Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Taseko Mines Limited - Exhibit 10.4

THIS CALL OPTION AGREEMENT dated September 29, 2004. 

AMONG: 

  
    
       688888 B.C. LTD., a corporation incorporated
        pursuant to the laws of the Province of British Columbia 

       (“Optionee”) 

    

  

AND: 

  
    
       RED MILE RESOURCES INC., in its capacity as general
        partner on behalf of all of the partners of RED MILE RESOURCES FUND
        LIMITED PARTNERSHIP, an Alberta limited partnership

       (“RMRF”) 

    

  

   AND: 

  
    
       WILSHIRE (GP) NO. 2 CORPORATION, in its capacity
        as general partner on behalf of all of the partners of RED MILE RESOURCES
        NO. 2 LIMITED PARTNERSHIP, a British Columbia limited partnership
      

       (“RLP”) 

    

  

WHEREAS

 A.              Gibraltar
  Mines Ltd., a corporation incorporated pursuant to the laws of the province
  of British Columbia (the “Resource Company”), RMRF and RLP
  have entered into a royalty agreement (“Royalty Agreement”)
  dated the date hereof and effective June 15, 2004, whereby Resource Company
  granted a royalty interest in certain mining tenures to RLP; 

 B.              Resource
  Company is the sole shareholder of Optionee; 

 C.              RMRF
  is the sole limited partner of RLP; 

 D.              RMRF
  wishes to grant to Optionee and Optionee wishes to acquire from RMRF an option
  to purchase the limited partnership units in RLP owned by RMRF upon and subject
  to the terms and conditions hereinafter set forth; 

 E.              RLP
  wishes to grant to Optionee and Optionee wishes to acquire from RLP an option
  to purchase RLP’s right to receive the Basic Royalty (as such term is
  defined in the Royalty Agreement) upon and subject to the terms and conditions
  hereinafter set forth;

 - 2 - 

 NOW THEREFORE, in consideration of the premises and
  mutual covenants and agreements hereinafter set forth and for other good and
  valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
  the parties agree as follows: 

	 1.      	 DEFINITIONS 

	 
	 1.1      	 Unless otherwise defined in this Agreement, all
        capitalized terms used herein, shall have the meanings ascribed to them
        in the Royalty Agreement. 

	 
	 1.2      	 In this Agreement, the following words have the
        following meanings: 

	 
	 	 “this Agreement”, “hereto”,
        “herein”, “hereby”, “hereunder”, “hereof”
        and similar expressions refer to this Agreement and not to any particular
        Article, Section, Subsection, Clause, Subdivision or other portion hereof
        and include any and every instrument supplemental or ancillary hereto;
      

	 
	 	 “Alberta Trust” means Alberta
        Capital Trust Corporation, a corporation incorporated pursuant to the
        laws of the Province of Alberta; 

	 
	 	 “Alberta Trust Default” has the
        meaning set forth in Subsection 2.1(3)(c) hereof; 

	 
	 	 “Alberta Trust Note” means the
        promissory note issued by Alberta Trust to the Resource Company in the
        principal amount of $68,172,380 due and payable on December 10, 2014;
      

	 
	 	 “Basic Royalty Call Option” has
        the meaning set forth in Subsection 2.1(2) hereof; 

	 
	 	 “Business Day” in any jurisdiction
        means a day, other than a Saturday or Sunday, on which banks in such jurisdiction
        are generally open for business; 

	 
	 	 “Call Completion Date” has the
        meaning set out in Subsection 2.1(4) hereof; 

	 
	 	 “Call Notice” has the meaning
        set out in Subsection 2.1(4) hereof; 

	 
	 	 “Call Option” means either a
        Unit Call Option or a Basic Royalty Call Option; 

	 
	 	 “Call Purchase Price” has the
        meaning set out in Subsection 2.1(5)hereof; 

	 
	 	 “CIM” means the Canadian Institute
        of Mining and Metallurgy; 

	 
	 	 “Consultant” means Watts, Griffis
        and McOuat Limited or such other consultant as may be proposed by the
        Resource Company and acceptable to RMRF and RLP acting reasonably; 

	 
	 	 “Fair Market Value” means the
        fair market value of the Basic Royalty or RMRF’s limited partnership
        units in RLP, as the case may be, determined in accordance with Section
        2.2 hereof; 

 - 3 - 

	 	 “General Partner of RMRF”
        means Red Mile Resources Inc. and its successors and assigns as provided
        for in the RMRF Limited Partnership Agreement; 

	 
	 	 “Insolvency Legislation”
        means any legislation in any jurisdiction relating to bankruptcy,
        insolvency, liquidation, winding-up, reorganization, arrangement or relief
        of debtors or the adjustment or composition of debt, including without
        limitation the 

	 
	 	 Bankruptcy and Insolvency Act (Canada),
        the Companies' Creditors Arrangement Act (Canada) and the Winding-Up
        and Restructuring Act (Canada); 

	 
	 	 “Option Period Notice”
        has the meaning ascribed to it in the Royalty Agreement; 

	 
	 	 “Payout Amount” means
        the payout amount set out in the Payout Notice; 

	 
	 	 “Payout Amount Calculation Date”
        means the 31st day of December of each year subsequent to the Commencement
        Date of Commercial Production; 

	 
	 	 “Payout Notice” means
        a notice in the form of Schedule A attached hereto; 

	 
	 	 “Royalty Purchase Price”
        means $67,357,000; 

	 
	 	 “RMRF Limited Partnership Agreement”
        means the agreement dated June 1, 2004 between the General Partner of
        RMRF and 1111066 Alberta Ltd. as the initial limited partner to form RMRF;
      

	 
	 	 “Royalty” means the
        Basic Royalty and the NPI granted by Resource Company to RLP pursuant
        to the Royalty Agreement; 

	 
	 	 “Royalty Agreement” has
        the meaning set forth in recital A of this Agreement; 

	 
	 	 “Unit Call Option” has
        the meaning set forth in Subsection 2.1(1); 

	 
	 	 “Valuation Report” has
        the meaning ascribed thereto in Subsection 2.2(2) hereof; 

	 
	 	 "Tax Act" means the Income Tax
        Act (Canada). 

	 
	 1.3      	 Expanded Meanings. Unless the context
        otherwise necessarily requires: 

	 
	 	 (a)     
      
	 words used herein importing the singular number
        only shall include the plural and vice versa, and words importing
        the use of any gender shall include all genders; 

	 
	 	 (b)      
	 references to the "parties" herein shall mean the
        parties to this Agreement; and 

	 
	 	 (c)      
	 references herein to any agreement or instrument,
        including this Agreement, shall be deemed to be references to the agreement
        or instrument as varied, amended, modified, supplemented or replaced from
        time to time, and any specific references herein to any legislation or
        enactment shall be deemed to be references to such legislation or enactment
        as the same may be amended or replaced from time to time. 

 - 4 - 

 1.4          Interpretation
  Not Affected by Headings, Etc. 

 The division of this Agreement into Articles and Sections,
  the provision of a table of contents and the insertion of headings are for convenience
  of reference only and shall not affect the construction or interpretation of
  this Agreement. 

 1.5          Day
  Not a Business Day 

 In the event that any day on or before which any action is
  required to be taken hereunder is not a Business Day in the jurisdiction relevant
  to the action to be taken, then such action shall be required to be taken at
  or before the requisite time on the next succeeding day that is a Business Day
  in such jurisdiction. 

 1.6          Inclusive
  Terms and Statements 

 The word “including”, when following any general
  term or statement, is not to be construed as limiting the general term or statement
  to the specific items or matters thereafter set forth or to similar items or
  matters, but rather as referring to all other items or matters that could reasonably
  fall within the broadest possible scope of the general term or statement. 

 1.7          Currency
  

 Unless otherwise specifically stated, a reference herein to
  currency is a reference to Canadian currency. 

