Document:

EXHIBIT 10.2

AGREEMENT FOR THE EXPLORATION AND EXPLOITATION OF THE MINING PROJECT, THE
SUBJECT HEREOF, THAT IS ENTERED INTO BY THE COMPANY NAMED MINERA APOLO, S.A. DE
C.V. (HEREINAFTER REFERRED TO AS "MINERA APOLO"), REPRESENTED BY ITS PRESIDENT
AND ATTORNEY-IN-FACT, MR. DONALD F. MCLEROY; BY THE COMPANY NAMED SIERRA MADRE
RESOURCES, S.A. DE C.V. (HEREINAFTER REFERRED TO AS "SIERRA MADRE") REPRESENTED
BY ITS ATTORNEY, LICENCIADO VICTOR GARCIA JIMENEZ; AND BY THE COMPANY NAMED
CAN-CAL RESOURCES LTD. (HEREINAFTER REFERRED TO AS "CAN-CAL"), REPRESENTED BY
ITS PRESIDENT AND ATTORNEY-IN-FACT, MR. ANTHONY F. CIALI, IN ACCORDANCE WITH THE
FOLLOWING STATEMENTS AND CLAUSES:

                                   STATEMENTS

I.   MINERA APOLO DECLARES, THROUGH ITS REPRESENTATIVE, THAT:

     a) It is a mining company duly organized and existing pursuant to the laws
        of the United Mexican States, in the terms of the Public Instrument
        Number 4601, dated the day 15 of October of 1976, notarized and attested
        to by Licenciado Adrian R. Iturbino Galindo, Notary Public No. 139 for
        Districto Federal, duly recorded with the Public Registry of Commerce
        for Districto Federal, under the Commercial Folio No. 217, on the day 12
        of November of 1976; and recorded under Number 118 at page 85 of Volume
        XXI of the book of Mining Companies with the Public Registry of Mining
        on the day 10 of December of 1976;

     b) It has the economic and legal capacity to be bound by the terms of this
        Agreement;

     c) Its representative has the faculties necessary for the execution of this
        Agreement, which have not been revoked or limited in any form
        whatsoever;

     d) It is the sole and legitimate holder of 100% (one hundred percent) of
        the rights derived from the following mining concessions which are
        located in the Municipality of Pinos, State of Zacatecas, Mexico,
        hereinafter referred to collectively as the "Mining Concessions":

MINING                                                TYPE OF
CONCESSION            TITLE NO.       HECTARES      CONCESSION
EL PERRO I              204061          61.7254     EXPLOITATION
TANOUS                  185956           8.3487     EXPLOITATION
LA PAZ                  183814         122.2521     EXPLOITATION
LA PAZ II               180417          30.7413     EXPLOITATION
LA PAZ III              214859          51.4413     EXPLOITATION
ANTONIO BARIO I         180440          72.8234     EXPLOITATION
APOLO FRAC. II          180419          10.4892     EXPLOITATION

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     e) Within the Mining Concessions, it has designated an area, referred to as
        the Catanava Block (the "Catanava Block"), comprising 131.566 (one
        hundred thirty one and decimal point five hundred sixty six) hectares,
        which is the subject of this Agreement. The dimensions and location of
        the Catanava Block are attached hereto as Exhibit A;

     f) The Mining Concessions are in force and current in compliance with all
        obligations established by the Mining Law and its Regulations and the
        Federal Fees Law, and as of the signature date of this Agreement, no
        official communication whatsoever has been received or issued by the
        General Bureau of Mines or other authority that could affect the rights
        derived from the Mining Concessions in any form;

     g) The Mining Concessions are free of all kinds of liens, impediments or
        claims of third parties, royalties, including but not limited to
        attachments, expropriation, temporary occupation, debt, contingencies,
        obstacles or litigation that could affect the object of this Agreement
        or reduce the value of the Mining Concessions;

     h) No type of obligation has been acquired with respect to any third party
        which prevents it from entering into this Agreement, nor are there
        pending proceedings or possible proceedings that expose the Mining
        Concessions, or the validity of this Agreement, to risk;

     i) Any available information with regard to the Mining Concessions has been
        delivered or disclosed to SIERRA MADRE; and

     j) The conditions and operations related to the Mining Concessions are in
        full compliance with the laws that govern environmental matters, and
        there are no orders or requirements in force related to environmental
        issues by which any remedy, work programs or expenses with respect to
        the Mining Concessions are sought, nor has it received any communication
        related to the foregoing, nor is it aware of there being any grounds on
        which such orders or requirements could be issued.

II.  SIERRA MADRE DECLARES, THROUGH ITS REPRESENTATIVE, THAT:

     a) It is a mining company duly organized and existing in accordance with
        the laws of the United Mexican States in the terms of Public Instrument
        Number 49,282, dated the day 18 of September of 2003, notarized and
        attested to by Licenciado Adrian R. Iturbide Galindo, Notary Public No.
        140 for Mexico City, Federal District, duly recorded with the Public
        Registry of Commerce of the Mexico City, Federal District, under
        Commercial folio No. 312546, on the day 31 of December of 2003; recorded
        under Number 97 at page 49 of Volume XXXVIII of the book of Mining
        Companies with the Public Registry of Mining on the day 27 of February
        of 2004;

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     b) It has the economic and legal capacity to be bound by the terms of this
        Agreement;

     c) In terms of the public instrument referred to in paragraph (a), above,
        its representative has the faculties necessary for the execution of this
        Agreement, which have not been revoked or limited in any form
        whatsoever; and

     d) It agrees to join its efforts and resources with those of MINERA APOLO
        for the Development of the Project, the subject of this Agreement, under
        the terms and conditions stipulated herein.

