fee actually received.
      However, no party who has engaged in any fraud, wilful misconduct or negligence shall be
      entitled to claim contribution from any Person who has not engaged in such
      fraud, wilful misconduct or negligence. The Corporation hereby waives all
      rights which it may have by statute or common law to recover contribution
      from the Underwriter in respect of losses, claims, costs, damages,
      expenses or liabilities which any of them may suffer or incur directly or
      indirectly (in this paragraph, “losses”) by reason of or in consequence of
      a document containing a misrepresentation; provided, however, that such
      waiver shall not apply in respect of losses by reason of or in consequence
      of any misrepresentation which is based upon or results from information
      or statements furnished by and relating solely to the
  Underwriter.

- 44 - 

	 	(b) 	
      Right of Contribution in Addition to Other Rights.
      The rights to contribution provided in this paragraph 18 shall be in
      addition to and not in derogation of any other right to contribution which
      the Underwriter may have by statute or otherwise at law.

	 	 	 	 
	 	(c) 	
      Calculation of Contribution. In the event that the
      Corporation may be held to be entitled to contribution from the
      Underwriter under the provisions of any statute or at law, the Corporation
      shall be limited to contribution in an amount not exceeding the lesser
      of:

	 	 	 	 
	 		(i) 	
      the portion of the full amount of the loss or liability
      giving rise to such contribution for which the Underwriter is responsible,
      as determined in subparagraphs 18(a) or (b) above, as the case may be;
      and

	 	 	 	 
	 		(ii) 	
      the amount of the aggregate fee actually received by the
      Underwriter from the Corporation under this Agreement,

	 	 	 	 
	 		(iii) 	
      and the Underwriter shall in no event be liable to
      contribute any amount in excess of such Underwriter’s portion of the
      agency fee actually received from the Corporation under this
    Agreement.

	 	 	 	 
	 	(d) 	
      Notice. If the Underwriter has reason to believe
      that a Claim for contribution may arise, it shall give the Corporation
      notice of such Claim in writing, as soon as reasonably possible, but
      failure to notify the Corporation shall not relieve the Corporation of any
      obligation which it may have to the Underwriter under this
    paragraph.

19.          
Expenses.

	 	(a) 	
      Expenses and Fees: The Corporation shall pay all
      reasonable and documented expenses and fees in connection with the
      offering of Securities contemplated by this Agreement, including, without
      limitation, all expenses of or incidental to the issue, sale or
      distribution of the Securities and all expenses of or incidental to all
      other matters in connection with the transaction set out in this
      Agreement, including, without limitation, the fees and expenses
      payable in connection with the distribution of the Securities, the fees
      and expenses of the Corporation’s counsel and of local counsel to the
      Corporation, the reasonable fees and expenses of the auditors and the
      transfer agent for the Common Shares, all costs incurred in connection
      with the preparation and printing of the Offering Documents and
      certificates representing the Securities, all costs incurred related to
      road shows and marketing activities, filing fees and all reasonable
      expenses and fees incurred by the Underwriter and the reasonable fees and
      disbursements of counsel to the Underwriter (to a maximum in respect of
      legal fees of $100,000, exclusive of disbursements and taxes), whether or
  not the Offering is completed.

- 45 - 

	 	(b) 	
      Taxes: In connection with any amount payable by
      the Corporation as directed or charged by the Underwriter under this
      paragraph 18 that is payable in satisfaction of applicable federal Goods
      and Services Tax, Provincial Sales tax and/or or Harmonized Sales Tax
      (collectively, “Tax”), the Underwriter shall provide the
      Corporation with a breakdown of the Tax payable to enable the Corporation
      to claim a credit or reimbursement for such Tax from applicable government
      authorities, if applicable.

20.          
Advertisements. The Corporation acknowledges that the Underwriter shall
have the right, subject always to this Agreement, at their own expense, subject
to the prior consent of the Corporation, such consent not to be unreasonably
withheld, to place such advertisement or advertisements relating to the sale of
the Securities contemplated herein as the Underwriter may consider desirable or
appropriate and as may be permitted by applicable law. The Corporation and the
Underwriter each agree that it will not make or publish any advertisement in any
media whatsoever relating to, or otherwise publicize, the transaction provided
for herein so as to result in any exemption from the prospectus and registration
or other similar requirements under applicable securities legislation in any of
the provinces of Canada or any other jurisdiction in which the Securities shall
be offered and sold being unavailable in respect of the sale of the Securities
to prospective purchasers.

21.          
U.S. Offers. The Underwriter makes the representations,
warranties and covenants applicable to them in Schedule “A” hereto and agree, on
behalf of themselves and their United States registered broker-dealer
affiliates, for the benefit of the Corporation, to comply with the U.S. selling
restrictions imposed by the laws of the United States and set forth in Schedule
“A” hereto, which forms part of this Agreement. Notwithstanding the foregoing
provisions of this section, the Underwriter will not be liable to the
Corporation under this section or Schedule “A” with respect to a violation by
another Underwriter of the provisions of this section or Schedule “A” if the
former Underwriter is not itself also in violation; and the Corporation makes
the representations, warranties and covenants applicable to it in Schedule “A”
hereto 

22.          
Confidentiality. All information, data, advice and opinions (the
“Information”) furnished by the Corporation or the Corporation’s legal
counsel to the Underwriter and the Underwriter’s legal counsel, in connection
with this Agreement, will be treated as confidential (except such Information
which is now or hereafter becomes publicly available or publicly known from time to time, other than as a result of improper
disclosure by the Underwriter, or is required by law or legal proceedings to be
disclosed) and will be used by the Underwriter only in connection with this
Agreement. The Underwriter will keep confidential the Information until such
time as the Information becomes public information 

- 46 - 

23. Notices. Unless otherwise expressly provided in this
Agreement, any notice or other communication to be given under this Agreement (a
“notice”) shall be in writing addressed as follows: 

	 	(a) 	If to the Corporation, to: 
	 	  	 
	 	  	American Bonanza Gold Corp. 
	 	  	200 Granville Street, Suite 1238 
	 	  	Vancouver, British Columbia 
	 	  	V6C 1S4 
	 	  	 
	 	  	Attention:      Brian Kirwin 
	 	  	E-mail:             info@americanbonanza.com 
	 	  	 
	 	  	with a copy (for information purposes only and
      not constituting notice) to: 
	 	  	 
	 	  	McMillan LLP 
	 	  	1500 Royal Centre 
	 	  	1055 West Georgia Street 
	 	  	PO Box 11117 
	 	  	Vancouver, British Columbia 
	 	  	V6E 4N7 
	 	  	Attention:       Cory H. Kent 
	 	  	E-mail:              cory.kent@mcmillan.ca 
	 	  	 
	 	  	If to the Underwriter, to: 
	 	  	 
	 	  	National Bank Financial Inc. 
	 	  	130 King Street West, Suite 3200 
	 	  	Toronto, ON M5X 1J9 
	 	  	Canada 
	 	  	 
	 	  	Attention:         Bill Washington 
	 	  	E-mail:                bwashington@nbfinancial.com 
	 	  	 
	 	  	With a copy (for information purposes only and
      not constituting notice) to: 
	 	  	 
	 	  	Fraser Milner Casgrain LLP 
	 	  	77 King St. W., Suite 400 
	 	  	Toronto-Dominion Centre

- 47 - 

	 	Toronto, Ontario M5K 0A1 
	 	 
	 	Attention:        James Clare 
	 	Email:                james.clare@fmc-law.com

and if so given, shall be deemed to have been given and
received upon receipt by the addressee or a responsible officer of the addressee
if delivered, or one hour after being telecopied and receipt confirmed during
normal business hours, as the case may be. Any party may, at any time, give
notice in writing to the others in the manner provided for above of any change
of address or fax number. 

24.          
Time of the Essence. Time
shall, in all respects, be of the essence hereof. 

25.          
Canadian Dollars. All references herein to dollar amounts
are to lawful money of Canada. 

26.          
Headings. The headings contained herein are for convenience only and
shall not affect the meaning or interpretation hereof. 

27.          
Singular and Plural, etc. Where
the context so requires, words importing the singular number include the plural
and vice versa, and words importing gender shall include the masculine, feminine
and neuter genders. 

28.          
Entire Agreement. This Agreement constitutes the only
agreement between the parties with respect to the subject matter hereof and
shall supersede any and all prior negotiations and understandings. This
Agreement may be amended or modified in any respect by written instrument only.

29.          
Severability. If one or more provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein. 

30.          
Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Province of British Columbia and
the laws of Canada applicable therein. Each of the Corporation and the
Underwriter irrevocably agrees that the courts of the Province of British
Columbia shall have non-exclusive jurisdiction to hear and decide any suit,
action or proceedings, and/or to settle any disputes, which may arise out of or
in connection with this Agreement and the transactions contemplated hereby
(“Proceedings”) and, for these purposes, each of them irrevocably submits
to the jurisdiction of the British Columbia courts and waives (and irrevocably
agrees not to raise) any objection which it may have now or hereafter to the
laying of the venue of any Proceedings in any such court and any claim that any
such Proceedings have been brought in an inconvenient forum and further
irrevocably agrees that a judgment in any Proceedings brought in any British
Columbia court shall be conclusive and binding upon it and may be enforced in
the courts of any other jurisdiction. 

