Document:

Unassociated Document

      Exhibit
10.42

       

    To:

    Western
Mesquite Mines, Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Treasurer

    

    Western
Goldfields Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Chief Financial Officer

    

    Western
Goldfields (USA) Inc.

    2 Bloor
Street West

    Suite
2102

    Box
110

    Toronto,
Ontario

    Canada

    M4 W
3E2

    Attention:
Chief Financial Officer

    

    9 January
2009

    

    Western Mesquite Mines, Inc.
– Fuel Price Hedging

    

    US$105,000,000
credit agreement originally dated 30 March 2007 (as amended and restated by an
amendment and restatement agreement dated 31 May 2007 and as further amended on
29 June 2007, 16 July 2007, 14 August 2007, 14 August 2008 and 18 December 2008)
between Western Mesquite Mines, Inc. as Borrower, Western Goldfields (USA) Inc.
(formerly known as Western Goldfields, Inc.) as Guarantor, Investec Bank (UK)
Limited as Agent, Mandated Lead Arranger and Security Trustee, Commonwealth Bank
of Australia as Lead Arranger, the Banks (as defined therein) and the Hedging
Banks (as defined therein) (the “Credit Agreement”)

    
      
         

      

      
        Page
1

        
          

        

      

      
         

      

    

    

    
      	
              1

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

            

    

    

    
      	
              2

            	
              The
      Agent (acting on the instructions of the Majority Banks) hereby consents
      to the fuel price hedging Derivative Transactions (the Fuel Price Hedging)
      entered or to be entered into by the Borrower
  with:

            

    

    

    
      	
            	
              (a)

            	
              Commonwealth
      Bank of Australia (CBA) pursuant to
      the ISDA Master Agreement between the Borrower and CBA dated as of 31 May
      2007, as amended by an amendment agreement (the CBA Amendment Agreement) dated 30
      December 2008; and

            

    

    

    
      	
            	
              (b)

            	
              The
      Bank of Nova Scotia (Scotia) (i)
      pursuant to the ISDA Master Agreement between the Borrower and Scotia
      dated as of 8 January 2009 and (ii) in accordance with an amendment
      agreement between the Borrower and Scotia dated 8 January 2009 relating to
      the ISDA Master Agreement between the Borrower and Scotia dated as of 15
      August 2007 ((i) and (ii) together the Scotia
  Agreements),

            

    

    

    (the CBA
Amendment Agreement and the Scotia Agreements, together being the Fuel Hedging Agreements)

    

    
      	
              3

            	
              In
      addition, and in order to give effect to the approval given in paragraph 2
      above, the Agent (acting on the instructions of the Majority Banks) and
      the other parties to this letter agree
that:

            

    

    

    
      	
            	
              (a)

            	
              the
      Fuel Hedging Agreements shall be
      Hedging Documents for the purposes of the Financing
    Documents;

            

    

    

    
      	
            	
              (b)

            	
              CBA
      and Scotia, in their capacities as hedge counterparties in respect of the
      Fuel Price Hedging shall be Hedging Banks for the purposes of the
      Financing Documents; and

            

    

    

    
      	
            	
              (c)

            	
              the
      obligations of the Borrower in respect of the Fuel Price Hedging shall be
      Secured Obligations for the purposes of the Financing Documents and the
      Approved Hedging Programme shall be amended by inserting the words
      “.other than its
      obligations under the Approved Fuel Hedging Derivative Transactions
      entered or to be entered into by the Borrower with Commonwealth Bank of
      Australia and The Bank of Nova Scotia (a) pursuant to an ISDA Master
      Agreement and schedule thereto between the Borrower and CBA dated as of 31
      May 2007, as amended by an amendment agreement dated 30 December 2008, in
      the case of Commonwealth Bank of Australia and (b) pursuant to a new ISDA
      Master Agreement and schedule thereto between the Borrower and The Bank of
      Nova Scotia dated as of 8 January 2009 and in accordance with an amendment
      agreement dated 8 January 2009 between the Borrower and The Bank of Nova
      Scotia relating to the existing ISDA Master Agreement and schedule thereto
      between the Borrower and The Bank of Nova Scotia dated as of 15 August
      2007, in the case of The Bank of Nova Scotia (in each case, as approved by
      the Agent (acting on the instructions of the Majority Banks)) pursuant to
      that certain letter agreement from the Agent to the Security Companies
      dated on or about 8 January 2009” after the words “...shall be
      unsecured...” in paragraph (c)(vi)(AA) of Schedule 14 (Approved Hedging
      Programme) to the Credit
Agreement.