III. CAN-CAL DECLARES, THROUGH ITS REPRESENTATIVE, THAT:

     a) It is a mining company duly organized and existing in accordance with
        the laws of the United States of America, in accordance with its
        Articles of Incorporation, filed and recorded in the Office of the
        Secretary of State of the State of Nevada on the day 22 of March of
        1995;

     b) It has the economic and legal capacity to be bound by the terms of this
        Agreement; and

     c) Its representative has the faculties necessary for the execution of this
        Agreement, which have not been revoked or limited in any form
        whatsoever.

Based on the foregoing Declarations, the Parties agree to this Agreement,
subject to the following:

                                     CLAUSES

FIRST     RIGHTS TO EXPLORE AND EXPLOIT THE PROJECT.

MINERA APOLO shall grant to SIERRA MADRE the exclusive rights to the exploration
and exploitation of the Project constituted within the Mining Concessions for
the existing term of the Mining Concessions, and any renewals thereof, and to
the exclusive utilization of any equipment, installations and improvements
thereon, in accordance with the terms and conditions stipulated in this
Agreement, which rights include, among other things, the right to conduct
geophysical, geological and drilling programs of any kind; and exploitation
programs, such as shaft sinking, blasting, tunneling, construction of facilities
and infrastructure improvements, milling and other processing activities; and
any other programs and activities that SIERRA MADRE shall deem necessary to
properly carry out the exploration and exploitation of the Project. It is agreed
that SIERRA MADRE shall be able to be associated with or to employ third parties
to collaborate in the execution of the operations, the subject of this clause.

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SECOND    GRANTING OF AN INITIAL OPTION

Upon the execution of this Agreement, MINERA APOLO grants to SIERRA MADRE an
exclusive Initial Option (the "Option") to, among other things, satisfy itself
as to the legal status of the Mining Concessions, further review available
geological and technical data pertaining to the Mining Concessions, to conduct
any geological and technical programs it deems necessary and to decide if it
wishes to proceed with this Agreement and with the exploration and exploitation
of the Project.

The term of this Option shall commence on the date of this Agreement and shall
expire on the 90th (ninetieth) day following execution of this Agreement (the
"Due Diligence" period). MINERA APOLO shall grant SIERRA MADRE, free of charges
and expenses, access to the Project and to all data relating to the Project in
its possession to assist SIERRA MADRE with its Due Diligence. If requested by
SIERRA MADRE, MINERA APOLO shall make its personnel based in the City of San
Luis Potosi available, free of charge, to assist SIERRA MADRE with its Due
Diligence. SIERRA MADRE shall be responsible for any costs incurred, which are
directly related to its Due Diligence efforts.

At, or prior to, the conclusion of the Due Diligence period, SIERRA MADRE shall
notify MINERA APOLO, in writing, whether it wishes to proceed with the
Development of the Project

If SIERRA MADRE exercises the Option, SIERRA MADRE shall have the right to
assign (the "Assignment") its rights and interests in this Agreement to a wholly
owned Mexican legal corporation ("NEWCO"), to be organized and owned 100% (one
hundred percent) either by SIERRA MADRE or SIERRA MADRE'S United States parent
company, CAN-CAL, a Nevada-based public company listed on the United States
Over-The-Counter Bulletin Board ("OTC BB"), under the stock symbol: CCRE. In
this Agreement, NEWCO'S parent company, whether it should be SIERRA MADRE or
CAN-CAL, shall hereinafter be referred to as "the MAJORITY SHAREHOLDER." It is
SIERRA MADRE'S and the MAJORITY SHAREHOLDER'S intention that NEWCO shall be
responsible for the Development of the Project should SIERRA MADRE exercise the
Option.

THIRD     INTERESTS OF THE PARTIES

If SIERRA MADRE exercises the Option and makes the Assignment in Clause Second,
above, the MAJORITY SHAREHOLDER shall ensure that NEWCO issues sufficient shares
of its common stock to MINERA APOLO, such that MINERA APOLO shall own 49%
(forty-nine percent), and the MAJORITY SHAREHOLDER 51% (fifty-one percent), of
the issued and outstanding common stock of NEWCO at the commencement of the
Development of the Project. MINERA APOLO shall receive its 49% (forty-nine
percent) equity interest in NEWCO in consideration of MINERO APOLO granting
NEWCO the exclusive rights to explore and exploit the Project and access to, and
exclusive use of, any equipment, installations and improvements that exist on
the Project as of the signing of this Agreement. Under no circumstances shall
MINERA APOLO be

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permitted to either refuse receipt of the shares of NEWCO from the MAJORITY
SHAREHOLDER or not grant NEWCO the exclusive rights noted above.

FOURTH.   DEVELOPMENT OF THE PROJECT

MINERA APOLO and SIERRA MADRE enter into this Agreement to establish and
regulate the terms of the participation of the Parties and other conditions
related to the Development of the Project, in which MINERA APOLO shall
participate with its resources and goods but not limited to the rights derived
from the Mining Concessions, whether for exploration or exploitation, in
addition to any improvements, equipment and installations existing on the
Project; and assuming SIERRA MADRE makes the Assignment in Clause Second, above,
the MAJORITY SHAREHOLDER shall ensure that NEWCO shall participate with the
financing, mining experience and management of the mining project to comply with
the terms of this Agreement. The form in which the expression "the Parties" is
used in this Agreement includes MINERA APOLO, SIERRA MADRE and CAN-CAL and any
other party that, from hereafter, acquires a participation in the Project
according to this Agreement.