 1.8          Schedules
  

 The following Schedules attached hereto form part of this
  Agreement:

Schedule A      -         
  Payout Notice 

Schedule B      -
           Valmin Guidelines
  of CIM 

	 2.      	 GRANT OF CALL OPTION 
	 
	 2.1      	 Call Option 
	 
	 1.      	 RMRF hereby grants to Optionee the option (the “Unit
        Call Option”) to purchase all, but not less than all, of the limited
        partnership units owned by RMRF in RLP on the terms and conditions set
        out herein. 

	 
	 2.      	 In addition to the foregoing, RLP grants to Optionee
        the option (the “Basic Royalty Call Option”) to purchase all,
        but not less than all, of RLP’s right to receive the Basic Royalty,
        in the event that, at, or at any time subsequent to the exercise by the
        Optionee of the Unit Call Option, RLP has any liabilities accrued contingent
        or otherwise, other than ordinary course liabilities in excess of $25,000,
        as indicated, or as should have been indicated in 

 - 5 - 

	 	 accordance with generally accepted accounting
        principles, in the financial statements of RLP or otherwise. If Optionee
        exercises the Basic Royalty Call Option, then it shall be deemed to have
        exercised it in lieu of the Unit Call Option and neither Optionee nor
        RMRF shall be obligated to complete the Unit Call Option. 

	 
	 3.      	 Optionee may exercise the Unit Call Option
        at any time on or after the earlier of October 1, 2014 or on the occurrence
        of any of the following events, provided that a Put Option has not otherwise
        been properly exercised by RLP pursuant to, and in compliance with, the
        Royalty Agreement: 

	 
	 	 a)     
      
	 the Payout Amount at the end of a Royalty Period
        (as set forth in a Payout Notice delivered to Resource Company) is less
        than 15% of the Royalty Purchase Price; 

	 
	 	 b)      
	 Alberta Trust breaches its payment obligation under
        section 8(a)(i) of the pledge, priorities and direction agreement dated
        as of the date hereof among inter alia Alberta Trust, Resource
        Company, RMRF and RLP, and such breach remains unremedied for ten (10)
        Business Days; 

	 
	 	 c)      
	 either Alberta Trust or Wilshire Financial Services
        Inc. exercises its respective put or call rights pursuant to the investor
        loan put/call agreement dated as of the 15th day of June, 2004 and amended
        September 29, 2004; or 

	 
	 	 d)      
	 Optionee has received an Option Period Notice from
        RMRF provided that the Unit Call Option may only be exercised in these
        circumstances for a period of 20 days after receipt of such notice. 

	 
	 4.      	 Optionee may exercise the Unit Call Option
        or the Basic Royalty Call Option by providing written notice of such exercise
        (the “Call Notice”) to RMRF and RLP, which Call Notice shall
        state the Business Day on which Optionee will complete the purchase (the
        “Call Completion Date”). The Call Completion Date shall be
        not less than 15 days or not more than 60 days following the date of the
        Call Notice. Notwithstanding the foregoing, in the event that Optionee
        exercises the Call Option: 

	 
	 	 a)      
	 at any time between October 1, 2014 and October
        31, 2014, the Call Completion Date shall be December 10, 2014; 

	 
	 	 b)      
	 at any other time, the Call Completion Date shall
        occur no later than the first Royalty Payment Date which occurs on or
        after receipt of the Call Notice. 

	 
	 5.      	 In all circumstances in which the Call
        Option is exercised, the purchase price in respect of the Call Option
        (the “Call Purchase Price”) will be equal to the lesser of:
      

	 
	 	 a)      
	 the Payout Amount; and 

	 
	 	 b)      
	 the Fair Market Value of the limited partnership
        units of RLP owned by RMRF (in the case of a Unit Call Option) or the
        Basic Royalty (in the case of a Basic Royalty Call Option) on the last
        day of the month prior to the month in which the Call Completion Date
        occurs. 

 - 6 - 

	 6.      	 Optionee shall purchase the limited partnership
        units owned by RMRF in RLP or the Basic Royalty from RLP on the Call Completion
        Date by paying to RMRF or RLP, as the case may be, the Call Purchase Price.
        10 days prior to the Call Completion Date, Optionee shall provide to RMRF
        or RLP, as the case may be, a certificate of the Chief Financial Officer
        of Optionee setting out the calculation of the Call Purchase Price and
        confirming that such calculation was made in accordance with the provisions
        of this Agreement. 

	 
	 7.      	 For greater certainty, it is understood that Optionee
        is not purchasing, or paying for, and RMRF is not selling, or receiving,
        any amount in respect of RLP’s interest in the NPI and that RLP
        has the right to distribute to RMRF the NPI prior to the Call Completion
        Date. 

	 
	 2.2      	 Valuation Report and Fair Market Value 

	 
	 1.      	 For the purposes of Subsections 2.1(5), Fair Market
        Value shall mean the value agreed to by Optionee on the one hand, and
        RMRF in the event of a Unit Call Option, or RLP in the event of a Basic
        Royalty Call Option, on the other hand, to be the highest price available
        in an open and unrestricted market between informed, prudent arm's length
        parties under no compulsion to act (“Fair Market Value”) having
        regard for the fact that Optionee is not buying, and RLP is not selling,
        RLP’s interest in the NPI. 

	 
	 2.      	 In the event that RLP or RMRF, as the case may be,
        and Optionee are not able to agree as to the Fair Market Value of RMRF’s
        limited partnership units in RLP, or of the Basic Royalty, as the case
        may be, the parties shall procure a valuation report (the “Valuation
        Report”) by the Call Completion Date. Each of RLP or RMRF, as the
        case may be, and Optionee shall pay one-half of the cost of the Valuation
        Report. 

	 
	 3.      	 The Valuation Report shall be prepared by the Consultant
        in accordance with the Valmin guidelines of CIM (a copy of which is attached
        hereto as Schedule B), whose experience and reputation in the Canadian
        mining industry generally and in particular whose experience in the valuation
        of properties and royalties the parties hereto expressly recognize. The
        Valuation Report shall indicate that it is based on information as of
        a date not more than 30 days prior to the date on which the Valuation
        Report is delivered to RLP in accordance with this Section 2.2. Resource
        Company shall make available to the Consultant all information within
        its possession or control which the Consultant considers relevant in preparing
        the Valuation Report. The Valuation Report shall set out any material
        assumptions on which the Consultant is relying and shall contain the Consultant's
        confirmation that in its view all such assumptions are reasonable in the
        circumstances in determining the Fair Market Value of RMRF’s limited
        partnership interest in RLP, or, of the Basic Royalty, as the case may
        be, and similar to the methodology used in evaluating the Basic Royalty
        as at the date hereof. The Valuation Report shall set out a dollar amount
        which in the Consultant's opinion is the Fair Market Value of RMRF’s
        limited partnership interest in RLP, or, of the Basic Royalty, as the
        case may be, as at the dates of the Call Notice, which amount shall be
        deemed to be the Fair Market Value. 

	 
	 2.3      	 Payment and Notices 

 - 7 - 

 All payments to be made to RMRF and all documents to be delivered
  to RMRF shall be made or delivered to the General Partner of RMRF or as the
  General Partner of RMRF shall otherwise direct. 

