Document:

Exhibit
      10.13

     

    AGENCY
      AGREEMENT

     

    December
      28, 2006

     

    Yukon
      Gold Corporation, Inc.

    55
      York
      Street, Suite 401

    Toronto,
      Ontario

    M5J
      1R7

     

    Attention:
      Paul Gorman

     

    Dear
      Sirs:

     

    The
      undersigned, Northern Securities Inc. (the "Agent")
      understands that the Company is prepared to issue and sell non-FT Special
      warrants (the "Non-FT
      Special Warrants")
      at a
      price of 0.90 per Non-FT Special Warrant, and flow-through Special warrants
      (the
      "FT
      Special Warrants")
      at a
      price of 1.05 per FT Special Warrant, for aggregate gross proceeds of up to
      $6,000,000 (the Non-FT Special Warrants and FT Special Warrants, together with
      any special warrants to be issued pursuant to the Agent's Option (as defined
      below), are referred to herein as the "Special
      Warrants").

     

    In
      addition, the Company hereby grants to the Agent an option (the "Agent's
      Option")
      for
      the Agent to increase the size of the offering by an additional $2,000,000
      of
      any combination of Non-FT Special Warrants and/or FT Special Warrants. The
      Agent's Option may be exercised in whole or in part at the sole discretion
      of
      the Agent at any time until 48 hours prior to the Special Warrant Closing Time
      by delivery to the Company by the Agent of the Option Exercise Notice (as
      hereinafter defined).

     

    Based
      upon the understanding of the Agent set out above and upon the terms and subject
      to the conditions contained hereinafter, upon the acceptance hereof by the
      Company, the Company hereby appoints the Agent to act as agent of the Company
      to
      solicit, on a best efforts basis, offers to purchase the Special Warrants,
      and
      the Agent hereby agrees to act as such Agent. It is understood and agreed that
      the Agent is under no obligation to purchase any of the Special Warrants,
      although it may subscribe for and purchase Special Warrants if it so
      desires.

     

    Subject
      to the approval of the TSX (as defined below) and receipt of shareholder
      approval:

     

    
      	(i)  	
              each
                FT Special Warrant is exercisable into one Flow-Through Share (as
                defined
                below) in
                the capital of the Company (subject to adjustment in certain
                circumstances) and

            

    

     

    
      	(ii)  	
              each
                Non-FT Special Warrant is exercisable into one unit (a "Unit")
                comprised of one common share (a "Unit
                Share")
                in the capital of the Company (subject to adjustment in certain
                circumstances) and one common share purchase warrant (a "Warrant")
                with each Warrant being exercisable into one common share (a "Warrant
                Share")
                in the capital of the Company (subject to adjustment in certain
                circumstances) at an exercise price of $1.05 at any time until the
                24
                month anniversary of the Special Warrant Closing Date (as defined
                below)
                (the Flow-Through
                Shares, Unit Shares and Warrants issuable on exercise of the Special
                Warrants are collectively referred to as the "Underlying
                Securities"
                and individually as an "Underlying
                Security"),

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    in
      each
      case, without payment of any additional consideration at any time on or before
      5:00 p.m. (Toronto time) on the date (the "Expiry
      Date")
      which
      is the earlier of:

     

    
      	(i)  	
              the
                3rd
                Business Day (as defined below) after a receipt is issued under the
                Mutual
                Reliance Review System for a Final Prospectus (as defined below)
                qualifying the issue of Underlying Securities to be issued upon the
                exercise of the Special Warrants and the Underlying Broker Securities
                (as
                defined below) issuable upon exercise of the Special Broker Warrants
                and
                FT Special Broker Warrants (each as defined below) filed in each
                of the
                offering jurisdictions in Canada within which purchasers of Special
                Warrants are resident (the "Qualifying
                Jurisdictions")
                and a Registration Statement (as defined below) on Form SB-2 is declared
                effective by the SEC (as hereinafter defined) in the United States
                in
                respect of the Special Warrants and Special Broker Warrants;
                and

            

    

     

    
      	(ii)  	
              the
                first Business Day following the date which is 4 months after the
                Special
                Warrant Closing Date;

            

    

     

    and
      Special Warrants not exercised prior to the Expiry Date will be automatically
      exercised without any further action on the part of the holders immediately
      prior to the Expiry Date. The Company shall prepare and file, in accordance
      herewith, a Preliminary Prospectus (as defined below) and a Final Prospectus
      (collectively, the "Prospectus")
      in
      order to qualify the Underlying Securities issuable on the exercise or automatic
      exercise of the Special Warrants and the Underlying Broker Securities issuable
      upon exercise of the Special Broker Warrants and FT Special Broker Warrants
      (the
      "Prospectus
      Qualification"),
      to
      the extent permitted by law and applicable securities regulatory authorities,
      for distribution in each of the Qualifying Jurisdictions. The Purchasers (as
      hereinafter defined), Agent and other holders (including subsequent transferees)
      of the Special Warrants (and any holders of Registrable Securities) (as
      hereinafter defined) will be entitled to the benefits of the registration rights
      agreement, to be dated as of the Closing Date (the "Registration
      Rights Agreement"),
      among
      the Company and the Agent, in the form attached hereto as Schedule
      "C".

     

    In
      consideration of the services to be rendered by the Agent in connection with
      the
      offering of the Special Warrants and all other matters in connection with the
      issue and sale of the Special Warrants and the issue of the Underlying
      Securities, the Company shall pay to the Agent a fee and grant the Agent,
      Special Broker Warrants and FT Special Broker Warrants in accordance with the
      provisions of paragraph 8.

     

    The
      offering of the Special Warrants is conditional upon and subject to the
      additional terms and conditions set forth below.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1  Interpretation

     

    1.1  In
      this
      Agreement and the Schedules hereto, in addition to the terms defined above,
      unless otherwise indicated or unless the context otherwise requires, the
      following terms shall have the following meanings:

     

    "Act"
      means
      the Income
      Tax Act
      (Canada),
      as
      amended from time to time
      and all
      rules and regulations made pursuant thereto;

     

    "affiliate"
      has the
      meaning ascribed thereto in the Securities
      Act
      (Ontario);

     

    "Agent" has
      the
      meaning ascribed thereto on the first page of this Agreement;

     

    "Agent's
      Option"
      has the
      meaning ascribed thereto on the first page of this Agreement;

     

    "Agreement"
      means
      this agreement and includes the schedules hereto, as modified, amended or
      supplemented from time to time;

     

    "AIF"
      means
      the annual report of the Company under the Exchange Act on Form 10-KSB in
      respect of its fiscal year ended April 30, 2006;

     

    "Ancillary
      Documents"
      means
      all agreements, indentures, certificates (including the certificates
      representing the Special Warrants, Special Broker Warrants and FT Special Broker
      Warrants) and other documents (including the Prospectus and any Supplementary
      Material) executed and delivered, or to be executed and delivered, by the
      Company in connection with the transactions contemplated by this Agreement
      and
      the Subscription Agreements and includes the Subscription
      Agreements;

     

    "Broker
      Shares"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    "Broker
      Warrants"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    "Broker
      Warrant Shares"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    "Business
      Day"
      means a
      day which is not a Saturday, a Sunday or a statutory or civic holiday, or a
      day
      on which commercial banks are not open for business in the City of Toronto,
      Canada;

     

    "Canadian
      Exploration Expenses"
      or
      "CEE"
      means
      Canadian exploration expense described in paragraph (f) of the definition of
      "Canadian exploration expense" in subsection 66.1(6) of the Act, excluding
      (i)
      amounts which are prescribed to constitute "Canadian exploration and development
      overhead expense" under the Act, (ii) CEE to the extent of the amount of any
      assistance described in paragraph 66(12.6)(a) of the Act, (iii) any expenditures
      described in paragraph (b.1) of subsection 66(12.6) of the Act, and (iv) any
      expenses for prepaid services or rent that do not qualify as outlays and
      expenses for the period as described in the definition "expense" in subsection
      66(15) of the Act;

     

    "Claim"
      has the
      meaning ascribed to it in paragraph
      13(c);

     

    "Commitment
      Amount"
      means
      the gross proceeds from the sale of the FT Special Warrants;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    "Common
      Share"
      means a
      common share in the capital of the Company;

     

    "Company" has
      the
      meaning ascribed thereto on the first page of this Agreement;

     

    "Company's
      Auditors"
      means
      Schwartz Levinsky Feldman;

     

    "Disclosure
      Documents"
      means
      all information regarding the Company that is, or becomes, publicly available
      on
      SEDAR and EDGAR, including the Financial Statements and the AIF;

     

    "distribution"
      means
      distribution or distribution to the public, as the case may be, as those terms
      are defined in Canadian Securities Laws;

     

    "Engagement
      Letter"
      means
      the engagement letter dated November
      22,
      2006
      between the Company and the Agent, and any amendments thereto;

     

    "Exchange
      Act"
      means
      the Securities Exchange Act of 1934, as amended;

     

    "Expenditure
      Period"
      means
      the period commencing on the Special Warrant Closing Date and ending on the
      earlier of:

     

    
      	 	
              I.

            	
              the
                date on which the Commitment Amount has been fully expended in accordance
                with the terms hereof; and

            

    

     

    
      	
            	II.	
              December
                31, 2007;

            

    

     

    "Expiry
      Date"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

    "Final
      Prospectus"
      has the
      meaning ascribed to it in paragraph 2.8;

     

    "Financial
      Statements"
      means
      the audited consolidated financial statements of the Company for the fiscal
      year
      ended April 30, 2006 and the unaudited interim financial statements of the
      Company for the
      six
      months ended October 31, 2006,
      prepared in accordance with U.S. generally accepted accounting
      principles;

     

    "Flow-Through
      Mining Expenditure"
      means
      an expense which is a "flow-through mining expenditure" as defined in subsection
      127(9) of the Act;

     

    "Flow-Through
      Shares"
      means
      the Common Shares issuable on the exercise or deemed exercise of FT Special
      Warrants that will qualify as "flow-through shares" as such term is defined
      in
      subsection 66(15) of the Act and the Proposed Amendments;

     

    "FT
      Broker Share"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    "FT
      Broker Warrant"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    "FT
      Special Warrants"
      has the
      meaning ascribed thereto on the first page of this Agreement;

     

    "FT
      Special Broker Warrants"
      has the
      meaning given to it in subsection 8(b)
      of this
      Agreement;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    "Indemnified
      Party"
      and "Indemnified
      Parties"
      have
      the meanings ascribed thereto in paragraph 13(a);

     

    "Indemnifier" has
      the
      meaning ascribed thereto in paragraph
      13(a);

     

    "Investment
      Company Act"
      means
      the United States Investment Company Act of 1940, as amended;

     

    "Joint
      Ventures"
      means
      the entities that are, or will on or before the Special Warrant Closing Time
      be,
      the direct and indirect joint venture interests of the Company;

     

    "Material
      Adverse Effect"
      means
      any change, fact, or state of being which could reasonably be expected to have
      a
      material and adverse effect (actual or anticipated, whether financial or
      otherwise) on the business, affairs, operations, Properties, Permits, assets,
      liabilities (contingent or otherwise), capital, results of operations or
      condition (financial or otherwise) of the Company and the Subsidiary, considered
      as a whole;

     

    "misrepresentation",
      "material
      fact",
      "material
      change"
      and "distribution"
      have
      the respective meanings ascribed to them in the Securities
      Act
      (Ontario);

     

    "NI
      51-102" means
      National Instrument 51-102 of the Canadian Securities Administrators, and
      includes any replacements or modifications thereof;

     

    "Non-FT
      Special Warrants" has
      the
      meaning ascribed thereto on the first page of this Agreement;

     

    "Offering"
      means
      the offering of Special Warrants contemplated by this Agreement;

     

    "Option
      Exercise Notice"
      means
      the written notice to be delivered to the Company by the Agent not less than
      48
      hours prior to the Special Warrant Closing Time specifying the aggregate number
      of Special Warrants in respect of which the Agent wishes to exercise the Agent's
      Option;

     

    "Permits"
      means
      the permits set out in Schedule "B" in respect of each Property;

     

    "Person"
      means
      an individual, a firm, a corporation, a syndicate, a partnership, a trust,
      an
      association, an unincorporated organization, a joint venture, an investment
      club, a government or an agency or political subdivision thereof and every
      other
      form of legal or business entity of any nature or kind whatsoever;

     

    "Preliminary
      Prospectus"
      has the
      meaning ascribed to it in paragraph 2.7;

     

    "Principal-Business
      Corporation"
      means a
      principal-business corporation as defined in subsection 66(15) of the
      Act;

     

    "Properties"
      means
      the material mineral properties and projects of the Company and the Subsidiary
      as more particularly set out in Schedule "B" and "Property"
      means
      any one of them;

     

    "Proposed
      Amendments"
      means
      the draft legislation to amend the Act and regulations thereto announced by
      the
      Minister of Finance (Canada) on December 20, 2002 and November 9,
      2006;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    "Prospectus"
      means
      the Preliminary Prospectus and the Final Prospectus, collectively;

     

    "Prospectus
      Qualification"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

    "Purchasers"
      means
      the persons who as purchasers acquire Special Warrants by duly completing and
      executing the Subscription Documents, and permitted assignees or transferees
      of
      such persons from time to time;

     

    "Qualification
      Deadline"
      means
      the day that is 60 days following the Special Warrant Closing Date;

     

    "Qualifying
      Date"
      means
      the date on which (i) the last of the receipts is issued by the securities
      regulatory authorities in each of the Qualifying Jurisdictions for a Final
      Prospectus qualifying the issuance of the Underlying Securities and Underlying
      Broker Securities and (ii) a Registration Statement on Form SB-2 is declared
      effective by the SEC in the United States in respect of the Special Warrants
      and
      Special Broker Warrants;

     

    "Qualifying
      Expenditures"
      means
      expenditures that are Canadian Exploration Expenses which qualify as
      Flow-Through Mining Expenditures, and which are made or incurred after the
      Special Warrant Closing Date and on or before December 31, 2007, which may
      be
      renounced as CEE by the Company pursuant to subsection 66(12.6) of the Act
      in
      accordance with subsection 66(12.66) of the Act with an effective date not
      later
      than December 31, 2006 and in respect of which, but for the renunciation, the
      Company would be entitled to a deduction from income for income tax
      purposes;

     

    "Qualifying
      Jurisdictions"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

    "Registration
      Rights Agreement"
      shall
      have the meaning ascribed to such term on the second page of this
      Agreement;

     

    "Registration
      Statement"
      means
      the registration statement of the Corporation to be filed with the SEC in order
      to register, or register the resale of, the Registrable Securities, as
      applicable, as such Registration Statement is amended from time to
      time

     

    "Registrable
      Securities"
      means
      the Flow-Through Shares, Unit Shares, the Warrant Shares, the Broker Shares,
      the
      Broker Warrant Shares and the FT Broker Shares;

     

    "Regulation
      D"
      means
      Regulation D under the U.S. Securities Act;

     

    "Regulation
      S"
      means
      Regulation S under the U.S. Securities Act;

     

    "SEC"
      means
      the United States Securities and Exchange Commission;

     

    "Securities
      Laws"
      means
      all applicable securities laws in each of the Qualifying Jurisdictions and
      the
      respective rules and regulations made thereunder, together with applicable
      published policy statements, instruments, orders and rulings of the securities
      regulatory authorities in such provinces the applicable policy statements issued
      by the securities regulators in the Qualifying Jurisdictions, the securities
      laws of the United States, any applicable States and any jurisdictions outside
      of Canada and the United States, the regulations and rules thereunder and the
      forms prescribed thereby and the rules of any applicable stock
      exchange;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    "Securities
      Regulators"
      means
      the securities commissions or other securities regulatory authorities of the
      Qualifying Jurisdictions, including the SEC, or, as the context
      may require, any one or more of the Qualifying Jurisdictions;

     

    "SEDAR"
      means
      the System for Electronic Document Analysis and retrieval established by
      National Instrument 13-101 of the Canadian Securities
      Administrators;

     

    "Special
      Warrant Certificates"
      means
      the certificates evidencing the Special Warrants and setting forth their terms
      and conditions;

     

    "Special
      Warrants"
      has the
      meaning ascribed thereto on the first page of this Agreement;

     

    "Special
      Broker Warrants"
      has the
      meaning given to it in subsection 9(b)
      of this
      Agreement;

     

    "Special
      Warrant Closing"
      means
      the completion of the issue and sale by the Company, and the purchase by the
      Purchasers, of the Special Warrants pursuant to the Subscription
      Agreements;

     

    "Special
      Warrant Closing Date"
      means
      December 28, 2006 or such other date(s) as the Company and the Agent may agree
      upon for the Special Warrant Closing;

     

    "Special
      Warrant Closing Time"
      means
      11:00 a.m. (Toronto time) on the Special Warrant Closing Date or such other
      time
      on the Special Warrant Closing Date as the Company and the Agent may
      agree;

     

    "Subscription
      Agreements"
      means
      the subscription agreements, in the form agreed upon by the Company and the
      Agent, pursuant to which Purchasers agree to subscribe for and purchase Special
      Warrants;

     

    "Subscription
      Documents"
      means,
      with respect to a Purchaser, a Subscription Agreement duly completed by the
      Purchaser together with all applicable duly completed schedules to the
      Subscription Agreement in the forms attached thereto and any other forms
      required under Securities Laws
      or any
      other applicable laws;

     

    "Subsidiary"
      means
      Yukon Gold Corp.;

     

    "Supplementary
      Material"
      has the
      meaning ascribed thereto in paragraph 2.12;

     

    "TSX"
      means
      the Toronto Stock Exchange;

     

    "Underlying
      Broker Securities" has
      the
      meaning given to it in subsection 9(b)
      of this
      Agreement;

     

    "Underlying
      Securities"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    "Unit"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

    "Unit
      Broker Warrants"
      has the
      meaning given to it in subsection 9(b)
      of this
      Agreement;

     

    "United
      States"
      and
      "U.S."
      means
      the United States of America, its territories and possessions, any state of
      the
      United States, and the District of Columbia;

     

    "Unit
      Share"
      has the
      meaning ascribed thereto on the second page of this Agreement;

     

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

     

    "Warrant"
      has the
      meaning ascribed thereto on the second page of this Agreement; and

     

    "Warrant
      Share"
      has the
      meaning ascribed thereto on the second page of this Agreement.

     

    1.2  Business
      Days.
      Where
      any action or step is to be taken or completed on or by a specified date, and
      such date is not a Business Day in the applicable jurisdiction, then such action
      or step may be taken or completed on the next following Business
      Day.

     

    1.3  Plural
      and Gender.
      Whenever
      used in this Agreement, words importing the singular number only shall include
      the plural and vice versa and words importing the masculine gender shall include
      the feminine gender and neuter.

     

    1.4  Currency.
      All
      references to monetary amounts in this Agreement are to lawful money of Canada
      unless otherwise specified.

     

    1.5  Schedules.
      The
      following schedules are attached to this Agreement and are deemed to be a part
      of and incorporated into this Agreement:

     

    
      	
              Schedule

            	
              Title

            
	
              A

            	
              Subsidiary

            
	
              B

            	
              Properties
                and Permits

            
	
              C

            	
              Registration
                Rights Agreement

            

    

     

    2  Terms
      and Conditions

     

    2.1  Sale
      on Exempt Basis.
      The
      Special Warrants will be distributed in the Qualifying Jurisdictions in
      compliance with the Securities Laws and only to such Purchasers and in such
      manner to reasonably ensure that, pursuant to the provisions of applicable
      Securities Laws, no prospectus (as such term is defined in Canadian Securities
      Laws) or other similar document need be filed or delivered in connection
      therewith. The
      Agent
      covenants with the Company that it will: (i) obtain from each Purchaser
      appropriate executed Subscription Documents; (ii) ensure that any selling agent
      appointed by the Agent in connection with sales of Special Warrants agrees
      with
      the Agent to comply with the covenants and obligations of the Agent contained
      herein; and (iii) execute and deliver to the Company, subject to the terms
      and
      conditions of this Agreement, any certificate required to be executed by them
      under Canadian Securities Laws in connection with the Prospectus and any
      Supplementary Material provided that the Agent is satisfied, acting reasonably,
      that it is appropriate and responsible to do so.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    2.2  Legal
      Compliance.
      The
      Company undertakes to file or cause to be filed, within the time periods
      stipulated by Securities Laws, all forms, undertakings and other documents
      required to be filed by the Company under Securities Laws in connection with
      the
      purchase and sale of the Special Warrants, the issue of the Agent's Option
      and
      the issue of the Special Broker Warrants and FT Special Broker Warrants so
      that
      the distribution of the Special Warrants, the Underlying Securities and the
      Underlying Broker Securities may lawfully occur without the necessity of filing
      a prospectus or similar document in Canada. All fees payable in connection
      with
      such filings shall be at the sole expense of the Company. The Company further
      agrees to comply with all Securities Laws and applicable stock exchange
      requirements (including those of the TSX) in connection with the distribution
      of
      the Special Warrants, the Agent's Option, the Underlying Securities, the Special
      Broker Warrants, the FT Special Broker Warrants and the Underlying Broker
      Securities.

     

    2.3  Restrictions
      on Sales Outside the Qualifying Jurisdictions.
      The
      Agent agrees not to distribute the Special Warrants in such manner as to require
      the filing of a prospectus or any similar document under the laws of any
      jurisdiction outside the Qualifying Jurisdictions other than the Registration
      Statement on Form SB-2 which is contemplated herein. The Agent shall be
      permitted to offer the Special Warrants
      in any
      jurisdiction outside of Canada and the United States as may be permitted by
      applicable laws provided that no prospectus, registration statement or similar
      document is required to be filed in any such jurisdiction; in each case as
      the
      Agent and the Company determine appropriate. Any agreements between the Agent
      and the members of any selling group will contain restrictions which are
      substantially the same as those contained in this paragraph 2.3.

     

    2.4  No
      Media.
      Subject
      to paragraph
      15,
      neither
      the Company nor the Agent shall cause the sale of the Special Warrants to be
      advertised in printed media of general and regular paid circulation, radio
      or
      television or telecommunications, including electronic display, such as the
      Internet.

     

    2.5  Securities
      Laws.
      The
      Agent covenants and agrees with the Company that it shall conduct, and shall
      use
      commercially reasonable efforts to cause its affiliates and any person acting
      on
      its behalf to conduct, activities in connection with arranging for the sale
      of
      the Special Warrants in compliance with applicable Securities Laws.

     

    2.6  Toronto
      Stock Exchange.
      The
      Agent's obligation to complete the transactions contemplated herein shall be
      conditional upon the TSX conditionally approving for listing the Unit Shares,
      Flow-Through Shares, Warrant Shares, Broker Shares, FT Broker Shares and the
      Broker Warrant Shares on the terms and conditions contemplated herein and the
      Company will use its best efforts to obtain, prior to the Special Warrant
      Closing Date, the necessary approvals of the TSX in respect thereof on such
      conditions as are acceptable to the Agent, acting reasonably.

     

    2.7  Preliminary
      Prospectus.
      The
      Company shall, as soon as practicable following the Special Warrant Closing
      Date
      and using its commercially reasonable efforts, prepare, file under applicable
      Securities Laws of each of the Qualifying Jurisdictions and obtain a receipt
      for, a preliminary short form prospectus (the "Preliminary
      Prospectus")
      in
      form and substance satisfactory to the Company and the Agent, each acting
      reasonably, and shall prepare and file other related documents (including the
      Registration Statement on Form SB-2) relating to the proposed distribution
      and
      issuance of the Underlying Securities and the Underlying Broker Securities
      (excluding any warrants in the case of the Registration Statement). The Agent
      shall co-operate in such filing including by signing the relevant certificate
      required to be signed by them provided that they are satisfied, acting
      reasonably, with their due diligence investigation of the Company and the
      Subsidiary and as to disclosure requirements of applicable Securities Laws
      having been fulfilled by the Company.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    2.8  Final
      Prospectus.
      The
      Company shall, using its commercially reasonable efforts, as soon as practicable
      after all comments of applicable securities regulatory authorities have been
      satisfied with respect to the Preliminary Prospectus, prepare, file under
      applicable Securities Laws of each of the Qualifying Jurisdictions and obtain,
      prior to the Qualification Deadline, a receipt for, a (final) short form
      prospectus (the "Final
      Prospectus")
      in
      form and substance satisfactory to the Company and the Agent, each acting
      reasonably, and fulfil and comply with, to the satisfaction of the Agent's
      counsel, acting reasonably, all applicable Securities Laws to be fulfilled
      or
      complied with by the Company in order to qualify the distribution and issuance
      of the Underlying Securities and the Underlying Broker Securities after the
      Qualifying Date in the Qualifying Jurisdictions. Notwithstanding the foregoing
      sentence of this paragraph 2.8,
      if
      receipts for the Final Prospectus are not issued by the securities regulatory
      authorities of the Qualifying Jurisdictions (or the SEC has not cleared the
      Registration Statement on Form SB2) on or before the Qualification Deadline,
      the
      Company will continue to use its commercially reasonable efforts to file a
      Preliminary Prospectus and a Final Prospectus (as applicable) in the Qualifying
      Jurisdictions (and to clear the Registration Statement on Form SB-2 with the
      SEC) and to obtain such receipts (or clearance) as soon as possible thereafter.
      The Agent shall co-operate in such filing including by signing the relevant
      certificates required to be signed by them provided that they are satisfied,
      acting reasonably, with their due diligence investigation of the Company and
      its
      Subsidiary and as to disclosure requirements of applicable Securities Laws
      having been fulfilled by the Company.

     

    2.9  Registration
      Statement.
      The
      Company will use its commercially reasonable efforts, promptly following the
      Special Warrant Closing Date, to prepare and file with the SEC the Registration
      Statement on Form SB-2 (or, if Form SB-2 is not then available to the Company,
      on such form of registration statement as is then available) to effect a
      registration covering the resale of the Registrable Securities in an amount
      at
      least equal to the aggregate of the Registrable Securities. The Registration
      Statement also shall cover, to the extent allowable under the U.S. Securities
      Act and the rules promulgated thereunder (including Rule 416), such
      indeterminate number of additional shares of common stock of the Company
      resulting from stock splits, stock dividends or similar transactions with
      respect to the Registrable Securities. The Company shall use its commercially
      reasonable efforts to have the Registration Statement declared effective by
      the
      SEC as soon as practicable.