The expressions the "Development of the Project" or the "Project" used in this
Agreement mean the mining project referred to as "The Catanava Block"
constituted within the Mining Concessions and the rights derived from the
applications for said Mining Concessions, all of which are located in the
Municipality of Pinos, State of Zacatecas, Mexico, for which a location diagram
of the Mining Concessions is attached hereto as Exhibit B.

The Parties agree that the MAJORITY SHAREHOLDER shall be the operator (the
"Operator") of the Development of the Project, responsible for the daily
management of the administrative, managerial, and technical operations of the
Project. If CAN-CAL is the MAJORITY SHAREHOLDER of NEWCO, it shall have the
right to appoint SIERRA MADRE, or any other wholly owned subsidiary or legal
entity in which it has more than a 50% (fifty percent) equity interest, as
Operator.

FIFTH.    OPERATING COMMITTEE.

If SIERRA MADRE exercises the Option and makes the Assignment in Clause Second,
above, MINERO APOLO and the MAJORITY SHAREHOLDER, as the shareholders of NEWCO
following the Assignment, agree to timely form an Operating Committee (the
"Committee") of the Board of Directors of NEWCO. The Committee shall have the
overall responsibility for the supervision of the Development of the Project.
The Committee will be comprised of 4 (four) members, 2 (two) of whom will be
appointed by MINERA APOLO and shall include the President of MINERA APOLO, and
the 2 (two) remaining members shall be appointed by the MAJORITY SHAREHOLDER and
shall include the President of the MAJORITY SHAREHOLDER. The members will
exercise their duties and responsibilities as Committee members without any
economic compensation.

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The Committee shall have among its obligations and attributes the following:

     i)     The Committee shall decide on the acquisition of any additional
            concessions to be added to the Project. In no case will MINERA
            APOLO, or any of its stockholders, employees, advisors or related
            parties, be permitted to make a new application for any concession
            which is located in an area of 5 (five) kilometers from the Project,
            unless approved in advance and in writing by the Committee;
     ii)    If the Committee decides to acquire a new concession located within
            an area of 5 (five) kilometers from the Project, the concession will
            be applied for in the name of NEWCO, and any such concession shall
            form part of the Project and will be subject to conditions of this
            Agreement; and
     iii)   The Committee will decide on the appropriate exploration and
            exploitation programs for the Development of the Project, based on
            the recommendations and direction of the Operator.

The Committee shall meet and adopt decisions as follows:

     i)     The Committee shall meet at least once each quarter or more
            frequently if the Operator so determines;
     ii)    The members of the Committee must be given notice at least 10 (ten)
            calendar days in advance of the date on which the Committee meeting
            will be held;
     iii)   The convocation must be notified to the Committee members by fax or
            any other means that assures its receipt, in Spanish and in English;
            iv) MINERA APOLO gives as its fax Number to which convocations
            should be sent the following number in Mexico: (444) 815-1293;
     v)     The MAJORITY SHAREHOLDER gives as its fax numbers to which
            convocations should be sent the following numbers in the USA: (609)
            219-7493 and (702) 243-1869;
     vi)    If all of the members of the Committee meet without a prior
            convocation, they may make decisions;
     vii)   The Committee may make decisions even when the members do not meet,
            provided said decisions are ratified in writing by all members who
            constitute the Committee;
     viii)  In order for a Committee meeting to be valid and for decisions to be
            taken and binding on the Parties, the members who are the respective
            Presidents of MINERA APOLO and the MAJORITY SHAREHOLDER must be
            present. Members of the Committee may not be represented by proxy in
            meetings;
     ix)    The Committee may take decisions by a majority of votes present, and
            in the case of deadlock on a decision by the members of MINERA APOLO
            and the MAJORITY SHAREHOLDER, the MAJORITY SHAREHOLDER shall have
            the deciding vote based on its 51% (fifty-one percent) equity
            interest in NEWCO; and
     x)     The decisions that the Committee adopts are binding for the
            signatories of this Agreement.

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In addition to other matters prescribed in this Agreement, MINERA APOLO and the
MAJORITY SHAREHOLDER agree and shall ensure that the Board of Directors of NEWCO
shall approve resolutions on the Project's profits and losses, on expenses and
investment budgets, and other matters of importance for the Development of the
Project, complying with the provisions contained in this Agreement regarding the
functions, liabilities, rights, and obligations of the Parties, according to the
following dispositions:

     i)     The MAJORITY SHAREHOLDER will determine the profits and losses of
            each commercial year in agreement with the accounting principles
            that govern in Mexico;
     ii)    The commercial years of the Project will be established on an annual
            basis, and they shall begin on the day 1 of January and end on the
            day 31 of December of each year, except for the first year that will
            be irregular and shall run from the date this Agreement is signed to
            the day 31 of December of 2005;
     iii)   The MAJORITY SHAREHOLDER will prepare and will deliver to the
            Committee the balance sheet and the other financial statements of
            the commercial year (" the Annual Balance") at the latest within 3
            (three) months following the end of each commercial year. The
            accounting records and all supporting documentation shall remain at
            the MAJORITY SHAREHOLDER'S tax address located at San Francisco No.
            656-601, Col. Del Valle, 03100, Mexico, D.F. or at any future
            address that may be properly notified by the MAJORITY SHAREHOLDER;
     iv)    The resolutions approving the Annual Balance, any distribution of
            profits or their reinvestment or their use in the amortization of
            losses or in the creation or reconstitution of reserves and on other
            matters of interest for the Project discussed in the Annual Meeting
            of the Committee shall be approved by the majority of the
            participation interests of the Parties.
     v)     The profits and the losses, when the Annual Meeting of the Committee
            do not decide to apply them to other ends, shall be distributed in
            accordance with the participation interests of the Parties;
     vi)    No distribution of profits will be decreed if they are not actually
            made and shown as such in the Annual Balance;
     vii)   The MAJORITY SHAREHOLDER will prepare and deliver to MINERA APOLO a
            monthly balance at the latest within the month following the end of
            each calendar month. The accounting records and supporting
            documentation shall remain at MINERA APOLO'S disposal as, where, and
            for the use provided at the MAJORITY SHAREHOLDER'S tax address as
            indicated in section (iii), above, of this Clause;
     viii)  The profit distributions to MINERA APOLO shall be paid to it at the
            MAJORITY SHAREHOLDER'S tax address indicated in section (iii),
            above, of this Clause; and
     ix)    The operating and capital budget (hereinbefore and hereinafter
            called "the Period's Budget") may be annual or for a shorter period,
            as resolved by the Committee. The MAJORITY SHAREHOLDER shall deliver
            or send to the Committee the Period's Budget at least 15 (fifteen)
            calendar days ahead of the

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     x)     date on which it will be discussed and approved by the Committee.
            Once approved, the MAJORITY SHAREHOLDER shall notify the Committee,
            in writing, at meetings of the Committee during the course of the
            year, of any changes to the Period Budget, and any material
            variances, defined as greater than 20% (twenty percent) of any
            Period Budget line item or 5% (five percent) of the total Period
            Budget, which must be approved by the Committee in advance. The
            Period's Budget shall include only expenses that benefit the Project
            directly, unless the Parties decide otherwise. The Project shall not
            pay charges coming from the shareholders of the Parties, different
            from the ones provided herein or different from the ones expressly
            and previously authorized by both Parties.

All the provisions of this Clause Fifth, as well as Clause Sixth, below, shall
be set forth in the corporate records of NEWCO and ratified, as such, by NEWCO'S
Board of Directors. In addition, the Parties agree that NEWCO'S articles of
incorporation and by-laws, as applicable, shall contain the following
provisions:

     i)     Any increase in NEWCO'S share capital, whether of the fixed or
            variable capital, must be approved, in advance, by a vote of at
            least 65% (sixty-five percent) of NEWCO'S shares outstanding at the
            time, and
     ii)    A unanimous vote of NEWCO'S Board of Directors is required for the
            authorization of: a) Third party financing agreements, b) Purchase
            of any third party securities or other non-mining-related
            obligations, and c) Any changes to NEWCO'S articles of incorporation
            and by-laws.

SIXTH.    MANAGEMENT OF NEWCO AND PROJECT MANAGER.

The MAJORITY SHAREHOLDER shall have the sole right to appoint the President and
officers of NEWCO, subject to the approval of NEWCO'S Board of Directors.

The MAJORITY SHAREHOLDER shall have the right to appoint the Project Manager,
who will direct the daily operations of the Development of the Project. Said
appointment shall be subject to the approval of MINERA APOLO, which shall not be
unreasonably withheld. The Project Manager will report directly to the MAJORITY
SHAREHOLDER, on a daily basis, as well as to the Committee at least quarterly at
meetings of the Committee or when so determined by the Committee.

SEVENTH.  CONSIDERATION FOR SIERRA MADRE'S OPTION AND THE MAJORITY
          SHAREHOLDER'S RIGHT TO PARTICIPATE IN THE DEVELOPMENT OF THE
          PROJECT.

Upon this Agreement being duly recorded with the Public Registry of Mining,
SIERRA MADRE shall pay MINERA APOLO US$25,000 for the Option, payable wholly in
restricted publicly traded common stock of CAN-CAL, pursuant to the United
States Securities and Exchange Commission Rule 144 ("restricted shares"). The
number of restricted shares to be issued to MINERA APOLO shall be determined by
dividing US$25,000 by the average of CAN-CAL'S closing share prices on the OTC
BB during the 5 (five) trading days prior to the signing of this Agreement.

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If SIERRA MADRE elects to proceed with the Development of the Project at, or
prior to, the conclusion of the Due Diligence period and assigns its rights and
interests in this Agreement to NEWCO, the MAJORITY SHAREHOLDER agrees and shall
ensure that NEWCO shall pay MINERA APOLO an additional US$50,000, as follows:
a.) US$25,000 in cash and b.) US$25,000 payable in CAN-CAL restricted shares.
The number of restricted shares to be issued to MINERA APOLO shall be determined
by dividing US$25,000 by the average of CAN-CAL'S closing share prices on the
OTC BB during the 5 (five) trading days prior to SIERRA MADRE'S election
notification to MINERA APOLO to proceed with the Development of the Project.

In all cases, the restricted shares of CAN-CAL shall be delivered to the
representative of MINERA APOLO, at the company's address indicated in Clause
Nineteenth, below, within 10 (ten) business days following the due dates noted
above. Under no circumstances shall MINERA APOLO be permitted to refuse receipt
of the restricted shares.