	 3.      	 REPRESENTATIONS, WARRANTIES AND
        COVENANTS OF OPTIONEE 

	 
	 3.1      	 Representations and Warranties
      

	 
	 1.      	 Optionee represents and warrants to RLP
        and RMRF that: 

	 
	 	 (a)     
      
	 this Agreement has been duly authorized, executed
        and delivered by Optionee, no approval or authorization by its shareholders
        is required in connection therewith and this Agreement is a legally binding
        obligation of Optionee enforceable against it in accordance with its terms,
        subject to bankruptcy, insolvency, and other laws generally affecting
        the enforceability of creditors rights and subject to equitable remedies
        such as injunction and specific performance being available only in the
        discretion of the court; 

	 
	 	 (b)      
	 the execution, delivery and performance by Optionee
        of this Agreement does not: (i) contravene Optionee’s articles or
        by-laws or any resolution of the board of directors or shareholders of
        Optionee; (ii) violate any provision of any law, regulation, ordinance,
        rule, order, writ, judgement, injunction decree, determination or award
        applicable to Optionee or any of its property; (iii) result in a breach
        of or constitute a default under or require the consent of or notice to
        any third party pursuant to any indenture, agreement, lease or instrument
        to which Optionee is a party or by which it is bound (except for any required
        consents or notices which Optionee has given or obtained); or (iv) result
        in, or require, the creation or imposition of any mortgage, pledge, lien,
        security interest or other charge or encumbrance of any nature upon or
        with respect to any of Optionee’s property except as contemplated
        by this Agreement; 

	 
	 	 (c)      
	 no authorization, consent, approval or other action
        by, and no notice to or filing with, any Governmental Authority is required
        for the due execution, delivery and performance of this Agreement by Optionee;
      

 2.          The
  foregoing representations and warranties shall survive and continue for the
  benefit of RLP, RMRF and the limited partners of RMRF so long as there are any
  obligations outstanding under this Agreement. 

	 3.2      	 General Covenants 
	 
	 1.      	 Optionee covenants with RLP and RMRF that
        so long as this Agreement is in effect and/or the Resource Company is
        required to make payment on account of the Royalty under the Royalty Agreement,
        it will: 

	 
	 	 (a)     
      
	 do or cause to be done all things necessary to preserve
        and maintain in full force and effect its corporate existence and rights
        in its jurisdiction of incorporation, 

 - 8 - 

	 	 and in each other jurisdiction in which
        such qualification is necessary or desirable in view of its business and
        operations or ownership of property; 

	 
	 	 (b)     
      
	 promptly and duly execute and deliver to RLP or
        RMRF, as the case may be, such documents and assurances and take such
        further action as RLP or RMRF may from time to time reasonably request
        in order to carry out more effectively the intent and purpose of this
        Agreement and the documents delivered pursuant hereto and to establish
        and protect the rights and remedies created or intended to be created
        in favour of RLP or RMRF; and 

	 
	 	 (c)      
	 promptly and diligently perform and carry out all
        of the acts or things to be done by it as provided in this Agreement.
      

	 
	 2.      	 Optionee shall, as necessary, comply with
        all applicable securities regulatory requirements in connection with the
        purchase hereunder of the limited partnership interests of RLP held by
        RMRF. 

	 
	 4.      	 REPRESENTATIONS AND COVENANTS OF
        RLP, RMRF AND GENERAL PARTNERS OF RLP AND RMRF 

	 
	 4.1      	 Representations of RLP and General Partner of RLP 

RLP and General Partner of RLP hereby represent and warrant to Optionee that: 

	 	 (a)      	 the execution, delivery and performance by RLP of this Agreement
      does not: 
	 
	 	 	 (i)     
      
	 contravene the RLP Limited Partnership Agreement;
        or 

	 
	 	 	 (ii)      
	 violate any provision of any law, regulation, ordinance,
        rule, order, writ, judgement, injunction decree, determination or award
        applicable to RLP or any of its property; 

	 
	 	 (b)      
	 no authorization, consent, approval or
        other action by, and no notice to or filing with, any Governmental Authority
        is required for the due execution, delivery and performance of this Agreement
        by RLP; 

	 
	 	 (c)      
	 this Agreement has been duly executed
        and delivered by RLP and constitutes a legally binding obligation of RLP
        enforceable against it in accordance with its terms, subject to bankruptcy,
        insolvency and other laws generally affecting the enforceability of creditors
        rights (other than those pertaining to fraudulent assignments and preferences)
        and subject to equitable remedies such as injunction and specific performance
        being available only in the discretion of the court; 

	 
	 	 (d)      
	 RMRF is the sole limited partner of RLP
        and no other limited partners will be admitted without the prior written
        consent of Optionee, such consent not to be unreasonably withheld; and
      

 - 9 - 

	 	 (e)      	 each of the General Partner of RLP and RMRF, is
        a resident of Canada for purposes of the Tax Act. 

 The foregoing representations and warranties shall survive
  and continue for the benefit of Optionee so long as there are any obligations
  outstanding under this Agreement. 

 4.2          Covenants of
  RLP and General Partner of RLP 

 RLP and the General Partner of RLP each covenants with Optionee
  that: 

	 	 (a)      	 so long as obligations remain outstanding under
        this Agreement, it will promptly and duly execute and deliver to Optionee,
        at the request and expense of Optionee, such documents and take such further
        action as Optionee may from time to time reasonably request in order to
        carry out more effectively the intent and purpose of this Agreement and
        the documents delivered pursuant hereto; and 

	 
	 	 (b)      	 in the event that Optionee exercises its Basic Royalty
        Call Option pursuant to Subsection 2.1(2) hereof, RLP shall pay or discharge,
        both prior to and after the Call Completion Date, all liabilities with
        respect to services rendered up to and including the Call Completion Date,
        provided however that RLP shall not be required to pay or discharge any
        such liability so long as its validity or quantum is contested in good
        faith by appropriate proceedings, and a reserve has been established in
        its books and records in accordance with generally accepted accounting
        principles in an amount satisfactory to the Optionee in its sole discretion,
        acting reasonably. 

	 
	 4.3      	 Representations of RMRF and General Partner of RMRF
    

RMRF and General Partner of RMRF hereby represent and warrant to Optionee that: 

	 	 (a)      	 RMRF has been established under the laws
        of Alberta and is duly qualified to carry on its business and to own the
        limited partnership units of RLP and General Partner of RMRF has been
        incorporated pursuant to the laws of the Province of Alberta and has full
        corporate right, power and authority to enter into this agreement and
        perform its obligation as General Partner of RMRF; 

	 
	 	 (b)      	 the execution, delivery and performance
        by RMRF of this Agreement does not 

	 
	 	 	 (i)     
      
	 contravene the RMRF Limited Partnership Agreement;
      

	 
	 	 	 (ii)      
	 violate any provision of any law, regulation, ordinance,
        rule, order, writ, judgement, injunction decree, determination or award
        applicable to RMRF or any of its property; 

	 
	 	 (c)      	 no authorization, consent, approval or
        other action by, and no notice to or filing with, any Governmental Authority
        is required for the due execution, delivery and performance of this Agreement
        by RMRF; 

 - 10 - 

	 	 (d)      	 this Agreement has been duly executed and delivered
        by RMRF and constitutes a legally binding obligation of RMRF enforceable
        against it in accordance with its terms, subject to bankruptcy, insolvency
        and other laws generally affecting the enforceability of creditors rights
        (other than those pertaining to fraudulent assignments and preferences)
        and subject to equitable remedies such as injunction and specific performance
        being available only in the discretion of the court; and 

	 
	 	 (e)      	 each of the limited partner of RMRF and the General
        Partner of RMRF is a resident of Canada for purposes of the Tax Act. 

 The foregoing representations and warranties shall survive
  and continue for the benefit of Optionee so long as there are any obligations
  outstanding under this Agreement. 

 4.4          Covenants
  of RMRF and General Partner of RMRF 

 The RMRF and the General Partner of the RMRF each covenants
  with Optionee that so long as RMRF is holding the limited partnership units
  of RLP, it will promptly and duly execute and deliver to Optionee, at the request
  and expense of Optionee, such documents and take such further action as Optionee
  may from time to time reasonably request in order to carry out more effectively
  the intent and purpose of this Agreement and the documents delivered pursuant
  hereto and it shall not create or permit, or allow to be created a security
  interest, pledge, lien or other encumbrance on the limited partnership units
  which it holds in RLP without the prior written consent of Optionee.