- 48 - 

31.          
Successors and Assigns. The terms and
provisions of this Agreement shall be binding upon and enure to the benefit of
the Corporation and the Underwriter and their respective successors and
permitted assigns. 

32.          
Further Assurances. Each of the parties hereto shall do or
cause to be done all such acts and things and shall execute or cause to be
executed all such documents, agreements and other instruments as may reasonably
be necessary or desirable for the purpose of carrying out the provisions and
intent of this Agreement. 

33.          
Effective Date. This Agreement is intended to and shall take
effect as of the date first set forth above, notwithstanding its actual date of
execution or delivery. 

34.          
Counterparts and Facsimile Copies.
This Agreement may be executed in any number of counterparts and by
facsimile, which taken together shall form one and the same agreement. 

35.          
Conflict. The Corporation acknowledges that the Underwriter and its
affiliates carry on a range of businesses, including providing stockbroking,
investment advisory, research, investment management and custodial services to
clients and trading in financial products as agent or principal. It is possible
that the Underwriter and other entities in its respective group that carry on
those businesses may hold long or short positions in securities of companies or
other entities, which are or may be involved in the transactions contemplated in
this Agreement and effect transactions in those securities for their own account
or for the account of their respective clients. The Corporation agrees that
these divisions and entities may hold such positions and effect such
transactions without regard to the Corporation’s interests under this
Agreement.

- 49 - 

36.           Fiduciary. The Corporation hereby acknowledges that the Underwriter is
acting solely as underwriter in connection with the purchase and sale of the
Securities. The Corporation further acknowledges that the Underwriter is acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis, and in no event do the parties intend that the
Underwriter act or be responsible as a fiduciary to the Corporation, its
management, shareholders or creditors or any other person in connection with any
activity that the Underwriter may undertake or have undertaken in furtherance of
such purchase and sale of the Corporation’s securities, either before or after
the date hereof. The Underwriter hereby expressly disclaims any fiduciary or
similar obligations to the Corporation, either in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions, and the Corporation hereby confirms its understanding and
agreement to that effect. The Corporation and the Underwriter each agree that
they are each responsible for making their own independent judgments with
respect to any such transactions and that any opinions or views expressed by the
Underwriter to the Corporation regarding such transactions, including, but not
limited to, any opinions or views with respect to the price or market for the
Corporation’s securities, do not constitute advice or recommendations to the
Corporation. The Corporation and the Underwriter each agree that the Underwriter
are acting as principal and not the agent or fiduciary of the Corporation and
the Underwriter has not assumed, and will not assume, any advisory
responsibility in favour of the Corporation with respect to the transactions contemplated hereby or the process
leading thereto (irrespective of whether the Underwriter has advised or is
currently advising the Corporation on other matters). The Corporation hereby
waives and releases, to the fullest extent permitted by law, any claims that the
Corporation may have against the Underwriter with respect to any breach or
alleged breach of any fiduciary, advisory or similar duty to the Corporation in
connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions. Notwithstanding the foregoing and for greater
certainty, the waiver and release shall in no way apply to NBF in respect of the
advisory services which it has provided other than in respect of the Offering or
which NBF may provide to the Corporation other than in respect of the
Offering.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

If the Corporation is in agreement with the foregoing terms and
conditions, please so indicate by executing a copy of this Agreement where
indicated below and delivering the same to the 

Underwriter. 

Yours very truly, 

	NATIONAL BANK 
	FINANCIAL INC. 
	By: 	  
	  	  
	  	  
	  	  
	(signed) “William Washington” 
	Name: 	William Washington 
	Title: 	Managing Director

The foregoing is hereby accepted on the terms and conditions
therein set forth as of the 14th day of September, 2011. 

AMERICAN BONANZA GOLD
CORP. 

	By: 	(signed) “Brian Kirwin”	 
	  	Brian Kirwin 	 
	 	Chief Executive
      Officer  	 

SCHEDULE “A” 

UNITED STATES OFFERS
AND SALES 

As used in this Schedule “A” and related appendices,
capitalized terms used herein and not defined herein shall have the meanings
ascribed thereto in the Underwriting Agreement to which this Schedule “A” is
annexed and to which it forms a part, and the following terms shall have the
meanings indicated:

	 	(a) 	
      “Code” means the United States Internal Revenue
      Code of 1986, as amended;

	 	 	 
	 	(b) 	
      “Directed Selling Efforts” means directed selling
      efforts as that term is defined in Regulation S. Without limiting the
      foregoing, but for greater clarity in this Schedule, it means, subject to
      the exclusions from the definition of directed selling efforts contained
      in Regulation S, any activity undertaken for the purpose of, or that could
      reasonably be expected to have the effect of, conditioning the market in
      the United States for any of the Securities and includes the placement of
      an advertisement in a publication with a general circulation in the United
      States that refers to the offering of the Securities;

	 	 	 
	 	(c) 	
      “Foreign Issuer” shall have the meaning ascribed
      thereto in Regulation S. Without limiting the foregoing, but for greater
      clarity, it includes any issuer which is a corporation or other
      organization incorporated or organized under the laws of any country other
      than the United States, except an issuer meeting the following conditions
      as of the last business day of its most recently completed second fiscal
      quarter: (1) more than 50 percent of the outstanding voting securities of
      such issuer are owned of record either directly or indirectly by residents
      of the United States; and (2) any of the following: (i) the majority of
      the executive officers or directors are United States citizens or
      residents, (ii) more than 50 percent of the assets of the issuer are
      located in the United States, or (iii) the business of the issuer is
      administered principally in the United States;

	 	 	 
	 	(d) 	
      “General Solicitation” and “General
      Advertising” means “general solicitation” and “general advertising”,
      respectively, as used in Rule 502(c) under the U.S. Securities Act,
      including, without limitation, advertisements, articles, notices or other
      communications published in any newspaper, magazine, or similar media or
      on the internet or broadcast over radio, or television or the internet or
      any seminar or meeting whose attendees had been invited by general
      solicitation or general advertising or in any other manner involving a
      public offering within the meaning of Section 4(2) of the U.S. Securities
      Act;

A-2

	 	(e) 	
      “Institutional Accredited Investor” means an
      “accredited investor” who satisfies one or more of the criteria set forth
      in Rule 501(a)(1), (2), (3) or (7) of Regulation D;

	 	 	 
	 	(f) 	
      “Qualified Institutional Buyer” means a “qualified
      institutional buyer” as defined in Rule 144A under the U.S. Securities
      Act;

	 	 	 
	 	(g) 	
      “Regulation D” means Regulation D adopted by the
      SEC under the U.S. Securities Act;

	 	 	 
	 	(h) 	
      “Regulation S” means Regulation S adopted by the
      SEC under the U.S. Securities Act;

	 	 	 
	 	(i) 	
      “SEC” means the United States Securities and
      Exchange Commission;

	 	 	 
	 	(j) 	
      “Substantial U.S. Market Interest” means
      “substantial U.S. market interest” as that term is defined in Regulation
      S;

	 	 	 
	 	(k) 	
      “U.S. Exchange Act” means the United States
      Securities Exchange Act of 1934, as amended;

	 	 	 
	 	(l) 	
      “U.S. Holders” means (i) citizens or individual
      residents of the United States as defined under United States tax laws;
      (ii) corporations or other entities taxable as corporations that are
      created or organized in or under the laws of the United States or of any
      political subdivision thereof; (iii) estates, the income of which is
      subject to United States federal income taxation regardless of the source
      of such income; or (iv) trusts if in each case (a) a court within the
      United States is able to exercise primary supervision over the trust’s
      administration and one or more United States persons have the authority to
      control all of its substantial decisions or (b) the trust has a valid
      election in effect under applicable United States Treasury Regulations
      under the Code to be treated as a United States person;

	 	 	 
	 	(m) 	
      “U.S. Fiduciary” means a dealer or other
      professional fiduciary organized, incorporated, or (if an individual)
      resident in the United States holding a discretionary account or similar
      account (other than an estate or trust) for the benefit of a person
      excluded from the definition of "U.S. Person" pursuant to paragraph
      (k)(2)(i) of Rule 902 of Regulation S, provided that the U.S. Fiduciary is
      acting solely in its capacity as the holder of such accounts;
and

	 	 	 
	 	(n) 	
      “U.S. Securities Act” means the United States
      Securities Act of 1933, as amended.