Unless this Agreement is terminated, as provided for herein, the MAJORITY
SHAREHOLDER agrees and shall ensure that NEWCO shall be responsible for making
the following additional payments to MINERA APOLO:

(a.) Advance Minimum Royalty Payments:

NEWCO shall pay MINERA APOLO, in cash, Advance Minimum Royalty Payments, payable
quarterly in arrears, as from the date SIERRA MADRE exercises its Option to
proceed with the Development of the Project, as follows:

        - 3 (three) months after the Option is exercised         US$5,000
        - 6 (six) months after the Option is exercised           US$10,000
        - 9 (nine) months after the Option is exercised          US$15,000
        - 12 (twelve) months after the Option is exercised       US$20,000
        - 15 (fifteen) months after the Option is exercised
            and quarterly thereafter                             US$25,000

NEWCO shall be entitled to deduct all Advance Minimum Royalty Payments against
any future Net Smelter Return ("NSR") royalty payments due MINERA APLOLO.

(b.) NSR Royalty Payments:

In addition to MINERA APOLO'S participation interest in the Project, NEWCO shall
pay MINERA APOLO, quarterly in arrears, a 1% (one percent) NSR Royalty, in
accordance with mining industry standards, on the sale of any mineral products
from the Project. No NSR Royalty payments shall be due MINERA APOLO until NEWCO
has recovered all prior Advance Minimum Royalty payments made to MINERA APOLO.
The NSR Royalty due MINERA APLOL shall be paid by not later than the 45th
(forty-fifth) day following the end of each quarter.

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EIGHT.    OBLIGATIONS TO PROVIDE FINANCING FOR THE DEVELOPMENT OF THE PROJECT.

MINERA APOLO and the MAJORITY SHAREHOLDER agree that NEWCO shall be solely
responsible for providing the financial resources for the Development of the
Project, in accordance with the terms and conditions of this Agreement. The
financial resources required by NEWCO for the Development of the Project shall
be provided to NEWCO, when and as required, by the MAJORITY SHAREHOLDER, which
obligation shall cease when MINERA APOLO is provided with notice that NEWCO has
commenced commercial production ("Commercial Production"), defined as the point
in time when NEWCO receives the first cash proceeds from any precious metals
sales following NEWCO'S notice to MINERA APOLO that it has commenced production
at the minimum monthly rate specified in Clause Thirteenth (iii), below. Once in
Commercial Production, MINERA APOLO and the MAJORITY SHAREHOLDER shall be
responsible for funding any of NEWCO'S financial requirements in excess of the
Project's periodic cash flow (the "Incremental Funding Requirement"). MINERA
APOLO and the MAJORITY SHAREHOLDER shall contribute to NEWCO'S Incremental
Funding Requirement in accordance with each Party's then equity interest in
NEWCO. If one of the Parties fails to provide any, or all, of its proportionate
share of NEWCO'S Incremental Funding Requirement, the other Party may contribute
to make up for any deficiency on the part of the non-funding Party, for which
the funding Party shall have the right to be repaid by NEWCO as a first,
priority call on any subsequent dividend distributions by NEWCO, until the
amount funded by the funding Party on behalf of the deficient funding Party,
plus interest calculated and accrued at the US Prime Rate of interest, is
completely repaid.

In consideration for providing the financial resources for the Development of
the Project, as well as for the overall management oversight of NEWCO, the
MAJORITY SHAREHOLDER shall be entitled to an administrative fee (the "Fee") that
shall be calculated at 15% (fifteen percent) of the Project's monthly
exploration and exploitation expenditures incurred prior to NEWCO achieving
Commercial Production. The Project's monthly exploration and exploitation
expenditures and monthly operating expenses during the Development of the
Project shall not include any non-cash charges, such as depreciation and
amortization, or the Fee. The Fee shall be accrued on a monthly basis and shall
be payable to the MAJORITY SHAREHOLDER ratably over a period of 15 (fifteen)
months following NEWCO'S notice to MINERA APOLO that it has commenced Commercial
Production, as defined above. No interest charges shall be applicable to any
outstanding Fee accruals.

NINTH.    TERMINATION.

a)   MINERA APOLO shall be prohibited from terminating this Agreement, unless
     SIERRA MADRE or the MAJORITY SHAREHOLDER fails to fulfill any of its
     obligations under this Agreement. For said purposes, MINERA APOLO shall
     provide SIERRA MADRE or the MAJORITY SHAREHOLDER, as applicable, with a
     Notice, in writing, of the default, and if, after a period of sixty 60
     (sixty)

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     days from the date of delivery of the Notice, the default has not been
     cured by SIERRA MADRE or the MAJORITY SHAREHOLDER, as applicable, MINERA
     APLOLO shall have the right, at its option, to demand fulfillment in a
     court of law or to terminate this Agreement.

b)   SIERRA MADRE or the MAJORITY SHAREHOLDER shall be entitled to terminate
     this Agreement at any time and for any reason, by providing a 30 (thirty)
     days advance notification of termination, in writing, to MINERA APOLO. Once
     the notice is effective, SIERRA MADRE or the MAJORITY SHAREHOLDER, as
     applicable, shall: i.) Forfeit all funding obligations paid to date, ii.)
     Be relieved from making any additional funding obligations on behalf of the
     Project and from making any further payments to MINERA APOLO, unless the
     payments fall due within the notice period, and iii.) Deliver all technical
     and accounting information and records on the Project to MINERA APOLO. In
     addition, the MAJORITY SHAREHOLDER shall relinquish its 51% (fifty-one
     percent) equity interest in NEWCO to MINERA APOLO.

TENTH.    CONFIDENTIALITY.