     

    2.10  Qualification
      Penalty. If
      the
      Qualifying Date does not occur on or before the Qualification Deadline, then
      the
      holders of the Special Warrants will receive upon exercise of each Special
      Warrant 1.1 Underlying Securities without payment of additional
      consideration.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    2.11  Deliveries
      at Time of Filing.
      The
      Company shall deliver to the Agent contemporaneously with or prior to the filing
      of the Preliminary Prospectus, the Final Prospectus and the Registration
      Statement (as the case may be) with the applicable securities regulatory
      authority in each of the Qualifying Jurisdictions:

     

    
      	(a)  	
              a
                signed copy of each of the Preliminary Prospectus, Final Prospectus
                or
                Registration Statement, as the case may
                be;

            

    

     

    
      	(b)  	
              signed
                copies of any other document required to be filed by the Company
                at such
                time under the Securities Laws;

            

    

     

    
      	(c)  	
              in
                the case of the Final Prospectus, a long-form comfort letter of the
                Company's Auditors, dated the date of the Final Prospectus addressed
                to
                the Agent, its counsel and the board of directors of the Company,
                in form
                and substance satisfactory to the Agent, acting reasonably, relating
                to
                the verification of certain financial and accounting information
                relating
                to the Company contained in the Final Prospectus and which shall
                be based
                on a review by the Company's Auditors to a date not more than two
                Business
                Days prior to the date of such letter and which letter shall be in
                addition to the auditors' report contained in the Final Prospectus
                and any
                comfort letter provided to the securities regulatory authorities,
                and also
                to the effect that the Company's Auditors are independent of the
                Company
                as required by Securities Laws; and

            

    

     

    
      	(d)  	
              in
                the case of the Final Prospectus, a legal opinion from counsel to
                the
                Company addressed to the Agent to the effect that the Company is
                valid and
                subsisting under the laws of its jurisdiction of incorporation, the
                Company has the corporate power and capacity to authorize the signing
                of
                the Final Prospectus, the Final Prospectus has been duly authorized
                by the
                Company and has been duly signed by the proper officers of the Company
                for
                and on behalf of the Company, to counsel's knowledge there are no
                legal or
                governmental proceedings pending or threatened to which the Company
                is a
                party or to which any of the Properties of the Company is subject,
                and as
                to such other matters as the Agent or its counsel may reasonably
                request.

            

    

     

    2.12  Supplementary
      Material.
      The
      Company shall also prepare, allow the Agent to participate in the preparation
      of, and deliver promptly to the Agent duly signed copies of all amended or
      supplementary prospectuses or supplemental statements and related documents
      required to be filed by the Company under the laws of any Qualifying
      Jurisdiction or Securities Laws and of any amendment to the Preliminary
      Prospectus, Final Prospectus, Registration Statement or other document required
      to be filed under paragraph 2.11
      (collectively, the "Supplementary
      Material").
      The
      Prospectus, Registration Statement and the Supplementary Material shall be
      in
      form and substance satisfactory to the Agent, acting reasonably. In connection
      with the filing of any Supplementary Material, upon the request of the Agent,
      the Company shall deliver to the Agent and its counsel documents substantially
      similar to those contemplated in paragraph 2.11,
      which
      shall be in form and substance satisfactory to the Agent (acting
      reasonably).

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    2.13  Deliveries.
      The
      Company shall cause commercial copies of the Preliminary Prospectus, the Final
      Prospectus and the Registration Statement to be delivered to the Agent without
      charge, in such numbers and in such cities as the Agent may reasonably request
      to satisfy its reasonable requirements. Such delivery shall be effected as
      soon
      as practicable and, in any event, with respect to each of the Preliminary
      Prospectus and the Final Prospectus, on or before the date that is two Business
      Days after the filing thereof in the Qualifying Jurisdictions. The Company
      shall
      cause commercial copies of the Final Prospectus and any Supplementary
      Materials
      required
      to be delivered to each of the holders of Special Warrants.

     

    2.14  Representation
      as to Prospectus, Registration Statement and Supplementary
      Material.
      Delivery
      of the Prospectus, Registration Statement and any Supplementary Material shall
      constitute a representation and warranty of the Company to the Agent that:
      (i) all information and statements (except information and statements
      relating solely to or provided solely by the Agent in writing) contained therein
      are true and correct in all material respects at the time of delivery thereof
      and contain no misrepresentation; (ii) such documents constitute full, true
      and plain disclosure of all material facts relating to the Company (on a
      consolidated basis), the Underlying Securities and the Underlying Broker
      Securities and that no material fact has been omitted therefrom which is
      required to be stated therein or is necessary to make the statements or
      information contained therein not misleading in light of the circumstances
      under
      which they were made; (iii) such documents comply in all material respects
      with the Securities Laws including, without limitation, containing the
      disclosure required by, and satisfying the form requirements of, the Securities
      Laws; and (iv) the Financial Statements contained therein comply with U.S.
      generally accepted accounting principles and, if applicable, have been audited
      in accordance with U.S. generally accepted auditing standards. Each such
      delivery shall also constitute the Company's consent to the Agent to use the
      Preliminary Prospectus, the Final Prospectus, any Supplementary Material and
      any
      other public documents supplied to the Agent by the Company for and in
      connection with the distribution of the Underlying Securities in the Qualifying
      Jurisdictions in compliance with the provisions of this Agreement and Securities
      Laws.

     

    2.15  Reliance
      on Prospectus and Registration Statement.
      The
      Company recognizes that it is fundamental to the Purchasers that the
      distribution of the Flow-Through Shares, Unit Shares and Warrants be qualified
      under the Final Prospectus and their resale be registered in the United States
      under the Registration Statement so that the Flow-Through Shares, Unit Shares,
      Warrants and Warrant Shares will be tradable in such Qualifying Jurisdictions
      and in the United States without the necessity of the holder thereof filing
      a
      prospectus or effecting the trade in a manner which falls within one of the
      various private placement exemptions or exemptions from registration under
      applicable securities legislation or subject to any statutory or regulatory
      hold
      periods or trade restrictions in such Qualifying Jurisdictions and in the United
      States (provided such trade is not a "control distribution" as defined by the
      applicable Securities Laws, or an "affiliate" as defined in Rule 144 under
      the U.S. Securities Act). The Company acknowledges that it is for this reason
      that the Company has agreed to use its commercially reasonable efforts to ensure
      that the Preliminary Prospectus and the Final Prospectus are to be filed with
      the Securities Regulators and receipts are to be obtained therefore and the
      Registration Statement is to be filed with the SEC in the United States within
      the time periods contemplated by this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    3  COVENANTS
      OF THE COMPANY

     

    In
      addition to the covenants of the Company set out in the other paragraphs of
      this
      Agreement, the Company hereby covenants to and for the benefit of the Agent
      and
      the Purchasers that:

     

    
      	(a)  	
              for
                so long as the Special Warrants remain outstanding, the Company shall
                comply with its obligations under the Securities
                Laws;

            

    

     

    
      	(b)  	
              the
                Company shall duly execute and deliver the Special Warrant Certificates
                on
                or before the Special Warrant Closing Date, and the Company shall
                comply
                with its covenants contained in the Special Warrant
                Certificates;

            

    

     

    
      	(c)  	
              the
                Company shall use its commercially reasonable best efforts to ensure
                that
                the Flow-Through Shares, Unit Shares, Warrant Shares, Broker Shares,
                FT
                Broker Shares and Broker Warrant Shares are or will be listed and
                posted
                for trading on the TSX, and the Company shall on or before the Special
                Warrant Closing Time provide to the Agent a copy of the conditional
                listing approval from the TSX for the same, subject only to the
                fulfillment of customary listing
                conditions;

            

    

     

    
      	(d)  	
              the
                Company shall use the gross proceeds of the sale of FT Special Warrants
                to
                incur, during the Expenditure Period, Qualifying Expenditures in
                an amount
                equal to the Commitment Amount and shall renounce to the Purchasers
                of FT
                Special Warrants in accordance with the Act, the Qualifying Expenditures,
                in an amount equal to the Commitment Amount which renunciation shall
                be
                effective on or before December 31,
                2006;

            

    

     

    
      	(e)  	
              if
                the Company does not renounce to the purchasers of FT Special Warrants,
                effective on or before December 31, 2006, Qualifying Expenditures
                incurred
                equal to the Commitment Amount, or if the amount of such renunciation
                is
                reduced pursuant to subsection 66(12.6) or subsection 66(12.73) of
                the
                Act, as the sole recourse by the purchasers of FT Special Warrants
                for
                such failure, the Company agrees to indemnify such purchasers as
                to, and
                pay in settlement thereof, an amount equal to the amount of any taxes
                payable or that may become payable under the Act (and under any
                corresponding provincial legislation) by the purchasers of FT Special
                Warrants as a consequence of such failure or reduction, as the case
                may
                be;

            

    

     

    
      	(f)  	
              the
                Company is a Principal-Business Corporation and shall maintain its
                status
                as a Principal-Business Corporation at all times relevant to the
                valid
                renunciation of Qualifying Expenditures to Purchasers of FT Special
                Warrants effective on or before December 31,
                2006;

            

    

     

    
      	(g)  	
              the
                Company has not and will not enter into any transactions or take
                deductions which would otherwise reduce its cumulative CEE to an
                extent
                which would preclude the renunciation of Qualifying Expenditures
                in
                accordance with the Subscription Agreements for FT Special Warrants
                in an
                amount equal to the Commitment Amount effective on or before December
                31,
                2006;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	(h)  	
              the
                Company shall at all times prior to the date of the Final Prospectus
                allow
                the Agent and its representatives to conduct all due diligence which
                the
                Agent may reasonably require to be conducted in order to fulfil its
                obligations under Securities Laws and in order to enable the Agent
                responsibly to execute any certificates required to be executed by
                the
                Agent in connection with the Prospectus and any Supplementary Material,
                and it shall be a condition precedent to the Agent's execution of
                any
                certificates in the Prospectus and any Supplementary Material that
                it be
                satisfied, acting reasonably, with its due diligence investigation
                of the
                Company and the Subsidiary and as to the form and content of the
                Prospectus and any Supplementary
                Material;

            

    

     

    
      	(i)  	
              the
                Company shall fulfil each of the conditions set out in paragraph
                9;

            

    

     

    
      	(j)  	
              the
                Company shall use its commercially reasonable efforts to cause the
                Qualifying Date to occur
                on
                or before the Qualification
                Deadline;

            

    

     

    
      	(k)  	
              the
                Company agrees that, for a period of 90 days from the Special Warrant
                Closing Date (the "Black-Out
                Period"),
                it shall not, without the prior written consent of the Agent (such
                consent
                not to be unreasonably withheld), directly or indirectly, issue or
                announce any intention to issue any additional Common Shares or any
                securities convertible or exchangeable into Common Shares, other
                than
                pursuant to (i) the Offering, the granting of the Agent's Option
                and the
                granting of the Special Broker Warrants and FT Special Broker Warrants
                contemplated in this Agreement, (ii) the grant or exercise of stock
                options and other similar issuances pursuant to any stock option
                plan in
                place at the Special Warrant Closing Time, or (iii) the issue of
                Common
                Shares upon the exercise of convertible securities, warrants or options
                outstanding at the Special Warrant Closing Time (including the Special
                Warrants, the Special Broker Warrants and the FT Special Broker
                Warrants);

            

    

     

    
      	(l)  	
              the
                net proceeds of the sale of Special Warrants will be used by the
                Company:

            

    

     

    
      	(i)  	
              to
                develop the Company's mineral projects;
                and

            

    

     

    
      	(ii)  	
              for
                general corporate purposes;

            

    

     

    
      	(m)  	
              the
                Company will deliver to the Agent copies of all correspondence and
                other
                written communications between the Company and the securities regulatory
                authorities of the Qualifying Jurisdictions and other jurisdictions
                and
                the TSX relating to the Offering and will generally keep the Agent
                apprised of the status of, including all developments relating to,
                the
                Offering;

            

    

     

    
      	(n)  	
              the
                Company shall use its commercially reasonable best efforts to obtain,
                to
                the extent not already obtained, all consents and approvals from
                the
                securities regulatory authorities of the Qualifying Jurisdictions
                for the
                Offering on such terms as are mutually acceptable to the Company
                and the
                Agent, and shall make all necessary filings and give any required
                notices
                and use its commercially reasonable best efforts to obtain all other
                necessary governmental, regulatory and other consents and approvals
                required in connection with the transactions contemplated by this
                Agreement;

            

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	(o)  	
              the
                Company shall fulfil all legal requirements to permit the creation,
                issue,
                offering and sale of the Special Warrants, the granting of the Agent's
                Option, the creation and issue of the Special Broker Warrants and
                FT
                Special Broker Warrants and the reservation and issue of the Underlying
                Securities and the Underlying Broker Securities as contemplated in
                this
                Agreement including, without limitation, in compliance with the Securities
                Laws to enable the Special Warrants to be offered for sale and sold
                under
                this Agreement and the Subscription Agreements, and the Agent's Option,
                the Special Broker Warrants and the FT Special Broker Warrants to
                be
                issued to the Agent, and to enable the Underlying Securities and
                Underlying Broker Securities to be issued, without the necessity
                of filing
                a prospectus in the Qualifying
                Jurisdictions;

            

    

     

    
      	(p)  	
              at
                all times prior to the completion of the distribution of the Underlying
                Securities, the Company shall continue
                to operate its business and the businesses of the Subsidiary in the
                ordinary course, in compliance with all applicable laws (including
                without
                limitation those of the Qualifying Jurisdictions, the United States
                and
                the Yukon Territory) and prior to the completion of the distribution
                of
                the Units and Flow-Through Shares, shall notify the Agent of any
                material
                changes or changes of material fact in the respective businesses,
                affairs,
                operations, assets, Properties, Permits, prospects, financial condition,
                capital or liabilities (contingent or otherwise) of the Company or
                the
                Subsidiary;

            

    

     

    
      	(q)  	
              it
                shall execute and file with the Securities Regulators all forms,
                notices
                and certificates required to be filed pursuant to the Securities
                Laws in
                the time required by the applicable Securities
                Laws;

            

    

     

    
      	(r)  	
              it
                shall not to be or become, at any time prior to the expiration of
                five
                years after the Closing Time, an open-end investment company, unit
                investment trust, closed-end investment company or face-amount certificate
                company that is or is required to be registered under Section 8 of
                the Investment Company Act;

            

    

     

    
      	(s)  	
              the
                Company will comply with the U.S. Securities Act so as to permit
                the
                completion of the distribution of the Special Warrants and the
                Flow-Through Shares, Unit Shares and Warrants contemplated hereby.
                At any
                time when the Company is not subject to Section 13 or 15(d) of the
                Exchange Act, for the benefit of holders from time to time of Flow-Through
                Shares, Unit Shares, Warrants and Warrant Shares, to furnish at its
                expense, upon request, to holders of such securities and prospective
                purchasers of any such securities information satisfying the requirements
                of subsection (d)(4)(i) of Rule 144A under the U.S. Securities
                Act;

            

    

     

    
      	(t)  	
              the
                Registration Statement and the Prospectus and any amendments or
                supplements thereto, and the Disclosure Documents did not and will
                not, as
                of their respective dates, contain an untrue statement of a material
                fact
                or omit to state a material fact necessary in order to make the statements
                therein, in the light of the circumstances under which they were
                made, not
                misleading; provided, however, that this representation and warranty
                shall
                not apply to any statements or omissions made in reliance upon and
                in
                conformity with information furnished in writing to the Company by
                the
                Agent; and

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	(u)  	
              the
                Company will timely file such reports pursuant to the Exchange Act
                as are
                necessary in order to make generally available to its securityholders
                as
                soon as practicable an earnings statement for the purposes of, and
                to
                provide the Agent the benefits contemplated by, the last paragraph
                of
                Section 11(a) of the U.S. Securities
                Act.

            

    

     

    4  Condition
      to the Agent's Certification.

     

    The
      obligation of the Agent to execute any certificates or deliver any documents
      pertaining to the Preliminary Prospectus, the Final Prospectus and any
      Supplementary Material shall be conditional upon compliance in all material
      respects by the Company up to the date of such execution or delivery with each
      of the Company's covenants contained in this Agreement to be complied with
      prior
      to the filing of the Preliminary Prospectus or the Final Prospectus, as the
      case
      may be. If the Agent does not execute the certificates pertaining to the
      Preliminary Prospectus, the Final Prospectus and any Supplementary Material,
      other than as a result or consequence of the default by or failure of the
      Company to comply in all material respects with its covenants and agreements
      contained herein or in any Ancillary Document or the material inaccuracy of
      any
      representation or warranty of the Company herein or in any Ancillary Document,
      the Company shall thereafter be relieved of its filing and delivery obligations
      under this Agreement in respect of the Preliminary Prospectus, the Final
      Prospectus and any Supplementary Material.

     

    5  Material
      Changes During Distribution.

     

    During
      the period from the date hereof to the completion of the distribution and
      issuance of all of the Units and Flow-Through Shares upon the exercise of the
      Special Warrants, the Company shall
      promptly
      notify the Agent (and, if requested by the Agent, confirm such notification
      in
      writing) and provide full particulars to the Agent of:

     

    
      	(a)  	
              any
                material fact or change in a material fact which has arisen and would
                have
                been required to have been stated in the Final Prospectus had the
                fact or
                change in fact arisen on, or prior to, the date of the Final Prospectus;
                and

            

    

     

    
      	(b)  	
              any
                change in any material fact contained in the Preliminary Prospectus,
                Final
                Prospectus or any Supplementary Material or Registration Statement
                or any
                amendments or supplements thereto which change is, or may be, of
                such a
                nature as to render any material statement contained in the Preliminary
                Prospectus, Final Prospectus or any Supplementary Material or Registration
                Statement misleading or untrue or which results in or could result
                in a
                misrepresentation in the Preliminary Prospectus, Final Prospectus
                or
                Supplementary Material or Registration Statement or which could result
                in
                the Preliminary Prospectus, Final Prospectus or Supplementary Material
                or
                Registration Statement not complying (to the extent that such compliance
                is required) with the Securities Laws or which could reasonably be
                expected to have a significant affect on the market price or value
                of the
                Unit Shares, Warrants and/or Flow-Through
                Shares.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    The
      Company shall promptly, and in any event, within any applicable time limitation
      periods prescribed by Securities Laws, comply with all applicable filing and
      other requirements under Securities Laws as a result of such change provided
      however that the Company shall not file any Supplementary Material without
      first
      complying with paragraph 2.12 hereof.
      The Company shall in good faith discuss with the Agent any fact or change in
      circumstances (actual, anticipated, contemplated or threatened, financial or
      otherwise) which is of such a nature that there is reasonable doubt as to
      whether notice in writing need be given to the Agent pursuant to this paragraph
      5.

     

    6  Change
      in Securities Laws.

     

    If,
      during the period from the date hereof to the completion of the distribution
      and
      issuance of all of the Units and Flow-Through Shares upon the exercise of the
      Special Warrants, there shall be any change in Securities Laws which in the
      opinion of counsel to the Company or of counsel to the Agent requires the filing
      of Supplementary Material, then the Company shall, to the satisfaction of its
      counsel and the Agent's counsel, promptly prepare and file such Supplementary
      Material with the appropriate securities regulatory authority in each of the
      Qualifying Jurisdictions where such filing is required.

     

    7  Representations
      and Warranties and Additional Covenants.

     

    The
      Company represents and warrants to, and covenants with, the Agent and the
      Purchasers, and acknowledges that each of them is relying upon such
      representations and warranties and covenants in completing the Special Warrant
      Closing, that as of the Special Warrant Closing Time or as of such other time
      as
      is contemplated by any representation, warranty or covenant set forth
      below:

     

    
      	(a)  	
              the
                Company has been duly incorporated and is validly existing under
                the laws
                of Delaware and has all requisite corporate power, capacity and authority
                to (i) own, lease and operate its Properties and assets and conduct
                its
                business as currently conducted or proposed to be conducted and to
                execute, deliver and carry out its obligations under this Agreement,
                the
                Subscription Agreements and all Ancillary Documents and to do all
                acts and
                things and execute and deliver all documents as are required hereunder
                and
                thereof in accordance with the terms hereof and thereof, and (ii)
                create,
                offer, issue and sell the Special Warrants, Agent's Option, Special
                Broker
                Warrants, FT Special Broker Warrants and issue the Unit Shares, Warrants,
                Warrant Shares, Flow-Through Shares, Underlying Broker Securities,
                Broker
                Shares, Broker Warrants, Broker Warrant Shares and FT Broker Shares
                in
                accordance with the provisions of this
                Agreement;

            

    

     

    
      	(b)  	
              the
                Company is current with all filings required to be made under its
                jurisdiction of incorporation and all other jurisdictions in which
                it
                exists or carries on any material business and has, and will upon
                completion of the Offering have, all necessary licences, leases,
                permits,
                authorizations and other approvals necessary to permit it to conduct
                its
                business as currently conducted or proposed to be conducted, except
                where
                the absence of such power or authority or failure to make any filing
                or
                obtain any licence, lease, permit, authorization or other approval
                would
                not have a Material Adverse Effect;

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	(c)  	
              the
                Subsidiary has been duly incorporated and is validly existing under
                the
                laws of its jurisdiction of incorporation and has all requisite corporate
                power, capacity and authority to own, lease and operate, as applicable,
                its Properties, Permits and assets and conduct its business as currently
                conducted or proposed to be conducted, and the Subsidiary is current
                with
                all filings required to be made under its jurisdiction of incorporation
                and all other jurisdictions in which it exists or carries on any
                material
                business and has, and will upon completion of the Offering have,
                all
                necessary licences, leases, permits, authorizations and other approvals
                necessary to permit it to conduct its business as currently conducted
                or
                proposed to be conducted, except where the absence of such power
                or
                authority or failure to make any filing or obtain any licence, lease,
                permit, authorization or other approval would not have a Material
                Adverse
                Effect;

            

    

     

    
      	(d)  	
              the
                Company has taken all necessary corporate action to authorize the
                execution, delivery and performance of this Agreement and the Ancillary
                Documents and to observe and perform the provisions of this Agreement
                and
                the Ancillary Documents in accordance with the provisions hereof
                and
                thereunder (including the incurring and renunciation to Purchasers
                of FT
                Special Warrants of Qualifying Expenditures in an amount equal to
                the
                Commitment Amount) including, without limitation and in the case
                of the
                Company, the issue of the Special Warrants, Agent's Option, Special
                Broker
                Warrants and FT Special Broker Warrants upon the terms and conditions
                set
                forth herein, and the issue of the Underlying Securities upon the
                exercise
                or automatic exercise of the Special Warrants and the issue of the
                Underlying Broker Securities upon the exercise of the Special Broker
                Warrants and FT Special Broker
                Warrants;

            

    

     

    
      	(e)  	
              neither
                the Company nor the Subsidiary has committed an act of bankruptcy
                or is
                insolvent, has proposed a compromise or arrangement to its creditors
                generally, has had a petition or a receiving order in bankruptcy
                filed
                against it, has made a voluntary assignment in bankruptcy, has taken
                any
                proceedings with respect to a compromise or arrangement, has taken
                any
                proceedings to have itself declared bankrupt or wound-up, has taken
                any
                proceedings to have a receiver appointed for any of its property
                or has
                had any execution or distress become enforceable or become levied
                upon any
                of its property;

            

    

     

    
      	(f)  	
              the
                authorized capital of the Company consists of an unlimited number
                of
                Common Shares, of which as of the date hereof, 20,170,538
                Common Shares
                were issued and outstanding as fully paid and non-assessable
                shares.
                As of the date hereof, other than an aggregate of 2,134,000
                options,
                an aggregate of 4,905,791 common share purchase warrants and
                an aggregate of 533,133
                brokers' warrants to acquire an aggregate of
                7,572,924 Common Shares which are issued and outstanding, and other
                than
                pursuant to the Special Warrants, Agent's Option, Special Broker
                Warrants
                and FT Special Broker Warrants and as set forth in the Disclosure
                Documents, no Person will have any agreement, option, right or privilege
                (whether pre-emptive, contractual or otherwise) capable of becoming
                an
                agreement for the purchase, acquisition, subscription for or issue
                of any
                of the unissued shares or other securities of the Company. Other
                than the
                holders of the Special Warrants there are no persons with registration
                rights or other similar rights to have any securities registered
                pursuant
                to the Registration Statement or otherwise registered by the Company
                under
                the U.S. Securities Act;

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	(g)  	
              the
                issued and outstanding equity securities of the Subsidiary are as
                set out
                in Schedule "A" and are held directly by the Company as indicated
                therein.
                No Person has, or will upon completion of the Offering have, any
                agreement, option, right or privilege (whether pre-emptive, contractual
                or
                otherwise) capable of becoming an agreement for the purchase, acquisition,
                subscription for or issue of any of the unissued or outstanding shares
                or
                other securities of the Subsidiary;

            

    

     

    
      	(h)  	
              there
                are no, and at the Special Warrant Closing Time, there will be no
                shareholders' agreements to which the Company is a party, and to
                the best
                knowledge of the Company there are no, and at the Special Warrant
                Closing
                Time there will be no, pooling agreements, voting trusts or other
                similar
                agreements with respect to the ownership or voting of any of the
                securities of the Company. There are no, and at the Special Warrant
                Closing Time there will be no, agreement or other instrument pursuant
                to
                which any Person may have any right or claim in connection with any
                existing or past equity interest in the
                Company;

            

    

     

    
      	(i)  	
              all
                necessary corporate action has been taken by the Company to authorize
                the
                valid creation, issue and sale of, and the delivery of certificates
                representing, the Special Warrants, and upon payment of the requisite
                consideration therefor the Special Warrants will be validly created
                and
                issued, and upon the due exercise thereof the Unit Shares
                and the Flow-Through Shares will be validly issued as fully paid
                and
                non-assessable shares. All necessary corporate action has been taken
                by
                the Company to authorize the granting of the Agent's Option. All
                necessary
                corporate action has been taken by the Company to authorize the granting
                of the Warrants and the valid creation, issue of, and the delivery
                of the
                certificates representing the Warrants. Upon the exercise of the
                Warrants
                and payment of the requisite consideration for the Warrant Shares
                in
                accordance with the provisions of the Warrants, the Warrant Shares
                will be
                validly issued as fully paid and non-assessable shares. All necessary
                corporate action has been taken by the Company to authorize the valid
                creation, issue and sale of, and the delivery of certificates
                representing, the Special Broker Warrants and Unit Broker Warrants
                and the
                Special Broker Warrants and Unit Broker Warrants will be validly
                created
                and issued, and upon the due exercise of the Unit Broker Warrants,
                the
                Broker Shares will be validly issued as fully paid and non-assessable
                shares All necessary corporate action has been taken by the Company
                to
                authorize the granting of the Broker Warrants and the valid creation,
                issue of, and the delivery of the certificates representing the Broker
                Warrants. Upon the exercise of the Broker Warrants and payment of
                the
                requisite consideration for the Broker Warrant Shares in accordance
                with
                the provisions of the Broker Warrants, the Broker Warrant Shares
                will be
                validly issued as fully paid and non-assessable shares. All necessary
                corporate action has been taken by the Company to authorize the granting
                of the FT Special Broker Warrants and the FT Broker Warrants and
                the valid
                creation, issue of, and the delivery of the certificates representing
                the
                FT Special Broker Warrants and FT Broker Warrants. Upon the exercise
                of
                the FT Broker Warrants and payment of the requisite consideration
                for the
                FT Broker Shares in accordance with the provisions of the FT Broker
                Warrants, the FT Broker Shares will be validly issued as fully paid
                and
                non-assessable shares;