A-3

Representations,
Warranties and
Covenants of
the Underwriter

The Underwriter acknowledges that the Securities have not been
and will not be registered under the U.S. Securities Act or under the securities
laws of any state of the United States, and may be offered and sold only in
transactions exempt from or not subject to the registration and broker-dealer
requirements of the U.S. Securities Act and state securities laws. Accordingly,
the Underwriter and the U.S. Affiliate represents, warrants and covenants to the
Corporation that:

	1. 	
      It has not offered or sold, and will not offer or sell,
      any Securities except (a) in accordance with Rule 903 of Regulation S or
      (b) in the United States as provided in paragraphs 2 through 12 below;
      provided that, for all purposes hereof (including Exhibit "A" hereto),
      U.S. Fiduciaries shall be deemed not to be in the United States.
      Accordingly, neither the Underwriter nor its U.S. Affiliate nor any
      Persons acting on its or their behalf has engaged or will engage in (i)
      any offer to sell or any solicitation of an offer to buy, any Securities
      or to or for the account or benefit of any Person in the United States, or
      (ii) any sale of Securities to any purchaser unless, at the time the buy
      order was or will have been originated, the purchaser was outside the
      United States, or such Underwriter, U.S. Affiliate or Person acting on
      behalf of either reasonably believed that such purchaser was outside the
      United States, (iii) any Directed Selling Efforts with respect to the
      Securities, or (iv) any action in violation of Regulation M under the U.S.
      Exchange Act in connection with the offer and sale of the
    Securities.

	 	 
	2. 	
      All offers and sales of the Securities in the United
      States by the Underwriter will be effected solely by or through the U.S.
      Affiliate, each which is and on the dates of such offers and sales will be
      duly registered as a broker-dealer under the U.S. Exchange Act and under
      the securities laws of each state in which such offers and sales are made
      (unless exempted from the respective state’s broker-dealer registration
      requirements), and is a member in good standing with the Financial
      Industry Regulatory Authority, Inc., in accordance with all applicable
      United States state and federal securities laws or regulations governing
      the registration or conduct of securities brokers or dealers and all
      applicable rules of the Financial Industry Regulatory Authority,
    Inc.

	 	 
	3. 	
      It has not entered and will not enter into any
      contractual arrangement with respect to the distribution of the
      Securities, except with its U.S. Affiliates, any selling group members or
      with the prior written consent of the Corporation. It shall require its
      U.S. Affiliate and each selling group member to agree, for the benefit of
      the Corporation, to comply with, and shall use its reasonable best efforts
      to ensure that its U.S. Affiliate and selling group member complies with,
      the provisions of this Schedule “A” applicable to such Underwriter as if
      such provisions applied to such U.S. Affiliate and selling group
      member.

A-4

	4. 	
      Offers and sales of Securities in the United States by
      the Underwriter, its U.S. Affiliate or any Person acting on its or their
      behalf have not been and will not be made (i) by any form of General
      Solicitation or General Advertising, or (ii) in any manner involving a
      public offering within the meaning of Section 4(2) of the U.S. Securities
      Act.

	 	 
	5. 	
      Any offer or sale of, or solicitation of an offer to buy,
      Securities that has been made or will be made in the United States was or
      will be made only to Qualified Institutional Buyers or Institutional
      Accredited Investors in transactions that are exempt from registration
      under the U.S. Securities Act and applicable state securities
  laws.

	 	 
	6. 	
      Each offeree in the United States of the Underwriter or
      its U.S. Affiliate has been or shall be provided with a copy of the
      preliminary U.S. Placement Memorandum, including the Preliminary
      Prospectus or Final Prospectus. Prior to any sale of Securities to a
      Person in the United States or to a Person who was offered Securities in
      the United States, each such purchaser shall be provided with a copy of
      the U.S. Placement Memorandum, including the Final Prospectus, and no
      other written material shall be used by the Underwriter or its U.S.
      Affiliate in connection with the offer and sale of the Securities in the
      United States.

	 	 
	7. 	
      It has offered and will offer the Securities in the
      United States only to offerees with respect to which it has a pre-existing
      relationship and has reasonable grounds to believe was at the time of such
      offer was a Qualified Institutional Buyer or an Institutional Accredited
      Investor, and at the time of completion of each sale to a Person in the
      United States, the Underwriter, its U.S. Affiliates, and any person acting
      on its or their behalf will have reasonable grounds to believe and will
      believe, that each purchaser purchasing Securities from the Underwriter or
      its U.S. Affiliate is a Qualified Institutional Buyer and each purchaser
      designated by the Underwriter or its U.S. Affiliate to purchase Securities
      as a Substituted Purchaser from the Corporation is an Institutional
      Accredited Investor.

	 	 
	8. 	
      All purchasers of the Securities that are in the United
      States shall be informed that the Securities have not been and will not be
      registered under the U.S. Securities Act and are being offered and sold to
      such purchasers in reliance on the exemption from the registration
      requirements of the U.S. Securities Act.

	 	 
	9. 	
      Prior to the completion of any sale of Securities to
      Persons in the United States, each such purchaser who is not a Qualified
      Institutional Buyer, or any Person that is purchasing the Securities for
      the account or benefit of a Person in the United States who is not a
      Qualified Institutional Buyer, will be required
to execute and deliver a U.S. subscription agreement
      substantially in the form set forth as Exhibit "II" to the U.S. Placement
  Memorandum.

A-5

	10. 	
      Each purchaser of the Securities that is in the United
      States that is a Qualified Institutional Buyer will be deemed to have
      provided the representations, warranties and covenants of a Qualified
      Institutional Buyer in the U.S. Offering Memorandum.

	 	 
	11. 	
      At least one business day prior to each of the Closing
      Time, the transfer agent of the Securities and the Corporation will be
      provided with a list of all purchasers of the Securities in the United
      States and all purchasers who were offered Securities in the United
      States.

	 	 
	12. 	
      At the Closing Time, the Underwriter together with its
      U.S. Affiliate that offered or sold the Securities in the United States or
      to U.S. Persons, will provide to the Corporation a certificate in the form
      of Exhibit A to this Schedule “A” relating to the manner of the offer and
      sale of the Securities in the United States or will be deemed to have
      represented and warranted that neither it nor its U.S. Affiliate offered
      or sold securities in the United States.

Representations,
Warranties and
Covenants of
the Corporation 

		
      The Corporation represents, warrants, covenants and
      agrees that:

	 	 
	1. 	
      The Corporation (i) is a Foreign Issuer with no
      Substantial U.S. Market Interest in its common shares and (ii) is not
      required to be registered as an “investment company” under the United
      States Investment Company Act of 1940, as amended; and no Securities will
      be, when issued, of the same class (within the meaning of Rule
      144A(d)(3)(i) under the U.S. Securities Act) as securities listed on a
      national securities exchange registered under section 6 of the U.S.
      Exchange Act or quoted in a U.S. automated inter-dealer quotation system
      and neither the Corporation nor any of its predecessors or affiliates has
      been subject to any order, judgment or decree of any court of competent
      jurisdiction temporarily, preliminarily or permanently enjoining such
      person for failure to comply with Rule 503 of Regulation D.

	 	 
	2. 	
      Except with respect to offers and sales to Institutional
      Accredited Investors in reliance upon an exemption from registration
      available under Rule 506 of Regulation D, neither the Corporation nor any
      of its affiliates, nor any person acting on its or their behalf (other
      than the Underwriter, its U.S. Affiliate, its respective affiliates or any
      person acting on its behalf, in respect of which no representation is
      made), has made or will make: (A) any offer to sell, or any solicitation
      of an offer to buy, any Securities to, or for the account or benefit of, a
      Person in the United States; or (B) any sale of Securities unless, at the
      time the buy order was or will have been originated, (i) the purchaser is
      outside the United States, or (ii) the Corporation, its affiliates,
      and any person acting on their behalf reasonably believe that the
  purchaser is outside the United States.

A-6

	3. 	
      During the period in which the Securities are offered for
      sale, neither it nor any of its affiliates, nor any person acting on its
      or their behalf (other than the Underwriter, its U.S. Affiliate, its
      respective affiliates or any person acting on its behalf, in respect of
      which no representation is made) has engaged in or will engage in any
      Directed Selling Efforts in the United States, or has taken or will take
      any action that would cause the exemption afforded by Rule 506 of
      Regulation D or Rule 144A to be unavailable for offers and sales of
      Securities in the United States in accordance with this Schedule "A", or
      the exclusion from registration afforded by Rule 903 of Regulation S to be
      unavailable for offers and sale of Securities outside the United States in
      accordance with this Underwriting Agreement.

	 	 
	4. 	
      None of the Corporation, any of its affiliates or any
      person acting on its or their behalf (other than the Underwriter, its U.S.
      Affiliate, its respective affiliates or any person acting on its behalf,
      in respect of which no representation is made) has offered or will offer
      to sell, or has solicited or will solicit offers to buy, Securities in the
      United States by means of any form of General Solicitation or General
      Advertising or in any manner involving a public offering within the
      meaning of Section 4(2) of the U.S. Securities Act.

	 	 
	5. 	
      The Corporation has not and will not, during the period
      beginning six months prior to the start of the offering of Securities and
      ending six months after the completion of the offering of Securities sell,
      offer for sale or solicit any offer to buy any of its common shares in the
      United States or to U.S. Persons in a manner that would be integrated with
      and would cause the exemption from registration provided by Rule 506 of
      Regulation D to be unavailable with respect to offers and sales of the
      Securities pursuant to this Schedule "A".