            

    

    
      
         

      

      
        Page
2

        
          

        

      

      
         

      

    

    

    
      	
              4

            	
              The
      approval given in paragraph 2 above and the agreement in paragraph 3 will
      not come into effect until the Agent notifies the Borrower, CBA and Scotia
      in writing that it has received satisfactory board minutes of the
      Borrower, Western Goldfields (USA) Inc. and the Guarantor approving and
      authorizing the entry into the Fuel Hedging Agreements and the Fuel Price
      Hedging.

            

    

    

    
      	
              5

            	
              By
      the acceptance of this letter you agree to the repetition of the Repeating
      Representations by yourselves by reference to the facts and circumstances
      existing on the date of this
letter.

            

    

    

    
      	
              6

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

            

    

    

    
      	
            	
              (a)

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

            

    

    

    
      	
            	
              (b)

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

            

    

    

    
      	
              7

            	
              This
      letter is hereby designated as a Financing
  Document.

            

    

    

    
      	
              8

            	
              This
      letter shall be governed by and construed in accordance with English law.
      The courts of England have exclusive jurisdiction to settle any dispute
      arising out of or in connection with this letter (including a dispute
      regarding the existence, validity or termination of this
      letter).

            

    

    

    
      	
              9

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

            

    

    

    Please
indicate your acceptance of the terms and conditions of this letter by
countersigning the copy of this letter where indicated below.

    

    Yours
faithfully

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	/s/
      Serena Smulansky	
                                       

                                       

                                    	/s/
      George Rogers  
	Investec Bank (UK)
      Limited	 	Investec Bank (UK)
      Limited
	(as
      Agent on behalf of the Majority Banks)	 	(as
      Agent on behalf of the Majority Banks)
	Serena Smulansky	 	George Rogers
	

                                      Authorised Signatory

                                    	 	Authorised Signatory

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        Page
3

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    Accepted
      and agreed, on 9 January 2009

                  
	 
      
	/s/
      Brian
      Penny	 
      
	
                    Western
      Mesquite Mines, Inc.

                  
	 
      
	/s/
      Brian
      Penny	 
      
	
                    Western
      Goldfields Inc.

                  
	 
      
	/s/
      Brian
      Penny	 
      
	
                    Western
      Goldfields (USA)
Inc.

                  

          

        

      

    

     

    
      
         

      

      
        Page
4

        
          

        

      

      
         

      

    

    WESTERN
GOLDFIELDS INC.

    

    UNANIMOUS
WRITTEN CONSENT OF THE BOARD OF DIRECTORS

    

    December
29, 2008

    

    The
undersigned, being all the directors of Western Goldfields Inc. (the “Corporation”), by
their signatures, hereby consent, pursuant to the Business Corporations Act
(Ontario), to the following resolutions (the “Resolutions”):

    

    WHEREAS, Western Mesquite
Mines, Inc. (the “Borrower”) has
entered into and will enter into certain fuel hedging arrangements (the “Fuel Hedging
Arrangements”) with Commonwealth Bank of Australia (“CBA”) and The Bank of
Nova Scotia (“Scotia”);

    

    WHEREAS, the Borrower has
agreed with CBA and Scotia that the Borrower’s obligations under the Fuel
Hedging Arrangements will be supported by the security interests (the “Security Interests”)
created in connection with the US$105,000,000 credit agreement originally dated
30 March 2007 (as amended and restated by an amendment and restatement agreement
dated 31 May 2007 and as further amended on 29 June 2007, 16 July 2007, 14
August 2007, 14 August 2008 and 18 December 2008) among the Borrower, Western
Goldfields (USA) Inc. (formerly known as Western Goldfields, Inc.) as Guarantor,
Investec Bank (UK) Limited as Agent, Mandated Lead Arranger and Security
Trustee, Commonwealth Bank of Australia as Lead Arranger, the Banks (as defined
therein, the “Banks”) and the
Hedging Banks (as defined therein) (the “Credit
Agreement”);