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	(j)  	
              none
                of the offering, issuance and sale of the Special Warrants, the granting
                of the Agent's Option, the granting of the Special Broker Warrants
                and FT
                Special Broker Warrants, the execution and delivery of this Agreement,
                the
                Subscription Agreements, the Ancillary Documents, the compliance
                by the
                Company with the provisions of this Agreement, the Subscription
                Agreements, the Ancillary Documents or the consummation of the
                transactions contemplated herein and therein including, without
                limitation, the issue and sale of the Special Warrants, the issue
                of the
                Underlying Securities upon the exercise or deemed exercise of the
                Special
                Warrants, the issue of the Warrant Shares upon the exercise of the
                Warrants, the issue of the Special Broker Warrants and the FT Special
                Broker Warrants, the issue of the Underlying Broker Securities upon
                the
                exercise of the Special Broker Warrants and FT Special Broker Warrants
                and
                the issue of the Broker Warrant Shares upon the exercise of the Broker
                Warrants do or will (i) require the consent, approval, or authorization,
                order or agreement of, or registration or qualification with, any
                governmental agency, body or authority, court, stock exchange, securities
                regulatory authority or other Person, except (A) such as have been
                obtained, or (B) such as may be required under applicable Securities
                Laws
                and will be obtained in compliance with the requirements of Securities
                Laws, or (ii) conflict with or result in any breach or violation of
                any of the provisions of, or constitute a default under (whether
                after
                notice or lapse of time or both), any indenture, mortgage, deed of
                trust,
                lease or other material agreement or instrument to which the Company
                or
                the Subsidiary is a party or by which any of them or any of the
                Properties, Permits or assets thereof are bound, or the articles
                or
                by-laws or any other constating document of the Company or the Subsidiary
                or any resolution passed by the directors (or any committee thereof)
                or
                shareholders of the Company or the Subsidiary, or any statute or
                any
                judgment, decree, order, rule, policy or regulation of any court,
                governmental authority, arbitrator, stock exchange or securities
                regulatory authority applicable to the Company or the Subsidiary
                or any of
                the Properties, Permits or assets thereof, which would have a Material
                Adverse Effect;

            

    

     

    
      	(k)  	
              at
                the Special Warrant Closing Time all necessary action will have been
                taken
                by the Company to duly allot and reserve for issuance the Unit Shares,
                the
                Warrant Shares, the Flow-Through Shares the Broker Shares, the FT
                Broker
                Shares and the Broker Warrant Shares and such shares will be duly
                allotted
                and reserved for issuance;

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	(l)  	
              this
                Agreement has been authorized, executed and delivered by
                the Company and constitutes a valid and legally binding obligation
                of the
                Company enforceable against the Company in accordance with the terms
                hereof and upon being executed and delivered the Ancillary Documents
                will
                constitute valid and legally binding obligations of the Company
                enforceable against the Company in accordance with the terms thereof,
                except as enforcement thereof may be limited by bankruptcy, insolvency,
                reorganization, moratorium and other laws relating to or affecting
                the
                rights of creditors generally and except as limited by the application
                of
                equitable principles when equitable remedies are sought, and by the
                fact
                that rights to indemnity, contribution and waiver, and the ability
                to
                sever unenforceable terms, may be limited by applicable law and except
                as
                may be limited by the Limitations
                Act, 2002
                (Ontario);

            

    

     

    
      	(m)  	
              the
                Disclosure Documents complied in all material respects with Securities
                Laws at the time they were filed. There is no material fact known
                to the
                Company which the Company has not disclosed to, or which the Company
                has
                withheld from, the Agent and which results or may reasonably be expected
                to result in a Material Adverse Effect or which materially adversely
                affects or which may reasonably be expected to
                materially adversely affect the ability of the Company to perform
                its
                obligations under this Agreement or the Ancillary
                Documents;

            

    

     

    
      	(n)  	
              there
                has not occurred any material adverse change (actual, anticipated,
                contemplated or threatened, whether financial or otherwise) in the
                assets,
                liabilities (contingent or otherwise), Properties, Permits, capital,
                affairs, business, operations or condition (financial or otherwise)
                of the
                Company or the Subsidiary which has not been publicly
                disclosed;

            

    

     

    
      	(o)  	
              no
                order preventing, ceasing or suspending trading in any securities
                of the
                Company or prohibiting the issue and sale of securities by the Company
                has
                been issued and no proceedings for either of such purposes have been
                instituted or, to the best of the knowledge of the Company, are pending,
                contemplated or threatened;

            

    

     

    
      	(p)  	
              the
                Financial Statements and the notes thereto, present fairly, in all
                material respects, the financial position of the Company and the
                statements of operations, retained earnings, cash flow from operations
                and
                changes in financial information of the Company for the periods specified
                in such Financial Statements, and have been prepared in conformity
                with
                U.S. generally accepted accounting principles applied on a consistent
                basis throughout the periods involved, and there has been no material
                change in accounting policies or practices of the Company since
                April
                30, 2006.
                All disclosures in the Disclosure Documents regarding "non-GAAP financial
                measures" (as such term is defined by the rules and regulations of
                the SEC) comply with Regulation G under the U.S. Securities Act,
                to the
                extent applicable;;

            

    

     

    
      	(q)  	
              other
                than as publicly disclosed by the Company, since April 30, 2006,
                none
                of:

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	(i)  	
              the
                Company or the Subsidiary has paid or declared any dividend or incurred
                any material capital expenditure or made any commitment
                therefor;

            

    

     

    
      	(ii)  	
              the
                Company or the Subsidiary has incurred any obligation or liability,
                direct
                or indirect, contingent or otherwise, except in the ordinary course
                of
                business and which is not, and which in the aggregate are not, material;
                and

            

    

     

    
      	(iii)  	
              the
                Company or the Subsidiary has entered into any material
                transaction.

            

    

     

    
      	(r)  	
              other
                than as disclosed to the Agent, none of the Company or the Subsidiary
                has
                approved or has entered into any agreement in respect of, or has
                any
                knowledge of:

            

    

     

    
      	(i)  	
              the
                purchase of any Property, Permit or material assets or any interest
                therein;

            

    

     

    
      	(ii)  	
              the
                sale, transfer or other disposition of any Property, Permit or material
                assets or any interest therein currently owned, directly or indirectly,
                by
                the Company or the Subsidiary whether by asset sale, transfer of
                shares or
                otherwise; or

            

    

     

    
      	(iii)  	
              the
                change of control (by sale or transfer of shares or sale of all or
                substantially all of the Properties, Permits and assets of the Company
                or
                the Subsidiary or otherwise) of the Company or the
                Subsidiary.

            

    

     

    
      	(s)  	
              each
                of the Company and the Subsidiary has filed in a timely manner all
                necessary tax returns and notices and has paid all applicable taxes
                of
                whatsoever nature for all tax years prior to the date hereof to the
                extent
                that such taxes have become due or have been alleged to be due and
                neither
                the Company nor the Subsidiary is aware of any tax deficiencies or
                interest or penalties accrued or accruing, or alleged to be accrued
                or
                accruing, thereon where, in any of the above cases, it might reasonably
                be
                expected to result a Material Adverse Effect and there are no agreements,
                waivers or other arrangements providing for an extension of time
                with
                respect to the filing of any tax return by any of them or the payment
                of
                any material tax, governmental charge, penalty, interest or fine
                against
                any of them. There are no material actions, suits, proceedings,
                investigations or claims now threatened or pending against the Company
                or
                the Subsidiary which could result in a material liability in respect
                of
                taxes, charges or levies of any governmental authority, penalties,
                interest, fines, assessments or reassessments or any matters under
                discussion with any governmental authority relating to taxes, governmental
                charges, penalties, interest, fines, assessments or reassessments
                asserted
                by any such authority and the Company and the Subsidiary has withheld
                (where applicable) from each payment to each of the present and former
                officers, directors, employees and consultants thereof the amount
                of all
                taxes and other amounts, including, but not limited to, income tax
                and
                other deductions, required to be withheld therefrom, and has paid
                the same
                or will pay the same when due to the proper tax or other receiving
                authority within the time required under applicable tax
                legislation;

            

    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	(t)  	
              each
                of the Company and the Subsidiary has conducted and is conducting
                the
                business thereof in compliance in all material respects with all
                applicable laws, rules, regulations, tariffs, orders and directives
                of
                each jurisdiction in which it carries on a material portion of its
                business and possesses all material approvals, consents, certificates,
                registrations, authorizations, permits (including the Permits) and
                licenses issued by the appropriate provincial, state, municipal,
                federal,
                national or other regulatory agency or body necessary to carry on
                the
                business currently carried on or contemplated to be carried on by
                it or as
                contemplated to be conducted, is in compliance in all material respects
                with the terms and conditions of all such approvals, consents,
                certificates, authorizations, permits (including the Permits) and
                licenses
                and with all laws, regulations, tariffs, rules, orders and directives
                material to the operations thereof, and none of the Company or the
                Subsidiary has received any notice of the modification, revocation
                or
                cancellation of, or any intention to modify, revoke or cancel or
                any
                proceeding relating to the modification, revocation or cancellation
                of any
                such approval, consent, certificate, authorization, permit (including
                any
                Permit) or license which, singly or in the aggregate, if the subject
                of an
                unfavourable decision, order, ruling or finding, would result in
                a
                Material Adverse Effect. All such material approvals, consents,
                certificates, registrations, authorizations, permits (including the
                Permits) and licenses are and will at the Special Warrant Closing
                Time be
                valid, subsisting and in good
                standing;

            

    

     

    
      	(u)  	
              neither
                the Company nor the Subsidiary is in violation of any term of the
                articles
                or by-laws or any constating document thereof. Neither the Company
                nor the
                Subsidiary is in violation of any term or provision of any material
                agreement, indenture or other instrument applicable to it which would
                result in any Material Adverse Effect. Neither the Company nor the
                Subsidiary is in default in the payment of any obligation owed which
                is
                now due and there are no actions, suits, proceedings or investigations
                commenced, pending or, to the knowledge of the Company, threatened
                which,
                in the aggregate, would result in any Material Adverse Effect or
                in any
                material liability on the part of the Company or the Subsidiary or
                which
                places, or could place, in question the validity of the Offering,
                or the
                validity or enforceability of this Agreement, the Ancillary Documents
                or
                any document or instrument delivered, or to be delivered, by the
                Company
                pursuant hereto or thereto;

            

    

     

    
      	(v)  	
              the
                Company and the Subsidiary are the absolute legal and beneficial
                owner of,
                and have good and marketable title to, all of the material Properties,
                Permits and assets thereof, free of all mortgages, liens, charges,
                pledges, security interests, encumbrances, claims or demands whatsoever,
                and no other property rights are necessary for the conduct of the
                business
                of the Company or the Subsidiary as currently conducted or as contemplated
                to be conducted, none of the Company or the Subsidiary knows of any
                claim
                or the basis for any claim that might or could adversely affect the
                right
                thereof to use, transfer or otherwise exploit such Property rights,
                and
                neither the Company nor the Subsidiary has any responsibility or
                obligation to pay any commission, royalty, licence fee or similar
                payment
                to any Person with respect to the Property rights
                thereof;

            

    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	(w)  	
              a
                complete and accurate list of the material mineral properties of
                the
                Company together with a complete and accurate list of the Permits
                of the
                Company that relate thereto is set forth in Schedule "B". The Company
                and
                the Subsidiary hold either freehold title, mining leases, mining
                concessions, mining claims, exploration permits, prospecting permits
                or
                participating interests or other conventional property or proprietary
                interests or rights, recognized in the jurisdiction in which a particular
                Property is located, in respect of the ore bodies and minerals located
                in
                the Properties in which the Company or the Subsidiary has an interest
                under valid, subsisting and enforceable title documents or other
                recognized and enforceable agreements or instruments, sufficient
                to permit
                the Company or the applicable Subsidiary to explore the minerals
                relating
                thereto, all Property leases or claims and Permits in which the Company
                or
                the Subsidiary has an interest or right have been validly located
                and
                recorded in accordance with all applicable laws and are valid and
                subsisting, the Company and the Subsidiary have all necessary surface
                rights, access rights and other necessary rights and interests relating
                to
                the Properties in which the Company and the Subsidiary have an
                interest,
                granting the Company or the Subsidiary the right and ability to explore
                for minerals, ore and metals for development purposes as are appropriate
                in view of the rights and interest therein of the Company or the
                Subsidiary, with only such exceptions as do not materially interfere
                with
                the use made by the Company or the Subsidiary of the rights or interests
                so held, and each of the property interests or rights and each of
                the
                documents, agreements and instruments and obligations relating thereto
                referred to above is currently in good standing in the name of the
                Company
                or the Subsidiary;

            

    

     

    
      	(x)  	
              any
                and all of the Permits, agreements and other documents and instruments
                pursuant to which the Company or the Subsidiary holds an interest
                in the
                Properties and assets thereof (including any interest in, or right
                to earn
                an interest in, any Property) are valid and subsisting Permits,
                agreements, documents or instruments in full force and effect, enforceable
                in accordance with the terms thereof, neither the Company nor the
                Subsidiary is in default of any of the material provisions of any
                such
                agreements, documents or instruments nor has any such default been
                alleged, and such Properties, Permits and assets are in good standing
                under the applicable laws of the jurisdictions in which they are
                situated,
                all leases, licences, Permits and claims pursuant to which the Company
                or
                the Subsidiary derive the interests thereof in such Properties and
                assets
                are in good standing and there has been no material default under
                any such
                lease, licence, Permit or claim and all fees and other amounts required
                to
                be paid with respect to such Permits, Properties and assets to the
                date
                hereof have been paid, other than defaults which could not result
                in a
                Material Adverse Effect. None
                of the Properties (or any interest in, or right to earn an interest
                in,
                any Property) of the Company or the Subsidiary is subject to any
                right of
                first refusal or purchase or acquisition
                right;

            

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	(y)  	
              neither
                the Company nor the Subsidiary is in default of any material term,
                covenant or condition under or in respect of any judgement, order,
                agreement or instrument to which it is a party or to which it or
                any of
                the Property or assets thereof are or may be subject, and no event
                has
                occurred and is continuing, and no circumstance exists which has
                not been
                waived, which constitutes a default in respect of any commitment,
                agreement, document or other instrument to which the Company or the
                Subsidiary is a party or by which it is otherwise bound entitling
                any
                other party thereto to accelerate the maturity of any amount owing
                thereunder or which would result in a Material Adverse
                Effect;

            

    

     

    
      	(z)  	
              the
                Company and the Subsidiary is in compliance with all laws and regulations
                respecting employment and employment practices, terms and conditions
                of
                employment, pay equity and wages, except where such non-compliance
                would
                not result in a Material Adverse Effect, and there is no labour strike,
                dispute, slowdown, stoppage, complaint or grievance pending or threatened
                against the Company or the
                Subsidiary;

            

    

     

    
      	(aa)  	
              the
                Company and the Subsidiary:

            

    

     

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

            

    

     

    
      	(ii)  	
              do
                not have any knowledge of, and have not received any notice of, any
                material claim, judicial or administrative proceeding, pending or
                threatened against, or which may affect, either the Company or the
                Subsidiary or any of the Properties, assets or operations thereof,
                relating to, or alleging any violation of any Environmental Laws,
                the
                Company is not aware of any facts which could give rise to any such
                claim
                or judicial or administrative proceeding and neither the Company
                nor the
                Subsidiary nor any of the Properties, assets or operations thereof
                is the
                subject of any investigation, evaluation, audit or review by any
                "Governmental
                Authority"
                (which term means and includes, without limitation, any national,
                federal
                government, province, state, municipality or other political subdivision
                of any of the foregoing, any entity exercising executive, legislative,
                judicial, regulatory or administrative functions of or pertaining
                to
                government and any corporation or other entity owned or controlled
                (through stock or capital ownership or otherwise) by any of the foregoing)
                to determine whether any violation of any Environmental Laws has
                occurred
                or is occurring or whether any remedial action is needed in connection
                with a release of any Contaminant into the environment, except for
                compliance investigations conducted in the normal course by any
                Governmental Authority;

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	(iii)  	
              do
                not store any hazardous or toxic waste or substance on the Properties
                thereof and have not disposed of any hazardous or toxic waste, in
                each
                case in a manner contrary to any Environmental Laws, and there are
                no
                Contaminants on any of the premises or Properties at which the Company
                or
                the Subsidiary carries on business, in each case other than in compliance
                with Environmental Laws; and

            

    

     

    
      	(iv)  	
              to
                the knowledge of the Company, neither the Company nor the Subsidiary
                are
                subject to any contingent or other liability relating to the restoration
                or rehabilitation of land, water or any other part of the environment
                (except for those derived from normal exploration activities) or
                non-compliance with Environmental
                Law.

            

    

     

    
      	(bb)  	
              all
                consents, approvals, permits, authorizations or filings as may be
                required
                under Securities Laws necessary to the performance by the Company
                of its
                obligations under this Agreement and the Subscription Agreements
                will have
                been obtained at the Special Warrant Closing Date or will be obtained
                within the time prescribed by Securities
                Laws;

            

    

     

    
      	(cc)  	
              provided
                the Agent and Purchasers comply with their obligations set forth
                in this
                Agreement and the Subscription Agreements (respectively), none of
                the
                execution and delivery of this Agreement, the Subscription Agreements,
                the
                Ancillary Documents, the Special Warrants, Agent's Option, Special
                Broker
                Warrants and the FT Special Broker Warrants, the performance by the
                Company of its obligations hereunder and thereunder, the creation,
                sale
                and issuance of the Special Warrants, Agent's Option, Special Broker
                Warrants and FT Special Broker Warrants hereunder and the consummation
                of
                the transactions contemplated by this Agreement, including the issuance
                and delivery of the Underlying Securities and Underlying Broker
                Securities, will conflict with or result in a breach or violation
                of any
                applicable Canadian federal or provincial
                laws;

            

    

     

    
      	(dd)  	
              other
                than as disclosed in the Financial Statements,
                no
                material legal or governmental proceedings are pending to which the
                Company or the Subsidiary is a party or to which any Property, or
                any
                Property interest, of the Company or the Subsidiary is subject, and
                to the
                knowledge of the Company, no such proceedings have been threatened
                or are
                contemplated;

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	(ee)  	
              the
                Preliminary Prospectus, the Final Prospectus and the Registration
                Statement will accurately summarize, in all material respects, the
                attributes of the Underlying Securities and Underlying Broker Securities
                to the extent required by Securities
                Laws;

            

    

     

    
      	(ff)  	
              other
                than the Agent and except as may be consented to by the Agent, there
                is no
                Person acting or purporting to act at the request of the Company,
                who is
                entitled to any brokerage or agency fee in connection with the
                transactions contemplated herein;

            

    

     

    
      	(gg)  	
              the
                Company's Auditors who reported on the annual Financial Statements
                are
                independent with respect to the Company within the meaning of Securities
                Laws;

            

    

     

    
      	(hh)  	
              the
                Company and the Subsidiary maintain, and will maintain, a system
                of
                internal accounting controls sufficient to provide reasonable assurance
                that (i) transactions are executed in accordance with management's
                general
                or specific authorizations, (ii) transactions are recorded as necessary
                to
                permit preparation of financial statements in conformity with generally
                accepted accounting principles in Canada and to maintain asset
                accountability, (iii) access to assets is permitted only in accordance
                with management's general or specific authorization, and (iv) the
                recorded
                accountability for assets is compared with the existing assets at
                reasonable intervals and appropriate action is taken with respect
                to any
                material differences;

            

    

     

    
      	(ii)  	
              the
                forms of the certificates representing the Special Warrants, the
                Underlying Securities, the Special Broker Warrants, the FT Special
                Broker
                Warrants, the Underlying Broker Securities and the Broker Warrants
                have
                been duly approved by the Company and comply with the provisions
                of
                applicable law;

            

    

     

    
      	(jj)  	
              the
                Company is a reporting issuer or the equivalent thereof in Ontario
                and is
                not in default of any of its obligations under Securities
                Laws;

            

    

     

    
      	(kk)  	
              the
                Company has not breached any flow-through share agreement to which
                it is a
                party and, in particular, the Company has not failed to incur and
                renounce
                expenses which it covenanted to incur and renounce pursuant to such
                agreements nor has the Canada Revenue Agency or the Company reduced,
                pursuant to section 66(12.73) of the Act, any amount renounced by
                the
                Company;

            

    

     

    
      	(ll)  	
              the
                Company is a "principal-business corporation" as defined in subsection
                66(15) of the Act and will continue to be a "principal-business
                corporation" at all times relevant to the valid renunciation of Qualifying
                Expenditures to Purchasers of FT Special Warrants effective on or
                before
                December 31, 2006;

            

    

     

    
      	(mm)  	
              upon
                issuance pursuant to the provisions of the Subscription Agreement
                for FT
                Special Warrants, the FT Special Warrants and the Flow-Through Shares
                issuable on the exercise or deemed exercise of FT Special Warrants
                will be
                "flow-through shares" as defined in subsection 66(15) of the Act
                and will
                not constitute "prescribed rights" or "prescribed shares" within
                the
                meaning of section 6202.1 of the regulations to the Act or the Proposed
                Amendments;

            

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	(nn)  	
              the
                Company is in material compliance with all rules, regulations and
                policies
                of the TSX;

            

    

     

    
      	(oo)  	
              The
                Disclosure Documents, when they were or are filed with the SEC, conformed
                or will conform in all material respects to the applicable
                requirements of the Exchange Act and the applicable rules and
                regulations of the SEC thereunder and when read together did not
                and will
                not contain an untrue statement of a material fact or omit to state
                a
                material fact required to be stated therein or necessary to make
                the
                statements therein not misleading;

            

    

     

    
      	(pp)  	
              the
                currently issued and outstanding Common Shares currently trade on
                the
                Over-the-Counter market and are quoted in the Bulletin Board system
                maintained by the National Association of Securities Dealers, Inc.
                and no order ceasing or suspending trading in any securities of the
                Company or the trading of any of the Company’s issued securities is
                currently outstanding and no proceedings for such purpose are, to
                the
                knowledge of the Company, pending or
                threatened;

            

    

     

    
      	(qq)  	
              other
                than in connection with transferring the listing of the Common Shares
                to
                the American Stock Exchange or the NASDAQ Market, Inc. the Company
                shall not take any action which would be reasonably expected to result
                in
                the delisting or suspension of its Common Shares on the Over-the-Counter
                Bulletin Board system or from any other securities exchange, market
                or
                trading or quotation facility on which its Common Shares become listed
                or
                quoted (including the Toronto Stock Exchange) and the Company shall
                comply, in all material respects, with the rules and regulations
                thereof;

            

    

     

    
      	(rr)  	
              all
                information which has been prepared by the Company relating to the
                Company
                and the Subsidiary and their respective business, property and liabilities
                and either publicly disclosed or provided to the Agent, including
                all
                financial, marketing, sales and operational information provided
                to the
                Agent and all Disclosure Documents did not and will not contain a
                misrepresentation or an untrue statement of a material fact or omit
                to
                state a material fact required to be stated therein or necessary
                to make
                the statements therein not
                misleading;

            

    

     

    
      	(ss)  	
              other
                than the notification filing on Form D required to be filed with the
                SEC 15 days after the Closing Date and the filing of Form 45-106F1
                within
                10 days after the Closing Date, all filings required to be made by
                the
                Company and the Subsidiary pursuant to the Securities Laws and general
                corporate law applicable to them have been made and such filings
                were true
                and accurate as at the respective dates thereof and the Company has
                not
                filed any confidential material change
                reports;

            

    

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	(tt)  	
              None
                of the transactions contemplated by this Agreement including, without
                limitation, the use of the proceeds from the sale of the Special
                Warrants
                will violate or result in a violation of Section 7 of the Exchange
                Act, or any regulation promulgated thereunder, including, without
                limitation, Regulations G, T, U, and X of the Board of Governors
                of the
                Federal Reserve System;

            

    

     

    
      	(uu)  	
              There
                is and has been no failure on the part of the Company or any of the
                Company’s directors or officers, in their capacities as such, to comply in
                all material respects with any applicable provision of the Sarbanes-Oxley
                Act of 2002 and the rules and regulations promulgated in connection
                therewith, including Section 402 related to loans and Sections 302
                and 906 related to certifications;

            

    

     

    
      	(vv)  	
              Prior
                to the date hereof, neither the Company nor any of its affiliates
                has
                taken any action which is designed to or which has constituted or
                which
                might have been expected to cause or result in stabilization or
                manipulation of the price of any security of the Company in connection
                with the offering of the Special
                Warrants;

            

    

     

    
      	(ww)  	
              The
                Company is subject to Section 13 or 15(d) of the Exchange
                Act;

            

    

     

    
      	(xx)  	
              The
                Company is not, and after giving effect to the offering and sale
                of the
                Special Warrants, will not be an "investment company", or an entity
                "controlled" by an "investment company", as such terms are defined
                in the
                Investment Company Act;

            

    

     

    
      	(yy)  	
              Assuming
                compliance with the terms of the Subscription Agreements, and this
                Agreement, neither the Company nor any person acting on its behalf
                has
                offered or sold the Special Warrants (or any securities issuable
                on
                conversion thereof) by means of any general solicitation or general
                advertising within the meaning of Rule 502(c) under the U.S. Securities
                Act or, with respect to the Special Warrants (or any such securities)
                sold
                outside the United States to non-U.S. persons (as defined in Rule 902
                under the U.S. Securities Act), by means of any directed selling
                efforts
                within the meaning of Rule 902 under the U.S. Securities Act and the
                Company, any affiliate of the Company and any person acting on its
                or
                their behalf has complied with and will implement the offering restriction
                requirements of Rule 902 under the U.S. Securities
                Act;

            

    

     

    
      	(zz)  	
              The
                Company and the Subsidiary maintain a system of internal accounting
                controls sufficient to provide reasonable assurances that (A) transactions
                are executed in accordance with management’s general or specific
                authorization; (B) transactions are recorded as necessary to permit
                preparation of financial statements in conformity with U.S. generally
                accepted accounting principles and to maintain accountability for
                assets;
                (C) access to assets is permitted only in accordance with management’s
                general or specific authorization; and (D) the recorded accountability
                for
                assets is compared with the existing assets at reasonable intervals
                and
                appropriate action is taken with respect to any differences. Since
                December 31, 2004, there has been (1) no material weakness in
                the Company’s internal control over financial reporting (whether or not
                remediated) and (2) no change in the Company’s internal control over
                financial reporting that has materially affected, or is reasonably
                likely
                to materially affect, the Company’s internal controls over financial
                reporting.

            

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	(aaa)  	
              The
                Company has no Joint Ventures.