	 	 
	6. 	
      The Corporation will, within prescribed time periods,
      prepare and file any forms or notices required under the U.S. Securities
      Act or applicable blue sky laws in connection with the offer and sale of
      the Securities.

	 	 
	7. 	
      For so long as the Securities which have been sold in the
      United States in reliance upon Rule 144A are outstanding and are
      “restricted securities” within the meaning of Rule 144(a)(3) under the
      U.S. Securities Act, and if the Corporation is neither (i) subject to and
      in compliance with the reporting requirements of Section 13 or 15(d) of
      the U.S. Exchange Act nor (ii) exempt from such reporting requirements
      pursuant to Rule 12g3-2(b) thereunder, the Corporation shall provide to
      holders of the Securities which have been sold in the United States in
      reliance upon Rule 144A, or to any prospective purchasers of the
      Securities designated by such holders, upon request of such holders or
      prospective holders, at or prior to the time of resale, the information
      required to be provided by Rule 144A(d)(4) under the U.S. Securities Act
      (so long as such requirement is necessary in order to permit holders of
      the Securities to effect resales under Rule 144A).

A-7

	8. 	
      None of the Corporation, any of its affiliates or any
      person acting on any of their behalf (other than the Underwriter, its
      respective affiliates, or any person acting on any of its behalf, in
      respect of which no representation is made) has taken or will take,
      directly or indirectly, any action in violation of Regulation M under the
      U.S. Exchange Act in connection with the offer and sale of the
      Securities.

	 	 
	9. 	
      The Corporation will (a) make available to any U.S.
      Holder, upon such U.S. Holder’s written request, timely and accurate
      information as to the Corporation’s status as a “passive foreign
      investment company” (a “PFIC”) within the meaning of Section 1297 of the
      Code, and the status of any of the Corporation’s subsidiary corporations
      that are also PFICs (“Subsidiary PFICs”) in which the Corporation owns
      more than 50% of such Subsidiary PFIC’s total aggregate voting power, and
      (b) for each year in which the Corporation is a PFIC or owns more than 50%
      of a Subsidiary PFIC’s total aggregate voting power, provide to a U.S.
      Holder, upon written request, all information and documentation that a
      U.S. Holder making a “qualified electing fund” election under the meaning
      of Section 1295 of the Code is required to obtain for U.S. federal income
      tax purposes with respect to the Corporation, if it is a PFIC, and any
      Subsidiary PFIC in which the Corporation owns more than 50% of the total
      aggregate voting power.

EXHIBIT “A” 

TO SCHEDULE “A” 

UNDERWRITER’S CERTIFICATE 

In connection with the private placement in the United States
of common shares (the “Securities”) of American Bonanza Gold Corp. (the
“Corporation”) pursuant to the Underwriting Agreement dated as of
September 14, 2011 among the Corporation and the Underwriter named therein (the
“Underwriter”), each of the undersigned does hereby certify as follows:

	(i) 	
      each undersigned U.S. affiliate of the undersigned
      Underwriter (the “U.S. Affiliate”) who offered or sold Securities in the
      United States is duly registered as a broker or dealer under the U.S.
      Exchange Act and the securities laws of each state in which such offer or
      sale is made (unless exempted from the respective state’s broker-dealer
      registration requirements) and a member of and in good standing with the
      Financial Industry Regulatory Authority, Inc. (“FINRA”) on the date
      hereof and on the date of each offer and sale made in the United
      States;

	 	 
	(ii) 	
      all offers and sales of Securities in the United States
      or to or for the account or benefit of Persons in the United States were
      made only through the U.S. Affiliate and have been effected in accordance
      with all applicable U.S. broker-dealer requirements;

	 	 
	(iii) 	
      each offeree was provided with a copy of the U.S.
      Placement Memorandum, including the Prospectus, and each purchaser of
      Securities (i) in the United States or (ii) who was offered Securities in
      the United States, was provided with a copy of the U.S. Placement
      Memorandum, including the Prospectus, and no other written material was
      used by any of the undersigned in connection with the offer and sale of
      the Securities in the United States;

	 	 
	(iv) 	
      immediately prior to transmitting the U.S. Placement
      Memorandum, we had reasonable grounds to believe and did believe that each
      offeree in the United States was a “qualified institutional buyer” as that
      term is defined in Rule 144A (“Qualified Institutional Buyer”)
      under the United States Securities Act of 1933, as amended (the “U.S.
      Securities Act”) or an “institutional accredited investor” satisfying
      one or more of the criteria set forth in Rule 501(a)(1), (2), (3) or (7)
      of Regulation D (an “Institutional Accredited Investor”) under the
      Securities Act, and, on the date hereof, we continue to believe that (i)
      each person in the United States and (ii) each person offered Securities
      in the United States, in each case that is purchasing Securities from or
      through us, is a Qualified Institutional Buyer or an Accredited
      Investor;

	 	 
	(v) 	
      each purchaser that is in the United States or that was
      offered Securities in the United States and that we reasonably believe is
      not a Qualified Institutional Buyer has been treated as a substituted
      purchaser in accordance with the Underwriting
Agreement;

- 2 - 

	(vi) 	
      no form of general solicitation or general advertising
      (as those terms are used in Regulation D under the U.S. Securities Act)
      was used by us, including without limitation advertisements, articles,
      notices or other communications published in any newspaper, magazine or
      similar media or broadcast over radio or television or the internet, or
      any seminar or meeting whose attendees had been invited by general
      solicitation or general advertising, in connection with the offer or sale
      of the Securities in the United States;

	 	 
	(vii) 	
      the offering of the Securities in the United States has
      been conducted by us and through our U.S. Affiliate in accordance with the
      terms of the Underwriting Agreement;

	 	 
	(viii) 	
      prior to any sale of Securities to any purchaser in the
      United States or who was offered the Securities in the United States, we
      caused each such purchaser that is not a Qualified Institutional Buyer to
      execute a U.S. subscription agreement in the form of Exhibit II attached
      to the U.S. Placement Memorandum; and

	 	 
	(ix) 	
      neither we nor any of our affiliates have taken or will
      take any action which would constitute a violation of Regulation M under
      the United States Securities Exchange Act of 1934, as
  amended.

Terms used in this certificate have the meanings given to them
in the Underwriting Agreement unless otherwise defined herein. 

Dated this __ day of ______________, 2011. 

	[AGENT] 	 	[U.S. AFFILIATE]    
	 	  	 	 	  
	 	  	 	 	  
	By: 	 	 	By: 	 
	 	Name: 	 	 	Name: 
	 	Title: 	 	 	Title: 

SCHEDULE “B” 

CONVERTIBLE SECURITIES

	American Bonanza Gold
      Corp. 

	Security 	Number 	Exercise Price 	Expiry Date 
	Common Shares 	185,283,272 	  	  
	Total Common Shares 	185,283,272 	  	  
	Options 	1,150,000 	$0.220 	November 6,2012 
	Options 	910,000 	$0.070 	August 6, 2013 
	Options 	1,460,000 	$0.060 	January 26, 2014 
	Options 	2,110,000 	$0.085 	March 18, 2014 
	Options 	500,000 	$0.090 	July 28, 2014 
	Options 	100,000 	$0.19 	March 25, 2015 
	Options 	6,495,000 	$0.390 	March 2, 2016 
	Options 	100,000 	$0.385 	May 5, 2016 
	Options 	350,000 	$0.365 	June 23, 2016 
	Options 	4,830,000 	$0.530 	September 2, 2016 
	Total Options 	18,005,000 	  	  
	Warrants 	1,666,858 	$0.230 	August 11, 2012 
	Warrants 	2,254,083 	$0.230 	August 24, 2012 
	Warrants 	24,829,500 	$0.45 	July 21, 2012 
	Warrants 	2,963,700 	$0.38 	July 21, 2012 
	Total Warrants 	31,714,141American Bonanza Gold Corp.: Exhibit 4.6 - Filed by newsfilecorp.com

SECURED PROMISSORY NOTE 
AND GUARANTY 

	USD $6,000,000.00 	February 14, 2012 

FOR VALUE RECEIVED, the undersigned AMERICAN BONANZA
GOLD CORP., a corporation organized and existing under the laws of British
Columbia (“American Bonanza” or the “Borrower”) together with its
wholly owned subsidiary BONANZA EXPLORATIONS INC., a company incorporated
and existing under the laws of Nevada (“Bonanza Explorations”, or the
“Guarantor” and together with the Borrower, the “Obligors”),
promises to pay to the order of RESOURCE INCOME FUND, L.P., a limited liability
company organized under the laws of the State of Delaware (“Holder”), the
principal sum of USD$6,000,000.00, to be repaid in London good delivery gold
ounces (the “Gold Advance”). The Gold Advance shall be non-interest
bearing and shall, subject to earlier repayment in accordance with the terms of
this Note, be paid in 32 weekly installments of gold ounces (each a “Gold
Repayment”) commencing the week of May 7, 2012, and each week thereafter
through and including the week of December 10, 2012 (each a “Gold Repayment
Date”) as set forth in Appendix I. Each Gold Repayment shall be delivered to
Auramet Trading, LLC (“Auramet”) as Gold Agent for the Holder (the
“Gold Agent”). Notwithstanding the foregoing, upon the occurrence and
during the continuance of a Default (defined below), the principal balance then
outstanding on this Note shall at the option of the Holder upon written notice
to Borrower accrue interest at the lower of (i) 15% per annum or (ii) the
highest rate allowable by applicable law. Interest shall be calculated on the
basis of a year of 360 days. 