Each of the Parties to this Agreement undertakes and agrees:

a)   Not to use in any way any Confidential Information of any other Party or
     the Project without the prior approval of that other Party;

b)   Not to disclose to any person or assist or make it possible for any person
     to observe any Confidential Information of any other Party or the Project,
     without the prior approval of that other Party or otherwise in accordance
     with the provisions of this Clause; and

c)   Not to allow or assist or make it possible for any person (other than any
     of the Parties) to observe any Confidential Information of any other Party
     or the Project, without the prior approval of each other Party.

Nothing in this Clause prohibits the disclosure of Confidential Information by
any Disclosing Party:

     (i.)   To any corporation or other entity affiliated with the Disclosing
            Party;

     (ii.)  If and to the extent required pursuant to any applicable legislation
            or other legal requirement or pursuant to the rules or regulations
            of any recognized stock exchange which are applicable to the
            Disclosing Party or any entity affiliated with the Disclosing Party,
            PROVIDED HOWEVER that the Disclosing Party will use its best
            endeavors to provide a copy of any such disclosure or announcement
            to the other Party prior to making or releasing the same;

     (iii.) If and to the extent that it may be necessary or desirable to
            disclose the information to any government or governmental authority
            or agency in connection with applications for any government
            consents which are necessary to carry out this Agreement;

                                       27
<PAGE>

     (iv.)  To a recognized financial institution (and its professional
            advisers) or other fiduciary in connection with any loan or other
            financial accommodation sought to be arranged by the Disclosing
            Party for purposes of this Agreement; (v.) To professional advisers
            (including legal advisers) and consultants of the Disclosing Party
            whose duties in relation to the Disclosing Party or under this
            Agreement necessarily require the disclosure; (vi.) To employees,
            officers, representatives, and agents of the Disclosing Party whose
            duties in relation to the Disclosing Party or under this Agreement
            necessarily require the disclosure; or (vii.) Pursuant to a binding
            order of any court of competent jurisdiction or other competent
            authority;

The provisions of this Clause shall survive and continue to bind the Parties
following termination of this Agreement, except that if this Agreement is
terminated in accordance with Clause Ninth, above, MINERA APOLO shall be free to
disclose any Confidential Information related and limited directly to the
Project, but not related to the MAJORITY SHAREHOLDER, to third parties for the
purpose of promoting and obtaining new investors in the Project.

The undertakings and agreements contained in this Agreement shall be in addition
to and shall in no way derogate from the obligations of the Parties in respect
of secret and confidential information at law, in equity or under any statute or
trade or profession custom or use

ELEVENTH. ASSIGNMENT OR SALE OF A PARTICIPATION IN THIS AGREEMENT.

a)   Any of the Parties to this Agreement shall be entitled to assign its
     participation interest in this Agreement to a wholly owned subsidiary or to
     a legal entity in which it has more than a 50% (fifty percent) equity
     interest, or which has more than a 50% (fifty percent) equity interest in
     it. In such case, the assignee shall agree, in advance, to be legally bound
     by the terms and conditions of this Agreement.

b)   None of the Parties of this Agreement shall have the right to sell the
     total or any portion of its participation interest in this Agreement to an
     unaffiliated third party without the prior approval of the other Party,
     which shall not be unreasonably withheld. The non-selling Party shall be
     provided with a Right of First Refusal to match any offer for the purchase
     of any portion of the other Party's participation interest in this
     Agreement and shall have 60 (sixty) days from receiving notice from the
     selling Party to exercise its right. If a Party's interest is sold to an
     unaffiliated third party, said third party shall agree, in advance, to be
     legally bound by the terms and conditions of this Agreement.

                                       28
<PAGE>

TWELFTH.  OBLIGATIONS OF MINERA APOLO.

During the term of this Agreement, MINERA APOLO shall have the following
additional obligations:

     i)     Not to alienate or promise to alienate any right whatsoever to the
            Mining Concessions or any equipment, improvements and installations
            at the Project;
     ii)    Not to create any lien whatsoever on the Mining Concessions or any
            improvements, equipment and installations at the Project;
     iii)   Not to grant third parties any right or interest with respect to the
            Mining Concessions or any equipment, installations and improvements
            at the Project that could adversely affect or prevent exercise of
            the rights granted to SIERRA MADRE and the MAJORITY SHAREHOLDER
            hereunder or affect the value of the Mining Concessions;
    iv)    To grant the MAJORITY SHAREHOLDER the right to extend any of the
            then existing mining operations on the Project onto any of MINERA
            APOLO'S other Pinos District concessions (the "Concessions") that
            are contiguous with the Project, so long as MINERA APOLO retains the
            exploration and exploitations rights to the Concessions at the time
            this right is exercised pursuant to this clause. If MINERA APOLO
            subsequently assigns, leases or sells any of the Concessions on
            which the MAJORITY SHAREHOLDER has extended its mining operations
            pursuant to this clause, the MAJORITY SHAREHOLDER'S right to
            continue with said mining operations shall cease 1 (one) year after
            the signing of any such assignment, lease or sale.
     v)     To grant the MAJORITY SHAREHOLDER the right to utilize as much of
            the 85 (eighty-five) hectares of surface rights outside of the
            Project area that MINERA APOLO owns on the Concessions, except for
            the tailings area and any areas that are subject to other third
            party surface rights agreements in force as of the signing of this
            Agreement, as reflected in the attached Exhibit C, for the purposes
            of access and the installation of whatever processing facilities and
            improvements the MAJORITY SHAREHOLDER deems necessary or appropriate
            in order to process the ore from the Project's mining operations;
     vi)    Pay its proportionate share of the mining fees with respect to the
            Mining Concessions, whether for exploration or exploitation, as
            specified in Clause Thirteenth (vii), below;
     vii)   Give immediate notice to SIERRA MADRE, the MAJORITY SHAREHOLDER, and
            NEWCO, as applicable, of any government official communication or
            any claim, demand, or suit of which MINERA APOLO has knowledge and
            that could limit or adversely affect the rights granted hereunder to
            SIERRA MADRE, the MAJORITY SHAREHOLDER and NEWCO, as applicable;