 5.          MISCELLANEOUS

 5.1          Royalty
  Notices 

 Each of RMRF and RLP agree to deliver any Payout Notice or
  Option Period Notice sent to Resource Company pursuant to the Royalty Agreement
  concurrently to Optionee.

 5.2          Confidential
  Information 

 All information furnished to or obtained by RMRF or RLP pursuant
  to this Agreement concerning Resource Company and Optionee shall, subject to
  any law or legal proceeding requiring disclosure, be held in confidence and
  shall not be photocopied or provided to any other person by RMRF or RLP, unless
  and until it has been publicly disclosed or is otherwise in the public domain
  at the time of such disclosure or use (otherwise than as a result of a breach
  of this provision by RMRF or RLP); provided, however that neither RMRF
  nor RLP shall in any way be restricted in the use of such information in order
  to enforce compliance with the terms and conditions of this Agreement or to
  protect or preserve its respective rights hereunder or the rights of any of
  the Partners and each may provide information to its consultants, agents and
  advisors on a need-to-know basis provided that such information is kept confidential.

 5.3          Notices 

 Any notice, direction or other instrument required or permitted
  to be given under this Agreement by or to any of the parties hereto shall be
  in writing and may be given by delivering or mailing 

 - 11 - 

 same by registered mail or sending by facsimile or other telecommunication
  device or other similar form of communication to the following addresses: 

	 Optionee:  	 688888 B.C. Ltd.  
	  	 1020 – 800 W. Pender St.  
	  	 Vancouver, British Columbia  
	  	 V6C 2V6  
	  	 
	  	 Attention:              President 
    
	  	 Facsimile No.:        (604)
      681-2741  
	  	 
	 With a copy to:  	 Lang Michener LLP  
	  	 1500 Royal Centre  
	  	 P.O. Box 11117  
	  	 1055 West Georgia Street  
	  	 Vancouver, British Columbia  
	  	 V6E 4N7  
	  	 Attention:              Bernard
      J. Zinkhofer  
	  	 Fax:                         
      (604) 893-2395  
	  	 
	 RLP  	 Red Mile Resources No. 1 Limited Partnership  
	  	 c/o Wilshire (GP) No. 1 Corporation  
	  	 Suite 920 – 1040 West Georgia Street  
	  	 Vancouver, British Columbia  
	  	 V6E 4H1  
	  	 Attention:              Robert
      C. Strother  
	  	 Fax:                         
      (604) 669-9485  
	 And:  	  
	  	 Attention:              Michael
      Simonetta  
	  	 Fax:                         
      (416) 920-1947  
	  	 
	 With a copy to:  	 Heenan Blaikie LLP  
	  	 P.O. Box 185  
	  	 Suite 2600, 200 Bay Street,  
	  	 South Tower, Royal Bank Plaza  
	  	 Toronto, Ontario  
	  	 M5J 2J4  
	  	 Attention:              Norman
      Bacal  
	  	 Fax:                         
      416 360-8425  
	  	 
	  	 
	 RMRF  	 Red Mile Resources Fund Limited Partnership  
	  	 c/o Red Mile Resources Inc.  
	  	 Suite 620 – 1001 13th Avenue S.W., 
    
	  	 Calgary, Alberta  
	 	T2R 0L5
	 	Attention:          President
    
	 	Fax:                     
      (604) 669-9485

 - 12 - 

Any notice, direction or instrument aforesaid shall: 

	 	 (a)      	 if delivered, be deemed to have been given or made
        at the time of delivery; 

	 
	 	 (b)      	 if sent by facsimile or other telecommunication
        device or other similar form of communication, be deemed to have been
        given or made on the day following the Business Day on which it was sent.
      

 Any party may give written notice of change of address in
  the same manner, in which event such notice or communication shall thereafter
  be given to it as above provided at such changed address. 

 5.4         
  Assignment and Enurement 

 This Agreement shall not be assignable by Optionee without
  the prior written consent of RLP and RMRF. RMRF may not assign its interest
  in RLP without the prior written consent of Optionee. Where Optionee exercises
  the Call Option, RLP may exercise its right to assign the NPI to RMRF prior
  to the purchase by Optionee from RMRF of its limited partnership units of RLP.
  This Agreement shall enure to the benefit of and shall be binding upon Optionee
  and its successors and assigns and upon RLP, RMRF and the respective heirs,
  executors, successors and assigns of each Partner, as the case may be. 

 5.5         
  No Partnership 

 The parties do not hereby intend to create, and this Agreement
  shall not be construed as creating, a partnership or to render parties liable
  as partners.

 5.6         
  No Waiver 

 No failure on the part of Optionee, RMRF or RLP in exercising
  any right or remedy hereunder shall operate as a waiver thereof, nor shall any
  single or partial exercise of any such right or remedy, preclude any other or
  further exercise thereof or the exercise of any other right or remedy of law
  or in equity or otherwise. Except as otherwise expressly provided herein, no
  waiver of any provision of this Agreement, including this Section, shall be
  effective otherwise than by an instrument in writing executed by duly authorized
  representatives of the party making such waiver. 

 5.7         
  Further Assurances 

 The parties hereto shall, at the expense of Optionee, execute
  and deliver such further and other assurances, deeds, acts and conveyances as
  may be necessary to properly carry out the intention of this Agreement and the
  transactions contemplated hereby. 

 - 13 - 

 5.8          Severability
  

 If any provision of this Agreement is determined by a court
  of competent jurisdiction to be invalid or unenforceable in whole or in part,
  such invalidity or unenforceability shall attach only to such provision or part
  thereof and the remaining part of such provision and all other provisions hereof
  shall continue in full force and effect. 

 5.9         
  Applicable Law 

 This Agreement shall be governed by and construed in accordance
  with the laws of the Province of British Columbia, and the federal laws of Canada
  applicable therein, and Optionee and RLP each hereby irrevocably attorn to the
  jurisdiction of the courts of the Province of British Columbia.

 5.10         Amendment
  

 This Agreement may only be amended by agreement in writing
  duly executed by Optionee, RMRF and RLP. 

 5.11         Counterparts
  

 This Agreement may be extended in several counterparts, each
  of the counterparts shall be deemed to be an original and together shall consolidate
  one and the same thereof. 

 5.12         Time
  of the Essence 

 Time shall be the essence of this Agreement.

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 - 14 - 

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

	 	 688888 B.C. LTD. 
      

	 	
	 

	 	By: 
	

	 	
	

	 	By: 
	

	 	
	 

	 	
	 

	 	 WILSHIRE (GP) NO. 2 CORPORATION,
        in its own capacity and in its capacity as general partner on behalf of
        all the limited partners of RED MILE RESOURCES NO. 2 LIMITED
        PARTNERSHIP 

	 	
	

	 	By: 
	

	 	
	

	 	
	 

	 	 RED MILE RESOURCES INC.,
        in its own capacity and in its capacity as general partner on behalf
        of all the limited partners of RED MILE RESOURCES FUND LIMITED
        PARTNERSHIP

	 	
	 

	 	By: 
	
      

- 15 - 

SCHEDULE A 

 FORM OF PAYOUT NOTICE UNDER SUBSECTION 2.6(2)
  

  TO THE ROYALTY AGREEMENT EXECUTED SEPTEMBER 29, 2004, EFFECTIVE

  JUNE 15, 2004 AMONG GIBRALTOR MINES LTD., RED MILE RESOURCES FUND 

  LIMITED PARTNERSHIPAND RED MILE RESOURCES NO. 2 LIMITED

  PARTNERSHIP (THE “ROYALTY AGREEMENT”) 

 Re:      Payout Notice 

              under Subsection
  2.6(2) of the Royalty Agreement 

 Unless otherwise defined in this Schedule, all capitalized
  terms used herein, shall have the meanings ascribed to them in the Royalty Agreement.