This Promissory Note (the
“Note”) is being issued to Holder in connection with a Secured Gold
Financing provided to the Borrower by Holder in the amount of USD$6,000,000.00.
This Note is secured by (i) first priority security interest in all personal
property (but not including that certain mining lease dated June 12, 2005 by and
between The Patching Living Trust and American Bonanza or the reserves or
resource thereunder (the “Mining Lease”); (ii) Pledge Agreement (the “Stock
Pledge”) from Borrower to Holder of 100% of the outstanding stock of Bonanza
Explorations Inc. (“Bonanza Explorations” or “Guarantor”), (iii) the General
Security Agreement from the Borrower to the Holder (the “AB Security
Agreement”), (iv) the General Security Agreement from the Guarantor to the
Holder (the “BE Security Agreement” and together with the AB Security Agreement,
the “Security Agreements”), (v) the Gold Purchase and Sale Agreement between
American Bonanza and the Gold Agent with respect to all gold sales of the
Borrower and Guarantor (the “Purchase Agreement”); and (vi) the Guaranty
contained in Section 12 hereof of Bonanza Explorations (the “Guaranty”).
The Note, the General Security Agreements, the Purchase Agreement, the Guaranty
and the Stock Pledge, as well as each and every other document executed in
connection therewith by the Borrower and the Guarantor are hereinafter referred
to as the “Loan Documents”. 

Use of Proceeds. The
proceeds of the Gold Advance shall be used by the Borrower to (i) pay all fees
owing under the Gold Advance, (ii) to complete the Copperstone mine according to
the Mine Plan presented to and accepted by the Holder, (iii) for general working
capital purposes.

“Business
Day” means any day that is not a Saturday, Sunday, or other day on which
banks in the State of New York or Province of British Columbia, Canada are
authorized or required to close. 

The
following is a statement of the rights of Holder and the conditions to which
this Note is subject, and to which Holder, by acceptance of this Note, agrees:

1.                Maturity Date. The
unpaid principal balance hereof, represented solely by undelivered gold ounces,
and accrued but unpaid interest thereon, if any, shall be due and payable on
December 10, 2012. 

2.               Loss of Note. Upon
receipt by the Borrower of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Note, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Note, if mutilated, the Borrower will execute and deliver a
new Note of like tenor and date. 

3.                Default. 

(a)                The occurrence of any of the following events shall be a “Default” hereunder: 

	 	(1) 	
      the Borrower shall fail to make any Gold Repayment of the
      Gold Advance hereunder on any Gold Repayment Date, unless the failure to
      make a Gold Repayment is caused by administrative or technical error and
      such Gold Repayment is made within three Business Days of its due
    date;

	 	 	 
	 	(2) 	
      subject to any applicable cure period in the Mining
      Lease, any default shall have occurred under the Mining Lease or the same
      ceases to be in full force and effect for the full benefit of the Obligors
      ;

	 	 	 
	 	(3) 	
      any representation or warranty made by any Obligor to
      Holder herein or in any other Loan Document or the Mining Lease shall fail
      to be true and correct in any material respect (provided that the Obligors
      shall have a period of five (5) Business Days from the date they receive
      notice thereof from the Holder within which to cure such
  Default(s);

	 	 	 
	 	(4) 	
      the Obligors shall fail to observe or perform any of the
      covenants, agreements or obligations (excluding the Borrower’s obligation
      to repay the Gold Advance) contained in the Note or any other Loan
      Document or any other agreement with Holder in any material respect
      (provided that the Obligors shall have a period of five (5) Business Days
      from the date they receive written notice thereof from the Holder within
      which to cure such Default(s);

2 

	 	(5) 	
      any Obligor shall institute proceedings to be adjudicated
      bankrupt or insolvent, or consent to the institution of bankruptcy or
      insolvency proceedings against it under any applicable federal, provincial
      or state insolvency law, or consent to, or acquiescence in, the filing of
      any such petition by any Obligor or in the appointment of a receiver,
      liquidator, assignee, trustee, or other similar official of any Obligor,
      or of any substantial part or its property, or the making by any Obligor
      of an assignment for the benefit of creditors, or the admission by any
      Obligor in writing of its inability to pay its debts generally as they
      become due;

	 	 	 
	 	(6) 	
      within sixty (60) days after the commencement of
      proceedings against any Obligor seeking any bankruptcy, insolvency,
      liquidation, dissolution or similar relief under any present or future
      statute, law or regulation, such action shall not have been dismissed or
      all orders or proceedings thereunder affecting the operations or the
      business of such Obligor stayed, or the stay of any such order or
      proceedings shall thereafter be set aside, or, within thirty (30) days
      after the appointment without the consent or acquiescence of such Obligor
      of any trustee, receiver or liquidator of such Obligor over of all or any
      substantial part of the properties of such Obligor, such appointment shall
      have not been vacated;

	 	 	 
	 	(7) 	
      any Obligor shall dissolve or take corporate action
      toward dissolution;

	 	 	 
	 	(8) 	
      final judgments which exceed an aggregate of $100,000
      shall be rendered against any Obligor and shall not have been paid,
      discharged or vacated within forty-five (45) days after entry or filing of
      such judgments;

	 	 	 
	 	(9) 	
      any event of default (as such term is defined under any
      applicable underlying agreement) of any Obligor’s indebtedness in excess
      of $100,000 in the aggregate shall occur, provided that any applicable
      cure periods in such underlying agreement have also
  expired.

(b)               
Remedies upon Default. Upon the occurrence, and at any time during the
continuance of, any Default, Holder, upon notice in writing to the Borrower, may
declare all unpaid principal of the Note and the interest thereon to be
immediately due and payable and the same shall become immediately due and
payable upon such declaration and Holder may pursue any remedy available to
Holder at law or in equity; provided, however, that in the event
of any Default under clauses (4) or (5) above with respect to any Obligor, all
unpaid principal hereof and interest hereunder shall automatically become
immediately due and payable, without the need for declaration, presentment,
demand, protest, or other notice of any kind; and, provided further, that for a
period of 60 (sixty) days following such Event of Default ,Lender shall not
liquidate its collateral position in the stock of Bonanza Explorations, but
shall hold the same for redemption by the Borrower upon payment of
all amounts owing hereunder, nor shall it liquidate any other collateral under
the Loan Documents; nothing contained herein shall prohibit the Lender from
taking such actions as it may deem necessary, including the commencement of
collection and legal action, but short of liquidation during such 60 day
period.

3 

4.                Prepayment. 

(a)               
Optional Prepayment. The Borrower may, upon five (5) days prior written
notice to Holder, prepay this Note in whole or in part, but in no event less
than 50 Ounces of Gold for each occurrence of a prepayment, at any time without
premium or penalty. 

(b)               
Mandatory Prepayment. For so long as this Note shall be outstanding, the
Borrower agrees to apply all funds received by the Borrower on any of its future
borrowings or offerings of equity, including without limitation any financings,
debt offerings, offerings of its equity or debt securities, royalty sales (as
well as any proceeds or disbursements on account of its insurance policies
received on account of claims in excess of $600,000), against the outstanding
balance due under this Note (to be applied to the purchase and delivery of
Ounces of Gold to repay the Gold Advance; provided that the Obligors may incur
up to USD$ 500,000 in purchase money security interest borrowings to finance the
purchase of equipment without repaying the Gold Advance. In addition, this Note
shall be subject to mandatory prepayment, at the option of the Holder, in the
event of a change of control of the Borrower. A change of control shall only be
deemed to have occurred if any one person acquires more than 50% of the
outstanding shares of the Borrower.

4 

5.                 Default Notices to
Holder. So long as this Note shall be outstanding, the Borrower shall
promptly deliver a notice to Holder describing any Default of which it has
become aware. 

6.               Gross Up. All
Repayments under this Note by Borrower will be made without any deduction or
withholding for or on account of any tax or other withholding or deduction
unless such tax, deduction or withholding is required by any applicable law then
in effect (a “Required Tax, Deduction or Withholding”), any such tax,
withholding or deduction shall be for Borrower’s account and promptly reimbursed
to Lender. 

7.                Costs. The Borrower
agrees to reimburse Holder for any reasonable legal fees or other reasonable
costs associated with this Note or any of the other Loan Documents, such fees
and expenses for the preparation of the Loan Documents not to exceed US$35,000
without the written consent of the Borrower. 

8.                 Representations and
Warranties. Each Obligor hereby makes each of the representations and
warranties set forth on Schedule 1 hereto, as of the date of this
Agreement. 

9.                 Covenants. Each
Obligor hereby agrees to observe and fully perform each of the covenants set
forth on Schedule 2 hereto. 