            

    

     

    8  Special
      Warrant Closing.

     

    The
      purchase and sale of the Special Warrants shall be completed at the Special
      Warrant Closing Time at the offices of MacLeod Dixon LLP in Toronto, Canada
      or
      at such other place as the Agent and the Company may agree upon. At the Special
      Warrant Closing Time:

     

    
      	(a)  	
              the
                Company shall deliver to the Agent certificates in definitive form
                representing the Special Warrants registered in accordance with the
                terms
                and conditions of the Subscription Agreements, completed and executed
                copies of which shall have been received by the Company at least
                twenty-four (24)
                hours prior to the Special Warrant Closing Time, against payment
                by the
                Agent to the Company of the net proceeds, net of the fee payable
                to the
                Agent in accordance with paragraph 8(b)
                and the expenses of the Agent in accordance with paragraph
                11,
                in
                lawful money of Canada by certified cheque or banker's draft or wire
                transfer to the Company; and

            

    

     

    
      	(b)  	
              in
                full consideration for all advisory, arrangement, book running and
                distribution services rendered by the Agent in connection with the
                Offering, the Company shall pay to the Agent (i) a fee equal to 7%
                of the
                aggregate gross proceeds of Special Warrants sold, payable in lawful
                money
                of Canada to or to the order of the Agent (the $25,000 due diligence
                fee
                previously paid to the Agent will be set off against the foregoing
                commission), (ii) issue to the Agent such number of warrants
                (the "Special
                Broker Warrants")
                equal to 7% of the number of Non FT Special Warrants sold in the
                Offering.
                Each Special Broker Warrant will entitle the holder thereof to acquire
                for
                no additional consideration one unit broker warrant (a "Unit
                Broker Warrant").
                Each Unit Broker Warrant will entitle the holder thereof to subscribe
                for
                one unit comprised of one Common Share (each a "Broker
                Share")
                and one common share purchase warrant (each a "Broker
                Warrant")
                at a price of $0.941 for a period of 24 months from the Special Warrant
                Closing Date. Each Broker Warrant will entitle the holder thereof
                to
                acquire one Common Share (each a "Broker
                Warrant Share")
                at a price of $1.05 for a period of 24 months from the Special Warrant
                Closing Date and (iii) issue to the Agent such number of warrants
                (the
                "FT
                Special Broker Warrants")
                equal to 7% of the number of FT Special Warrants sold in the Offering.
                Each FT Special Broker Warrant will entitle the holder thereof to
                acquire
                for no additional consideration one flow-through broker warrant (a
                "FT
                Broker Warrant").
                Each FT Broker Warrant will entitle the holder thereof to subscribe
                for
                one Common Share (each an "FT
                Broker Share")
                at a price of $1.05 for a period of 24 months from the Special Warrant
                Closing Date. Where used in this Agreement, the term "Underlying
                Broker Securities"
                shall mean the Unit Broker Warrants and FT Broker
                Warrants.

            

    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    In
      the
      event that the Qualifying Date does not occur prior to the Qualification
      Deadline, each Special Broker Warrant will entitle the holder thereof to receive
      on exercise thereof 1.1 Unit Broker Warrants and each FT Special Broker Warrant
      will entitle the holder thereof to receive on exercise thereof 1.1 FT Broker
      Warrants.

     

    9  Special
      Warrant Closing Conditions.

     

    In
      addition to the deliveries contemplated by paragraph 8,
      each
      Purchaser's subscription to purchase the Special Warrants and the Agent's
      obligations to close the purchase of Special Warrants from the Company at the
      Special Warrant Closing Time shall be conditional upon the fulfilment at or
      before the Special Warrant Closing Time of the following
      conditions:

     

    
      	(a)  	
              the
                TSX shall have accepted notice of the issuance of, and conditionally
                approved the issuance and listing thereon of the Unit Shares, Warrant
                Shares, Flow-Through Shares, Broker Shares, FT Broker Shares and
                Broker
                Warrant Shares, subject to the Company fulfilling the customary
                requirements as to the filing of certain documents and the payment
                of the
                necessary listing fees and subject to requisite shareholder approval,
                and
                provided that such acceptance and approval shall be on terms satisfactory
                to the Agent acting reasonably;

            

    

     

    
      	(b)  	
              the
                Company shall have made and/or obtained the necessary filings, approvals,
                consents and acceptances under applicable Securities Laws and the
                TSX
                required to be made or obtained by the Company in connection with
                the
                offering of Special Warrants and the grant of Special Broker Warrants
                and
                FT Special Broker Warrants, on terms which are acceptable to the
                Agent,
                acting reasonably (other than the prospectus qualification of the
                Underlying Securities and Underlying Broker Securities required pursuant
                to this Agreement);

            

    

     

    
      	(c)  	
              the
                Agent shall have received a certificate, dated as of the Special
                Warrant
                Closing Date, signed by the Chief Executive Officer of the Company,
                or
                such other senior officer as may be acceptable to the Agent, certifying
                for and on behalf of the Company, to the best of the knowledge,
                information and belief of the person so signing, after having made
                due
                enquiry, but without personal liability,
                that:

            

    

     

    
      	(i)  	
              since
                April 30, 2006 (A) there has been no material change (actual, anticipated,
                contemplated or threatened, whether financial or otherwise) in the
                business, affairs, operations, Properties, Permits, assets, liabilities
                (contingent or otherwise), financial condition or capital of the
                Company
                and the Subsidiary taken as a whole and (B) no transaction has been
                entered into by the Company or the Subsidiary which is or would be
                material to the Company or the
                Subsidiary;

            

    

     

    
      	(ii)  	
              no
                order, ruling or determination having the effect of suspending or
                prohibiting the sale or ceasing the trading of the Common Shares,
                Special
                Warrants or Underlying Securities has been issued by any applicable
                regulatory authority in any of the Qualifying Jurisdictions and is
                continuing in effect and no proceedings for that purpose have been
                instituted or are pending or, to the knowledge of such officers,
                contemplated or threatened by any applicable regulatory authority
                in any
                of the Qualifying Jurisdictions;

            

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	(iii)  	
              the
                Company has duly complied in all material respects with all of its
                covenants, and satisfied all of the terms and conditions, of this
                Agreement on its part to be complied with or satisfied up to the
                Special
                Warrant Closing Time (other than those which have been waived in
                writing
                by the Agent); and

            

    

     

    
      	(iv)  	
              the
                representations and warranties of the Company contained in this Agreement,
                the Subscription Agreements and all Ancillary Documents are true
                and
                correct in all material respects as of the Special Warrant Closing
                Date
                with the same force and effect as if made at and as of such time
                after
                giving effect to the transactions contemplated by this
                Agreement.

            

    

     

    Notwithstanding
      the foregoing, the certificate contemplated by this paragraph 9(c)
      shall certify such other matters as the Agent may reasonably
      request;

     

    
      	(d)  	
              the
                Agent shall have received at the Special Warrant Closing Time certificates
                dated the Special Warrant Closing Date, signed by appropriate officers
                of
                the Company addressed to the Agent and counsel to the Agent, with
                respect
                to the constating documents of the Company, all resolutions of the
                Company's board of directors relating to this Agreement and the
                consummation of the respective transactions contemplated herein and
                therein, and the incumbency and specimen signatures of signing officers
                and such other matters as the Agent may reasonably
                request;

            

    

     

    
      	(e)  	
              the
                Company's board of directors shall have authorized and approved this
                Agreement, the Subscription Agreements, the Special Warrant Certificates
                and any other agreements pursuant to which the Special Warrants are
                to be
                issued, and the offering, issue and sale of the Special Warrants,
                the
                Agent's Option, the Underlying Securities, the Warrant Shares, the
                Special
                Broker Warrants, the FT Special Broker Warrants, the Underlying Broker
                Securities, the Broker Shares, the Broker Warrants the Broker Warrant
                Shares and the FT Broker Shares and all matters relating to the
                foregoing;

            

    

     

    
      	(f)  	
              the
                Subscription Agreements shall have been accepted, executed and delivered
                by the Company;

            

    

     

    
      	(g)  	
              the
                Agent shall have received favourable legal opinions addressed to
                the
                Purchasers and the Agent and its counsel, in form and substance
                satisfactory to the Agent's counsel, dated the Special Warrant Closing
                Date from MacLeod Dixon LLP, counsel for the Company, and local counsel
                to
                the Qualifying Jurisdictions, as to the laws of the Qualifying
                Jurisdictions in which Purchasers are resident at the Special Warrant
                Closing Time, and from Kavinoky Cook LLP, which counsel may rely
                as to
                factual matters only, on certificates of Company's Auditors, the
                Company's
                registrar and transfer agent, public and stock exchange officials
                and
                officers of the Company, which opinion shall address such matters
                as the
                Agent may reasonably request;

            

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      	(h)  	
              the
                Company shall have fulfilled to the satisfaction of the Agent all
                covenants set forth in paragraph 3
                that are required to be satisfied by it in or prior to the Special
                Warrant
                Closing Time;
                and

            

    

     

    
      	(i)  	
              the
                Agent shall have received such other documentation from the Company
                as the
                Agent may reasonably request prior
                to the Special Warrant Closing Time.

            

    

     

    10  Rights
      of Termination.

     

    
      	(a)  	
              The
                Agent shall be entitled, at its sole option, to terminate and cancel,
                without any liability on the part of the Agent, all of its obligations
                under this Agreement and the obligations of any Purchaser arranged
                by it
                to purchase Special Warrants, by notice in writing to that effect
                delivered to the Company prior to or at the Special Warrant Closing
                Time
                if:

            

    

     

    
      	(i)  	
              any
                enquiry, action, suit, investigation or other proceeding whether
                formal or
                informal (including matters of regulatory transgression or unlawful
                conduct) is instituted, announced or threatened, or any order or
                ruling is
                made by any federal, provincial or other governmental authority or
                the TSX
                or any securities regulatory authority, in relation to or against
                the
                Company or the Subsidiary or any directors or officers of principal
                shareholders thereof;
                or

            

    

     

    
      	(ii)  	
              there
                should develop, occur or come into effect any occurrence, event or
                incident of any nature, including without limitation, accident, natural
                disaster, act of terrorism, public protest, governmental law or
                regulation, or financial occurrence of national or international
                consequence, which in the sole opinion of the Agent adversely affects
                or
                involves, or may adversely affect or involve, the national or
                international financial markets or the properties, operations, business,
                affairs, prospects, financial condition or assets of the Company
                or the
                Subsidiary or the market price or value or marketability of the securities
                of the Company;
                or

            

    

     

    
      	(iii)  	
              there
                is, in the opinion of the Agent, any material change in relation
                to the
                Company or the Subsidiary, or if there should, whether as a result
                of the
                Agent's continuing due diligence or otherwise, be discovered any
                previously undisclosed material fact, or if there should occur a
                change in
                any material fact or a new material fact should arise such as is
                contemplated by paragraph 5,
                which
                in any case, in the opinion of the Agent, has or could reasonably
                be
                expected to have a Material Adverse Effect;
                or

            

    

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    
      	(iv)  	
              the
                state of the financial markets is such that in the sole opinion of
                the
                Agent it would be unprofitable to offer or continue to offer for
                sale the
                Offered Securities;

            

    

     

    
      	(v)  	
              the
                Company is in breach of a material term, condition or covenant of
                this
                Agreement required to be fulfilled at or prior to the Special Warrant
                Closing Time (the Company agreeing that all terms and conditions
                in this
                Agreement to be fulfilled at or prior to the Special Warrant Closing
                Time
                shall be construed as conditions and complied with so far as the
                same
                relate to acts to be performed or caused to be performed by it, that
                it
                will use its best efforts to cause such conditions to be complied
                with,
                and that the Agent may waive, in whole or in part, or extend the
                time for
                compliance with, any terms and conditions of this Agreement without
                prejudice to their rights in respect of any other of such terms and
                conditions or any other or subsequent breach or non-compliance, provided
                that any such waiver or extension shall be binding upon the Agent
                only if
                the same is in writing);
                or

            

    

     

    
      	(vi)  	
              the
                Company is in breach of any material term of any Ancillary Document
                or if
                any of the representations or warranties made by the Company in this
                Agreement or in any Ancillary Document delivered by the Company in
                connection with the Offering is false or has become false;
                or

            

    

     

    
      	(vii)  	
              the
                Agent is not satisfied in its sole discretion with the results of
                the due
                diligence review and investigation, conducted by it or on its behalf,
                of
                the Company, the Subsidiary or
                their respective Properties, businesses, operations, affairs, prospects,
                liabilities (contingent or otherwise), financial condition or assets;
                or

            

    

     

    
      	(viii)  	
              any
                order to cease trading in securities of the Company is made or threatened
                by a securities regulatory authority;
                or

            

    

     

    
      	(ix)  	
              any
                condition precedent set out in paragraph 9
                remains outstanding and uncompleted at the Special Warrant Closing
                Time.

            

    

     

    
      	(b)  	
              The
                rights of termination contained in paragraph 10(a)
                may be exercised by each of the Agent and are in addition to any
                other
                rights or remedies the Agent may have in respect of any default,
                act or
                failure to act or non-compliance by the Company in respect of any
                of the
                matters contemplated by this Agreement or otherwise. In the event
                of any
                such termination, there shall be no further liability on the part
                of the
                Agent to the Company or on the part of the Company to the Agent except
                in
                respect of any liability which may have arisen or arises after such
                termination under paragraphs 8,
                11,
                12,
                13
                and 14.

            

    

     

    
      	(c)  	
              The
                Agent shall make reasonable best efforts to give the notice to the
                Company
                as contemplated by paragraph 10(a)
                of
                the occurrence of any of the events or circumstances referred to
                therein,
                provided that neither the giving nor the failure to give such notice
                shall
                in any way affect the Agent's entitlement to exercise their rights
                contained in paragraph 10(a)
                at
                any time through to the Special Warrant Closing
                Time.

            

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    11  Expenses.

     

    Whether
      or not the issuance and sale of the Special Warrants or the issuance of the
      Underlying Securities shall be completed, all reasonable expenses of or
      incidental to the issue and delivery of such Special Warrants and Underlying
      Securities and of or incidental to all matters in connection with the
      transactions herein set out shall be borne by the Company including, without
      limitation, expenses in connection with the issuance and sale of the Special
      Warrants all private placement fees required under Securities Laws, all filing
      fees in connection with the qualification of the Underlying Securities and
      Underlying Broker Securities for distribution in the Qualifying Jurisdictions,
      the fees and expenses of counsel to the Company and all local counsel selected
      by the Company, all costs incurred in connection with the preparation and
      printing of the Preliminary Prospectus, the Final Prospectus and any
      Supplementary Material, all TSX and any other listing fees, all fees and
      expenses of the Company's Auditors, all reasonable expenses of the Agent
      (including all reasonable travel, meals and accommodation expenses in connection
      with road show presentations, marketing and due diligence)
      (with
      such expenses in excess of $35,000 to be pre-approved by the Company
      and all
      disbursements, fees and expenses of legal counsel to the Agent in all
      jurisdictions.
      Costs
      and expenses of the Agent will be payable by the Company in addition to any
      other fees payable under this Agreement and will be payable at the Special
      Warrant Closing or forthwith upon the Company receiving an invoice from the
      Agent. In the event that the Offering is not completed for any reason
      whatsoever, or the Agent has terminated this Agreement pursuant to paragraph
      10,
      the
      Company shall be responsible for the payment of all of the expenses of the
      Agent
      otherwise payable by the Company under this paragraph without regard to any
      limit on such expenses. All or part of any of the commission, fees and other
      expenses to be paid to the Agent under this Agreement may be subject to
      applicable taxes in which event a corresponding additional amount will be
      payable by the Company to the Agent.

     

    12  Survival
      of Representations and Warranties.

     

    All
      warranties, representations, covenants and agreements herein contained or
      contained in any documents delivered pursuant to this Agreement and in
      connection with the transactions herein contemplated shall survive the issuance
      and sale of the Special Warrants and the issuance of the Underlying Securities
      and continue in full force and effect for the benefit of the Agent and the
      Purchasers and shall not be limited or prejudiced by any investigation made
      by
      or on behalf of the Agent in connection with the issuance and sale of the
      Special Warrants or the preparation of the Preliminary Prospectus, the Final
      Prospectus or otherwise. All
      warranties, representations, covenants and agreements provided herein shall
      survive the Special Warrant Closing Date until two years from the Special
      Warrant Closing Date.

     

    13  Indemnity.

     

    
      	(a)  	
              The
                Company (the "Indemnifier")
                agrees to indemnify and save harmless each of the Agent and its
                shareholders, directors, officers, employees, counsel, partners,
                affiliates and agents (collectively, the "Indemnified
                Parties"
                and individually an "Indemnified
                Party") from
                and against all liabilities, claims, actions, suits, proceedings,
                losses
                (other than loss of profits), costs, damages and expenses (including
                legal
                expenses) in any way caused by, or arising directly or indirectly
                from, or
                in consequence of:

            

    

     

    
      	(i)  	
              any
                misrepresentation or alleged misrepresentation contained herein or
                made by
                the Company in connection with the issuance and sale of the Special
                Warrants or the issuance of the Underlying Securities, or contained
                in the
                Preliminary Prospectus, Final Prospectus or in any Supplementary
                Material;

            

    

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    
      	(ii)  	
              any
                information or statement (except any information or statement relating
                solely to the Agent or provided by the Agent in writing) contained
                in the
                Preliminary Prospectus, Final Prospectus, any Supplementary Material
                or
                any Ancillary Documents of the Company delivered pursuant to this
                Agreement which, at the time and in light of the circumstances under
                which
                it was made, contains or is alleged to contain a
                misrepresentation;

            

    

     

    
      	(iii)  	
              any
                order made or enquiry, investigation or proceeding commenced or threatened
                by any securities regulatory authority or other competent authority,
                including the TSX, based upon any untrue statement or omission or
                alleged
                untrue statement or alleged omission or any misrepresentation or
                alleged
                misrepresentation (except a statement or omission or alleged statement
                or
                alleged omission relating solely to the Agent or provided by the
                Agent in
                writing) in this Agreement, any Ancillary Document, the Preliminary
                Prospectus, the Final Prospectus or any Supplementary Material or
                based
                upon any failure to comply with Securities Laws (other than any failure
                or
                alleged failure to comply by the Agent) which prevents or restricts
                the
                trading in or the sale or distribution of the Special Warrants, Underlying
                Securities or Common Shares in any of the Qualifying
                Jurisdictions;

            

    

     

    
      	(iv)  	
              the
                non-compliance or alleged (by any applicable regulatory or governmental
                body) non-compliance by the Company with any applicable laws (including
                Securities Laws), regulatory requirements or stock exchange rules
                or
                policies in connection with the transactions herein contemplated
                including
                the Company's non-compliance with any statutory requirement to make
                any
                document available for inspection (other than non-compliance resulting
                from a breach by the Agent of any covenant set out herein or otherwise
                imposed on the Agent by law);

            

    

     

    
      	(v)  	
              any
                statement contained in the Disclosure Documents which at the time
                and in
                the light of the circumstances under which it was made, contained
                or is
                alleged to have contained a
                misrepresentation;

            

    

     

    
      	(vi)  	
              the
                omission or alleged omission to state in any of the Preliminary
                Prospectus, the Final Prospectus and any Supplementary Material or
                in this
                Agreement or any Ancillary Documents of the Company delivered hereunder
                or
                pursuant hereto any material fact required to be stated therein or
                necessary to make any statement therein not misleading in light of
                the
                circumstances under which it was made (other than omissions relating
                solely to the Agent);

            

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	(vii)  	
              any
                misrepresentation or alleged misrepresentation (except any made by
                the
                Agent and for which the Agent did not rely on any information provided
                by
                the Company or anyone acting on its behalf) relating to the Offering,
                whether oral or written and whether made during and in connection
                with the
                Offering, where such misrepresentation or alleged misrepresentation
                may
                give or gives rise to any other liability under any statute in any
                jurisdiction which is in force on the date of this
                Agreement;

            

    

     

    
      	(viii)  	
              any
                failure or alleged failure to make timely disclosure of a material
                change
                by the Company, where such failure or alleged failure occurs during
                the
                Offering or during the period of distribution, where such failure
                relates
                to the Offering of
                the Special Warrants or Underlying Securities and may give or gives
                rise
                to any liability under any statute in any jurisdiction which is in
                force
                on the date of this Agreement; or

            

    

     

    
      	(ix)  	
              any
                material breach of any representation or warranty of the Company
                contained
                herein or the failure of the Company to comply with any of its respective
                covenants or other obligations hereunder in any material
                respect.

            

    

     

    
      	(b)  	
              With
                respect to this paragraph 13,
                the
                Indemnifier acknowledges and agrees that the Agent is contracting
                on its
                own behalf and as agent for the other Indemnified Parties. To the
                extent
                that any Indemnified Party is not a party to this Agreement, the
                Agent
                shall obtain and hold the right and benefit of the indemnity provisions
                of
                this Agreement in trust for and on behalf of such Indemnified
                Party.

            

    

     

    
      	(c)  	
              If
                any matter or thing contemplated by paragraph 13(a)
                (any such matter or thing being referred to as a "Claim")
                is asserted against any Indemnified Party in respect of which
                indemnification under this paragraph 13
                is
                or might reasonably be considered to be provided, such Indemnified
                Party
                will notify the Indemnifier as soon as practicable of the nature
                of such
                Claim (provided that any failure to so notify in respect of any potential
                Claim shall not affect the liability of the Indemnifier hereunder
                except
                to the extent that the Indemnifier is prejudiced by such failure)
                and the
                Indemnifier shall be entitled (but not required) to assume the defence
                of
                any suit brought to enforce such Claim, provided, however, that the
                defence shall be conducted through legal counsel acceptable to the
                Indemnified Party (acting reasonably), that no settlement of any
                such
                Claim may be made by the Indemnifier or the Indemnified Party without
                the
                prior written consent of the other parties (acting reasonably) and
                the
                Indemnifier shall not be liable for any settlement of any such Claim
                unless it has consented in writing to such
                settlement.

            

    

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

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

            

    

     

    
      	(e)  	
              The
                indemnity of this paragraph 13
                shall not apply in respect of any particular Indemnified Party, in
                the
                event that a court of competent jurisdiction in a final judgment
                that has
                become non-appealable shall determine that such losses, expenses,
                claims,
                actions, damages or liabilities to which that particular Indemnified
                Party
                may be subject were primarily caused by the negligence, fraud or
                wilful
                misconduct of that particular Indemnified Party (provided that if
                such
                losses, expenses, claims, actions, damages or liabilities were caused
                only
                in part by such negligence, fraud or wilful misconduct, the indemnity
                shall apply only in respect of the proportion of such losses, expenses,
                claims, actions, damages or liabilities which were not so
                caused).

            

    

     

    14  Contribution.

     

    
      	(a)  	
              In
                order to provide for a just and equitable contribution in circumstances
                in
                which the indemnity provided in paragraph 13
                would otherwise be available in accordance with its terms but is,
                for any
                reason, held to be unavailable to or unenforceable by the Agent or
                enforceable otherwise than in accordance with its terms, the Indemnifier
                and the Agent shall contribute to the aggregate of all claims, expenses,
                costs, damages and liabilities and all losses (other than loss of
                profits)
                of a nature contemplated in this paragraph 14
                in
                such proportions so that the Agent is responsible for the portion
                represented by the percentage that the aggregate fee payable by the
                Company to the Agent pursuant to this Agreement bears to the aggregate
                gross proceeds from the sale of the Special Warrants and the Indemnifier
                is responsible for the balance, whether or not they have been sued
                together or sued separately. Notwithstanding the foregoing, the Agent
                shall not in any event be liable to contribute, in the aggregate,
                any
                amounts in excess of such aggregate fee or any portion of such fee
                actually received. However, no party who has engaged in any fraud,
                fraudulent misrepresentation or negligence shall be entitled to claim
                contribution from any person who has not engaged in such fraud, fraudulent
                misrepresentation or negligence.

            

    

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    
      	(b)  	
              In
                the event that the Indemnifier may be held to be entitled to contribution
                from the Agent under the provisions of any statute or at law, the
                Indemnifier shall be limited to contribution in an amount not exceeding
                the lesser of:

            

    

     

    
      	(i)  	
              the
                portion of the full amount of the loss or liability giving rise to
                such
                contribution for which the Agent is responsible, as determined in
                paragraph 14(a)
                above; and

            

    

     

    
      	(ii)  	
              the
                amount of the aggregate fee actually received by the Agent from the
                Company under this Agreement.

            

    

     

    
      	(c)  	
              The
                rights to contribution provided in paragraph 14
                shall be in addition to and not in derogation of any other right
                to
                contribution which the Agent or the Indemnifier may have by statute
                or
                otherwise at law.

            

    

     

    
      	(d)  	
              If
                the Agent has reason to believe that a claim for contribution may
                arise,
                they shall give the Indemnifier notice of such claim in writing,
                as soon
                as reasonably possible, but failure to notify the Indemnifier shall
                not
                relieve the Indemnifier of any obligation which they may have to
                the Agent
                under this paragraph except to the extent the Indemnifier is materially
                prejudiced by such failure.

            

    

     

    15  Advertisements.

     

    The
      Company acknowledges that the Agent shall have the right, at its own expense,
      to
      place such advertisement or advertisements or press releases relating to and
      following the completion of the sale of the Special Warrants contemplated herein
      as the Agent may consider desirable or appropriate and as may be permitted
      by
      applicable law. The Company and the Agent each agree that it will not make
      or
      publish any advertisement or press release in any media whatsoever relating
      to,
      or otherwise publicizing, the transaction provided for herein so as to result
      in
      any exemption from the prospectus and registration requirements of applicable
      securities legislation in Canada or the United States, or of any province,
      territory, possession, administrative district or state thereof, being
      unavailable in respect of the sale of the Special Warrants and
      the
      issuance
      of Underlying Securities to prospective purchasers. Subject to compliance with
      applicable law, any press release or advertisement of the Company relating
      to
      the Offering will be provided in advance to the Agent and the Company will
      use
      its reasonable commercial efforts to agree to the form and substance thereof
      with the Agent prior to the release thereof.

     

    16  Notices.

     

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

     

    If
      to the
      Company, at:

     

    Yukon
      Gold Corporation, Inc.

    55
      York
      Street, Suite 401

    Toronto,
      Ontario

    M5J
      1R7

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    Attention: President

    Telecopy: (416)
      865-1250

     

    and,
      in
      respect of any notice given to the Company, with a copy to:

     

    MacLeod
      Dixon LLP

    100
      Wellington Street West

    Suite
      500

    Toronto,
      Ontario

    M5K
      1H1

     

    Attention: Richard
      Lachcik

    Telecopy: (416)
      360-8277

     

    Kavinoky
      Cook LLP

    726
      Exchange Street

    Suite
      800

    Buffalo,
      NY 14210

     

    Attention: Jonathan
      Gardner

    Telecopy: (716)
      845-6474

     

    If
      to the
      Agent, at:

     

    Northern
      Securities Inc.