                                       29
<PAGE>

     viii)  Hold SIERRA MADRE, the MAJORITY SHAREHOLDER, and NEWCO harmless from
            any liability or loss of value in relation to the Mining Concessions
            when the claim or demand, to which item (vii), above, refers to, is
            the responsibility of MINERA APOLO;
     ix)    Indemnify SIERRA MADRE, the MAJORITY SHAREHOLDER, and NEWCO for any
            environmental contingency or similar claim in relation to the
            activities or operations that have been performed on the Mining
            Concessions prior to the signature date of this Agreement;
     x)     Sign the proof of works for exploration and, if applicable,
            exploitation on time, as applicable, and any other documents
            necessary to keep the Mining Concessions in force; and
     xi)    Collaborate with SIERRA MADRE, whenever necessary, to carry out the
            formalization of the Spanish version of this Agreement before a
            Notary Public and proceed to its registration with the Public
            Registry of Mining; otherwise, SIERRA MADRE may accelerate
            termination of this Agreement, and shall be released from its
            obligation to provide Funds to the Project and to make any future
            payments to MINERA APOLO as provided in Clause Seventh, above.

THIRTEENTH. OBLIGATIONS OF THE MAJORITY SHAREHOLDER.

During the term of this Agreement, the MAJORITY SHAREHOLDER shall ensure that
NEWCO:

     i)     Carries out the Development of the Project in accordance with
            appropriate and recognized mining industry standards and practices,
            complying with any related obligations established by the Mining and
            Environmental Laws and their Regulations, and with the provisions
            that apply to mine safety;
     ii)    Prepares and files, on time, the reports on proof of works for
            exploration and, if applicable, exploitation, performed on the
            Mining Concessions comprising the Project;
     iii)   Commences production at the Project, at a minimum rate of 3,250
            (three thousand two hundred fifty) tonnes per month, within 15
            (fifteen) months from exercising its Option to proceed with the
            Development of the Project, in accordance with Clause Second, above.
            If NEWCO fails to timely meet the above production requirement, the
            Advance Minimum Royalty payments due MINERO APOLO in Clause Seventh,
            above, shall be increased to US$50,000 (fifty thousand US dollars)
            per quarter until NEWCO either meets the above production
            requirement or terminates this Agreement;
     iv)    Pays to MINERA APOLO the consideration to which Clause Seventh,
            above, refers; v) Permits MINERA APOLO to inspect the Project and
            the exploration and exploitation activities that will be carried out
            by NEWCO, so long as MINERA APOLO provides NEWCO with advance notice
            of its visits and does not interfere with NEWCO'S exploration and
            exploitation activities;

                                       30
<PAGE>

     vi)    Adopts necessary measures to keep the Mining Concessions and any
            rights related thereto in force, and perform the acts required to
            assure that the Mining Concessions remain without any encumbrance or
            lien, whatsoever, by reason of the exploration and exploitation work
            undertaken by NEWCO;
     vii)   Pays its proportionate share of the mining fees with respect to the
            Mining Concessions, whether for exploration or exploitation. NEWCO'S
            proportionate share shall be based on a percentage calculated by
            dividing the total hectares comprising the Project by the total
            hectares comprising the Mining Concessions. The remainder of the
            fees applicable to the Mining Concessions shall be paid by MINERA
            APOLO; and
     viii)  Complies at all times with the federal, state and municipal legal
            provisions that are applicable to the exploration and exploitation
            operations on the Mining Concessions.

If, pursuant to a separate agreement, MINERA APOLO grants either SIERRA MADRE or
the MAJORITY SHAREHOLDER a majority interest (the "Interest") in the exploration
and exploitation rights, as applicable, to the Concessions, and if SIERRA MADRE
or the MAJORITY SHAREHOLDER maintains its Interest at the time NEWCO, pursuant
to Clause Twelfth (iv), above, wishes to elect its right (the "Right") to extend
any of its existing mining operations on the Project onto any of the Concessions
that are contiguous with the Project, SIERRA MADRE or the MAJORITY SHAREHOLDER
shall honor NEWCO'S Right, if exercised. If SIERRA MADRE or the MAJORITY
SHAREHOLDER subsequently assigns, leases or sells its Interest to any of the
Concessions on which NEWCO has extended its mining operations pursuant to this
clause, NEWCO'S right to continue with said mining operations shall cease 1
(one) year after the signing of any such assignment, lease or sale.

FOURTEENTH.   PRE-PRODUCTION OPERATIONS.