    

    WHEREAS, the Credit Agreement,
the ISDA master agreement between the Borrower and CBA dated as of 31 May 2007
and the ISDA master agreement between the Borrower and Scotia dated as of 15
August 2007 (such ISDA master agreements, collectively, the “ISDA Master
Agreements”) must be amended (the “Amendments”) in order
for the Fuel Hedging Arrangements to be supported by the Security
Interests;

    

    WHEREAS, the Board of
Directors has determined that it is advisable and in the best interests of the
Corporation that the Borrower enter into the Fuel Hedging Arrangements and in
furtherance thereof that the Corporation execute, deliver and perform the
Amendments and consummate the transactions contemplated
thereunder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Approval of the
Amendments

    

    RESOLVED, that the forms,
terms and provisions of the Amendments (in the forms substantially similar to
that presented to the Board of Directors on December 29, 2008), the transactions
contemplated thereby, and the obligations pursuant thereto be, and they hereby
are, in all respects, authorized, approved and adopted; and further

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed on behalf of the Corporation
and in its name to execute and deliver, or cause to be executed and delivered,
the Amendments and such other agreements, instruments or certificates as such
officer(s) shall approve in connection with the Amendments from time to time
(with such approval conclusively evidenced by the execution and delivery, or
delivery, of such agreement, instrument or certificate), with such other changes
therein as the officer(s) shall, by the execution and delivery, or delivery,
thereof, approve, and to take all such other actions as such officer(s) deems
necessary or desirable to perform or otherwise carry out the terms and
conditions of the Amendments and the transactions contemplated therein; and
further

    

    Enabling Resolutions;
Ratification

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed to take all such further
action and to prepare, amend, revise, execute, deliver and file all such
agreements, instruments, documents and certificates, and to incur and pay such
expenses in the name, and on behalf, of the Corporation under its corporate seal
or otherwise as they, or any one of them, shall deem necessary, proper or
advisable in order to effectuate the transactions contemplated by these
resolutions, including any agreement executed by the Corporation in connection
with the Amendments, and otherwise to carry out the intent and effectuate the
purpose of each of the foregoing resolutions; and finally

    

    RESOLVED, that any action
taken by any of the officers of the Corporation prior to the adoption of these
resolutions which is within the authority conferred by the foregoing resolutions
is hereby ratified, approved and adopted.

    

    [Remainder
of page intentionally left blank]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the 29
day of December, 2008.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	/s/
      Randall
      Oliphant
	 
      	
                                Randall
      Oliphant

                              
	 	 
	 
      	 
      
	 
      	
                                Vahan
      Kololian

                              
	 	 
	 
      	 
      
	 
      	
                                Martyn
      Konig

                              
	 	 
	 
      	 
      
	 
      	
                                Gerald
      Ruth

                              
	 	 
	 
      	 
      
	 
      	
                                Raymond
      Threlkeld

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the 29
day of December, 2008.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      
	 
      	
                                Randall
      Oliphant

                              
	 	 
	 
      	/s/
      Vahan
      Kololian  
	 
      	
                                Vahan
      Kololian

                              
	 	 
	 
      	 
      
	 
      	
                                Martyn
      Konig

                              
	 
      	 
      
	 	 
	 
      	
                                Gerald
      Ruth

                              
	 
      	 
      
	 	 
	 
      	
                                Raymond
      Threlkeld

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the 29
day of December, 2008.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      
	 
      	
                                Randall
      Oliphant

                              
	 	 
	 
      	 
      
	 
      	
                                Vahan
      Kololian

                              
	 	 
	 
      	
                                /s/
      Martyn Konig 

                              
	 