    150
      York
      Street

    Suite
      1800

    Toronto,
      Ontario

    M5H
      3S5

     

    Attention: Doug
      Harris

    Telecopy: (416)
      644-0270

     

    and,
      in
      respect of any notice given to the Agent, with a copy to:

     

    Fogler,
      Rubinoff LLP

    95
      Wellington Street West

    Suite
      1200

    TD
      Centre

    Toronto,
      Ontario M5J 2Z9

     

    Attention: Eric
      Roblin

    Telecopy: (416)
      941-8811

     

    Dorsey
      & Whitney

    Canada
      Trust Tower

    BCE
      Place

    161
      Bay
      Street, Suite 4310

    Toronto,
      Canada M5J 2S1 

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    Attention: Gil
      Cornblum

    Telecopy: (416)
      367-7371

     

    or
      to
      such other address as any of the parties may designate by notice given to the
      others.

     

    Each
      notice shall be personally delivered to the addressee or sent by facsimile
      transmission to the addressee and a notice which is personally delivered shall,
      if delivered on a Business Day, be deemed to be given and received on that
      day
      and, in any other case, be deemed to be given and received on the first Business
      Day following the day on which it is delivered; and a notice which is sent
      by
      facsimile transmission shall be deemed to be given and received on the first
      Business Day following the day on which it is sent.

     

    17  General

     

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

     

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

     

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

     

    17.4  Severability.
      The
      invalidity or unenforceability of any particular provision of this Agreement
      shall not affect or limit the validity or enforceability of the remaining
      provisions of this Agreement.

     

    17.5  Successors
      and Assigns.
      The
      terms and provisions of this Agreement shall be binding upon and enure to the
      benefit of the Company, the Agent and the Purchasers and their respective
      successors and permitted assigns; provided that, except as provided herein
      or in
      the Subscription Agreements, this Agreement shall not be assignable by either
      party without the prior written consent of the other.

     

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

     

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

     

    17.8  Counterparts
      and Facsimile Execution.
      This
      Agreement may be executed in any number of counterparts, which
      taken
      together shall form one and the same agreement. This Agreement may be executed
      by one or more of the parties by facsimile transmitted signature and all parties
      agree that the reproduction of signature by way of facsimile will be treated
      as
      though such reproductions were executed originals.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    17.9  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      Ontario and the laws of Canada applicable therein. Any and all disputes arising
      under this Agreement, whether as to interpretation, performance or otherwise,
      shall be subject to the exclusive jurisdiction of the courts of the Province
      of
      Ontario and each of the parties hereto hereby irrevocably attorns to the
      jurisdiction of the courts of such province. The parties to this Agreement,
      to
      the extent permitted by applicable law hereby waive, and agree not to assert,
      by
      way of motion, as a defense, or otherwise, in any such suit, action or
      proceeding brought in the above-named court, any claim that it is not subject
      personally to the jurisdiction of such court, that its property is exempt or
      immune from attachment or execution, that the suit, action or proceeding is
      brought in an inconvenient forum, that the venue of the suit, action or
      proceeding is improper or that this agreement or the subject matter hereof
      may
      not be enforced in or by such court. The parties to this Agreement hereby
      consent to service of process by mail, at their respective addresses to which
      notices are to be given to its pursuant hereto. The Company agrees that its
      submission to jurisdiction and consent to service of process by mail is made
      for
      the express benefit of the Agent. Final judgment against either party in any
      such action, suit or proceeding shall be conclusive, and may be enforced in
      any
      other jurisdiction (x) by suit, action or proceeding on the judgment, a
      certified or true copy of which shall be conclusive evidence of the fact and
      the
      amount of indebtedness or liability of a party therein described or (y) in
      any
      other manner provided by, or pursuant to, the laws of such other
      jurisdiction

     

    [Signatures
      on following page]

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

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

     

    Yours
      very truly, 

      	 	 	 
	 	
              NORTHERN
                SECURITIES INC.

            
	 
 	 
 	 
 
	 	By:  	/s/
              Douglas Harris
	 	
              

              Name: Douglas
                Harris

              
                Title: 

              

            

    

     

    The
      foregoing is hereby accepted on the terms and conditions herein set
      forth.

     

    DATED
      as of
      the ____ day of December, 2006.

    
      	 	 	 
	 	
              YUKON
                GOLD CORPORATION, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Paul
              Gorman
	 	
              

              Name: Paul
                Gorman

              
                Title: Chief
                  Executive Officer

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      "A"

    SUBSIDIARIES
      

     

    Subsidiaries

     

    
      	
              Name
                of 

              Subsidiary

            	 	
              Jurisdiction
                of Incorporation

            	 	
              %
                of Issued and Outstanding Share Capital owned by, and entity holding
                such
                interest, as of the date hereof

            
	
              Yukon
                Gold Corp.

            	 	
              Yukon
                Territory

            	 	
              100%
                owned by Yukon Gold Corporation,
                Inc.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      "B"

    PROPERTIES
      AND PERMITS

     

    
      	
              Property
                Name

            	 	
              Permits

            	 	
              Attributed
                Mining Rights

            	 	
              Expiry
                Date(s) of Key Permits

            	 	
              Size
                of Property

            
	
              Marg
                Property

            	 	
              Class
                III (LQ 00106)

            	 	
              Ground
                base exploration (Quartz)

            	 	
              August
                7, 2008

            	 	
              20,000
                acres

            
	
              Mt.
                Hinton

            	 	
              Class
                III (LQ 00107)

            	 	
              Area
                exploration (Quartz)

            	 	
              October
                3, 2007

            	 	
              14,000
                acresFLOW-THROUGH
        WARRANTS

       

    

    Exhibit
      10.14

     

    YUKON
      GOLD CORPORATION, INC.

     

    SUBSCRIPTION
      AGREEMENT FOR SPECIAL FLOW-THROUGH WARRANTS

     

    (For
      Alberta, British Columbia, Nova Scotia, Ontario, Québec
      and Non-U.S. Offshore Subscribers)

     

    TO:          
      YUKON
      GOLD CORPORATION, INC.

     

    AND
      TO: NORTHERN
      SECURITIES INC. (the
      “Agent”)

     

    The
      undersigned (the “Subscriber”)
      hereby
      subscribes for and agrees to purchase from Yukon Gold Corporation, Inc. (the
      “Corporation”)
      that
      number of special flow-through warrants of the Corporation (each, a
“Warrant”)
      set
      out below at a price of CDN$1.05 per Warrant. In accordance with this agreement,
      after the Closing Time (as hereinafter defined), such agreement will be
      irrevocable. Each Warrant entitles the Subscriber to receive upon exchange,
      without payment of additional consideration, one “flow-through” common share in
      the capital of the Corporation (each, a “Flow-Through Common
      Share”).
      The
      Warrants may be exchanged by the holder at any time in accordance with their
      terms, and each Warrant shall in any event be automatically exchanged for one
      Flow-Through Common Share immediately after the earlier of: (i) the
      Qualification Date (as hereinafter defined) and (ii) the first Business Day
      (as
      hereinafter defined) following the date which is four months after the Closing
      Date (as hereinafter defined). The Subscriber agrees to be bound by the terms
      and conditions set forth in the attached “Terms and Conditions of Subscription
      for Warrants of Yukon Gold Corporation, Inc.” including without limitation the
      representations, warranties and covenants set forth in the applicable schedules
      attached thereto. The Subscriber further agrees, without limitation, that the
      Corporation and the Agent may rely upon the Subscriber’s representations,
      warranties and covenants contained in such documents.

    
      	
            	 	 	
            
	
               

              
                

              

              (Name
                of Subscriber)

            	 	 	
              
                Number
                  of Warrants  X
                  CDN$1.05

                                =

              

            
	 	 	 	
              Aggregate
                Subscription Price:  _______________________

            
	
              

              Account
                Reference (if applicable)

            	 	 	
               
                (the “Subscription
                Price”)

            
	 	 	 	 
	Per:	 	 	 
	
              
                

              

              Authorized
                Signature

            	 	 	
              If
                the Subscriber is signing as agent for a principal (“Beneficial
                Purchaser”)
                and is not a trust company or portfolio manager, in either case,
                purchasing as trustee or agent for accounts fully managed by it,
                complete
                the following and if applicable, ensure that Schedule A is completed
                on
                behalf of such Beneficial Purchasers:

            
	 	 	 	 
	
              

              Official
                Capacity of Title - if the Subscriber is not an
                individual)

            	 	 	
              
                

              

              (Name
                of Disclosed Principal)

            
	 	 	 	 
	
              

              (Name
                of individual whose signature appears above if different that the
                name of
                the subscriber printed above.)

            	 	 	
              
                

              

              (Disclosed
                Principal’s Residential Address)

            
	 	 	 	 
	
              

              (Subscriber’s
                Residential Address, including Municipality and Province)

            	 	 	 
	 	 	 	 
	
              

              (Fax
                Number)

            	 	 	
              
                

              

              (Fax
                Number)

            
	 	 	 	 
	
              

              (Telephone
                Number)    (Email
                Address)

            	 	 	
              
                

              

              (Telephone
                Number)    (Email
                Address)

            
	 	 	 	 
	
              (Social
                Insurance Number, Federal Corporate Tax Account Number or Tax Shelter
                ID
                Number).

            	 	 	
              (Social
                Insurance Number, Federal Corporate Tax Account Number or Tax Shelter
                ID
                Number)

            
	 	 	 	 
	
              Registered
                Shareholder Information (if different from
                Subscriber):

            	 	 	
              Delivery
                Instructions as set forth below:

            
	 	 	 	 
	
              

              (Name)

            	 	 	
              

              (Name)

            
	 	 	 	 
	
              

              (Account
                Reference, if applicable)

            	 	 	
              

              (Account
                Reference, if applicable)

            
	 	 	 	 
	
              

              (Address,
                including Postal Code)

            	 	 	
              

              (Address)

            
	 	 	 	 
	 	 	 	
              

              (Contact
                Name)    (Telephone
                Number)

            

    

     

    This
      is
      the first page of an agreement comprised of 18 pages (not including Schedules
      A,
      B and C).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    In
      addition to this face page, the Subscriber must complete each applicable
      schedule and exhibit attached hereto.

     

    The
      Corporation hereby accepts the subscription as set forth above, on the terms
      and
      conditions contained in this Subscription Agreement and the Corporation
      represents and warrants to the Subscriber that the representations and
      warranties made by the Corporation to the Agent in the Agency Agreement (as
      hereinafter defined) are true and correct in all material respect as of the
      Closing Date (as hereinafter defined) (save and except as waived by the Agent)
      and that the Subscriber is entitled to rely thereon.

     

    
      ACCEPTED
        this ___ day of _________________, 2006.

    

     

    
      	
              YUKON
                GOLD CORPORATION, INC.

            
	 
	
              Per:

            	
              

              Authorized
                Signing Officer 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TERMS
      AND CONDITIONS OF SUBSCRIPTION FOR

    WARRANTS
      OF YUKON GOLD CORPORATION, INC.

     

    ARTICLE
      1 - INTERPRETATION

     

    
      	
              1.1

            	
              Definitions

            

    

     

    Whenever
      used in this Subscription Agreement, unless there is something in the subject
      matter or context inconsistent therewith, the following words and phrases shall
      have the respective meanings ascribed to them as follows:

     

    “Agency
      Agreement”
means
      the agency agreement to be entered into between the Agent and the Corporation
      in
      respect of the Offering. 

     

    “Agent” means
      Northern Securities Inc., together with any of its affiliates and any other
      investment dealers included in the syndicate for the Offering.

     

    “Agent’s
      Option” means
      the
      option of the Agent, exercisable within 48 hours prior to the Closing, to
      purchase or offer for sale additional Warrants and/or Conventional Warrants
      up
      to maximum additional proceeds of $2,000,000 on the same terms and conditions
      as
      the Offering.

     

    “Broker
      Warrant”
shall
      have the meaning ascribed to such term in Section 8.1.

     

    “Business
      Day”
means
      a
      day other than a Saturday, Sunday or any other day on which the principal
      chartered banks located in Toronto are not open for business.

     

    “Canadian
      Exploration Expense”
or
      “CEE” means a Canadian exploration expense described in paragraph (f) of the
      definition of “Canadian Exploration Expense” in subsection 66.1(6) of the Tax
      Act, other than Canadian exploration and development overhead expenses as
      defined in Regulation 1206(1) of the Tax Act, the amount of any assistance
      received by the Corporation relating to specified expenses as described in
      paragraph 66(12.6)(a) of the Tax Act or specified expenses which are a cost
      of, or for the use of, seismic data as described in paragraph 66(12.6)(b.1)
      of the Tax Act.

     

    “Closing”
shall
      have the meaning ascribed to such term in Section 4.1.

     

    “Closing Date”
shall
      have the meaning ascribed to such term in Section 4.1.

     

    “Closing Time”
shall
      have the meaning ascribed to such term in Section 4.1.

     

    “Common
      Shares”
shall
      mean the common shares in the capital of the Corporation. 

     

    “Committed
      Amount”
means
      the aggregate Subscription Price.

     

    “Conventional
      Warrants”
means
      the warrants concurrently being offered by the Corporation, where each such
      Conventional Warrant entitles the holder thereof to receive, without payment
      of
      additional consideration, one Common Share and one common share purchase warrant
      (the “Underlying
      Warrants”).

     

    
      
        
        

      

      
        -
          1
          -

        
          

        

      

      
        
        

      

    

     

    “Corporation”
means
      Yukon Gold Corporation, Inc. and includes any successor corporation to or of
      the
      Corporation.

     

    “Disclosed
      Principal”
shall
      have the meaning ascribed to such term on the face mage of this Subscription
      Agreement. 

     

    “Final Receipt”
means
      the final MRRS decision document issued in accordance with the Mutual Reliance
      Review System evidencing that final receipts for the Prospectus have been issued
      for each of the Selling Jurisdictions in which Subscribers are resident.

     

    “Flow-Through
      Common Share”
shall
      have the meaning ascribed to such term on the face page hereof. 

     

    “Flow-Through
      Mining Expenditure”
means
      an expense which is a “flow-through
      mining expenditure”
      as
      defined in subsection 127(9) of the Tax Act. 

     

    “FT
      Broker Warrant”
shall
      have the meaning ascribed to such term in Section 8.1 hereof. 

     

    “Insider”
      means
      (a) a director or senior officer of the Corporation, (b) a director or senior
      officer of a company that is an insider or subsidiary of the Corporation, or
      (c)
      any person who beneficially owns, directly or indirectly, voting securities
      of
      the Corporation or who exercises control or direction over voting securities
      of
      the Corporation or a combination of both carrying more than 10% of the voting
      rights attached to all voting securities of the Corporation for the time being
      outstanding. 

     

    “Offering”
means
      the offering in the Selling Jurisdictions, subject to the Agent’s Option, of
      Warrants and/or Conventional Warrants for aggregate proceeds of up to
      $6,000,000, provided that the issuance and sale of Conventional Warrants
      accounts for a minimum of $1,000,000 of gross proceeds raised pursuant to the
      Offering.

     

    “person”
means
      any individual (whether acting as an executor, trustee administrator, legal
      representative or otherwise), corporation, firm, partnership, sole
      proprietorship, syndicate, joint venture, trustee, trust, unincorporated
      organization or association, and pronouns have a similar extended
      meaning.

     

    “Proposed
      Amendments”
means
      the draft legislation to amend the Tax Act and regulations thereto released
      by
      the Minister of Finance (Canada) on December 20, 2002 and November 9,
      2006.

     

    “Prospectus”
means
      a
      final short form prospectus in respect of the distribution of Flow-Through
      Common Shares issuable upon the exercise of the Warrants and the Common Shares
      and Underlying Warrants issuable upon the exercise of the Conventional
      Warrants.

     

    “Qualification
      Date”
means
      the third Business Day after the later of (i) the date of issuance of a Final
      Receipt and (ii) the clearance of a Registration Statement. 

     

    “Registration
      Statement”
means
      the registration statement to be filed by the Corporation with the United States
      Securities Exchange Commission with respect to the Securities. 

     

    “Resource
      Expense”
means
      an expense which is CEE which qualifies as Flow-Through Mining Expenditure
      and
      which is incurred on or after the Closing Date (as defined in section 4.1
      hereof) and on or before the Termination Date which may be renounced by the
      Corporation pursuant to subsection 66(12.6) of the Tax Act in accordance with
      subsection 66(12.66) of the Tax Act with an effective date not later than
      December 31, 2006 and in respect of which, but for the renunciation, the
      Corporation would be entitled to a deduction from income for income tax
      purposes.

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    “Regulation
      D”
means
      Regulation D under the U.S. Securities Act. 

     

    “Regulation
      S”
means
      Regulation S under the U.S. Securities Act. 

     

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

     

    “SEC”
means
      the United States Securities and Exchange Commission. 

     

    “SEC”
means
      the United States Securities and Exchange Commission. 

     

    “Securities”
means,
      collectively, the Warrants and the Flow-Through Common Shares.

     

    “Securities
      Laws”
means
      collectively, the securities laws, instruments, regulations, rules, rulings
      and
      orders in the Selling Jurisdictions, as applicable, the policy statements issued
      by the Securities Regulators and the rules of the TSX.

     

    “Securities
      Regulators”
means
      the securities regulatory authorities or securities commissions in the Selling
      Jurisdictions.

     

    “Selling
      Jurisdictions”
means
      Alberta, British Columbia, Nova Scotia Ontario, and Quebec and any other
      jurisdictions inside or outside Canada, as may be agreed upon by the Agent
      and
      the Corporation as evidenced by the Corporation’s acceptance of a Subscription
      Agreement with respect thereto. 

     

    “Special
      FT Broker Warrant”
shall
      have the meaning ascribed to such term in Section 8.1. 

     

    “Special
      Unit Broker Warrant”
shall
      have the meaning ascribed to such term in Section 8.1. 

     

    “Special
      Warrant Certificate”
means
      a
      certificate representing one or more Warrants and containing the terms set
      out
      in Section 3.1 hereof. 

     

    “Subscriber”
means
      the subscriber for the Warrants as set out on the face page of this Subscription
      Agreement.

     

    “Subscription Agreement”
means
      this subscription agreement (including any schedules hereto) and any instrument
      amending this Subscription Agreement; “hereof”,
      “hereto”,
      “hereunder”,
      “herein”
and
      similar expressions mean and refer to this Subscription Agreement and not to
      a
      particular Article or Section; and the expression “Article”
or
      “Section”
      followed by a number means and refers to the specified Article or Section of
      this Subscription Agreement.

     

    “Subscription Price”
shall
      have the meaning ascribed to such term on the face page of this Subscription
      Agreement.

     

    “Tax
      Act”
means
      the Income
      Tax Act (Canada)
      and the regulations promulgated thereunder. 

     

    “Termination
      Date”
means
      December 31, 2007.

     

    “Term
      Sheet”
means
      the term sheet delivered to prospective purchasers of Warrants, a copy of which
      is attached hereto as Schedule “C”.

     

    “TSX”
means
      the Toronto Stock Exchange.

     

    “Unit
      Broker Warrant”
shall
      have the meaning ascribed to such term in Section 8.1. 

     

    
      
        
        

      

      
        -
          3
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    “United States”
means
      the United States of America, its territories and possessions, any State of
      the
      United States and the District of Columbia.

     

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

     

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

     

    
      	
              1.2

            	
              Taxation
                Act (Québec)

            

    

     

    Any
      reference to a word or term defined in the Tax Act shall include, for purposes
      of Québec
      income
      taxation, a reference to the equivalent word or term, if any, defined in the
      Taxation Act (Québec)
      as such
      act may be amended, re-enacted or replaced from time to time. Any reference
      to
      the Tax Act or a provision thereof shall include, for purposes of Québec income
      taxation, a reference to the Taxation Act (Québec) or the equivalent provision
      thereof as such act may be amended, re-enacted or replaced from time to time.
      Any reference to a filing or similar requirement imposed under the Tax Act
      shall
      include, for purposes of Québec income taxation, a reference to the equivalent
      filing or similar requirement, where applicable, under the Taxation Act (Québec)
      as the may be amended, re-enacted or replaced from time to time; provided that,
      if no filing or similar requirement is provided under the Taxation Act (Québec),
      a copy of any material filed under the Tax Act shall be filed with the ministère
      du Revenu du Québec.

     

    
      	
              1.3

            	
              Gender
                and Number

            

    

     

    Words
      importing the singular number only shall include the plural and vice versa,
      words importing the masculine gender shall include the feminine gender and
      words
      importing persons shall include firms and corporations and vice
      versa.

     

    
      	
              1.4

            	
              Currency

            

    

     

    Unless
      otherwise specified, all dollar amounts in this Subscription Agreement,
      including the symbol “$”, are expressed in Canadian dollars.

     

    
      	
              1.5

            	
              Subdivisions,
                Headings
                and Table of Contents

            

    

     

    The
      division of this Subscription Agreement into Articles, Sections, Schedules
      and
      other subdivisions and the inclusion of headings are for convenience of
      reference only and shall not affect the construction or interpretation of this
      Subscription Agreement. The headings in this Subscription Agreement are not
      intended to be full or precise descriptions of the text to which they refer.
      Unless something in the subject matter or context is inconsistent therewith,
      references herein to an Article, Section, Subsection, paragraph, clause or
      Schedule are to the applicable article, section, subsection, paragraph, clause
      or schedule of this Subscription Agreement.

     

    ARTICLE
      2
      - SCHEDULES

     

    
      	
              2.1

            	
              Description
                of Schedules

            

    

     

    The
      following are the Schedules attached to and incorporated in this Subscription
      Agreement by reference and deemed to be a part hereof:

     

    Schedule
      “A” Representation
      Letter

     

    
      
        
        

      

      
        -
          4
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    Schedule
      “B” Certificate
      - Additional Representations, Warranties and Covenants for Non-Canadian
      Subscribers (other than U.S. Persons)

     

    Schedule
      “C” Term
      Sheet

     

    ARTICLE
      3
      - SUBSCRIPTION AND DESCRIPTION OF 

    Warrants

     

    
      	
              3.1

            	
              Terms
                of the Offering

            

    

     

    Each
      Warrant entitles the Subscriber to receive upon exchange, without payment of
      additional consideration, one Flow-Through Common Share. The Warrants may be
      exchanged by the holder at any time in accordance with their terms, and each
      Warrant shall in any event be automatically exchanged for one Flow-Through
      Common Share immediately after the earlier of (i) the Qualification Date and
      (ii) the first Business Day following the date which is four months after the
      Closing Date. 

     

    If
      the
      Qualification Date has not occurred by 4:30 p.m. (Toronto time) on the date
      which is 60 days from the Closing Date, each holder of Warrants shall thereafter
      be entitled to receive, upon the exercise or deemed exercise of the Warrants
      1.1
      Flow-Through Common Shares for every Warrant then held by such holder (in lieu
      of the one Flow-Through Common Share otherwise receivable) at no additional
      consideration.

     

    The
      Corporation will not, under any circumstances, be obligated to issue any
      fraction of a Flow-Through Common Share on the exchange of the Warrants. To
      the
      extent that a holder of the Warrants would otherwise have been entitled to
      receive, on the exchange of Such Warrants, a fraction of a Flow-Through Common
      Share, such right may only be exercised in respect of such fraction in
      combination with another Warrant Certificate which in the aggregate entitles
      the
      warrantholder to receive a whole number of Flow-Through Common Shares. In any
      other case where a warrantholder would be entitled upon the exchange of a
      Warrant to receive a fraction of a Flow-Through Common Share, the number of
      Flow-Through Common Shares to be issued shall be rounded down to the next whole
      number and the holder of such Warrant certificate shall not be entitled to
      any
      compensation in respect of any fractional Flow-Through Share.

     

    
      	
              3.2

            	
              Subscription
                for the Warrants

            

    

     

    The
      Subscriber acknowledges (on its own behalf and, if applicable, on behalf of
      those for whom the Subscriber is contracting hereunder, including each
      Beneficial Purchaser) that the Warrants being subscribed for hereunder form
      part
      of the Offering in Canada and elsewhere outside of Canada where legally
      permitted of Warrants and Conventional Warrants for aggregate gross proceeds
      of
      up to $6,000,000, subject to the Agent’s Option. The Subscriber (on its own
      behalf and, if applicable, on behalf of those for whom the Subscriber is
      contracting hereunder, including each Beneficial Purchaser) hereby confirms
      its
      subscription for and offer to purchase the Warrants from the Corporation, on
      and
      subject to the terms and conditions set out in this Subscription Agreement,
      for
      the Subscription Price which is payable as described in Article 4
      hereto.

     

    
      	
              3.3

            	
              Acceptance
                and Rejection of Warrant by the
                Corporation

            

    

     

    The
      Subscriber acknowledges and agrees (on its own behalf and, if applicable, on
      behalf of those for whom the Subscriber is contracting hereunder, including
      each
      Beneficial Purchaser) that the Corporation reserves the right, in its absolute
      discretion, to reject this subscription for Warrants, in whole or in part,
      at
      any time prior to the Closing Time. If this subscription is rejected in whole,
      any cheques or other forms of payment delivered to the Corporation representing
      the Subscription Price will be promptly returned to the Subscriber without
      interest or deduction. If this subscription is accepted only in part, a cheque
      representing any refund of the Subscription Price for that portion of the
      subscription for the Warrants which is not accepted, will be promptly delivered
      to the Subscriber without interest or deduction. 

     

    
      
        
        

      

      
        -
          5
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    ARTICLE
      4
      - CLOSING

     

    
      	
              4.1

            	
              Closing

            

    

     

    Issuance,
      sale and delivery of the Warrants and payment of the Subscription Price will
      be
      completed (the “Closing”)
      at the
      offices of Macleod Dixon LLP, Suite 500, 100 Wellington Street West, Toronto,
      Ontario, Canada at 11:00 a.m. EST (the “Closing
      Time”)
      on
      December 15, 2006 or such earlier or later date or time as the Corporation
      and
      the Agent may agree (the “Closing
      Date”).

     

    
      	
              4.2

            	
              Conditions
                of Closing

            

    

     

    The
      Subscriber acknowledges and agrees (on its own behalf and, if applicable, on
      behalf of those for whom the Subscriber is contracting hereunder, including
      each
      Beneficial Purchaser) that the obligations of the Corporation hereunder are
      conditional on the accuracy and truth of the representations and warranties
      of
      the Subscriber contained in this Subscription Agreement as of the date of this
      Subscription Agreement, and as of the Closing Time as if made at and as of
      the
      Closing Time, and the fulfillment of the following conditions as soon as
      possible and in any event no later than the Closing Time:

     

    
      	 	
              (a)

            	
              the
                Corporation accepts the Subscriber’s subscription in whole or in
                part;

            

    

     

    
      	 	
              (b)

            	
              unless
                other arrangements acceptable to the Corporation and the Agent have
                been
                made, payment by the Subscriber of the Subscription Price by certified
                cheque or bank draft in Canadian dollars payable to “Northern Securities
                Inc..”

            

    

     

    
      	 	
              (c)

            	
              the
                Subscriber having properly completed, signed and delivered this
                Subscription Agreement no later than 9:00 a.m. EST on the last Business
                Day preceding the Closing Date to:

            

    

     

    Northern
      Securities Inc.