 We hereby confirm that as of December 31, 20___, the Payout
  Amount is $[_________ ] ________________ , calculated as set out below:

	 Payout Amount Calculation Date:  	 
	 	 
	 Purchase Price:  	 
	 	 
	 Payout Amount:  	 

	 Is Payout Amount < 72% of the Purchase Price? 
    	 ̈	 ̈	 
	  	 Yes*	 No	 
	  	 	 	 
	* If yes, is RMRF concurrently delivering an Option Period
      Notice?  	 ̈	 ̈	 
	  	 Yes	 No	 
	  	 	 	 
	 Is Payout Amount < 15% of the Purchase Price? 
    	 ̈	 ̈	 
	  	 Yes**	 No	 

 ** If yes, then RLP hereby notifies Optionee that Optionee
  has the right to exercise its Call Option in accordance with Subsection 2.1(3)(a)
  of the Call Option Agreement. 

- 16 - 

SCHEDULE B 

VALMIN GUIDELINES OF CIM 

TO THE ROYALTY AGREEMENT 

      EXECUTED SEPTEMBER 29, 2004,
  EFFECTIVE JUNE 15, 2004 AMONG 

  GIBRALTOR MINES LTD., RED MILE RESOURCES FUND LIMITED PARTNERSHIP 

AND RED MILE RESOURCES NO. 2 LIMITED PARTNERSHIPFiled by Automated Filing Services Inc. (604) 609-0244 - Taseko Mines Limited - Exhibit 10.5

 FUNDING AGREEMENT 

THIS AGREEMENT dated the 29th of day September, 2004. 

B E T W E E N: 

  
    
       GIBRALTAR MINES LTD., a corporation incorporated
        pursuant to the laws of the Province of British Columbia 

       (hereinafter called the “Resource Company”)
      

    

  

 -and- 

  
    
       WILSHIRE FINANCIAL SERVICES INC.,
        a corporation incorporated pursuant to the laws of the Province of Alberta
      

       (hereinafter called the “Wilshire”)
      

    

  

WHEREAS: 

	 A.      	 Pursuant to the terms of a put/call option agreement
        (the “Put/Call Agreement”), dated June 15, 2004, as
        amended September 29, 2004, between Wilshire and Alberta Capital Trust
        Corporation (“Alberta Trust”), Wilshire has been granted
        an option to purchase or may be required to purchase certain indebtedness
        due and owing to Alberta Trust. 

	 
	 B.      	 Resource Company has agreed to make available to
        Wilshire a credit facility which may be drawn upon from time to time to
        assist Wilshire in satisfying its obligations pursuant to the Put/Call
        Agreement on the terms and conditions set out in this Agreement. 

 NOW THEREFORE, in consideration of the mutual covenants
  and premises contained herein and for other good and valuable consideration
  (the receipt and sufficiency of which are hereby acknowledged), the parties
  hereby agree as follows: 

 ARTICLE 1 

  INTERPRETATION

	 1.1      	 Computation of Time Periods. 
	 
	 	 In this Agreement, in the computation of periods
        of time from a specified date to a later specified date, unless otherwise
        expressly stated, the word “from” means “from and including”
        and the words “to” and “until” each mean “to
        but excluding”. 

	 
	 1.2      	 Singular, Plural, etc. 

	 
	 	 As used herein, each gender shall include all genders,
        and the singular shall include the plural and the plural shall include
        the singular as the context shall require. 

 

	 1.3      	 Currency. 

	 
	 	 Unless otherwise expressly stated, any reference
        herein to any sum of money shall be construed as a reference to lawful
        currency of Canada. 

	 
	 1.4      	 Time. 

	 
	 	 Unless otherwise expressly stated, any reference
        herein to time shall be construed as a reference to the local time in
        Calgary, Alberta. 

	 
	 1.5      	 Governing Law. 

	 
	 	 This Agreement shall be governed by and construed
        in accordance with the laws of the Province of Alberta and the laws of
        Canada applicable therein and each party hereby irrevocably attorns to
        the jurisdiction of the courts of the Province of Alberta. 

	 
	 1.6      	 Entire Agreement. 

	 
	 	 This Agreement constitutes the entire agreement
        between Wilshire and Resource Company in connection with the credit facility
        created hereunder and supersedes all prior agreements, whether oral or
        written, between Wilshire and Resource Company in respect of the transactions
        contemplated hereby. 

	 
	 1.7      	 Severability. 

	 
	 	 If any one or more of the provisions of this Agreement
        shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
        legality and enforceability of such provision in any other jurisdiction
        and the validity, legality and enforceability of any other provision hereof
        shall not in any way be affected or impaired. 

 ARTICLE 2

  THE LOAN

	 2.1      	 Credit Facility. 

	 
	 	 Subject to the terms and conditions hereof, Resource
        Company agrees to establish a credit facility in favour of Wilshire (the
        “Loan”) up to a maximum aggregate amount at any time
        equal to the amounts of indebtedness owing by Alberta Trust to Resource
        Company evidenced by the Promissory Note as defined in the Funding Pledge
        Agreement (as hereinafter defined) (the “Loan Maximum”),
        provided that all conditions precedent to the Loan have been satisfied
        and there exists no Event of Default (as hereinafter defined) that has
        not been waived by Resource Company. 

	 
	 2.2      	 Repayment. 

	 
	 	 Wilshire agrees to repay the Advance (as hereinafter
        defined) (the “Indebtedness”) to Resource Company by
        no later than December 31, 2014 (the “Maturity Date”)
        and, 

 2 

 

	 	 upon repayment by Wilshire to Resource Company of
        the Indebtedness, Resource Company shall surrender the Promissory Note
        (as hereinafter defined) to Wilshire. 

	 
	 2.3      	 Advance. 

	 
	 	 Subject to the terms of a Funding Pledge Agreement
        among Resource Company, Wilshire and Alberta Trust entered into on the
        date hereof (the “Funding Pledge Agreement”), Resource
        Company agrees to advance or cause to be advanced such amounts up to the
        Loan Maximum in effect at that time to Wilshire on such date or dates
        as Wilshire may request after receipt of a Put Notice a Call Notice or
        a notice pursuant to section 2.4 of the Put/Call Agreement, as the case
        may be, as defined in and pursuant to the Put/Call Agreement; provided
        that each request for an advance (an “Advance”) shall
        be made by Wilshire in writing and delivered to Resource Company five
        (5) business days prior to the date of such Advance. Wilshire acknowledges
        and agrees that the Advance to be made by Resource Company hereunder may
        be made and satisfied exclusively by endorsing and transferring the Promissory
        Note or by assigning the Note Proceeds (as such term is defined in the
        Funding Pledge Agreement) notwithstanding any security interest in the
        Note Proceeds and that Resource Company shall have no other liability
        or obligations in respect of the making or other satisfaction of the Advance
        hereunder and such endorsement or assignment shall constitute an Advance
        hereunder. Such payment shall be made without recourse to Resource Company
        and shall be valid notwithstanding the insolvency or bankruptcy of Alberta
        Trust or any other circumstance which results in the obligations of Alberta
        Trust being invalid or unenforceable. 

	 
	 2.4      	 Use of Proceeds. 

	 
	 	 Wilshire covenants and agrees that it shall only
        use the proceeds of the Advance exclusively to satisfy its obligations
        to Alberta Trust under the Put/Call Agreement. 

	 
	 2.5      	 Security. 

	 
	 	 Resource Company hereby agrees to enter into the
        Funding Pledge Agreement in order to provide security for its obligations
        to make the Advance hereunder. The parties further agree to execute and
        deliver such documentation as may be required by Wilshire and Alberta
        Trust to enable Wilshire and Alberta Trust to perfect the security interest
        in such instrument or instruments. 

	 
	 2.6      	 Promissory Note. 

	 
	 	 As evidence of the Indebtedness, Wilshire shall
        deliver to Resource Company a promissory note (the “Promissory
        Note”) in the form set out in Schedule “A” hereto.
        The Promissory Note shall be non-negotiable. 