      	
                                Martyn
      Konig

                              
	 	 
	 
      	 
      
	 
      	
                                Gerald
      Ruth

                              
	 	 
	 
      	 
      
	 
      	
                                Raymond
      Threlkeld

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the 29
day of December, 2008.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      
	 
      	
                                Randall
      Oliphant

                              
	 	 
	 
      	 
      
	 
      	
                                Vahan
      Kololian

                              
	 	 
	 
      	 
      
	 
      	
                                Martyn
      Konig

                              
	 	 
	 
      	/s/
      Gerald
      Ruth
	 
      	
                                Gerald
      Ruth

                              
	 	 
	 
      	 
      
	 
      	
                                Raymond
      Threlkeld

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the 29
day of December, 2008.

    

    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      
	 
      	
                                Randall
      Oliphant

                              
	 	 
	 
      	 
      
	 
      	
                                Vahan
      Kololian

                              
	 	 
	 
      	 
      
	 
      	
                                Martyn
      Konig

                              
	 	 
	 
      	 
       
	 
      	
                                Gerald
      Ruth

                              
	 	 
	 
      	/s/
      Raymond
      Threlkeld
	 
      	
                                Raymond
      Threlkeld

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    WESTERN
MESQUITE MINES, INC.

    

    UNANIMOUS
WRITTEN CONSENT OF THE BOARD OF DIRECTORS

    

    January
9, 2009

    

    The
undersigned, being all the directors of Western Mesquite Mines, Inc. (the “Corporation”), by
their signatures, hereby consent to the following resolutions (the “Resolutions”)

    

    WHEREAS, the Corporation has
entered into and will enter into certain fuel hedging arrangements (the “Fuel Hedging
Arrangements”) with Commonwealth Bank of Australia (“CBA”) and The Bank of
Nova Scotia (“Scotia”);
and

    

    WHEREAS, the Corporation has
agreed with CBA and Scotia that the Corporation’s obligations under the Fuel
Hedging Arrangements will be supported by the security interests (the “Security Interests”)
created in connection with the US$105,000,000 credit agreement originally dated
30 March 2007 (as amended and restated by an amendment and restatement agreement
dated 31 May 2007 and as further amended on 29 June 2007, 16 July 2007, 14
August 2007, 14 August 2008 and 18 December 2008) among the Corporation, Western
Goldfields (USA) Inc. (formerly known as Western Goldfields, Inc.) as Guarantor,
Investec Bank (UK) Limited as Agent, Mandated Lead Arranger and Security
Trustee, Commonwealth Bank of Australia as Lead Arranger, the Banks (as defined
therein, the “Banks”) and the
Hedging Banks (as defined therein) (the “Credit Agreement”);
and

    

    WHEREAS, the Credit Agreement,
the ISDA master agreement between the Corporation and CBA dated as of 31 May
2007 and the ISDA master agreement between the Corporation and Scotia dated as
of 15 August 2007 must be amended and the Corporation must enter into a new ISDA
master agreement between the Corporation and Scotia (such new ISDA master
agreement and the aforementioned amendments being, collectively, the “Amendments”, and all
the aforementioned ISDA master agreements, collectively, the “ISDA Master
Agreements”) in order for the Fuel Hedging Arrangements to be supported
by the Security Interests; and

    

    WHEREAS, the Board of
Directors has determined that it is advisable and in the best interests of the
Corporation that the Corporation enter into the Fuel Hedging Arrangements and in
furtherance thereof that the Corporation execute, deliver and perform the
Amendments and consummate the transactions contemplated
thereunder;

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Approval of the
Amendments

    

    RESOLVED, that the forms,
terms and provisions of the Amendments (in the forms substantially similar to
that presented to the Board of Directors on November 25, 2008), the transactions
contemplated thereby, and the obligations pursuant thereto be, and they hereby
are, in all respects, authorized, approved and adopted; and further