    150
      York
      Street, Suite 1800

    Toronto,
      Ontario

    M5H
      3S5

    

    Attention:
      Doug Harris

    Facsimile:
      (416) 644-0270

    

    
      	 	
              (d)

            	
              the
                Subscriber having properly completed, signed and delivered one of
                the
                certificates as set forth in Schedule “A” or Schedule “B” hereto, as
                applicable; 

            

    

     

    
      	 	
              (e)

            	
              the
                Subscriber having properly completed, signed and delivered to the
                Corporation such other documents as may be required pursuant to terms
                of
                this Subscription Agreement;

            

    

     

    
      	 	
              (f)

            	
              the
                offer, sale and issuance of the Warrants being exempt from the prospectus
                and registration requirements of applicable Securities Laws;
                and

            

    

     

    
      
        
        

      

      
        -
          6
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (g)

            	
              the
                conditions of closing contained in the Agency Agreement being satisfied
                or
                waived by the relevant party.

            

    

     

    
      	
              4.3

            	
              Authorization
                of the Agent

            

    

     

     

    The
      Subscriber (on its own behalf and, if applicable, on behalf of those for whom
      the Subscriber is contracting hereunder, including each Beneficial Purchaser)
      authorizes the Agent in its discretion, to act as the Subscriber’s
      representative at the Closing, and hereby appoints the Agent, with full power
      of
      substitution, as its true and lawful attorney with full power and authority
      in
      the Subscriber’s place and stead:

     

    
      	 	
              (a)

            	
              to
                represent the Subscriber at the Closing, to receive certificates
                representing the Warrants, to execute in the Subscriber’s name and on its
                behalf all closing receipts and required documents, and to exercise
                any
                rights of termination contained in the Agency
                Agreement;

            

    

     

    
      	 	
              (b)

            	
              to
                extend such time periods and to modify or waive, in whole or in part,
                any
                representations, warranties, covenants or conditions in the Agency
                Agreement or any ancillary or related document in its absolute discretion;
                

            

    

     

    
      	 	
              (c)

            	
              to
                terminate this Subscription Agreement and/or the Agency Agreement,
                in such
                manner and on such terms and conditions as the Agent in its sole
                discretion may determine; and

            

    

     

    
      	 	
              (d)

            	
              without
                limiting the generality of the foregoing, to negotiate, settle, execute,
                deliver and amend the Agency
                Agreement.

            

    

     

    ARTICLE
      5-
      REPRESENTATIONS
      AND WARRANTIES OF THE CORPORATION

     

    
      	
              5.1

            	
              By
                execution of this Subscription Agreement, the Corporation hereby
                agrees
                with the Subscriber that the Subscriber shall have the benefit of
                all
                representations, warranties and covenants made by the Corporation
                to the
                Agent and set forth in the Agency Agreement, such representations,
                warranties and covenants shall form an integral part of this Subscription
                Agreement, with such changes as are necessary to reflect that they
                are
                being made by the Corporation to the Subscriber, and shall survive
                the
                Closing of the purchase and sale of Warrants and shall continue in
                full
                force and effect for the benefit of the Subscriber in accordance
                with the
                Agency Agreement. In the event of conflict between the provisions
                of this
                Subscription Agreement and the provisions of the Agency Agreement,
                the
                provisions of the Agency Agreement
                prevail.

            

    

     

    
      	
              5.2

            	
              The
                Corporation hereby represents and warrants to the Subscriber (on
                its own
                behalf and, if applicable, on behalf of each person on whose behalf
                the
                Subscriber is contracting) and acknowledges that the Subscriber is
                relying
                thereon that: 

            

    

     

    
      	 	
              (a)

            	
              except
                as a result of any agreement to which the Corporation is not a party
                and
                of which it has no knowledge, and subject to compliance by the Subscriber
                and any beneficial purchaser on whose behalf it is acting with the
                covenant set forth in paragraph 6.1(u), upon issue, the Warrants
                and
                Flow-Through Common Shares will be “flow-through shares” as defined in
                subsection 66(15) of the Tax Act and will not be “prescribed shares” or
                “prescribed rights” within the meaning of section 6202.1 of the
                regulations to the Tax Act and the Proposed Amendments;
                

            

    

     

    
      
        
        

      

      
        -
          7
          -

        
          

        

      

      
        
        

      

       

    

    
      	 	
              (b)

            	
              the
                Corporation is a “principal-business corporation” as defined in subsection
                66(15) of the Tax Act and will continue to be a “principal-business
                corporation” at all times which are relevant for the purposes of the Tax
                Act and the Subscription Agreement;

            

    

     

    
      	 	
              (c)

            	
              the
                Corporation has no reason to believe that it will be unable to incur,
                or
                that it will be unable to renounce to the Subscriber effective on
                or
                before December 31, 2006, Resource Expenses in an aggregate amount
                equal
                to the Committed Amount and the Corporation has no reason to expect
                any
                reduction of such amount by virtue of subsection 66(12.73) of the
                Tax Act;
                

            

    

     

    
      	 	
              (d)

            	
              the
                Corporation hereby agrees to incur Resource Expenses in an amount
                equal to
                the Committed Amount on or before the Termination Date in accordance
                with
                this Subscription Agreement and agrees to renounce to the Subscriber,
                with
                an effective date no later than December 31, 2006, pursuant to subsection
                66(12.6) of the Tax Act, Resource Expenses in an amount equal to
                the
                Committed Amount; 

            

    

     

    
      	 	
              (e)

            	
              the
                Resource Expenses to be renounced by the Corporation to the Subscriber:
                

            

    

     

    
      	 	
              (i)

            	
              will
                constitute CEE on the effective date of the renunciation and will
                qualify
                as Flow-Through Mining Expenditure;

            

    

     

    
      	 	
              (ii)

            	
              will
                not include expenses that are “Canadian exploration and development
                overhead expenses” (as defined in the regulations to the Tax Act for
                purposes of paragraph 66(12.6)(b) of the Tax Act) of the Corporation
                or
                amounts which constitute specified expenses for seismic data described
                in
                paragraph 66(12.6)(b.1) of the Tax Act or any expenses for prepaid
                services or rent that do not qualify as outlays and expenses for
                the
                period as described in the definition of “expense” in subsection 66(15) of
                the Tax Act;

            

    

     

    
      	 	
              (iii)

            	
              will
                not include any amount that has previously been renounced by the
                Corporation to the Subscriber or to any other person;
                

            

    

     

    
      	 	
              (iv)

            	
              would
                be deductible by the Corporation in computing its income for the
                purposes
                of Part I of the Tax Act but for the renunciation to the
                Subscriber;

            

    

     

    
      	 	
              (f)

            	
              the
                Corporation shall not reduce the amount renounced to the Subscriber
                pursuant to subsection 66(12.6) of the Tax Act;

            

    

     

    
      	 	
              (g)

            	
              the
                Corporation shall not be subject to the provisions of subsection
                66(12.67)
                of the Tax Act in a manner which impairs its ability to renounce
                Resource
                Expenses to the Subscriber in an amount equal to the Committed Amount;
                

            

    

     

    
      	 	
              (h)

            	
              the
                Corporation shall use the proceeds from the sale of the Warrants
                for
                general exploration activities on the Corporation’s properties and shall
                deliver to the Subscriber, on or before March 1, 2007, a list of
                the
                provinces, territories or other jurisdictions in Canada where the
                Corporation has incurred, or intends to incur, Resource Expenses
                together
                with the amount incurred or to be incurred in each such province,
                territory or jurisdiction; 

            

    

     

    
      
        
        

      

      
        -
          8
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (i)

            	
              the
                Corporation has the full corporate right, power and authority to
                execute
                and deliver this Subscription Agreement, to issue the Warrants and
                the
                Flow-Through Shares to the Subscriber and to incur and renounce to
                the
                Subscriber Resource Expenses in an amount equal to the Committed
                Amount;

            

    

     

    
      	 	
              (j)

            	
              the
                execution and delivery of, and the performance of, the terms of this
                Subscription Agreement by the Corporation, including the issue of
                the
                Warrants and the Flow-Through Shares, the incurring of Resource Expenses
                and the renunciation of Resource Expenses to the Subscriber pursuant
                hereto does not and will not constitute a breach of or a default
                under the
                constating documents of the Corporation or any law, regulation, order
                or
                ruling applicable to the Corporation, or any agreement, contract
                or
                indenture to which the Corporation is a party or by which it is bound;
                

            

    

     

    
      	 	
              (k)

            	
              the
                Corporation will keep proper books, records and accounts of all Resource
                Expenses and all transactions affecting the Committed Amount and
                the
                Resource Expenses; 

            

    

     

    
      	 	
              (l)

            	
              the
                Corporation shall file all prescribed forms required under the Tax
                Act
                with respect to the issuance of the Warrants and Flow-Through Common
                Shares as flow-through shares or that are necessary to renounce Resource
                Expenses equal to the Committed Amount to the Subscriber effective
                on or
                before December 31, 2006 and shall provide the Subscriber with a
                copy of
                all such forms as are required to be provided
                thereto;

            

    

     

    
      	 	
              (m)

            	
              in
                the event the amount renounced to a Subscriber is reduced pursuant
                to
                subsection 66(12.73) of the Tax Act, as the sole recourse of the
                Subscriber for such event, the Corporation shall indemnify the Subscriber
                and pay in settlement thereof an amount equal to the amount of any
                tax
                payable or that may become payable under the Tax Act (and under any
                corresponding provincial legislation) by the Subscriber as a consequence
                of such reduction; 

            

    

     

    
      	 	
              (n)

            	
              that
                if the Corporation fails to renounce Resource Expenses to the Subscriber
                in an amount or amounts which in aggregate are equal to the Committed
                Amount and with an effective date or dates of not later than December
                31,
                2006, as the sole recourse of the Subscriber for such event, the
                Corporation shall indemnify the Subscriber and pay in settlement
                thereof
                an amount equal to the amount of any tax payable under the Tax Act
                (and
                under any corresponding provincial tax legislation) by the Subscriber
                as a
                consequence of such failure;

            

    

     

    
      	 	
              (o)

            	
              neither
                the Corporation nor any corporation “associated” (as such term is defined
                in the Tax Act) with the Corporation is a party to any other agreement
                for
                the issuance of “flow-through shares” as defined in subsection 66(15) of
                the Tax Act for which the required expenditures have note be incurred;
                and
                

            

    

     

    
      	 	
              (p)

            	
              the
                Corporation has not and will not enter into transactions or take
                deductions which would otherwise reduce its cumulative CEE to an
                extent
                which would preclude a renunciation of Resource Expenses hereunder
                in an
                amount equal to the aggregate Subscription Price on or before December
                31,
                2006. 

            

    

     

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    ARTICLE
      6
      - ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS AND

    WARRANTIES
      OF THE SUBSCRIBER

     

    
      	
              6.1

            	
              Acknowledgements,
                Representations, Warranties and Covenants of the
                Subscriber

            

    

     

    The
      Subscriber (on its own behalf and, if applicable, on behalf of those for whom
      the Subscriber is contracting hereunder, including each Beneficial Purchaser)
      hereby represents and warrants to, and covenants with, the Corporation as
      follows and acknowledges that the Corporation is relying on such representations
      and warranties both at the date hereof and at the Closing Time in connection
      with the transactions contemplated herein:

     

    
      	 	
              (a)

            	
              The
                Subscriber, and (if applicable) each Beneficial Purchaser for whom
                it is
                acting, were offered the Securities in and, are resident in the
                jurisdiction set out on the face page of this Subscription Agreement
                or
                are otherwise subject to the Securities Laws. Such address was not
                created
                and is not used solely for the purpose of acquiring the Warrants
                and the
                Subscriber and any Beneficial Purchaser was solicited to purchase
                the
                Warrants in such jurisdiction.

            

    

     

    
      	 	
              (b)

            	
              The
                Subscriber, and (if applicable) any Beneficial Purchaser for whom
                it is
                acting, has knowledge in financial and business affairs, is capable
                of
                evaluating the merits and risks of an investment in the Warrants
                and is
                able to bear the economic risk of such investment even if the entire
                investment is lost. 

            

    

     

    
      	 	
              (c)

            	
              the
                Subscriber has properly completed, executed and delivered to the
                Corporation Schedule “A” hereto (dated as of the date hereof), as
                applicable and the information contained therein is true and correct;
                

            

    

     

    
      	 	
              (d)

            	
              the
                representations, warranties and covenants contained in Schedule “A” will
                be true and correct both as of the date of execution of this Subscription
                Agreement and as of the Closing Time;

            

    

     

    
      	 	
              (e)

            	
              neither
                the Subscriber nor any Disclosed Principal is a U.S. Person nor
                subscribing for the Warrants for the account of a U.S. Person or
                for
                resale in the United States and the Subscriber confirms that the
                Warrants
                have not been offered to the Subscriber in the United States and
                that this
                Subscription Agreement has not been signed in the United States;
                

            

    

     

    
      	 	
              (f)

            	
              for
                purposes hereof, a “U.S. Person” (as defined in Rule 902 of Regulation S
                promulgated under the Securities Act), includes, but is not limited
                to:
                (1) any natural person resident in the United States, (2) any partnership
                or corporation organized under the laws of the United States, (3)
                any
                estate or trust of which the executor or administrator or trustee,
                respectively, is a U.S. person, (4) any discretionary or non-discretionary
                account held by a dealer or fiduciary for the benefit or account
                of a U.S.
                person and any partnership or company organized or incorporated under
                the
                laws of a foreign jurisdiction by a U.S. person principally for the
                purpose of investing in securities not registered under the Securities
                Act
                ;

            

    

     

    
      	 	
              (g)

            	
              the
                Subscriber acknowledges that the Warrants have not been, and will
                not be,
                and the Flow-Through Common Shares issuable upon the conversion of
                the
                Warrants have not been registered under the U.S. Securities Act and
                may
                not be offered or sold in the United States or to a U.S. Person unless
                the
                securities are registered under the U.S. Securities Act and all applicable
                State securities laws or an exemption from such registration requirements
                is available, and further agrees that hedging transactions involving
                such
                securities may not be conducted unless in compliance with the U.S.
                Securities Act; 

            

    

     

    
      
        
        

      

      
        -
          10
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (h)

            	
              the
                Subscriber and if applicable, the Disclosed Principal for whom the
                Subscriber is acting, understands that the Corporation is the seller
                of
                the Warrants and underlying securities and that, for purposes of
                Regulation S, a “distributor” is any underwriter, dealer or other person
                who participates, pursuant to a contractual arrangement in the
                distribution of securities sold in reliance on Regulation S and that
                an
                “affiliate” is any partner, officer, director or any person in question.
                Except as otherwise permitted by Regulation S, the Subscriber and
                if
                applicable, the Disclosed Principal for whom the Subscriber is acting,
                agrees that it will not, during a one year distribution compliance
                period,
                act as a distributor, either directly or through any affiliate, or
                sell,
                transfer, hypothecate or otherwise convey the Warrants or underlying
                securities other than to a non-U.S. Person;

            

    

     

    
      	 	
              (i)

            	
              the
                Subscriber and if applicable, the Disclosed Principal for whom the
                Subscriber is acting, acknowledges and understands that in the event
                the
                Warrants or underlying securities are offered, sold or otherwise
                transferred by the Subscriber of if applicable, the Disclosed Principal
                for whom the Subscriber is acting, to a non-U.S. Person prior to
                the
                expiration of a one year distribution compliance period, the purchaser
                or
                transferee must agree not to resell such securities except in accordance
                with the provisions of Regulation S, pursuant to registration under
                the
                U.S. Securities Act, or pursuant to an available exemption from
                registration; and must further agree not to engage in hedging transactions
                with regard to such securities unless in compliance with the U.S.
                Securities Act; and 

            

    

     

    
      	 	
              (j)

            	
              neither
                the Subscriber nor any Disclosed Principal will offer, sell or otherwise
                dispose of the Warrants or the Flow-Through Common Shares upon exercise
                thereof in the United States or to a U.S. Person unless the Corporation
                has consented to such offer, sale or disposition and such offer,
                sale or
                disposition is made in accordance with an exemption from the registration
                requirements under the U.S. Securities Act and the securities laws
                of all
                applicable states of the United States or the SEC has declared effective
                a
                registration statement in respect of such securities.
                

            

    

     

    
      	 	
              (k)

            	
              Unless
                the Subscriber is purchasing under Section 6.1(l) hereof, it is purchasing
                the Warrants as principal for its own account, not for the benefit
                of any
                other person, for investment only and not with a view to the resale
                or
                distribution of all or any of the Securities, it is resident in or
                is
                otherwise subject to applicable securities laws of the jurisdiction
                set
                out as the “Subscriber’s Residential Address” on the face page of this
                Subscription Agreement and it fully complies with one of the criteria
                set
                forth below:

            

    

     

    
      	 	
              (i)

            	
              it
                is an “accredited investor”, as such term is defined in National
                Instrument 45-106 - “Prospectus and Registration Exemptions” (“NI
                45-106”), it was not created or used solely to purchase or hold securities
                as an “accredited investor” as described in paragraph (m) of the
                definition of “accredited investor” in NI 45-106 and it has concurrently
                executed and delivered a Representation Letter in the form attached
                as
                Schedule “A” to this Subscription Agreement and has initialled in Appendix
                “I” thereto indicating that the Subscriber satisfies (and will satisfy
                at
                the Closing Time) one of the categories of “accredited investor” set forth
                in such definition; or

            

    

     

    
      	 	
              (ii)

            	
              the
                aggregate acquisition cost of the Warrants to the Subscriber is not
                less
                than CDN$150,000 paid in cash at the time of trade and it was not
                created
                or used solely to purchase or hold securities in reliance on the
                prospectus exemption or the dealer registration exemption set out
                in
                section 2.10 of NI 45-106; or

            

    

     

    
      
        
        

      

      
        -
          11
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (iii)

            	
              it
                is a resident of, or otherwise subject to, the securities legislation
                of a
                jurisdiction other than Canada or the United States and is not resident
                in
                Canada or the United States or otherwise subject to applicable securities
                laws of a Canadian jurisdiction or the United States and it has
                concurrently executed and delivered the certificate attached as Schedule
                “B” to this Subscription Agreement.

            

    

     

    
      	 	
              (l)

            	
              If
                the Subscriber is not purchasing the Warrants as principal for its
                own
                account, then: 

            

    

     

    
      	 	
              (i)

            	
              it
                is acting as agent for a Beneficial Purchaser who is disclosed on
                the face
                page of this Subscription Agreement, and who is purchasing as principal
                for its own account, not for the benefit of any other person, for
                investment only and not with a view to the resale or distribution
                of all
                or any of the Securities and each of such principals complies with
                Subsection (i) or Subsection (ii) of Section 6.1(k) hereof and has
                completed Schedule “A” hereto on behalf of such Beneficial Purchaser;
                or

            

    

     

    
      	 	
              (ii)

            	
              it
                is deemed to be purchasing as principal pursuant to NI 45-106 by
                virtue of
                being an “accredited investor” as such term is defined in paragraphs (p)
                or (q) of the definition of “accredited investor” in NI 45-106 (provided,
                however, that it is not a trust company or trust corporation registered
                under the laws of Prince Edward Island that is not registered or
                authorized under the Trust and Loan Companies Act (Canada) or under
                comparable legislation in another jurisdiction in Canada) and has
                concurrently executed and delivered a Representation Letter in the
                form
                attached as Schedule “A” to this Subscription Agreement and has initialled
                Appendix “I” thereto indicating that it satisfies one of the categories of
                “accredited investor” set out in paragraphs (p) or (q) of Appendix “I”
                thereto; and

            

    

     

    the
      Subscriber acknowledges the Corporation is required by law to disclose to
      certain regulatory authorities the identity of each Beneficial Purchaser of
      Warrants for whom it may be acting, the Subscriber is resident in or otherwise
      subject to applicable securities laws of the jurisdiction set out as the
“Subscriber’s Residential Address” on the face page of this Subscription
      Agreement and each Beneficial Purchaser is resident in or otherwise subject
      to
      applicable securities laws of the jurisdiction set out as the “Principal’s
      Residential Address” on the face page of this Subscription
      Agreement.

     

    
      	 	
              (m)

            	
              In
                the case of a subscription for the Warrants by the Subscriber acting
                as
                trustee or agent (including, for greater certainty, a portfolio manager
                or
                comparable adviser) for a principal, the Subscriber is duly authorized
                to
                execute and deliver this Subscription Agreement and all other necessary
                documentation in connection with such subscription on behalf of each
                such
                Beneficial Purchaser, each of whom is subscribing as principal for
                its own
                account, not for the benefit of any other person and not with a view
                to
                the resale or distribution of the Securities, and this Subscription
                Agreement has been duly authorized, executed and delivered by or
                on behalf
                of and constitutes a legal, valid and binding agreement of, such
                principal, and the Subscriber acknowledges that the Corporation may
                be
                required by law to disclose the identity of each Beneficial Purchaser
                for
                whom the Subscriber is acting.

            

    

     

    
      	 	
              (n)

            	
              In
                the case of a subscription for the Warrants by the Subscriber acting
                as
                principal, this Subscription Agreement and all other documentation
                in
                connection with such subscription has been duly authorized, executed
                and
                delivered by, and constitutes a legal, valid and binding agreement
                of, the
                Subscriber. This Subscription Agreement is enforceable in accordance
                with
                its terms against the Subscriber and any Beneficial Purchaser on
                whose
                behalf the Subscriber is acting.

            

    

     

    
      
        
        

      

      
        -
          12
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (o)

            	
              If
                the Subscriber is:

            

    

     

    
      	 	
              (i)

            	
              a
                corporation, the Subscriber is duly incorporated and is validly subsisting
                under the laws of its jurisdiction of incorporation and has all requisite
                legal and corporate power and authority to execute, deliver and be
                bound
                by this Subscription Agreement, to subscribe for the Warrants as
                contemplated herein and to carry out and perform its obligations
                under the
                terms of this Subscription
                Agreement;

            

    

     

    
      	 	
              (ii)

            	
              a
                partnership, syndicate or other form of unincorporated organization,
                the
                Subscriber has the necessary legal capacity and authority to execute
                and
                deliver this Subscription Agreement and to observe and perform its
                covenants and obligations hereunder and has obtained all necessary
                approvals in respect thereof; 

            

    

     

    
      	 	
              (iii)

            	
              an
                individual, the Subscriber is of the full age of majority in the
                jurisdiction which he or she is resident and has the legal capacity
                and
                competency to execute and deliver this Subscription Agreement and
                all
                other documentation in connection with the and to observe and perform
                his
                or her covenants and obligations hereunder;
                and

            

    

     

    
      	 	
              (iv)

            	
              subscribing
                on its own behalf, this Subscription Agreement has been duly executed
                and
                delivered by the Subscriber and constitutes a legal, valid and binding
                agreement of the Subscriber enforceable against him or her in accordance
                with its terms.

            

    

     

    
      	 	
              (p)

            	
              Other
                than the Agent (and any group of investment dealers managed by the
                Agent
                for purposes of offering the Warrants for sale), there is no person
                acting
                or purporting to act on behalf of the Subscriber in connection with
                the
                transactions contemplated herein who is entitled to any brokerage
                or
                finder’s fee. 

            

    

     

    
      	 	
              (q)

            	
              The
                Subscriber, and each Beneficial Purchaser for whom it is contracting
                hereunder, have been advised to consult their own legal advisors
                with
                respect to the execution, delivery and performance by it of this
                Subscription Agreement and the transactions contemplated by this
                Subscription Agreement, including but not limited to, trading in
                the
                Securities and with respect to the resale restrictions imposed by
                the
                Securities Laws and other applicable securities laws. The Subscriber
                and
                each Beneficial Purchaser, contracted hereunder may not be able to
                resell
                such securities except in accordance with limited exemptions under
                the
                Securities Laws and other applicable securities
                laws.

            

    

     

    
      	 	
              (r)

            	
              The
                Subscriber has not received or been provided with nor has it requested
                or
                have any need to receive, a prospectus, offering memorandum, within
                the
                meaning of the Securities Laws, or any sales or advertising literature
                or
                any other document describing or purporting to describe the business
                and
                affairs of the Corporation (other than any continuous disclosure
                document,
                the contents of which is prescribed by statute or regulation and
                which are
                available for review by prospective purchasers on the SEC EDGAR system
                in
                the United States and on SEDAR in Canada) in order to assist it in
                making
                an investment decision in connection with the Offering and the
                Subscriber’s decision to subscribe for the Warrants.
                

            

    

     

    
      
        
        

      

      
        -
          13
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (s)

            	
              The
                funds representing the Aggregate Subscription Price which will be
                advanced
                by the Subscriber to the Corporation hereunder will not represent
                proceeds
                of crime for the purposes of the Proceeds
                of Crime (Money Laundering) Act (Canada)
                and the Subscriber and, if applicable, the Disclosed Beneficial Purchaser,
                acknowledges that the Corporation may in the future be required by
                law to
                disclose the name of the Subscriber and, if applicable, the disclosed
                Beneficial Purchaser, and other information relating to this Subscription
                Agreement and the subscription hereunder, on a confidential basis,
                pursuant to the Proceeds
                of Crime (Money Laundering) Act
                (Canada). To the best of its knowledge (i) none of the subscription
                funds
                to be provided by the Subscriber (A) have been or will be derived
                from or
                related to any activity that is deemed criminal under the law of
                Canada,
                the United States of America, or any other jurisdiction, or (B) are
                being
                tendered on behalf of a person or entity who has not been identified
                to
                the Subscriber, and (ii) it shall promptly notify the Corporation
                if the
                Subscriber discovers that any of such representations ceases to be
                true,
                and to provide the Corporation with appropriate information in connection
                therewith..

            

    

     

    
      	 	
              (t)

            	
              The
                Subscriber acknowledges that the income tax considerations applicable
                to
                the Subscriber will vary depending on a number of factors including
                the
                Subscriber’s jurisdiction of residence and it has been encouraged to
                obtain independent legal, income tax and investment advice with respect
                to
                its subscription for the Warrants and, accordingly, has had the
                opportunity to acquire an understanding of the meanings of all terms
                contained herein relevant to the Subscriber for purposes of giving
                representations, warranties and covenants under this Subscription
                Agreement.

            

    

     

    
      	 	
              (u)

            	
              Neither
                the Subscriber, nor any beneficial purchaser, as the case may be,
                has or
                will knowingly enter into any agreement or arrangement which will
                cause
                the Warrants or Flow-Through Common Shares to be or become “prescribed
                shares” or “prescribed rights” for purposes of the “Tax Act” and the
                Proposed Amendments.

            

    

     

    
      	 	
              (v)

            	
              the
                Subscriber deals at arm’s length with the Corporation within the meaning
                of the Tax Act and will continue to deal at arm’s length with the
                Corporation until January 1, 2008.