	 
	 2.7      	 Interest. 

	 
	 	 The Advance shall bear interest from the date of
        the Advance at a rate per annum equal to six percent (6%) calculated daily
        and payable in arrears annually on February 15 of each 

 3 

 

	 	year by cheque or other form of negotiable instrument
        acceptable to Resource Company until such Advance is paid in full. 

ARTICLE 3 

  REPRESENTATIONS AND WARRANTIES

	 3.1      	 Representations and Warranties of Wilshire.
      

	 
	 	 Wilshire hereby represents and warrants
        to Resource Company as follows and acknowledges that Resource Company
        is relying on such representations and warranties without independent
        inquiry in entering into this Agreement and that such representations
        and warranties shall be continuing representations and warranties until
        repayment in full of the Indebtedness and shall be deemed to be made as
        of the date of each request for an Advance hereunder: 

	 
	 	 (a)     
      
	 Formation. Wilshire is a corporation formed
        under the laws of the Province of Alberta and is duly qualified or licensed
        to do business in all jurisdictions in which such qualification or licences
        are required at the date hereof in view of the business carried on by
        it and the assets which its owns; 

	 
	 	 (b)      
	 Corporate Power. Wilshire has full power
        and authority to borrow the Loan and to execute, deliver and perform all
        of its obligations under this Agreement and any other instrument or agreement
        required or referred to hereunder; 

	 
	 	 (c)      
	 Corporate Proceedings. All acts and proceedings
        on the part of Wilshire necessary for the authorization, execution, delivery
        and performance of this Agreement and any other instrument or agreement
        of Wilshire required or referred to hereunder have been duly taken; 

	 
	 	 (d)      
	 Due Execution and Enforceability. Each of
        this Agreement and any other instrument or agreement of Wilshire required
        or referred to hereunder has been duly authorized, executed and delivered
        by Wilshire and constitutes a legal, valid and binding obligation of Wilshire
        enforceable against it in accordance with its terms, subject to bankruptcy,
        insolvency, arrangement and the laws generally affecting the enforceability
        of creditors’ rights (other than those pertaining to fraudulent
        assignments and preferences) and the availability, in the discretion of
        a court of competent jurisdiction, of equitable remedies; 

	 
	 	 (e)      
	 No Contravention. There is no provision of
        Wilshire’s constating documents and no provision of any indenture
        or agreement, written or oral, to which Wilshire is a party or under which
        Wilshire is obligated, nor is there, to the best of the knowledge of Wilshire,
        any statute, rule or regulation, or any judgment, decree or order of any
        court or agency binding on Wilshire which would be contravened by the
        execution and delivery of this Agreement or any other instrument, agreement
        or document required or referred to hereunder, or by the performance of
        any provision, condition, covenant or other term hereof or thereof; and
      

 4 

 

	 	 (f)     
      
	 No Litigation. There is no matter, litigation,
        tax claim, proceeding or dispute pending or, to the knowledge of Wilshire,
        threatened against or affecting Wilshire or its property, the adverse
        determination of which might materially and adversely affect Wilshire’s
        financial condition or operations or impair Wilshire’s ability to
        perform its obligations hereunder. 

	 
	 	 (g)      
	 Conduct of Business in Ordinary Course. Wilshire
        carries on the business of providing consulting and management services
        to Red Miles Resources Fund Limited Partnership (“RMRF”)
        and certain other limited partnerships in which RMRF is or will become
        a limited partner (the “Business”). The Business is
        the only business operation carried on by Wilshire. 

	 
	 3.2      	 Survival. 

	 
	 	 The representations and warranties made
        by Wilshire in this Agreement shall survive the completion of the transactions
        contemplated by this Agreement and shall continue in full force and effect
        thereafter until such time as the Indebtedness has been repaid in full.
      

	 
	 3.3      	 Representations and Warranties of Resource
        Company. 

	 
	 	 Resource Company represents and warrants
        to Wilshire as follows, and acknowledges that Wilshire is relying thereon
        without independent inquiry in entering into this Agreement: 

	 
	 	 (a)      
	 Formation and Issuance. Resource Company
        is a corporation incorporated pursuant to the laws of the Province of
        British Columbia and has the right to enter into and perform its obligations
        hereunder; 

	 
	 	 (b)      
	 Corporate Power. Lender has the full corporate
        right, power and authority to enter into and perform its obligations under
        this Agreement and any other instrument or agreement required or referred
        to hereunder; 

	 
	 	 (c)      
	 No Litigation. There is no matter, litigation,
        tax claim, proceeding or dispute pending or, to the knowledge of Resource
        Company, threatened against or affecting Resource Company or its property,
        the adverse determination of which might materially and adversely affect
        Resource Company’s financial condition or operations or impair Resource
        Company’s ability to perform its obligations hereunder; and 

	 
	 	 (d)      
	 Due Execution and Enforceability. This Agreement
        has been duly executed and delivered by Resource Company and constitutes
        a legal, valid and binding obligation of Resource Company, enforceable
        against it in accordance with its terms, subject to bankruptcy, insolvency,
        arrangement and the laws generally affecting the enforceability of creditors’
        rights (other than those pertaining to fraudulent assignments and preferences)
        and the availability, in the discretion of a court of competent jurisdiction,
        of equitable remedies. 

 5 

 

	 3.4      	 Survival of Representations and Warranties. 
	 
	 	 The representations and warranties made by Resource
        Company in this Agreement shall remain in full force and effect so long
        as and shall be deemed to be repeated by Resource Company on each day
        Resource Company shall have any obligation to Wilshire hereunder. 

 ARTICLE 4 

  COVENANTS OF WILSHIRE

	 4.1      	 Positive Covenants. 

	 
	 	 From and after the time that any amounts
        are owing by Wilshire hereunder, Wilshire covenants and agrees that: 

	 
	 	 (a)     
      
	 Keep Proper Books. It shall keep accurate
        and complete books of account and records in which full and current entries
        shall be made of all financial transactions, assets and business of Wilshire
        and permit representatives of Resource Company access thereto at all reasonable
        times to inspect such books and records and to make extracts therefrom
        or copies thereof; 

	 
	 	 (b)      
	 Use of Proceeds. It shall use the proceeds
        of any Advance exclusively for the purposes of satisfying its obligations
        to Alberta Trust under the Put/Call Agreement; 

	 
	 	 (c)      
	 Maintain Corporate Existence. It shall preserve
        and maintain its corporate existence, rights, privileges, and other authority
        necessary for the conduct of its business; 

	 
	 	 (d)      
	 Comply with Laws. It shall comply in all
        material respects with all laws, regulations and orders applicable to
        Wilshire and its properties and assets and duly observe all material requirements
        of governmental authorities and all statutes and regulations, relating
        to its business and affairs; 

	 
	 	 (e)      
	 Pay all Taxes. It shall pay or cause to be
        paid all rents, taxes, rates, levies or assessments, fees or dues lawfully
        levied, assessed or imposed upon its property and assets or any part thereof
        as and when the same shall become due and payable prior to any penalties
        accruing thereon unless and to the extent only that: (i) the same shall
        be contested in good faith and by appropriate proceedings in such a manner
        as not to cause any materially adverse effect upon its financial condition;
        or (ii) adequate reserves shall have been set aside on its books; 

	 
	 	 (f)      
	 Perform all Obligations. It shall observe
        and perform all of its respective obligations in all matters and things
        necessary or expedient to be done, in order to preserve, protect and maintain
        all the rights of Resource Company; 

	 
	 	 (g)      
	 Notify Resource Company. It shall notify
        Resource Company promptly in writing of: 

 6 

 

	 	 	(i)
	 any proceeding or litigation against Wilshire which
        could have a material and adverse effect on Wilshire; 

	 
	 	 	(ii) 
	 any material adverse change in the financial position
        or operations of Wilshire; 

	 
	 	 	(iii)
	 a breach of, or non-compliance with, any term, condition
        or covenant contained in this Agreement or any other document required
        or referred to hereunder; 

	 
	 	 	(iv)
	 the happening of an Event of Default (as hereinafter
        defined) or a potential Event of Default and, upon demand, deliver a certificate,
        in form and substance satisfactory to Resource Company, certifying that
        no Event of Default has occurred or, if an Event of Default has occurred,
        specifying all details and their nature and status; and 

	 
	 	 	(v)
	 any material change in the direct or indirect ownership
        or control of Wilshire. 