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed on behalf of the Corporation
and in its name to execute and deliver, or cause to be executed and delivered,
the Amendments and such other agreements, instruments or certificates as such
officer(s) shall approve in connection with the Amendments from time to time
(with such approval conclusively evidenced by the execution and delivery, or
delivery, of such agreement, instrument or certificate), with such other changes
therein as the officer(s) shall, by the execution and delivery, or delivery,
thereof, approve, and to take all such other actions as such officer(s) deems
necessary or desirable to perform or otherwise carry out the terms and
conditions of the Amendments and the transactions contemplated therein; and
further

    

    Enabling Resolutions;
Ratification

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed to take all such further
action and to prepare, amend, revise, execute, deliver and file all such
agreements, instruments, documents and certificates, and to incur and pay such
expenses in the name, and on behalf, of the Corporation under its corporate seal
or otherwise as they, or any one of them, shall deem necessary, proper or
advisable in order to effectuate the transactions contemplated by these
resolutions, including any agreement executed by the Corporation in connection
with the Amendments, and otherwise to carry out the intent and effectuate the
purpose of each of the foregoing resolutions; and finally

    

    RESOLVED, that any action
taken by any of the officers of the Corporation prior to the adoption of these
resolutions which is within the authority conferred by the foregoing resolutions
is hereby ratified, approved and adopted.

    

    [Remainder
of page intentionally left blank]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the ninth
day of January, 2009.

     

    
      
        
          
            
              	 
      	
                      /s/
      Brian Penny

                    
	 
      	
                      Name:
      BRIAN PENNY

                    
	 
      	 
      
	 
      	
                      /s/
      Arthur Chen

                    
	 
      	
                      Name:
      ARTHUR CHEN

                    
	 
      	 
      
	 
      	
                      /s/
      Raymond
      Threlkeld

                    
	 
      	
                      Name:
      RAYMOND
      THRELKELD

                    

            

          

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    WESTERN
GOLDFIELDS (USA) INC.

    

    UNANIMOUS
WRITTEN CONSENT OF THE BOARD OF DIRECTORS

    

    January
9, 2009

    

    The
undersigned, being all the directors of Western Goldfields (USA) Inc. (the
“Corporation”),
by their signatures, hereby consent to the following resolutions (the “Resolutions”):

    

    WHEREAS, Western Mesquite
Mines, Inc. (the “Borrower”) has
entered into and will enter into certain fuel hedging arrangements (the “Fuel Hedging
Arrangements”) with Commonwealth Bank of Australia (“CBA”) and The Bank of
Nova Scotia (“Scotia”);
and

    

    WHEREAS, the Borrower has
agreed with CBA and Scotia that the Borrower’s obligations under the Fuel
Hedging Arrangements will be supported by the security interests (the “Security Interests”)
created in connection with the US$105,000,000 credit agreement originally dated
30 March 2007 (as amended and restated by an amendment and restatement agreement
dated 31 May 2007 and as further amended on 29 June 2007, 16 July 2007, 14
August 2007, 14 August 2008 and 18 December 2008) among the Borrower, the
Corporation as Guarantor, Investec Bank (UK) Limited as Agent, Mandated Lead
Arranger and Security Trustee, Commonwealth Bank of Australia as Lead Arranger,
the Banks (as defined therein, the “Banks”) and the
Hedging Banks (as defined therein) (the “Credit Agreement”);
and

    

    WHEREAS, the Credit Agreement,
the ISDA master agreement between the Borrower and CBA dated as of 31 May 2007
and the ISDA master agreement between the Borrower and Scotia dated as of 15
August 2007 must be amended and the Borrower must enter into a new ISDA master
agreement between the Borrower and Scotia (such new ISDA master agreement and
the aforementioned amendments being, collectively, the “Amendments”, and all
the aforementioned ISDA master agreements, collectively, the “ISDA Master
Agreements”) in order for the Fuel Hedging Arrangements to be supported
by the Security Interests; and

    

    WHEREAS, the Board of
Directors has determined that it is advisable and in the best interests of the
Corporation that the Borrower enter into the Fuel Hedging Arrangements and in
furtherance thereof that the Corporation execute, deliver and perform the
Amendments and consummate the transactions contemplated
thereunder;