            

    

     

    
      	
              6.2

            	
              Acknowledgments
                of the Subscriber

            

    

     

    The
      Subscriber (on its own behalf and, if applicable, on behalf of those for whom
      the Subscriber is contracting hereunder, including each Beneficial Purchaser)
      acknowledges and agrees as follows:

     

    
      	 	
              (a)

            	
              The
                Subscriber has received a copy of the Term Sheet setting out the
                principal
                terms of the Offering.

            

    

     

    
      	 	
              (b)

            	
              The
                Subscriber acknowledges that the aggregate gross proceeds of the
                Offering
                will be up to $6,000,000, subject to the Agent’s
                Option.

            

    

     

    
      	 	
              (c)

            	
              No
                prospectus has been filed with any Securities Regulators in connection
                with the Offering.

            

    

     

    
      	 	
              (d)

            	
              The
                Securities are being offered for sale only on a “private placement” basis
                and the sale and delivery of the Securities is conditional upon such
                sale
                being exempt from the requirements as to the filing of a prospectus
                or
                delivery of an offering memorandum or upon the issuance of such orders,
                consents or approvals as may be required to permit such sale without
                the
                requirement of filing a prospectus or delivering an offering memorandum
                and, as a consequence: (i) it is restricted from using most civil
                remedies
                available under securities legislation; (ii) it may not receive
                information that would otherwise be required to be provided to it
                under
                securities legislation; and (iii) the Corporation is relieved from
                certain
                obligations that would otherwise apply under securities
                legislation.

            

    

     

    
      
        
        

      

      
        -
          14
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (e)

            	
              No
                securities commission, agency, governmental authority, regulatory
                body,
                stock exchange or other regulatory body has reviewed or passed on
                the
                merits of an investment in or endorsement of the
                Securities.

            

    

     

    
      	 	
              (f)

            	
              The
                subscription for the Warrants has not been made through or as a result
                of,
                and the distribution of the Warrants is not being accompanied by
                any
                advertisement, including without limitation in printed public media,
                radio, television or telecommunications, including electronic display,
                or
                as part of a general solicitation.

            

    

     

    
      	 	
              (g)

            	
              The
                Corporation may complete additional financings in the future in order
                to
                develop the business of the Corporation and fund its ongoing development,
                and such future financings may have a dilutive effect on current
                securityholders of the Corporation, including the Subscriber but
                there is
                no assurance that such financing will be available, on reasonable
                terms or
                at all, and if not available, the Corporation may be unable to fund
                its
                ongoing development.

            

    

     

    
      	 	
              (h)

            	
              The
                Securities have not been registered under the U.S. Securities Act,
                or any
                state securities laws and the Securities may not be offered or sold
                in the
                United States or to a U.S. person without registration under the
                U.S.
                Securities Act or except in compliance with the requirements of an
                exemption from registration under the U.S. Securities Act and any
                applicable state securities laws.

            

    

     

    
      	 	
              (i)

            	
              The
                Subscriber’s ability to transfer the Securities is limited by, among other
                things, the Securities Laws.

            

    

     

    
      	 	
              (j)

            	
              The
                certificates (and any replacement certificates issued prior to the
                expiration of the applicable hold periods or ownership statements
                issued
                under a direct registry system or other electronic book entry system)
                representing the Warrants and, if issued prior to the Qualification
                Date,
                Flow-Through Common Shares, will bear, as of the Closing Date and
                until
                such time as is no longer required, legends substantially in the
                following
                form and with the necessary information
                inserted:

            

    

     

    “UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE THE DATE THAT IS [four months and a day after the
      Closing Date].”

     

    
      	 	
              (k)

            	
              The
                certificates (and any replacement certificates issued prior to the
                expiration of the applicable hold periods or ownership statements
                issued
                under a direct registry system or other electronic book entry system)
                representing the Flow-Through Common Shares, if issued prior to the
                Qualification Date, will bear, as of the Closing Date and until such
                time
                as is no longer required, legend substantially in the following form
                and
                with the necessary information
                inserted:

            

    

     

    
      
        
        

      

      
        -
          15
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
      EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
      FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
      ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN
      SETTLEMENT OF TRANSACTIONS ON THE TSX.”

     

    
      	 	
              (l)

            	
              The
                certificates (and any replacement certificates issued prior to the
                expiration of the applicable hold periods or ownership statements
                issued
                under a direct registry system or other electronic book entry system)
                representing the Warrants and Flow-Through Common Shares will bear,
                as of
                the Closing Date and until such time as is no longer required, legends
                substantially in the following form and with the necessary information
                inserted:

            

    

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNDER
      ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE LAWS”). THESE SECURITIES HAVE
      BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED
      OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
      OF THE SECURITIES ACT AND APPLICABLE STATE LAWS, OR PURSUANT TO APPLICABLE
      EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS WHICH MAY INCLUDE SALE THROUGH
      A
      DESIGNATED OFFSHORE SECURITIES MARKET. FURTHER, UNLESS THE SECURITIES HAVE
      BEEN
      REGISTERED UNDER THE SECURITIES ACT, THE SALE, TRANSFER, PLEDGE OR OTHER
      DISPOSITION OF THESE SECURITIES IN THE UNITED STATES IS PROHIBITED EXCEPT IN
      ACCORDANCE WITH THE PROVISIONS OF REGULATION S (RULE 901 THROUGH 905 AND THE
      PRELIMINARY NOTES) PROMULGATED UNDER THE SECURITIES ACT.”

     

    
      	 	
              (m)

            	
              The
                Corporation and the Agent are relying on the representations, warranties
                and covenants contained herein and in one of Schedule “A” or Schedule “B”
                attached hereto to determine the Subscriber’s eligibility to subscribe for
                the Warrants under the Securities Laws. The Subscriber
                undertakes
                to immediately notify the Corporation
                and
                the Agent of any change in any statement or other information relating
                to
                the Subscriber
                set
                forth in such Schedule which takes place prior to the Closing
                Time.

            

    

     

    
      	 	
              (n)

            	
              The
                Corporation is relying on an exemption from the requirement to provide
                the
                Subscriber with a prospectus under the Securities Laws and, as a
                consequence of acquiring the Securities pursuant to such exemption,
                certain information, protections, rights and remedies provided by
                the
                Securities Laws will not be available to the
                Subscriber.

            

    

     

    
      	 	
              (o)

            	
              The
                Subscriber, and each Beneficial Purchaser for whom it is contracting
                hereunder, has been encouraged to and should obtain independent legal,
                income tax and investment advise with respect to its subscription
                for
                Special Warrants and accordingly, has been independently advised
                as to the
                meaning of all terms contained herein relevant to the Subscriber
                for
                purposes of giving representations, warranties and covenants under
                this
                Subscription Agreement.

            

    

     

    
      
        
        

      

      
        -
          16
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (p)

            	
              There
                is no government or other insurance covering the
                Securities.

            

    

     

    
      	 	
              (q)

            	
              There
                are risks associated with the purchase of the Securities and the
                Subscriber and any Beneficial Purchaser for whom it is acting may
                lose
                his, her or its entire investment.

            

    

     

    
      	 	
              (r)

            	
              The
                sale of the Warrants will not be qualified by a prospectus, such
                sale and
                issuance is subject to the condition that the Subscriber or (if
                applicable) each Beneficial Purchaser for whom it is acting, sign
                and
                return to the Corporation all relevant documentation required by
                the
                Securities Laws. 

            

    

     

    
      	 	
              (s)

            	
              The
                Corporation may be required to provide the Securities Regulators
                with a
                list setting forth the identities of the Beneficial Purchasers of
                the
                Warrants. Notwithstanding that the Subscriber may be purchasing Warrants
                as agent on behalf of an undisclosed principal, the Subscriber agrees
                to
                provide, on request, particulars as to the identity of such undisclosed
                principal as may be required by the Corporation in order to comply
                with
                the foregoing.

            

    

     

    
      	
              6.3

            	
              Reliance
                on Representations, Warranties, Covenants and
                Acknowledgements

            

    

     

    The
      Subscriber acknowledges and agrees that the representations, warranties,
      covenants and acknowledgements made by the Subscriber in this Subscription
      Agreement are made with the intention that they may be relied upon by the
      Corporation and the Agent in determining the Subscriber’s eligibility (and, if
      applicable, the eligibility of others for whom the Subscriber is contracting
      hereunder) to purchase the Warrants under the Securities Laws or other
      applicable securities laws. The Subscriber further agrees that by accepting
      the
      Warrants, the Subscriber shall be representing and warranting that such
      representations, warranties, acknowledgements and covenants are true as at
      the
      Closing Time with the same force and effect as if they had been made by the
      Subscriber at the Closing Time.

     

    ARTICLE
      7
      - SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     

    
      	
              7.1

            	
              Survival
                of Representations, Warranties and Covenants of the Corporation

            

    

     

    The
      representations, warranties, acknowledgements and covenants of the Corporation
      contained in this Subscription Agreement shall continue in full force and effect
      for a period of two (2) years following the Closing and, notwithstanding such
      Closing or any investigation made by or on behalf of the Subscriber with respect
      thereto, shall continue in full force and effect for the benefit of the
      Subscriber and the Agent.

     

    
      	
              7.2

            	
              Survival
                of Representations, Warranties and Covenants of the
                Subscriber

            

    

     

    The
      representations, warranties, acknowledgements and covenants of the Subscriber
      contained in this Subscription Agreement shall be true and correct both as
      of
      the execution of this Subscription Agreement and as of the Closing Time and
      survive this completion of the issuance and sale of the Securities and,
      notwithstanding such Closing or any investigation made by or on behalf of the
      Corporation with respect thereto, shall continue in full force and effect for
      the benefit of the Corporation and the Agent for a period of two (2) years
      following the Closing Date, notwithstanding any subsequent disposition by the
      Subscriber of any of the Securities. Whether or not explicitly stated in this
      Subscription Agreement, any acknowledgement, representation, warranty, covenant
      or agreement made by the Subscriber in this Subscription Agreement, including
      the Schedule hereto, will be treated as if made by the disclosed Beneficial
      Purchaser, if any.

     

    
      
        
        

      

      
        -
          17
          -

        
          

        

      

      
        
        

      

    

    

    

    ARTICLE
      8
      - COMMISSION

     

    8.1 The
      Subscriber understands that in connection with the issue and sale of the
      Warrants pursuant to the Offering: (a) the Agent will receive from the
      Corporation on Closing, a cash commission equal to 7% of the gross proceeds
      of
      the Offering; and (b) the Corporation will also grant to the Agent (i) special
      warrants (the “Special Unit Broker
      Warrants”)
      equal
      in number to 7% of the number of Conventional Warrants and (ii) special warrants
      (the “Special FT Broker
      Warrants”)
      equal
      in number to 7% of the number of Warrants sold pursuant to the
      Offering.

     

    Each
      Special Unit Broker Warrant may be exercised at any time in accordance with
      its
      terms, and each Special Unit Broker Warrant shall be automatically exchanged
      for
      one broker warrant (each, a “Unit Broker
      Warrant”),
      without payment of additional consideration, immediately after the earlier
      of
(i)
      the
      Qualification Date and (ii) the first Business Day following the day which
      is
      four months after the Closing Date.
      Subject
      to anti-dilution provisions contained in the instrument under which the Unit
      Broker Warrants will be governed, each Unit Broker Warrant will entitle the
      Agent to purchase one Common Share and one Common Share purchase warrant (each
      whole such warrant being referred to as a “Broker
      Warrant”)
      at an
      exercise price of $0.90 per Unit Broker Warrant for a period of 24 months from
      the Closing Date . Each Broker Warrant will entitle the Agent to purchase one
      Common Share at a price of $1.05 per Common Share for a period of 24 months
      from
      the Closing Date. 

     

    Each
      Special FT Broker Warrant may be exercised at any time in accordance with its
      terms, and each Special FT Broker Warrant shall be automatically exchanged
      for
      one flow-through broker Warrant (each, a “FT Broker
      Warrant”),
      without payment of additional consideration, immediately after the earlier
      of
      (i) the Qualification Date and (ii) the first Business Day following the day
      which is four months after the Closing Date. Subject to anti-dilution provisions
      contained in the instrument under which the Broker Warrants will be governed,
      each FT Broker Warrant will entitle the Agent to acquire one flow-through Common
      Share at an exercise price of $1.05 per Common Share for a period of 24 months
      from the Closing Date. 

     

    If
      the
      Qualification Date has not occurred by 4:30 p.m. (Toronto time) on the date
      which is 60 days from the Closing Date, the Agent shall thereafter be entitled
      to receive, upon the exercise or deemed exercise of the Special Unit Broker
      Warrant, 1.1 Unit Broker Warrants for every Special Unit Broker Warrant then
      held by the Agent at no additional consideration and, upon the exercise or
      deemed exercise of the Special FT Broker Warrants, 1.1 FT Broker Warrants for
      every Special FT Broker Warrant then held by the Agent at no additional
      consideration. 

     

    In
      addition to the foregoing, the Agent has received a $25,000 (plus GST) due
      diligence fee from the Corporation.

     

    No
      other
      fee or commission is payable by the Corporation in connection with the
      completion of the Offering. However, the Corporation will pay certain fees
      and
      expenses of the Agent in connection with the Offering, as set out in the Agency
      Agreement.

     

    
      
        
        

      

      
        -
          18
          -

        
          

        

      

      
        
        

      

    

    
      

      

    

    ARTICLE
      9
      - COLLECTION OF PERSONAL INFORMATION

     

    
      	
              9.1

            	
              Collection
                of Personal Information

            

    

     

    The
      Subscriber acknowledges that this Subscription Agreement and Schedule “A” hereto
      require the Subscriber to provide certain personal information to the
      Corporation. Such information is being collected by the Corporation for the
      purposes of completing the Offering, which includes, without limitation,
      determining the Subscriber’s eligibility (or, if applicable, the eligibility of
      the disclosed Beneficial Purchaser) to purchase the Warrants under applicable
      securities legislation, preparing and registering certificates representing
      the
      Securities to be issued hereunder and completing filings required by any stock
      exchange or securities regulatory authority. The Subscriber’s personal
      information (and, if applicable, the disclosed Beneficial Purchaser’s personal
      information) may be disclosed by the Corporation to: (a) stock exchanges or
      securities regulatory authorities, (b) the Corporation’s registrar and transfer
      agent, (c) any government agency, board or other entity; and (d) any of the
      other parties involved in the Offering, including the Corporation, the Agent
      and
      their respective legal counsel, and may be included in record books in
      connection with the Offering. By executing this Subscription Agreement, the
      Subscriber (and, if applicable, the disclosed Beneficial Purchaser) is deemed
      to
      be consenting to the foregoing collection, use and disclosure of the
      Subscriber’s personal information (and, if applicable, the disclosed Beneficial
      Purchaser’s personal information). The Subscriber (and, if applicable, the
      disclosed Beneficial Purchaser) also consents to the filing of copies or
      originals of any of the documents described in Section 4.2 of this Subscription
      Agreement as may be required to be filed with any stock exchange or securities
      regulatory authority in connection with the transactions contemplated hereby
      and
      consents to the disclosure of such information to the public through the filing
      of a report of trade with applicable Securities Regulators. The Subscriber
      (and,
      if applicable, the disclosed Beneficial Purchaser) further acknowledges that
      it
      has been notified by the Corporation of and authorizes (a) the delivery to
      the
      Ontario Securities Commission (the “OSC”)
      of the
      full name, residential address and telephone number of the Subscriber (and,
      if
      applicable, the disclosed Beneficial Purchaser), the number and type of
      securities purchased, the total purchase price, the exemption relied upon and
      the date of distribution; (b) that this information is being collected
      indirectly by the OSC under the authority granted to it in securities
      legislation; (c) that this information is being collected for the purposes
      of
      the administration and enforcement of the securities legislation of Ontario;
      and
      (d) that the Administrative Assistant to the Director of Corporate Finance
      can
      be contacted at Ontario Securities Commission, Suite 1903, Box 55, 20 Queen
      Street West, Toronto, Ontario M5H 3S8, or at (416) 593-8086, regarding any
      questions about the OSC’s indirect collection of this information.

     

    ARTICLE
      10
      - MISCELLANEOUS

     

    
      	
              10.1

            	
              Further
                Assurances

            

    

     

    Each
      of
      the parties hereto upon the request of each of the other parties hereto, whether
      before or after the Closing Time, shall do, execute, acknowledge and deliver
      or
      cause to be done, executed, acknowledged and delivered all such further acts,
      deeds, documents, assignments, transfers, conveyances, powers of attorney and
      assurances as may reasonably be necessary or desirable to complete the
      transactions contemplated herein.

     

    
      	
              10.2

            	
              Notices

            

    

     

    
      	 	
              (a)

            	
              Any
                notice, direction or other instrument required or permitted to be
                given to
                any party hereto shall be in writing and shall be sufficiently given
                if
                delivered personally, or transmitted by facsimile tested prior to
                transmission to such party, as
                follows:

            

    

     

    
      
        
        

      

      
        -
          19
          -

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	 	
              (i)

            	
              in
                the case of the Corporation, to:

            

    

     

    Yukon
      Gold Corporation, Inc.

    55
      York
      Street, Suite 401

    Toronto,
      Ontario

    M5J
      1R7

     

    Attention:
      Paul Gorman

    Fax:
       (416)
      865-1250

     

    with
      a
      copy to:

     

    Macleod
      Dixon LLP

    Suite
      500, P.O. Box 128

    100
      Wellington Street West

    Toronto,
      Ontario M5K 1H1

    Canada

    

    Attention:
      Richard Lachcik

    Fax: (416)
      360-8277

     

    
      	 	
              (ii)

            	
              in
                the case of the Subscriber, at the address specified on the face
                page
                hereof, with a copy to the Agent
                at:

            

    

     

    Northern
      Securities Inc.

    150
      York
      Street, Suite 1800

    Toronto,
      Ontario

    M5H
      3S5

    

    Attention: Doug
      Harris

    Fax:
       (416)
      644-0270

    

    with
      a
      copy to:

    

    Fogler,
      Rubinoff LLP

    Suite
      1200 - 95 Wellington Street West

    Toronto,
      Ontario M5J 2Z9

    

    Attention:
       Eric
      R.
      Roblin

    Fax: (416)
      941-8852

    

    
      	 	
              (b)

            	
              Any
                such notice, direction or other instrument, if delivered personally,
                shall
                be deemed to have been given and received on the day on which it
                was
                delivered, provided that if such day is not a Business Day then the
                notice, direction or other instrument shall be deemed to have been
                given
                and received on the first Business Day next following such day and
                if
                transmitted by fax, shall be deemed to have been given and received
                on the
                day of its transmission, provided that if such day is not a Business
                Day
                or if it is transmitted or received after the end of normal business
                hours
                then the notice, direction or other instrument shall be deemed to
                have
                been given and received on the first Business Day next following
                the day
                of such transmission.

            

    

     

    
      
        
        

      

      
        -
          20
          -

        
          

        

      

      
        
        

      

      
         

      

    

    
      	 	
              (c)

            	
              Any
                party hereto may change its address for service from time to time
                by
                notice given to each of the other parties hereto in accordance with
                the
                foregoing provisions.

            

    

     

    
      	
              10.3

            	
              Time
                of the Essence

            

    

     

    Time
      shall be of the essence of this Subscription Agreement and every part
      hereof.

     

    
      	
              10.4

            	
              Costs
                and Expenses

            

    

     

    Except
      as
      otherwise provided in the Agency Agreement in respect of the Agent, all costs
      and expenses (including, without limitation, the fees and disbursements of
      special legal counsel retained by the Subscriber) incurred by the Subscriber
      in
      connection with this Subscription Agreement and the sale of Securities herein
      contemplated shall be paid by the Subscriber. 

     

    
      	
              10.5

            	
              Applicable
                Law

            

    

     

    This
      Subscription Agreement shall be construed and enforced in accordance with,
      and
      the rights of the parties shall be governed by, the laws of the Province of
      Ontario and the federal laws of Canada applicable therein. Any and all disputes
      arising under this Subscription Agreement, whether as to interpretation,
      performance or otherwise, shall be subject to the non-exclusive jurisdiction
      of
      the courts of the Province of Ontario and each of the parties hereto hereby
      attorns to the jurisdiction of the courts of the Province of Ontario and waives
      objection to the venue of any proceeding in such court or that such court
      provides an inconvenient forum.

     

    
      	
              10.6

            	
              Entire
                Agreement

            

    

     

    This
      Subscription Agreement, including the Schedules hereto, constitutes the entire
      agreement between the parties hereto with respect to the transactions
      contemplated herein and cancels and supersedes any prior understandings,
      agreements, negotiations and discussions between the parties. There are no
      representations, warranties, terms, conditions, undertakings or collateral
      agreements or understandings, express or implied, between the parties hereto
      other than those expressly set forth in this Subscription Agreement or in any
      such agreement, certificate, affidavit, statutory declaration or other document
      as set out in this Subscription Agreement. This Subscription Agreement may
      not
      be amended or modified in any respect except by written instrument executed
      by
      each of the parties hereto.

     

    
      	
              10.7

            	
              Counterparts

            

    

     

    This
      Subscription Agreement may be executed in two or more counterparts, each of
      which shall be deemed to be an original and all of which together shall
      constitute one and the same Subscription Agreement. Counterparts may be
      delivered either in original, faxed or pdf form and the parties adopt any
      signature received by a receiving fax machine or email as original signatures
      of
      the parties.

     

    
      	
              10.8

            	
              Assignment

            

    

     

    This
      Subscription Agreement may not be assigned by either party except with the
      prior
      written consent of the other parties hereto.

     

    
      
        
        

      

      
        -
          21
          -

        
          

        

      

      
        
        

      

    

    

    

    
      	
              10.9

            	
              Enurement

            

    

     

    This
      Subscription Agreement shall enure to the benefit of and be binding upon the
      parties hereto and their respective heirs, executors, successors (including
      any
      successor by reason of the amalgamation or merger of any party), administrators
      and permitted assigns.

     

    
      	
              10.10

            	
              Beneficial
                Subscribers

            

    

     

    Whether
      or not explicitly stated in this Subscription Agreement, any acknowledgement,
      representation, warranty, covenant or agreement made by the Subscriber in this
      Subscription Agreement, including the Schedules will be treated as if made
      by
      the disclosed beneficial subscriber, if any. 

     

    
      	
              10.11

            	
              Language
                of Documents

            

    

     

    It
      is the
      express wish of the parties to this Agreement that this Agreement and all
      related documents be drafted in English. Il est de la volonté expresse des
      parties aux présentes que la présente convention ainsi que tous les documents
      s’y rattachant soient rédigés en anglais. Les parties aux présentes conviennent
      et exigent que cette convention ainsi que tous les documents s’y rattachant
      soient rédigés en langue Anglais.

     

    
      
        
        

      

      
        -
          22
          -

        
          

        

      

      
        
        

      

    

    

    

    SCHEDULE
      “A”

    REPRESENTATION
      LETTER

     

    TO: Yukon
      Gold Corporation, Inc. (the “Corporation”)

     

    In
      connection with the purchase of Warrants (as such term is defined in the
      Subscription Agreement to which this Schedule is attached) of the Corporation
      (the “Purchased
      Warrants”)
      by the
      undersigned subscriber or, if applicable, the disclosed principal on whose
      behalf the undersigned is purchasing as agent (the “Subscriber”
for
      the
      purposes of this Schedule “A”), the Subscriber hereby represents, warrants,
      covenants and certifies to the Corporation that:

     

    
      	
              1.

            	
              The
                Subscriber is resident in the jurisdiction set out as the “Subscriber’s
                Residential Address” on the face page of the Subscription Agreement or is
                otherwise subject to applicable securities laws of such
                province;

            

    

     

    
      	
              2.

            	
              The
                Subscriber is purchasing the Purchased Warrants as principal (NOTE:
                For
                this purpose, a trust company or trust corporation described in paragraph
                (p) in Appendix “I” to this Representation Letter (other than a trust
                company or trust corporation registered under the laws of Prince
                Edward
                Island that is not registered or authorized under the Trust
                and Loan Companies Act
                (Canada) or under comparable legislation in another jurisdiction
                of
                Canada) and a person described in paragraph (q) in Appendix “I” to this
                Representation Letter is deemed to be purchasing as
                principal);

            

    

     

    
      	
              3.

            	
              The
                Subscriber is (and will be at the closing of the issue and sale of
                the
                Purchased Warrants) an “accredited investor” within the meaning of
                National Instrument 45-106 entitled “Prospectus and Registration
                Exemptions” by virtue of satisfying the indicated criterion as set out in
                Appendix “I” to this Representation Letter;
                and

            

    

     

    
      	
              4.

            	
              Upon
                execution of this Schedule “A” by or on behalf of the Subscriber, this
                Schedule “A” shall be incorporated into and form a part of the
                Subscription Agreement to which this Schedule is
                attached.

            

    

     

    Dated:
      _________________________, 2006

     

    
      	 	 	 	 
	
            	 	 	
              

              Print
                name of Subscriber, or person signing as agent 
                on
                  behalf of Subscriber

              

            
	
            	 	 	 
	 	 	 	
              

              Signature

            
	 	 	 	 
	 	 	 	
              
                

              

              Print
                name of Signatory (if different from Subscriber 

              or
                agent, as applicable)

            
	 	 	 	 
	 	 	 	
              
Title 

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
      

      

    

    **
      PLEASE INITIAL THE APPLICABLE PROVISION IN APPENDIX “I” ON THE FOLLOWING PAGES
      **

     

    
      
        
        

      

      
        -
          2
          -

        
          

        

      

      
        
        

      

    

    

    

    APPENDIX
      “I”

     

    TO
      SCHEDULE “A”

     

    NOTE:
      THE INVESTOR MUST INITIAL BESIDE THE APPLICABLE PORTION OF THE DEFINITION
      BELOW.

     

    Accredited
      Investor
      -
      (defined in National Instrument 45-106 “Prospectus and Registration Exemptions”
(“NI
      45-106”))
      means:

     

    
      	________	
              (a) a
                Canadian financial institution, or a Schedule III bank;
                or

            
	 	 
	________	
              (b) 
                the
                Business Development Bank of Canada incorporated under the Business
                Development Bank of Canada Act
                (Canada); or

            
	 	 
	________ 	
              (c) 
                a
                subsidiary of any person referred to in paragraphs (a) or (b), if
                the
                person owns all of the voting securities of the subsidiary, except
                the
                voting securities required by law to be owned by directors of that
                subsidiary; or

            
	 	 
	________ 	
              (d) 
                a
                person registered under the securities legislation of a jurisdiction
                of
                Canada as an adviser or dealer, other than a person registered solely
                as a
                limited market dealer under one or both of the Securities
                Act
                (Ontario) or the Securities
                Act
                (Newfoundland and Labrador); or

            
	 	 
	________  	
              (e) 
                an
                individual registered or formerly registered under the securities
                legislation of a jurisdiction of Canada as a representative of a
                person
                referred to in paragraph (d); or

            
	 	 
	________  	
              (f) 
                the
                Government of Canada or a jurisdiction of Canada, or any crown
                corporation, agency or wholly owned entity of the Government of Canada
                or
                a jurisdiction of Canada; or

            
	 	 
	________  	
              (g) 
                a
                municipality, public board or commission in Canada and a metropolitan
                community, school board, the Comité de gestion de la taxe scolaire de
                l’ile de Montréal or an intermuncipal management board in Québec;
                or

            
	 	 
	________  	
              (h) 
                any
                national, federal, state, provincial, territorial or municipal government
                of or in any foreign jurisdiction, or any agency of that government;
                or

            
	 	 
	________  	
              (i) 
                a
                pension fund that is regulated by either the Office of the Superintendent
                of Financial Institutions (Canada) or a pension commission or similar
                regulatory authority of a jurisdiction of Canada; or

            
	 	 
	________   	
              (j) 
                an
                individual who, either alone or with a spouse, beneficially owns,
                directly
                or indirectly, financial assets having an aggregate realizable value
                that
                before taxes, but net of any related liabilities, exceeds $1,000,000;
                or

            
	 	 
	 	
              **Note:
                if individual accredited investors wish to purchase through wholly-owned
                holding companies or similar entities, such purchasing entities must
                qualify under (t) below, which must be
                initialled. 