	 
	 	 (h)      
	 Financing Statements.
        From time to time at Resource Company’s request and in a form and
        substance satisfactory to Resource Company, Wilshire shall execute and
        promptly deliver to Resource Company for filing, financing statements,
        assignments of financing statements and any other documents or instruments
        that Resource Company may reasonably request, including, without limitation,
        subordination and postponement agreements in connection with perfecting,
        preserving or enforcing Resource Company’s security interest hereunder
        and with respect to any jurisdictions which Resource Company may designate.
        Furthermore, Wilshire agrees that, if it does not promptly comply with
        Resource Company’s requests hereunder, Resource Company is irrevocably
        authorized to prepare, execute and file such documents and instructions
        on its behalf as its attorney-in-fact, coupled with an interest; 

	 
	 	 (i)      
	 Cure Defects. It shall
        promptly cure, or cause to be cured, any defects in the execution and
        delivery of this Agreement or any of the other agreements, instruments
        or documents contemplated hereby or executed pursuant hereto and execute
        and deliver, or cause to be executed and delivered, all such agreements,
        instruments and other documents as Resource Company, acting reasonably,
        may consider necessary or desirable for the foregoing purposes and make
        all necessary filings and recordings for the foregoing purposes; and 

	 
	 	 (j)      
	 Pay All Amounts. It
        shall duly and punctually pay or cause to be paid to Resource Company
        all amounts payable by it hereunder at the dates and places, in the currencies
        and in the manner set forth herein. 

	 
	 4.2      	 Negative Covenants.
      

	 
	 	 From and after the time that
        any amounts are owing hereunder, Wilshire shall not do any of the following,
        without the prior written consent of Resource Company: 

 7 

 

	 	(a) 
	 Issue Interests. Issue any interest in Wilshire
        or its capital or any rights, warrants or options to acquire any interest
        in Wilshire or its capital; 

	 
	 	(b) 
	 Create Security Interest. Make any assignment,
        create, assume or suffer to exist any security interest, mortgage, pledge,
        encumbrance, assignment, lien or charge of any kind upon its property
        other than any Permitted Encumbrances (as such term is defined in Section
        4.3 below); 

	 
	 	(c) 
	 Sell Assets. Sell, lease, abandon, exchange
        or otherwise dispose of, directly or indirectly, any material assets or
        undertakings of Wilshire; 

	 
	 	(d) 
	 Consolidate, Merge, etc. Take any step, act
        or proceeding, including, but not limited to, any sale or disposition
        of any property or assets of Wilshire, for the purposes of or leading
        to the consolidation, amalgamation, merger, liquidation, dissolution or
        winding-up of Wilshire, if the result of such activity will have an adverse
        or detrimental effect on Resource Company; or 

	 
	 	(e)
	 File Articles of Amendment. Amend or revoke
        the articles or by-laws of Wilshire in whole or in part or enact any additional
        by-law if the result of such activity will have an adverse or detrimental
        effect on Resource Company . 

	 
	 	(f) 
	 Conduct Business in the Ordinary Course.
        Conduct any business other than the Business. 

	 
	 4.3      	 Acknowledgement of Lender.
      

	 
	 	 Resource Company hereby acknowledges
        that Wilshire may be entering into similar financing arrangements with
        other entities for the same purposes as the present facility, and Resource
        Company hereby consents to such borrowings and to the creation of any
        encumbrances in connection with such facilities (the “Permitted
        Encumbrances”) including, without limitation, the grant of the
        security interest to Alberta Trust under Section 5 of the Funding Pledge
        Agreement and acknowledges that Wilshire has granted a general security
        interest in favour of RMRF to secure its obligations under the management
        services agreement, dated as of June 15, 2004 between RMRF and Wilshire,
        which shall be a Permitted Encumbrance for the purposes of this Agreement.
      

 ARTICLE 5

  INDEMNITY

	 5.1      	 Indemnity. 
	 
	 	 Wilshire hereby indemnifies and saves Resource Company,
        its directors, officers, employees and agents harmless from and against
        any claims, demands, actions, causes of actions, damages, losses, and
        liabilities which may be made or brought against or suffered or incurred
        as a result of, in respect of or arising out of any incorrectness in or
        breach of any representation or warranty on the part of Wilshire set out
        herein, such indemnity to survive the termination hereof. 

 8 

 ARTICLE 6 

  CONDITIONS OF LENDING

	 6.1     
      
	 Condition Precedent to Advance.
      

	 
	 	 The obligation of Resource Company to
        make the Advance is subject to the satisfaction of the following terms
        and conditions precedent which are included herein for the sole benefit
        of Resource Company and which may be waived, at any time, in whole or
        in part, only by Resource Company: 

	 
	 	 (a)      
	 the representations and warranties contained
        in this Agreement shall be true and correct in all material respects as
        of such date with the same effect as though such representations and warranties
        had been made on and as of such date; 

	 
	 	 (b)      
	 no potential Event of Default or Event
        of Default will have occurred or be continuing, and Wilshire shall have
        been duly performing its obligations hereunder; 

	 
	 	 (c)      
	 Resource Company shall have received on
        or prior to the initial Advance: 

	 
	 	 	 (i)     
      
	 certified copies of the charter documents and by-laws
        of Wilshire and of the resolutions of the board of directors of Wilshire
        approving this Agreement; 

	 
	 	 	 (ii)      
	 a certificate of good standing with respect to Wilshire
        issued by the appropriate government officials of the jurisdiction of
        its incorporation; 

	 
	 	 	 (iii)      
	 a certificate from an authorized officer of Wilshire
        in a form satisfactory to Resource Company and its counsel providing that,
        as of the date of such certificate, this Agreement is in full force and
        effect, unamended, have been complied with to date and there exists no
        defaults hereunder; 

	 
	 	 	 (iv)      
	 an executed copy of the Promissory Note in the form
        of Schedule “A”; 

	 
	 	 (d)      
	 all legal matters relating to this Agreement
        and the transactions contemplated herein shall be satisfactory to counsel
        to Resource Company. 

	 
	 	 (e)      
	 Red Mile Resources No. 2 Limited Partnership
        (“RLP”) has fully satisfied its obligations under Subsection
        2.2 of the royalty agreement between RLP and the Resource Company dated
        September 29, 2004 effective as of June 15, 2004. 

      ARTICLE 7

  EVENTS OF DEFAULT

	 7.1      	 Events of Default. 
	 
	 	 If any one or more of the following events (an “Event
        of Default”) occurs after Resource Company has made an Advance,
        then Resource Company may declare the Indebtedness 

 9 

 

	 	 and all accrued
        and unpaid interest and fees, if any, together with all other sums due
        and payable by Wilshire hereunder, to be immediately due and payable,
        without any   declaration or other act on the part of Resource Company.