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Approval of the
Amendments

    

    RESOLVED, that the forms,
terms and provisions of the Amendments (in the forms substantially similar to
that presented to the Board of Directors on November 25, 2008), the transactions
contemplated thereby, and the obligations pursuant thereto be, and they hereby
are, in all respects, authorized, approved and adopted; and further

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed on behalf of the Corporation
and in its name to execute and deliver, or cause to be executed and delivered,
the Amendments and such other agreements, instruments or certificates as such
officer(s) shall approve in connection with the Amendments from time to time
(with such approval conclusively evidenced by the execution and delivery, or
delivery, of such agreement, instrument or certificate), with such other changes
therein as the officer(s) shall, by the execution and delivery, or delivery,
thereof, approve, and to take all such other actions as such officer(s) deems
necessary or desirable to perform or otherwise carry out the terms and
conditions of the Amendments and the transactions contemplated therein; and
further

    

    Enabling Resolutions;
Ratification

    

    RESOLVED, that the President,
Secretary, Chief Financial Officer and any other officer of the Corporation be,
and each of them hereby is, authorized and directed to take all such further
action and to prepare, amend, revise, execute, deliver and file all such
agreements, instruments, documents and certificates, and to incur and pay such
expenses in the name, and on behalf, of the Corporation under its corporate seal
or otherwise as they, or any one of them, shall deem necessary, proper or
advisable in order to effectuate the transactions contemplated by these
resolutions, including any agreement executed by the Corporation in connection
with the Amendments, and otherwise to carry out the intent and effectuate the
purpose of each of the foregoing resolutions; and finally

    

    RESOLVED, that any action
taken by any of the officers of the Corporation prior to the adoption of these
resolutions which is within the authority conferred by the foregoing resolutions
is hereby ratified, approved and adopted.

    

    [Remainder
of page intentionally left blank]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have executed this consent of the Board of Directors as of the ninth
day of January, 2009.

     

    
      	 
      	
              /s/
      Brian Penny

            
	 
      	
              Name:
      BRIAN PENNY

            
	 
      	 
      
	 
      	
              /s/
      Arthur Chen

            
	 
      	
              Name:
      ARTHUR CHEN

            
	 
      	 
      
	 
      	
              /s/
      Raymond
      Threlkeld

            
	 
      	
              Name:
      RAYMOND
      THRELKELDAFFINITY
GOLD CORP.

    Av.
Arenales 335

    Cercado,
Lima, Peru

    011-511-627-4600

    

    

    March 2,
2009

    

    Antonio
Rotundo

    Av.
Arenales 335

    Cercado,
Lima, Peru

    

    And
to:

    

    AMR Project Peru,
S.A.C.

    Av.
Arenales 335

    Cercado,
Lima, Peru

    

    Dear
Sir:

    

    
      
        	
                Re:

              	
                AGREEMENT
      TO CANCEL 26,500,000 SHARES OF COMMON STOCK OF AFFINITY GOLD CORP. (THE
      “COMPANY”) REGISTERED IN THE NAME OF ANTONIO ROTUNDO UPON COMPLETION OF
      THE ACQUISITION BY THE COMPANY OF THE MINING CONCESSION RIGHTS FROM AMR
      PROJECT PERU, S.A.C. (“AMR”) IN ACCORDANCE WITH THE ASSET PURCHASE AGREEMENT, DATED MARCH 2,
      2009

              

      

    

    

    Subject
to and in accordance with the terms and conditions contained herein, this
binding letter agreement (the “Agreement”) will set forth the understanding,
terms and conditions relating to the cancellation of 26,500,000 of the
34,800,000 shares of common stock of the Company registered in the name of
Antonio Rotundo concurrent with the completion of the asset purchase agreement
between the Company and AMR (the “Asset Purchase Agreement”), whereby the
Company will acquire the Mining Concession Rights (as defined in the Asset
Purchase Agreement) from AMR.  Such cancellation by Antonio Rotundo is
to encourage the Company to enter into the Asset Purchase Agreement and to
encourage equity investment into the Company.