10.              Conditions Precedent.
Prior to the extension of the funds contemplated to be advanced herein, unless
waived in writing in advance by Holder, the Borrower shall have delivered to
Holder the following documents, in form and substance satisfactory to Holder,
and performed the following undertakings to the satisfaction of Holder: 

(a)                This Note; 

(b)                This Guaranty 

(c)                The Pledge Agreement 

(d)                The Security Agreements 

(e)                The Gold Purchase and Sale Agreement; 

(f)                Payment of the Closing Fee to Holder in an amount equal to 3% of the dollar
principal amount of Gold Advance, payable in cash, and which shall be withheld
from proceeds of the Gold Advance; 

(g)               
An officer’s certificate of Borrower and Guarantor with respect to incumbency
and resolutions authorizing the execution and delivery of the Note and the other
Loan Documents to which they are a party; 

5 

(i)               
Grant to the Gold Agent, for the benefit of the Holder, 4,000 ounces of gold
call options, expiring one year from the closing date with a strike price of
USD$2,025.00 per ounce;

(j)                Entry into a hedge program with Gold Agent on behalf of Holder whereby the
Borrower will purchase from the Gold Agent “Put Options” for a minimum of 8,000
ounces of gold at a minimum strike price of $1,300 through and including June
2012 at a total estimated cost of US$120,000 ; and 

(k)               
Such other documents or certificates, and completion of such other matters, as
the parties may mutually deem necessary or appropriate in good faith. 

11.                Miscellaneous. 

(a)               
Waiver and Amendment. Any provision of this Note may be waived, amended
or modified only upon the written consent of the Borrower, the Guarantor and the
Holder. 

(b)               
Assignment; Participations. The Holder may assign (by way of security
only) this Note for financing purposes so long as no Default has occurred and is
continuing and transfer this Note with the written consent of the Borrower, not
to be unreasonably withheld, provided, however, that, Holder and the transferee
shall execute and deliver to the Borrower notice of the Note transfer in a form
satisfactory to the Borrower. The Borrower may not transfer or assign all or any
part of this Note without the prior written consent of Holder. 

In addition, the Holder may sell participations in all or a portion of the
Holder’s rights and obligations under this Note; provided that the Borrower
shall continue to deal solely and directly with the Holder in connection with
the Holder’s rights and obligations under this Note and all rights and remedies
with respect to the Loan Documents may only be exercised by the Holder.

(c)               
Governing Law. This Note shall be governed by the laws of the State of
New York. 

(d)               
Severability. If any of the provisions of this Note is held invalid, such
invalidity shall not affect the other provisions hereof that can be given effect
without the invalid provision, and to this end the provisions of this Note are
intended to be and shall be deemed severable. 

(e)               
Indemnification. The Obligors agree to hold harmless, defend and
indemnify Holder, its officers, employees, agents and representatives (each, an
“Indemnified Party”) from and against any liability, loss, cost,
expense, damage claim or cause of action due to or arising out of or in
connection with this Note or any other Loan Document in any way,  directly or indirectly. The indemnification provided for in the
immediately preceding sentence shall not apply to liabilities, losses, costs,
expenses, damage, claims or causes of action which may arise as the result of
the willful misconduct or negligence of the Holder or the Indemnified Party. 

6 

 

(f)               
Notices. All notices and other communications given to or made upon any
party hereto in connection with this Note shall, except as otherwise expressly
herein provided, be in writing (including telecopy, telefaxed, telegraphic or
electronic communication) and mailed via certified or electronic mail,
telefaxed, telegraphed or delivered to the respective parties, as follows: 

To the Borrower or the Guarantor, as
appropriate: 

	 	American Bonanza Gold Corporation 
	 	200 Granville Street – Suite 1238 
	 	Vancouver, BC 
	 	Canada V6C 1S4 
	 	Attn: Chief Executive Officer 
	 	Email: bongold@intercomm.com

To Holder: 

	 	Resource Income Fund, L.P. 
	 	2 Executive Drive 
	 	Suite 645 
	 	Fort Lee, New Jersey 07024 
	 	Attn: Justin M. Sullivan 
	 	Telecopy: 201-905-5001 

Or in accordance with any subsequent written direction from the
recipient party to the sending party delivered in accordance with this Section
11(g). All such notices and other communications shall, except as otherwise
expressly herein provided, be effective upon (i) delivery if delivered by hand;
(ii) the third (3rd) Business Day after the date sent, in the case of
certified mail; or (iii) receipt, in the case of telecopy.

7 

12.                Guaranty. In order to
induce the Holder to extend credit to the Borrower hereunder and under the other
Loan Documents, the Guarantor hereby irrevocably and unconditionally guarantees,
as a primary obligor and not merely as a surety, the payment when and as due of
the obligations of the Borrower hereunder each of the other Loan Documents
(collectively, the “Obligations”). The Guarantor further agrees that the
due and punctual payment of such Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee hereunder notwithstanding any such extension or
renewal of any such Obligation. 

The
Guarantor waives presentment to, demand of payment from and protest to the
Borrower of any of the Obligations, and also waives notice of acceptance of its
obligations and notice of protest for nonpayment. The obligations of the
Guarantor hereunder shall not be affected by (a) the failure of the Holder to
assert any claim or demand or to enforce any right or remedy against the
Borrower under the provisions of any Loan Document or otherwise hereunder, (b)
any extension or renewal of any of the Obligations, (c) any rescission, waiver,
amendment or modification of, or release from, any of the terms or provisions of
this Note, or any other Loan Document or agreement, (d) any default, failure or
delay, willful or otherwise, in the performance of any of the Obligations or (e)
any other act, omission or delay to do any other act which may or might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a
discharge of the guarantor as a matter of law or equity or which would impair or
eliminate any right of the Guarantor to subrogation. 

The
Guarantor further agrees that its agreement hereunder constitutes a guarantee of
payment when due (whether or not any bankruptcy or similar proceeding shall have
stayed the accrual or collection of any of the Obligations or operated as a
discharge thereof) and not merely of collection, and waives any right to require
that any resort be had by the Holder to any balance of any deposit account or
credit on the books of the Holder in favor of the Borrower or any other Person.

The
Guarantor further agrees that its obligations hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
the Holder upon the bankruptcy or reorganization of the Borrower or otherwise.

In
furtherance of the foregoing and not in limitation of any other right which the
Holder may have at law or in equity against the Guarantor by virtue hereof, upon
the failure of the Borrower to pay any Obligation when and as the same shall
become due whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Guarantor hereby promises to and will, upon receipt of written
demand by the Holder, forthwith pay, or cause to be paid, to the Holder in cash
an amount equal to the unpaid principal amount of such Obligations then due,
together with accrued and unpaid interest thereon. 

8 

Upon payment by the Guarantor of
any sums as provided above, all rights of the Guarantor against the Borrower
arising as a result thereof by way of right of subrogation or otherwise shall in
all respects be subordinated and junior in right of payment to the prior
indefeasible payment in full of all the Obligations owed by the Borrower to the
Holder. 

Nothing shall discharge or
satisfy the liability of the Guarantor hereunder except the full performance and
payment of the Obligations. 

The Guarantor represents and
warrants to the Holder that it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to carry on its business as now conducted. The
execution of this Guaranty is within its corporate powers and has been duly
authorized by all necessary corporate action. 

This Guaranty has been duly
executed and delivered by the Guarantor and constitutes a legal, valid and
binding obligation of said Guarantor, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law. 

The execution of this Guaranty
does not (a) require any consent or approval of, registration or filing with, or
any other action by, any governmental authority, except such as have been
obtained or made and are in full force and effect, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Guarantor or any of its subsidiaries or any order of any
governmental authority, (c) will not violate or result in a default under any
material indenture, agreement or other instrument binding upon the Guarantor or
any of its subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Guarantor or any of its subsidiaries, and
(d) will not result in the creation or imposition of any lien on any asset of
the Guarantor or any of its subsidiaries. 

This Guaranty shall terminate
upon the indefeasible payment of all amounts owing under this Note.

9 

 

Schedule 1 

The Obligors hereby represent and warrant to Holder, as of the
date of this Note, the following: 

(a)               
Organization. Each of them is duly organized, validly existing, and in
good standing under the laws of their respective jurisdictions, with full power
and authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with all federal, provincial, state, local, foreign, and other governmental
authorities and all courts and other tribunals, to own, lease, license and use
its properties and assets, and to carry on its business or proposed business as
required except where the failure to have such consents, authorizations,
approvals, orders, licenses, certifications and permits could not reasonably be
expected to have a material adverse effect on their respective businesses or
operations. Each is duly licensed and qualified to do business and be in good
standing in every jurisdiction in which the ownership, leasing, licensing or use
of property and assets or the conduct of its business makes such qualification
necessary except where the failure to have such licenses and qualifications
could not reasonably be expected to have a material adverse effect on their
respective businesses or operations. The corporate organization chart attached
hereto is true and accurate in all material respects. 