	 	  	 	 
	 	 (a)  
	 if Wilshire makes
        default in the observance or performance of any material written covenant
        or undertaking given by Wilshire to Resource Company contained herein
        or if any material representation or warranty made by Wilshire to Resource
        Company is untrue or incorrect in a material respect and such default
        remains unremedied for 20 business days after Wilshire has received notice
        of such default;

	 	  	 	 
	 	 (b)  
	 if Wilshire makes
        an assignment and or bulk sale of its assets;

	 	  	 	 
	 	 (c)  
	 if Wilshire admits
        its inability to pay its debts generally as they become due or otherwise
        acknowledges its insolvency;

	 	  	 	 
	 	 (d)  
	 if Wilshire institutes
        any proceeding or takes any corporate action or executes any agreement
        to authorize its participation in or commencement of any proceeding:

	 	  	 	 
	 	  	 (i)  
	 seeking to adjudicate it a bankrupt or
        insolvent; or

	 	  	 	 
	 	  	 (ii)  
	 seeking liquidation, dissolution, winding
        up, reorganization, arrangement, protection, relief or composition of
        it or any of its property or debt or making a proposal with respect to
        it under any law relating to bankruptcy, insolvency, reorganization or
        compromise of debts or other similar laws (including, without limitation,
        any application under the Companies’ Creditors Arrangement
        Act (Canada) or any reorganization, arrangement or compromise of debt
        under the laws of its jurisdiction of incorporation);

	 	  	 	 
	 	 (e)  
	 if any proceeding
        is commenced against or affecting Wilshire:

	 	  	 	 
	 	  	 (i)  
	 seeking to adjudicate it a bankrupt or
        insolvent;

	 	  	 	 
	 	  	 (ii)  
	 seeking liquidation, dissolution, winding
        up, reorganization, arrangement, protection, relief or composition of
        it or any of its property or debt or making a proposal with respect to
        it under any law relating to bankruptcy, insolvency, reorganization or
        compromise of debts or other similar laws (including, without limitation,
        any reorganization, arrangement or compromise of debt under the laws of
        its jurisdiction of incorporation); or 

	 	  	 	 
	 	  	 (iii)  
	 seeking appointment of a receiver, trustee,
        agent, custodian or other similar official for it or for any substantial
        part of its properties and assets;

	 	  	 	 
	 	  	 unless such proceeding
        is being contested actively and diligently in good faith by appropriate
        and timely proceedings and is dismissed, vacated or within 30 days of
        institution;

 10 

 

	 	 (f)      	 if any execution, distress or other enforcement
        process, whether by court order or otherwise, becomes enforceable against
        any substantial part of the property of Wilshire; or 

	 
	 	 (g)      	 if Wilshire ceases or threatens to cease to carry
        on business in the ordinary course, except where such cessation occurs
        in connection with an amalgamation, transfer of assets or other reorganization
        which is effected in accordance with the provisions hereof. 

     ARTICLE 8

  MISCELLANEOUS

	 8.1      	 Counterparts. 

	 
	 	 This Agreement may be executed in counterparts,
        each of which shall be deemed an original and all of which, taken together,
        shall constitute one and the same instrument. Delivery of an executed
        counterpart of this Agreement by facsimile shall be equally effective
        as delivery of a manually executed counterpart thereof. Any party delivering
        an executed counterpart by facsimile shall also deliver a manually executed
        counterpart of this Agreement, but failure to do so shall not affect the
        validity, enforceability, or binding effect hereof. 

	 
	 8.2      	 Further Assurances. 

	 
	 	 Each of the parties agrees to promptly do, make,
        execute, deliver or cause to be done, made, executed or delivered all
        such further acts, documents and things as the other party may reasonably
        require for the purpose of giving full force and effect to this Agreement.
      

	 
	 8.3      	 Time of the Essence. 

	 
	 	 Time shall be of the essence of this Agreement.
      

	 
	 8.4      	 No Partnership. 

	 
	 	 Nothing in this Agreement shall be deemed to constitute
        a partnership or joint venture among the parties hereto. No party shall
        have the right to incur any debts nor make any commitments for any other
        party. 

	 
	 8.5      	 Notices. 

	 
	 	 All notices given hereunder must be in writing and
        may be delivered by personal delivery or by pre-paid, registered or certified
        mail, telecopier or facsimile transmission to the following address or
        to such other address or addresses as the parties hereto advise the other
        parties in writing from time to time and shall be deemed received three
        days after mailing by registered or certified mail, and 24 hours after
        delivery by telecopier or facsimile transmission: 

	 	(a)	To Resource Company:

 11 

 

	 	 	 Gibraltar Mines Ltd. 
	 
	 	 	 1020 – 800 W. Pender St. 

      Vancouver, British Columbia 

      V6V 2V6 
	 
	 	 	 Attention: President 

      Facsimile No.: (604) 681-2741 
	 
	 	 	 With a copy to: 
	 
	 	 	 Lang Michener LLP 

      1500 Royal Centre 

      P.O. Box 11117 

      1055 West Georgia Street 

      Vancouver, British Columbia V6E 4N7 
	 
	 	 	 Attention: Bernard J. Zinkhofer 

      Fax: (604) 893-2395 
	 
	 	 (b)      	 To Wilshire: 
	 
	 	 	 Wilshire Financial Services Inc. 
	 
	 	 	 Suite 920, 1040 West Georgia Street 

      Vancouver, British Columbia 

      V6E 4H1 
	 
	 	 	 Attention: Robert C. Strother 

      Fax No.: (604) 669-9485 
	 
	 	 	 And: 
	 
	 	 	 Michael Simonetta 

      Fax: (416) 920-1947 
	 	 	 
	8.6 	Assignment. 

       This Agreement shall be binding upon and enure to the
        benefit of the Resource Company and Wilshire and their respective successors
        and assigns. Neither party may assign or transfer its respective rights
        hereunder without the prior written consent of the other party.

12 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

 13 

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

	 	 GIBRALTAR MINES LTD.  
	 	 	 
	 	 	 
	 	By: 	  
	 	 	 
	 	 	 
	 	 WILSHIRE FINANCIAL SERVICES INC. 
    
	 	 	 
	 	 	 
	 	By: 	  
	 	 	 
	 	 	 
	 	By: 	  

 14 

 SCHEDULE A 

 PROMISSORY NOTE 

 FOR VALUE RECEIVED, the undersigned, Wilshire Financial
  Services Inc., a corporation incorporated pursuant to the laws of the Province
  of Alberta (“Wilshire”), hereby acknowledges itself indebted
  to Gibraltar Mines Ltd., a corporation incorporated pursuant to the laws
  of the Province of Alberta (the “Resource Company”), and
  unconditionally promises to pay to or to the order of Resource Company, or as
  otherwise may be directed in writing by Resource Company, the unpaid principal
  balance of the advance made to the undersigned equal to $z(the “Advance”),
  together with any interest and any other payments due, pursuant to a funding
  agreement (the “Funding Agreement”) dated as of the date
  hereof, between Resource Company and the undersigned (the “Note”).

 Wilshire promises to pay interest at a rate of 6% per annum
  on the outstanding principal amount of the Advance from the date hereof calculated
  daily and due and payable by cheque in arrears in instalments on or before February
  15th of each year after the date of the Advance, until and including
  February 15, 2014, plus one final instalment due and payable by cheque on December
  31, 2014. 

 This Note evidences indebtedness incurred under, and is subject
  to, the terms and conditions of the Funding Agreement and all amendments thereto.
  This Note is not negotiable, except in accordance with the Funding Agreement.
  This Note shall be governed by and construed in accordance with the laws of
  the Province of Alberta and the laws of Canada applicable therein. 

 The undersigned hereby waives demand, presentment, protest
  and notice of any kind and description and waives any defenses based on any
  and all indulgences and forebearances which may be granted by the holder. 

 The undersigned agrees to pay all recoverable out-of-pocket
  costs and expenses in connection with the enforcement of this Note (including
  reasonable fees and out-of-pocket expenses of counsel to Resource Company) and
  including, without limitation, all post-judgment, post-maturity and post-default
  costs incurred by Resource Company. 

	 	 WILSHIRE FINANCIAL SERVICES INC. 
    
	 	 	 
	 	 	 
	 	By: 	  
	 	 	 
	 	 	 
	 	By: 	  

 15

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