    

    1.           Cancellation
of shares.     Mr. Antonio Rotundo hereby agrees
that concurrent with the closing of the Asset Purchase Agreement, whereby the
Company will acquire the Mining Concession Rights from AMR, Mr. Rotundo will
voluntarily surrender for cancellation and return to the Company’s treasury
26,500,000 of the 34,800,000 shares of common stock of the Company registered in
Mr. Rotundo’s name.  In addition, Mr. Rotundo hereby agrees to provide
the Company with an irrevocable stock power of attorney which will set out the
transfer of 26,500,000 shares of the Company’s common stock from the 34,800,000
shares registered in Mr. Rotundo’s name on share certificate #0136 to the
Company, which Mr. Rotundo will have medallion stamped by a brokerage house or
have his signature guaranteed by a bank or notary public that is acceptable to
the Company and it’s transfer agent.  A copy of the irrevocable stock
power of attorney is attached hereto as Schedule “A”.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    2.           Execution
in Counterparts.     This Agreement may be
executed in original or counterpart form, delivered by facsimile or otherwise,
and when executed by the parties as aforesaid, shall be deemed to constitute one
agreement and shall take effect as such.

    

    3.           Governing
Law.     This Agreement and each of the
documents contemplated by or delivered under or in connection with this
Agreement are governed exclusively by, and are to be enforced, construed and
interpreted exclusively in accordance with the laws of the State of Nevada and
the parties submit and attorn to the jurisdiction of the courts of the State of
Nevada.

    

    Yours
very truly,

    AFFINITY
GOLD CORP.

    

    
      
        	
                Per:

              	
                /s/ Corey Sandberg

              
	 
      	
                Corey
      Sandberg, Director

              

      

    

    

    If Mr.
Antonio Rotundo wishes to accept the terms and conditions set forth above,
please execute this Agreement and fax or scan and e-mail a copy of the executed
Agreement to Devlin Jensen, Attention: Michael Shannon at (604) 684-0916 as well
as return an originally signed copy to Devlin Jensen at 2550 – 555 W. Hastings
St., Vancouver, BC, Canada  V6B 4N5.  Upon such execution
and return via fax or scan and e-mail, this Agreement shall constitute a binding
agreement upon the parties.

    

    
      
        
          	
                  /s/ Antonio Rotundo

                	 	
                  Dated:
      March 2, 2009

                
	
                  Antonio
      Rotundo, shareholder of

                	 	 
      
	
                  Affinity
      Gold Corp.

                	 	 
      

        

      

    

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    Schedule
“A”

    

    IRREVOCABLE POWER OF
ATTORNEY TO TRANSFER SHARES

    

    KNOWN
ALL MEN BY THESE PRESENTS, that    ANTONIO
ROTUNDO

    For No Value Received does
hereby gift unto

    AFFINITY
GOLD CORP.

    

    Twenty-Six Million Five Hundred
Thousand (26,500,000) shares of common stock of Affinity Gold Corp. standing
in name of the undersigned on the share register of Affinity Gold Corp.
represented by Certificate No. 0136 herewith
AND the undersigned does
hereby constitute and appoint Affinity Gold Corp. as his
true and lawful attorney, IRREVOCABLY, for him and in
his name and stead to gift the said stock, and for that purpose to make and
execute all necessary acts of assignment and transfer thereof, and to substitute
one or more persons with like full power, hereby ratifying and confirming all
that his said Attorney or its/his substitute or substitutes shall lawfully do by
virtue hereof.

    

    IN WITNESS WHEREOF, the
undersigned have hereunto set her hand and seal at effective as of the ___ day
of March 2009.

    

    
      
        	
                SIGNED
      and DELIVERED by

              	
                )

              	 
      
	
                ANTONIO ROTUNDO in the presence
      of:

              	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	
                Witness

              	
                )

              	
                ANTONIO
      ROTUNDO

              
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	
                Address

              	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      
	 
      	
                )

              	 
      

      

    

    
       

      
        
The
signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit
Unions).

    

    
      
         

      

      
        - 3
-

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