(b)               
Financial Statements. The audited balance sheet of the Borrower and its
consolidated subsidiaries for the 12 month period ending December 31, 2010, the
related unaudited statements of operations and statements of cash flow for the
year ended December 31, 2010 and the unaudited balance sheet of the Borrower and
its consolidated subsidiaries for the nine months ended September 30, 2011 (such
date being referred to herein as the “Balance Sheet Date” and collectively, the
“Financial Statements”), present fairly in all material respects the financial
position and cash flows of the Borrower and its consolidated subsidiaries at the
indicated dates and for the indicated periods.

(c)               
Absence of Undisclosed Liabilities. The Borrower and its consolidated
subsidiaries have no material outstanding claims, liabilities, obligations or
indebtedness, contingent or otherwise, whether asserted or unasserted. All
material liabilities of the Borrower and its consolidated subsidiaries incurred
subsequent to the Balance Sheet Date have been incurred in the ordinary course
of business. 

(d)               
Absence of Changes. Since September 30, 2011, the Borrower and its
consolidated subsidiaries have operated in the ordinary course of business
consistent with past practice. Since the Balance Sheet Date, there has not
occurred any change in the financial condition, results of operations, assets,
liabilities or business of the Borrower which, in the aggregate, has had a
material adverse effect on the Borrower’s business. 

(e)               
Title to Properties; Encumbrances; Priority. The Obligors have (i) good
and valid title to all of their respective assets (real, personal, tangible and
intangible) (except as may be disposed of as permitted hereunder) and (ii)
either freehold title, mining leases, mining claims or licences or participating
interests or other conventional property, proprietary or contractual interests
or rights, recognized in the jurisdiction in which a particular property is located,
in respect of the ore bodies and minerals located in properties in which the
Obligors have an interest under valid, subsisting and enforceable title
documents or other recognized and enforceable agreements or instruments; in each
case clear of all encumbrances, liens, claims, charges or other restrictions of
whatever kind or character, except for Permitted Liens (as defined in Schedule
2). The Security Agreements and the Stock Pledge represent first priority
security interests in the collateral purported to be granted thereby. 

(f)               
Material Agreements; Mining Lease: The Obligors are not in material
violation or breach of or in material default with respect to, complying with
any provision of any material contract, agreement, instrument, lease, license,
arrangement or understanding to which it is a party, including without
limitation, the Mining Lease and each such material contract, agreement,
instrument, lease, license, arrangement and understanding is in full force and
effect and is a legal, valid and binding obligation enforceable in accordance
with its terms (subject to applicable bankruptcy, insolvency and other laws
affecting the enforceability of creditors’ rights generally and to general
equitable principles). Neither of the Obligors are aware of or have received
notice from any third party that the third party is in default under any
agreement, contract or other instrument, document or agreement to which an
Obligor is a party, which default would or could have a material adverse effect
on their respective properties or assets or their respective businesses as
presently conducted or proposed to be conducted. 

(g)               
Litigation. There is no material action, suit, investigation, customer
complaint, claim or proceeding at law or in equity by or before any arbitrator,
governmental instrumentality or other agency now pending or threatened against
or affecting an Obligor that has had or would reasonably be expected to have a
material adverse effect on its business or operations, nor, does there exist any
basis therefor. Neither Obligor is subject to any judgment, order, writ,
injunction or decree of any federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign. None of the Obligors’ officers or directors is a party to,
or subject to the provisions of, any order, writ, injunction, judgment or decree
of any court or governmental agency or instrumentality that has had or would
reasonably be expected to have a material adverse effect on its businesses or
operations. 

(h)               
Non-Defaults. Neither Obligor is in material default in the performance
or observance of any obligation with respect to any order, writ, injunction or
decree of any court of any federal, provincial, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign and there exists no condition, event or act which
constitutes, nor which after notice, the lapse of time or both, would
constitute, a material default under any of the foregoing, in each case that
would reasonably be expected to have a material adverse effect on their
businesses or operations. Upon the execution of the
Note, the Borrower will not be in material breach of any term of any of the Loan
Documents nor will any Default be presently occurring, which, in either event,
if not cured pursuant to the terms of the Note, would materially and adversely
impair the Borrower’s ability to perform its obligations under the Note. 

2 

(i)               
Taxes. The Obligors have filed all federal, state, local and foreign tax
returns which are required to be filed by it and all such returns are true and
correct in all material respects and have paid all taxes pursuant to such
returns or pursuant to any assessments received by it (other than any amounts
which they are disputing in good faith) and has withheld all amounts which it is
obligated to withhold from amounts owing to any employee, creditor or third
party. No deficiency assessment with respect to or proposed adjustment of the
Obligors’ federal, state, county or local taxes is pending or, to their
knowledge, threatened. There is no tax lien, whether imposed by any federal,
provincial, state, county or local taxing authority, outstanding against the
assets, properties or business of either Obligor. 

(j)               
Compliance with Laws; Environmental Matters, Licenses, Etc. The Obligors
have not received any notice of any violation of, or noncompliance with, any
federal, provincial, state, local or foreign laws, ordinances, regulations or
orders (including, without limitation, those relating to all applicable federal,
provincial, state and local insurance laws, rules and regulations, environmental
protection, occupational safety and health (“Notice of Violation”)
applicable to their businesses, the violation of, or noncompliance with which,
would have a material adverse effect on such business or operations. The
Obligors have all licenses and permits and other governmental certificates,
authorizations and permits and approvals (collectively, “Governmental
Licenses”) required for the operation of its businesses and the use of
its properties where the failure to obtain or possess such license or permit
would have a material adverse effect on such businesses.

(k)               
Authorization. The execution and delivery of the Note and the other Loan
Documents to which each Obligor is a party have been duly authorized by all
requisite corporate action, and when so executed and delivered, the Note and the
other Loan Documents will constitute the valid and binding obligations of such
Obligors, enforceable against them in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally
and general principles of equity.

(l)               
Non-Contravention Etc. The execution, delivery and performance of the
terms of the Note and the other Loan Documents will not (i) violate any
provision of law or statute or any order of any court or other agency of
government binding on the Obligors; or (ii) conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute (with due
notice or lapse of time or both) a default under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
the Obligors. 

3 

(m)               
Insurance. All insurable assets and properties of the Obligors are
insured against all risks usually insured against by persons owning or operating
similar properties and assets in the localities where such properties or assets
are located, through insurance policies all of which are in full force and
effect. Each of the insurance policies referred to in this section is issued by
an insurer of recognized responsibility, and the Obligors have not received any
notice or threat of the cancellation or nonrenewal of any such policy. 

(n)                No
Consent. No permit, consent, approval, authorization, order or filing with
any court or governmental authority is required in connection with the issuance
of the Note, except for recordations or filings necessary to perfect any
security interests granted pursuant to the Loan Documents.

(o)               
Employee Relations. The Obligors are in material compliance with all
applicable federal, provincial, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours and there are no pending investigations involving
any of them. No collective bargaining agreement or modification thereof is
currently being negotiated by the Borrower and no labor dispute with the
employees of the Borrower exists, or is imminent. 

4 

Schedule 2 

The Obligors covenant and agree
that for so long as the Note is outstanding or any amounts remain due and
payable to Holder hereunder, it shall observe and abide by each of the covenants
and agreements contained in this Schedule 2, unless consented to in
writing in advance by Holder or otherwise permitted hereunder. 

1.1.              Merger, Consolidation and
Disposition of Assets. 

1.1.1.               Mergers and
Acquisitions. Without Holder’s prior written consent, which consent may not
be unreasonably withheld, conditioned or delayed, the Obligors will not effect
any merger or consolidation, any asset acquisition or stock acquisition, except
that a subsidiary may merge or consolidate into another subsidiary and either
subsidiary may merge or consolidate into the Borrower so long as the Borrower is
the surviving entity. 

1.1.2.                Disposition of
Property. Without Holder’s prior written consent, which consent may not be
unreasonably withheld, neither the Borrower nor the Subsidiaries will sell,
lease or otherwise dispose of any of the property, including any disposition of
the property as part of a sale and leaseback transaction, to or in favor of any
person, except for (i) sales of inventory made in the ordinary course
(including, without limitation, pursuant to any installment, output requirement,
offtake or similar agreement with respect to the sale of future production in
the ordinary course) (ii) dispositions of equipment for cash and fair value that
are no longer used or useful in the business of the Borrower or Subsidiaries.

1.2.              Indebtedness. Neither
the Borrower nor the Subsidiaries will create, incur, assume, or suffer to
exist, any Indebtedness, except: (a) this Note (as the same may be extended,
increased, renewed or refunded from time to time by mutual agreement of the
parties); (b) the Call Option Agreement (c) accounts payable to trade creditors
and current operating expenses; (d) indebtedness incurred or assumed for the
purpose of financing all or any part of the cost of acquiring any equipment or
assets (including capital leases) in an aggregate principal amount at any time
outstanding not greater than $1,500,000 in the aggregate; (e) Indebtedness that
is subordinated in favor of the Holder, and (f) intercompany indebtedness
between the Borrower and its subsidiaries, (g) and contingent obligations
existing or arising under any hedging or swap agreement, provided that such
obligations are (or were) entered into with the Auramet Trading as the Gold
Agent in the ordinary course of business and not for speculative purposes, (h)
the royalty payable under the Mining Lease, and (h) indebtedness owing to
Centennial Development Corp. under Agreement dated February 13, 2002.