            

    

     

    
      
        
        

      

      
        I-1

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	________   	
              (k) 
                an
                individual whose net income before taxes exceeded $200,000 in each
                of the
                2 most recent calendar years or whose net income before taxes combined
                with that of a spouse exceeded $300,000 in each of the 2 most recent
                calendar years and who, in either case, reasonably expects to exceed
                that
                net income level in the current calendar year; or

            
	 	 
	 	
              **Note:
                if individual accredited investors wish to purchase through wholly-owned
                holding companies or similar entities, such purchasing entities must
                qualify under (t) below, which must be initialled.

            
	 	 
	________   	
              (l) 
                an
                individual who, either alone or with a spouse, has net assets of
                at least
                $5,000,000; or

            
	 	 
	 	
              **Note:
                if individual accredited investors wish to purchase through wholly-owned
                holding companies or similar entities, such purchasing entities must
                qualify under (t) below, which must be initialled.

            
	 	 
	________    	
              (m) 
                a
                person, other than an individual or investment fund, that has net
                assets
                of at least $5,000,000 as shown on its most recently prepared financial
                statements; or

            
	 	 
	________   	
              (n) 
                an
                investment fund that distributes or has distributed its securities
                only
                to:

            
	 	
               

              (i) a
                person that is or was an accredited investor at the time of the
                distribution,

               

              (ii) 
                a
                person that acquires or acquired securities in the circumstances
                referred
                to in sections 2.10 [Minimum amount investment] of NI 45-106, and
                2.19
                [Additional investment in investment funds] of NI 45-106, or

               

              (iii) 
                a
                person described in paragraph (i) or (ii) that acquires or acquired
                securities under section 2.18 [Investment fund reinvestment] of NI
                45-106;
                or

            
	________    	 
	________    	
              (o) 
                an
                investment fund that distributes or has distributed securities under
                a
                prospectus in a jurisdiction of Canada for which the regulator or,
                in
                Quebec, the securities regulatory authority, has issued a receipt;
                or

            
	 	 
	________    	
              (p) 
                a
                trust company or trust corporation registered or authorized to carry
                on
                business under the Trust
                and Loan Companies Act
                (Canada) or under comparable legislation in a jurisdiction of Canada
                or a
                foreign jurisdiction, acting on behalf of a fully managed account
                managed
                by the trust company or trust corporation, as the case may be;
                or

            
	 	 
	________    	
              (q) 
                a
                person acting on behalf of a fully managed account managed by that
                person,
                if that person:
 
	 	
              (i) 
                is
                registered or authorized to carry on business as an adviser or the
                equivalent under the securities legislation of a jurisdiction of
                Canada or
                a foreign jurisdiction, and

              (ii) 
                in
                Ontario, is purchasing a security that is not a security of an investment
                fund; or

            
	 	 
	________    	
              (r) 
                a
                registered charity under the Income
                Tax Act
                (Canada) that, in regard to the trade, has obtained advice from an
                eligibility adviser or an adviser registered under the securities
                legislation of the jurisdiction of the registered charity to give
                advice
                on the securities being traded; or

            
	 	 
	________    	
              (s) 
                an
                entity organized in a foreign jurisdiction that is analogous to any
                of the
                entities referred to in paragraphs (a) to (d) or paragraph (i) in
                form and
                function; or

            

    

     

    
      
        
        

      

      
        I-2

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	________    	
              (t) 
                a
                person in respect of which all of the owners of interests, direct,
                indirect or beneficial, except the voting securities required by
                law to be
                owned by directors, are persons that are accredited investors;
                or

            
	 	 
	________    	
              (u) 
                an
                investment fund that is advised by a person registered as an adviser
                or a
                person that is exempt from registration as an adviser;
                or

            
	 	 
	________    	
              (v) 
a
                person that is recognized or designated by the securities regulatory
                authority or, except in Ontario and Quebec, the regulator
                as:

            
	 	
               

              (i)
                an accredited investor, or

               

              (ii)
                an exempt purchaser in Alberta or British Columbia after NI 45-106
                came
                into force.

            

    

     

    
      
        
        

      

      
        I-3

        
          

        

      

      
        
        

      

    

    
      

      

    

    For
      the purposes hereof:

     

    an
      issuer
      is an “affiliate”
      of
      another issuer if

     

    
      	 	
              (a)

            	
              one
                of them is the subsidiary of the other,
                or

            

    

     

    
      	 	
              (b)

            	
              each
                of them is controlled by the same
                person;

            

    

     

    “bank”
means
      a
      bank named in Schedule I or II of the Bank
      Act
      (Canada);

     

    “Canadian
      financial institution”
means
      

     

    
      	 	
              (a)

            	
              an
                association governed by the Cooperative
                Credit Associations Act
                (Canada) or a central cooperative credit society for which an order
                has
                been made under section 473(1) of that Act,
                or

            

    

     

    
      	 	
              (b)

            	
              a
                bank, loan corporation, trust company, trust corporation, insurance
                company, treasury branch, credit union, caisse populaire, financial
                services cooperative, or league that, in each case, is authorized
                by an
                enactment of Canada or a jurisdiction of Canada to carry on business
                in
                Canada or a jurisdiction in Canada;

            

    

     

    “company”
means
      any corporation, incorporated association, incorporated syndicate or other
      incorporated organization;

     

    a
      person
      (first person) is considered to “control”
another
      person (second person) if

     

    
      	 	
              (a)

            	
              the
                first person, directly or indirectly, beneficially owns or exercises
                control or direction over securities of the second person carrying
                votes
                which, if exercised, would entitle the first person to elect a majority
                of
                the directors of the second person, unless that first person holds
                the
                voting securities only to secure an
                obligation,

            

    

     

    
      	 	
              (b)

            	
              the
                second person is a partnership, other than a limited partnership,
                and
                first person holds more than 50% of the interests of the partnership,
                or

            

    

     

    
      	 	
              (c)

            	
              the
                second person is a limited partnership and the general partner of
                the
                limited partnership is the first
                person;

            

    

     

    “director”
      means

     

    
      	 	
              (a)

            	
              a
                member of the board of directors of a company or an individual who
                performs similar functions for a company,
                and

            

    

     

    
      	 	
              (b)

            	
              with
                respect to a person that is not a company, an individual who performs
                functions similar to those of a director of a
                company;

            

    

     

    “entity”
means
      a
      company, syndicate, partnership, trust or unincorporated
      organization;

     

    “financial
      assets”
      means

     

    
      	 	
              (a)

            	
              cash,

            

    

     

    
      	 	
              (b)

            	
              securities,
                or

            

    

     

    
      
        
        

      

      
        I-4

        
          

        

      

      
        
        

      

      
         

      

    

    
      	 	
              (c)

            	
              a
                contract of insurance, a deposit or an evidence of a deposit that
                is not a
                security for the purposes of securities
                legislation;

            

    

     

    “foreign
      jurisdiction”
means
      a
      country other than Canada or a political subdivision of a country other than
      Canada;

     

    “fully
      managed account”
means
      an account of a client for which a person makes the investment decisions if
      that
      person has full discretion to trade in securities for the account without
      requiring the client’s express consent to a transaction;

     

    “investment
      fund”
means
      a
      mutual fund or non-redeemable investment fund, and, for greater certainty,
      in
      British Columbia includes an employee venture capital corporation that does
      not
      have a restricted constitution, and is registered under Part 2 of the
Employee
      Investment Act
      (British
      Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple
      investments and a venture capital corporation registered under Part 1 of the
      Small
      Business Venture Capital Act
      (British
      Columbia), R.S.B.C. 1996 c.429 whose business objective is making multiple
      investments;

     

    “jurisdiction”
means
      a
      province or territory of Canada except when used in the term “foreign
      jurisdiction”;

     

    “individual”
means
      a
      natural person, but does not include

     

    
      	 	
              (a)

            	
              a
                partnership, unincorporated association, unincorporated syndicate,
                unincorporated organization or a trust,
                or

            

    

     

    
      	 	
              (b)

            	
              a
                natural person in his or her capacity as trustee, executor, administrator
                or other legal personal
                representative;

            

    

     

    “mutual
      fund”
      includes an issuer whose primary purpose is to invest money provided by its
      security holders and whose securities entitle the holder to receive on demand,
      or within a specified period after demand, an amount computed by reference
      to
      the value of a proportionate interest in the whole or in a part of the net
      assets, including a separate fund or trust account, of the issuer of the
      securities;

     

    “non-redeemable
      investment fund”
means
      an issuer,

     

    
      	 	
              (a)

            	
              whose
                primary purpose is to invest money provided by its
                securityholders,

            

    

     

    
      	 	
              (b)

            	
              that
                does not invest,

            

    

     

    
      	 	
              (A)

            	
              for
                the purpose of exercising or seeking to exercise control of an issuer,
                other than an issuer that is a mutual fund or a non-redeemable investment
                fund, or

            

    

     

    
      	 	
              (B)

            	
              for
                the purpose of being actively involved in the management of any issuer
                in
                which it invests, other than an issuer that is a mutual fund or a
                non-redeemable investment fund, and

            

    

     

    
      	 	
              (c)

            	
              that
                is not a mutual fund;

            

    

     

    “person”
      includes 

     

    
      	 	
              (a)

            	
              an
                individual,

            

    

     

    
      
        
        

      

      
        I-5

        
          

        

      

      
        
        

      

      
         

      

    

    
      	 	
              (b)

            	
              a
                corporation,

            

    

     

    
      	 	
              (c)

            	
              a
                partnership, trust, fund and an association, syndicate, organization
                or
                other organized group of persons, whether incorporated or not,
                and

            

    

     

    
      	 	
              (d)

            	
              an
                individual or other person in that person’s capacity as a trustee,
                executor, administrator or personal or other legal
                representative;

            

    

     

    “regulator”
means,
      for the local jurisdiction, the person referred to in Appendix D of National
      Instrument 14-101 “Definitions” (“NI
      14-101”)
      opposite the name of the local jurisdiction;

     

    “related
      liabilities”
      means:

     

    
      	 	
              (a)

            	
              liabilities
                incurred or assumed for the purpose of financing the acquisition
                or
                ownership of financial assets; or

            

    

     

    
      	 	
              (b)

            	
              liabilities
                that are secured by financial
                assets;

            

    

     

    “Schedule
      III bank”
means
      an authorized foreign bank named in Schedule III of the
      Bank
      Act
      (Canada);

     

    “securities
      legislation”
means,
      for the local jurisdiction, the instruments listed in Appendix B of NI 14-101
      opposite the name of the local jurisdiction

     

    “securities
      regulatory authority”
means,
      for the local jurisdiction, the securities commission or similar regulatory
      authority listed in Appendix C of NI 14-101 opposite the name of the local
      jurisdiction;

     

    “spouse”
means
      an individual who,

     

    
      	 	
              (a)

            	
              is
                married to another individual and is not living separate and apart
                within
                the meaning of the Divorce
                Act (Canada),
                from the other individual,

            

    

     

    
      	 	
              (b)

            	
              is
                living with another individual in a marriage-like relationship, including
                a marriage-like relationship between individuals of the same gender,
                or

            

    

     

    
      	 	
              (c)

            	
              in
                Alberta, is an individual referred to in paragraph (a) or (b), or
                is an
                adult interdependent partner within the meaning of the Adult
                Interdependent Relationships Act (Alberta);
                and

            

    

     

    “subsidiary”
means
      an issuer that is controlled directly or indirectly by another issuer and
      includes a subsidiary of that subsidiary.

     

    
      
        
        

      

      
        I-6

        
          

        

      

      
        
        

      

    

    

    

    SCHEDULE
      “B”

    CERTIFICATE

    ADDITIONAL
      REPRESENTATIONS, WARRANTIES AND COVENANTS

    FOR
      NON-CANADIAN SUBSCRIBERS

    (OTHER
      THAN U.S. SUBSCRIBERS)

     

    The
      Subscriber, on its own behalf and (if applicable) on behalf of others for whom
      it is acting hereunder, further represents, warrants and covenants to and with
      the Corporation and the Agent and their respective counsel (and acknowledges
      that the Corporation, the Agent and their respective counsel are relying
      thereon) that it is, and (if applicable) any beneficial purchaser for whom
      it is
      acting hereunder is, a resident of, or otherwise subject to, the securities
      legislation of a jurisdiction other than Canada or the United States,
      and:

     

    
      	 	
              (a)

            	
              the
                Subscriber is, and (if applicable) any other purchaser for whom it
                is
                acting hereunder, is:

            

    

     

    (i) a
      purchaser that is recognized by the Securities Regulators in the jurisdiction
      in
      which it is, and (if applicable) any other purchaser for whom it is acting
      hereunder is resident or otherwise subject to the Securities Laws of such
      jurisdiction as an exempt purchaser and (subject to (b)(i) below) is purchasing
      the Warrants as principal for its, or (if applicable) each such other
      purchaser’s, own account, and not for the benefit of any other person, for
      investment only and not with a view to resale or distribution and no other
      person, corporation, firm or other organization has a beneficial interest in
      the
      said securities being purchased, or purchasing the securities as agent or
      trustee for the principal disclosed on the cover page of this Agreement and
      each
      disclosed principal for whom the Subscriber is acting is purchasing as principal
      for its own account, and not for the benefit of any other person, and is
      purchasing for investment only and not a view to resale or distribution;
      or

     

    (ii) a
      purchaser which is purchasing Warrants pursuant to an exemption from any
      prospectus or securities registration requirements (particulars of which are
      enclosed herewith) available to the Corporation, the Agent, the Subscriber
      and
      any such other purchaser under applicable Securities Laws of their jurisdiction
      of residence or to which the Subscriber and any such other purchaser are
      otherwise subject to, and the Subscriber and any such other purchaser shall
      deliver to the Corporation and the Agent such further particulars of the
      exemption and their qualification thereunder as the Corporation or the Agent
      may
      reasonably request;

     

    
      	 	
              (b)

            	
              if
                the Subscriber is resident in or otherwise subject to applicable
                Securities Laws of the United
                Kingdom:

            

    

     

    
      	 	
              (i)
                

            	
              the
                Subscriber is a person in the United Kingdom: (A) who is ‘qualified
                investor’ for the purposes of section 86(7) of the Financial Services and
                Markets Act 2000 (“FSMA”) and is purchasing the Warrants (or the
                Flow-Through Common Shares) as principal for its own account and
                not for
                the benefit of others, other than on behalf of (a) discretionary
                client(s)
                in circumstances where section 86 (2) FSMA applies; and (B) is such
                a
                person as is referred to in Article 19 (investment professionals)
                or 49
                (high net worth companies etc) of the Financial Services and Markets
                Act
                2000 (Financial Promotion) Order 2005; and (C) and has complied with
                and
                undertakes to comply with all applicable provisions of the FSMA and
                other
                applicable Securities Laws with respect to anything done by it in
                relation
                to the Warrants and Flow-Through Common Shares in, from or otherwise
                involving the United Kingdom; and

            

    

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

      
         

      

    

    
      	 	
              (ii)
                

            	
              the
                Subscriber confirms that, to the extent applicable to it, it is aware
                of,
                has complied and will comply with its obligations in connection with
                the
                Criminal Justice Act 1993, the Proceeds of Crime Act 2002 and Part
                VIII of
                the FSMA, it has identified its clients in accordance with the Money
                Laundering Regulations 2003 (the “Regulations”) and has complied fully
                with its obligations pursuant to the Regulations and will, as a condition
                precedent of any acceptance of this subscription, provide all such
                information and documents as may be required in relation to it (or
                any
                person on whose behalf it is acting as agent) that may be required
                by the
                Corporation or the Agent or any agent or person acting for them in
                order
                to discharge any obligations under the
                Regulations;

            

    

     

    
      	 	
              (c)

            	
              the
                purchase of Warrants (or the Flow-Through Common Shares issuable
                upon
                exchange of the Warrants) by the Subscriber, and (if applicable)
                each such
                other purchaser, does not contravene any of the applicable Securities
                Laws
                in such jurisdiction and does not trigger: (i) any obligation of
                the
                Corporation to prepare and file a prospectus, an offering memorandum
                or
                similar document, or (ii) any obligation of the Corporation to make
                any
                filings with or seek any approvals of any kind from any regulatory body in
                such jurisdiction or any other ongoing reporting requirements with
                respect
                to such purchase or otherwise; or (iii) any registration or other
                obligation on the part of the Corporation or the Agent;
                

            

    

     

    
      	 	
              (d)

            	
              the
                Subscriber is knowledgeable of, and has been independently advised
                as to,
                the securities laws of such jurisdiction as applicable to this
                Subscription Agreement; and

            

    

     

    
      	 	
              (e)

            	
              the
                Subscriber, and (if applicable) any other purchaser for whom it is
                acting
                hereunder will not sell or otherwise dispose of any Securities, except
                in
                accordance with applicable Securities Laws, and if the Subscriber,
                or (if
                applicable) such Beneficial Purchaser sell or otherwise dispose of
                any
                Securities to a person other than a resident of Canada, the Subscriber,
                and (if applicable) such Beneficial Purchaser, will obtain from such
                purchaser representations, warranties and covenants in the same form
                as
                provided in this Schedule “B” and shall comply with such other
                requirements as the Corporation may reasonably
                require.

            

    

     

    Dated
      at
      _______________ this ____ day of ____________, 2006.

     

    
      	 	 	 	 
	
              

              Name
                of Subscriber

            	 	 	
            

    

     

    
      	By:  	 	 	 	 
	 	
              

              Signature

            	 	 	
            
	 	 	 	 	 

    

    
       

      
        	 	 	 	 
	
                

                Title:

              	 	 	
              

      

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

    

    
      

      

    

    SCHEDULE
      “C”

    TERM
      SHEET

     

    PRIVATE
      PLACEMENT OF UNIT SPECIAL WARRANTS AND FLOW-THROUGH SPECIAL
      WARRANTS

     

    
      	
              Issuer:

            	
              Yukon
                Gold Corporation, Inc. (the “Corporation”).

            
	 	 
	
              Offering:

            	
              Private
                Placement of Unit Special Warrants and Flow-Through Special Warrants
                (the
                Unit Special Warrants and Flow-Through Special Warrants are collectively
                referred to herein as “Special Warrants”). 

            
	 	 
	
              Size
                of the Offering:

            	
              Offering
                of up to $6,000,000 of Special Warrants, subject to a minimum of
                $1,000,000 of Unit Special Warrants.

            
	 	 
	
              Agent:

            	
              Northern
                Securities Inc. (“Northern” or the “Agent”, which term includes each
                member of an underwriting syndicate arranged by Northern, if any,
                or
                “Northern”)

            
	 	 
	
              Agency
                Basis:

            	
              Private
                placement on a commercially reasonable best efforts agency basis
                without
                an offering memorandum, subject to the terms and conditions of an
                agency
                agreement.

            
	 	 
	
              Special
                Warrants:

            	
              The
                Special Warrants will be issued pursuant to the terms and conditions
                of a
                special warrant indenture to be entered into between the Corporation
                and a
                Canadian trust company (the “Warrant Agent”) acceptable to the Agent,
                acting reasonably. The Special Warrants will be exercisable by the
                holders
                thereof on a one-for-one basis (subject to the adjustment provisions
                set
                forth below) for Units or Flow-Through Shares, as applicable, without
                payment of additional consideration, at any time on or before 5:00
                p.m.
                (Toronto time) on the date (the “Expiry Date”) which is the earlier of:
                (i) the 3rd
                business day after a receipt is issued under the Mutual Reliance
                Review
                System for a final prospectus, qualifying the issuance of the Units
                and
                Flow-Through Shares, filed in each of the provinces and territories
                of
                Canada where Special Warrants are sold and an SB2 Registration statement
                is cleared in the United States (the “Prospectus Qualification Date”); and
                (ii) the first business day following the date which is 4 months
                after
                Closing Date (as defined below); and Special Warrants not exercised
                prior
                to the Expiry Date will automatically be exercised by the Warrant
                Agent on
                behalf of the holders of Special Warrants without any further action
                on
                the part of the holders immediately prior to the Expiry Date.

              In
                the event that the Prospectus Qualification Date does not occur prior
                to
                the day which is 60 days after the Closing Date (the “Qualification
                Deadline”), each Unit Special Warrant will entitle the holder thereof to
                receive on exercise thereof 1.1 Units and each Flow-Through Special
                Warrant will entitle the holder thereof to receive on exercise thereof
                1.1
                Flow-Through Shares.

              In
                addition to the foregoing, the Special Warrants will have such other
                terms
                and conditions as are customary for transactions of this
                nature.

            
	 	 
	
              Unit:

            	
              Each
                Unit will be comprised of one common share in the capital of the
                Corporation and one common share purchase warrant (each whole such
                warrant
                being referred to herein as a “Warrant”)

            
	 	 
	
              Warrant:

            	
              Each
                Warrant will be exercisable into one common share in the capital
                of the
                Corporation for a period of 24 months from Closing at an exercise
                price of
                $1.05 per share.

            
	 	 
	
              Unit
                Special Warrant Issue Price:

            	
              $0.90
                per Unit Special Warrant.

            

    

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

      
        
           

        

      

    

    
      	
              Flow-Through
                Special Warrant Issue Price:

            	
              $1.05
                per Flow-Through Special Warrant.

            
	 	 
	
              Flow-Through
                Income Tax Considerations:

            	
              The
                Corporation shall, pursuant to the provisions in the Income
                Tax Act
                (Canada) (the “Tax Act”), incur Canadian Exploration Expenses (as defined
                in the Tax Act) after the Closing Date and prior to December 31,
                2007 in
                the aggregate amount of not less than the gross proceeds raised from
                the
                sale of the Flow-Through Special Warrants pursuant to the
                Offering.

            
	 	 
	
              Use
                of Proceeds:

            	
              The
                gross proceeds of the Flow-Through Special Warrants shall be used
                to incur
                Canadian Exploration Expenses (as defined in the Tax Act) after the
                Closing Date and prior to December 31, 2007. The proceeds of the
                Unit
                Special Warrants shall be used for working capital and general corporate
                purposes.

            
	 	 
	
              Offering
                Jurisdictions:

            	
              Ontario,
                British Columbia, Nova Scotia, Alberta and Quebec and any other Provinces
                of Canada and those jurisdictions outside Canada as agreed to by
                the
                Corporation and the Agent. For greater certainty no securities will
                be
                offered to U.S. investors without the prior agreement of the
                Corporation.

            
	 	 
	
              Resale
                Restrictions:

            	
              The
                Unit Special Warrants and Flow-Through Special Warrants will not
                be
                qualified for sale to the public by way of a prospectus. Accordingly,
                the
                securities in the Offering will be subject to a resale restriction
                period
                of four months plus one day from Closing. In the event the Corporation
                obtains a receipt for a final short-form prospectus qualifying the
                securities underlying the Special Warrants and clears a Registration
                Statement on Form SB-2, such underlying securities will be freely-tradable
                at such time.

            
	 	 
	
              Over-Allotment
                Option:

               

            	
              The
                Corporation will grant the Agent an over-allotment option (“Over-Allotment
                Option”) to sell up to $2,000,000 of any combination of Unit Special
                Warrants and Flow-Through Special Warrants at the respective Unit
                Special
                Warrant and Flow-Through Special Warrant Issue Price, subject to
                a minimum
                issuance of $1,000,000 of Unit Special Warrants. The Over-Allotment
                Option
                may be exercised within 48 hours prior to Closing.

            
	 	 
	
              Due
                Diligence Work Fee:

            	
              A
                $25,000 (plus GST) non-refundable due diligence fee payable upon
                the date
                of execution of this agreement. The Due Diligence Work Fee will be
                netted
                against any Commission payable to Northern upon
                Closing.

            
	 	 
	
              Commission:

            	
              A
                cash commission equal to 7% of the aggregate gross proceeds of the
                Offering, payable at Closing. 

              In
                addition, the Corporation will issue to the Agent at Closing, (i)
                Unit
                Compensation Options entitling the Agent to acquire, for no additional
                consideration, Unit Compensation Warrants entitling the Agent to
                acquire,
                at a price per share equal to the Unit Special Warrant Issue Price,
                such
                number of Units as is equal to 7% of the number of Unit Special Warrants
                issued under the Offering. The Unit Compensation Options and Unit
                Compensation Warrants shall have an expiry date that is 24 months
                from the
                Closing Date; (ii) Flow-Through Compensation Options entitling the
                Agent
                to acquire, for no additional consideration, Flow-Through Compensation
                Warrants entitling the Agent to acquire, at a price per share equal
                to the
                Flow-Through Special Warrant Issue Price, such number of common shares
                in
                the capital of the Corporation as is equal to 7% of the number of
                Flow-Through Special Warrants issued under the Offering. The Flow-Through
                Compensation Options and Flow-Through Compensation Warrants shall
                have an
                expiry date that is 24 months from the Closing Date. The Unit Compensation
                Warrants and Flow-Through Compensation Warrants shall be qualified
                under
                the prospectus and registration statement referenced
                above.

            

    

     

    
      
        
        

      

      
        C-2

        
          

        

      

      
        
        

      

      
         

      

    

    
      	 	
              In
                the event that the Prospectus Qualification Date does not occur prior
                to
                the day which is 60 days after the Closing Date (the “Qualification
                Deadline”), each Unit Compensation Option will entitle the holder thereof
                to receive on exercise thereof 1.1 Unit Compensation Warrants and
                each
                Flow-Through Compensation Option will entitle the holder thereof
                to
                receive on exercise thereof 1.1 Flow-Through Compensation
                Warrants. 

            
	 	 
	
              Closing:

            	
              On
                or before December 15, 2006 (the “Closing Date”), or such other date as
                agreed to by Northern and the Corporation. Upon Closing, funds are
                to be
                released to the Corporation net of Commission (net of the Due Diligence
                Work Fee), costs and expenses.

            

    

    

    
      
        
        

      

      
        C-3

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