1.3.              Liens. Without the
prior written consent of Holder, other than Permitted Liens (as defined below),
neither the Borrower nor its subsidiaries will (i) create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
charge, restriction or other security interest of any kind (each of the
foregoing, a “Lien”) upon any of the Collateral, or upon the income or profits
therefrom, except as otherwise permitted herein, transfer any of such Collateral or the income or profits
therefrom for the performance of any other obligation in priority to payment of
its general creditors; or (ii) acquire, or agree or have an option to acquire,
any Property upon conditional sale or other title retention or purchase money
security agreement, device or arrangement. For purposes of this Note, the term
“Permitted Liens” means, collectively, (a) Liens arising pursuant to this Note
and the other Loan Documents; (b) Liens for taxes, fees, levies, duties or other
governmental charges of any kind, either not yet due or being contested in good
faith and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with generally accepted accounting
principles, provided the same have no priority over any of Holder’s security
interests; (c) Liens for landlords, common carriers, warehousemen, mechanics,
materialmen, laborers, employees, suppliers or similar Liens arising by
operation of law for amounts that are owed but not yet delinquent, provided such
Liens do not, in the aggregate, materially detract from the value of the assets
of the Borrower and its subsidiaries or materially impair the use thereof in the
operation of the Borrower’s or its subsidiaries’ business, in each case, taken
as a whole, (d) Liens not to exceed $500,000 in the aggregate in any fiscal year
incurred solely for the purpose of financing the acquisition of goods or
equipment acquired by the Borrower or any Subsidiary in the ordinary course of
business, (e) in the case of real property, any matters, restrictions,
covenants, conditions, limitations, rights, rights of way, encumbrances,
encroachments, reservations, easements, agreements and other matters of record,
such state of facts of which an accurate survey of the property would reveal,
which in the aggregate, are not material in amount, and which do not, in the
aggregate, materially detract from the value of any such real property or
materially interfere with the ordinary conduct of the Borrower’s and the
Subsidiaries business, (f) attachments, appeal bonds, judgments and other
similar Liens for sums not exceeding $100,000 arising in connection with court
proceedings; provided that the execution of such Liens is effectively stayed,
and (h) any other Liens arising from or related to immaterial indebtedness or
capital leases of the Borrower or any subsidiary, not to exceed $25,000 in the
aggregate in any fiscal year. 

Restrictions on Investments. Without Holder’s prior
written consent, the Borrower will not, and will not permit any of its
subsidiaries to make or permit to exist or to remain outstanding any investment
except investments in: (a) cash equivalents under normal course of cash
management; (b) short term indebtedness guaranteed by the United States
government with a maturity not exceeding 6 months; and (c) inventory purchased
in the ordinary course of business 

1.5.              Distributions; Restricted
Payments. Without Holder’s prior written consent, the Borrower shall not (i)
declare, pay or make any distribution on shares of its capital stock; or (ii)
apply any of its funds or property to the purchase, redemption or other
retirement of any shares of its capital stock or of any options to purchase or
acquire any capital stock of the Borrower or any of its subsidiaries.

1.6.              Compliance with
Environmental Laws. The Obligors will act at all times in compliance with
environmental laws, except where the failure of such compliance would not be reasonably likely to have a material adverse effect on the
Borrower’s business or operations. 

1.7.              Business Activities.
Without the prior written consent of Holder, which consent may be given or
denied at Holder’s sole discretion, neither the Borrower nor the Subsidiaries
will engage directly or indirectly (whether through subsidiaries or otherwise)
in any type of business other than the businesses presently or currently planned
to be conducted by them and in related lines of businesses. 

1.8.              Transactions with
Affiliates. Without the prior written consent of Holder, which consent may
be given or denied at Holder’s sole discretion, and other than in the Borrower’s
ordinary course of business, the Borrower will not engage in any transaction
with any Affiliate (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
affiliate or, to the knowledge of the Borrower, any person in which any such
affiliate has a substantial interest or is an officer, director, partner, member
or trustee on terms more favorable to such person than would have been
obtainable on an arm’s-length basis in the ordinary course of business. As used
herein, the term “Affiliate” means any person that is controlled by or is under
common control with such controlling person. As used in the prior sentence, the
term “control” means the power to vote 50% or more of any class of voting
securities of such person or to direct or cause the direction of the management
or policies of such Person. And, as used herein, “Person” shall mean any
individual, corporation, partnership, limited liability company, trust,
unincorporated association, business, or other legal entity, and any government
or any governmental authority. 

1.9.              Conflicting
Agreements. Without the prior written consent of Holder, which consent shall
not be unreasonably withheld, neither of the Obligors will enter into any
amendment or other modification the Mining Lease whatsoever; in addition,
neither of the Obligors will enter into any amendment or other modification to
any other currently existing contractual obligation, which amendment or
modification by its terms materially impairs the ability of the Borrower to (a)
repay the Gold Advance, or (b) fully satisfy all of its obligations hereunder,
without the prior written consent of Holder, which consent may be given or
denied at Holder’s sole discretion. 

1.10.            Monthly Operating
Reports. As soon as practicable following the end of each month while this
Note is outstanding, the Obligors shall deliver to Holder a copy of monthly
operating reports and such other reports as Holder may reasonably request. 

1.11.            Monthly Financial
Statements. Within forty five (45) days following the end of each month
while this Note is outstanding, the Obligors shall deliver to Holder unaudited
monthly financial statements (including statements of cash flow) of the Obligors
substantially prepared in accordance with Canadian generally accepted accounting
practices, except for normal recurring year-end adjustments provided that so
long as such documentation is publicly available at such times it shall be deemed to be
delivered for purposes of this covenant. 

1.12.            Notification as to
Certain Events. The Obligors shall notify Holder if the Obligors become
aware of any event that has or would reasonably be expected to have a material
adverse effect on the Obligors’ business or operations with respect to the
Property or the Obligors’ ability to perform its obligations under the Note. The
Obligors shall notify Holder immediately of all correspondence between owners of
the Mining Lease and the Obligors relating to a material event, or material
problem or alleging an event of default or an event which would become a default
if not corrected. 

1.13.            Maintenance of Required
Approvals and Consents; Compliance with Laws. The Obligors will take all
action necessary to maintain all approvals and consents necessary with respect
to the operation of their respective businesses, except where the failure to
maintain such approvals and consents shall not be expected to have a material
adverse effect on such businesses or operations. The Obligors shall comply in
all material respects with all applicable laws with respect to the operation of
their businesses. 

Appendix I 

Gold Delivery Schedule 

	  	 	Scheduled 	 	 	Outstanding 	 
	Date 	 	Delivery 	 	 	Balance 	 
	05/07/2012 	 	123.00 	 	 	(3,813.00) 	
	05/14/2012 	 	123.00 	 	 	(3,690.00)	
	05/21/2012 	 	123.00 	 	 	(3,567.00)	
	05/28/2012 	 	123.00 	 	 	(3, 444.00)	 
	06/04/2012 	 	123.00 	 	 	(3,321.00)	 
	06/11/2012 	 	123.00 	 	 	(3,198.00)	 
	06/18/2012 	 	123.00 	 	 	(3,
      075.00)	
	06/25/2012 	 	123.00 	 	 	(2,952.00)	 
	07/02/2012 	 	123.00 	 	 	(2,829.00)	 
	07/09/2012 	 	123.00 	 	 	(2,706.00)	 
	07/16/2012 	 	123.00 	 	 	(2,583.00)	 
	07/23/2012 	 	123.00 	 	 	(2,460.00)	 
	07/30/2012 	 	123.00 	 	 	(2,337.00)	 
	08/06/2012 	 	123.00 	 	 	(2,214.00)	 
	08/13/2012 	 	123.00 	 	 	(2,091.00)	 
	08/20/2012 	 	123.00 	 	 	(1,968.00)	 
	08/27/2012 	 	123.00 	 	 	(1,845.00)	 
	09/03/2012 	 	123.00 	 	 	(1, 722.00)	 
	09/10/2012 	 	123.00 	 	 	(1,599.00)	 
	09/17/2012 	 	123.00 	 	 	(1,476.00)	 
	09/24/2012 	 	123.00 	 	 	(1,353.00)	 
	10/01/2012 	 	123.00 	 	 	(1,230.00)	 
	10/08/2012 	 	123.00 	 	 	(1,107.00)	 
	10/15/2012 	 	123.00 	 	 	(984.00)	 
	10/22/2012 	 	123.00 	 	 	(861.00)	 
	10/29/2012 	 	123.00 	 	 	(738.00)	 
	11/05/2012 	 	123.00 	 	 	(615.00)	 
	11/12/2012 	 	123.00 	 	 	(492.00)	 
	11/19/2012 	 	123.00 	 	 	(369.00)	 
	11/26/2012 	 	123.00 	 	 	(246.00)	 
	12/03/2012 	 	123.00 	 	 	(123.00)	 
	12/10/2012 	 	123.00 	 	 	(0)

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