Prior to production commencing at the minimum monthly production rate in Clause
Thirteenth (iii.), above, the MAJORITY SHAREHOLDER shall have the right to
direct the Operator to initiate a pilot plant operation at the Project to
process ore from any of the Project's exploration / exploitation underground
mining activities. The scale of the pilot plant operation shall be at a minimum
average rate of 50 (fifty) tonnes per day. The MAJORITY SHAREHOLDER must notify
MINERA APOLO, in writing, within 6 (six) months from the signing of this
Agreement of its intention to proceed with the installation of the pilot plant.
If the MAJORITY SHAREHOLDER fails to provide the notice to MINERA APOLO in a
timely manner, MINERA APOLO shall be entitled to initiate a small-scale mining
and processing operation at the Project until NEWCO commences production at the
minimum monthly rate in Clause Thirteenth (iii), above. MINERA APOLO must obtain
the MAJORITY SHAREHOLDER'S agreement in advance and in writing, which shall not
be unreasonably withheld, for such matters relating to its operation as:
permitting; and mining and processing methods, plans, scale and installations.
MINERA APOLO'S proposed operation shall comply with any obligations and
regulations established by the Mining and Environmental Laws, and related
Regulations thereof, and with the Mining Law's provisions that apply to mine
safety and

                                       31
<PAGE>

shall not exceed an average rate of production of 100 (one hundred) tonnes per
day during the term of MINERA APOLO'S operations. When advised in writing by the
MAJORITY SHAREHOLDER that production has commenced at the minimum monthly
production rate in Clause Thirteenth (iii.), above, MINERA APOLO shall
immediately cease its mining operations and shall cease its processing
operations within 10 (ten) calendar days from the date of the MAJORITY
SHAREHOLDER'S notice or at later date, which the MAJORITY SHAREHOLDER may agree
to in writing, at its sole discretion. MINERA APOLO shall be entitled to retain
legal title to any equipment it has acquired in support of its operation, as
well as any operating supplies and precious metals inventory, but any of its
mining and processing-related improvements and installations shall be
relinquished and shall become assets for the benefit of the Project.

FIFTEENTH.    NONREDUCTION OF SURFACE AND WAIVER.

During the term of this Agreement, MINERA APOLO is obligated not to carry out,
act or to sign any document that would result in any:

     i)     Reduction of the surface of the Mining Concessions; and
     ii)    Waiver of the Mining Concessions.

SIXTEENTH. INDEMNIFICATION.

a)   MINERA APOLO agrees to indemnify and hold SIERRA MADRE, CAN-CAL and NEWCO
     harmless from and against any liabilities, claims, losses, damages, costs
     and expenses of any kind (including, without limitation, the reasonable
     fees and disbursements of SIERRA MADRE'S, CAN-CAL'S or NEWCO'S, as
     applicable, counsel) that may be incurred by SIERRA MADRE, CAN-CAL or
     NEWCO, as applicable, relating to or arising out of any breach of the
     representations and warranties made by MINERA APOLO in Clauses First and
     Twelfth, hereof, which cannot be cured or, if curable, has not been cured
     within 60 (sixty) calendar days following the delivery of SIERRA MADRE'S,
     CAN-CAL'S or NEWCO'S, as applicable, written notification of such default
     to MINERA APOLO.

b)   SIERRA MADRE, CAN-CAL and NEWCO agree to indemnify and hold MINERA APLOLO
     harmless from and against any liabilities, claims, losses, damages, costs
     and expenses of any kind (including, without limitation, the reasonable
     fees and disbursements of MINERA APOLO'S counsel) that may be incurred by
     MINERA APOLO relating to or arising out of any breach of the
     representations and warranties made by SIERRA MADRE, CAN-CAL or NEWCO, as
     applicable, in Clauses Second, Third and Thirteenth, hereof, which cannot
     be cured or, if curable, has not been cured within 60 (sixty) calendar days
     following the delivery of MINERA APOLO'S written notification of such
     default to SIERRA MADRE, CAN-CAL or NEWCO, as applicable.

                                       32
<PAGE>

SEVENTEENTH.   FORCE MAJEURE

a)   The obligations of the Parties may be suspended for the time when they are
     unable to perform same due to force majeure or due to any event outside of
     their control, including but not limited to (hereafter, the "Event"):

        i)  Fire, explosion, earthquake, hurricane, storm, flood, drought, or
            other event of adverse environmental conditions;
        ii) War, rebellion, act of terrorism, guerrilla acts, social disruption,
            insurrection or invasion;
        iii) Strike, work stoppage or other analogous labor dispute, taking of
            control of installations, obstruction, agrarian intrusion, and acts
            or omissions of indigenous groups, non-governmental organizations,
            or environmental groups, or groups with similar interests;
        iv) Acts of authorities, suit or other type of judicial determination,
            disqualification from of obtaining permits, consents, licenses,
            concessions, authorizations, and opinions;
        v)  Work accidents, failures or defects in equipment, machinery or
            installations; and
        vi) In general, any other analogous events totally out of the will and
            control of the Parties, which prevent them from fulfilling, all or
            any, of their obligations.

b)   The Party in the cases described in the foregoing section shall notify
     ("Notice") the Event to the other Party as soon as possible, explaining the
     origin and the nature of the Event and the time estimated for its duration.
     The affected Party shall resume performance of its obligations as soon as
     possible.

c)   The parties shall contribute proportionally to eliminating or reducing the
     cause or event that prevents or delays Development of the Project, or that
     in any way endangers the assets used in the Development of the Project or
     the possibility of performance of the operation.

d)   If after six months from the date of Notice, the Event still prevails and
     insufficient efforts have been made to remedy the Event, the other Party
     shall have the right to terminate this Agreement.

EIGHTEENTH. TOTAL AGREEMENT OF THE PARTIES.

This Agreement reflects the total agreement between the Parties with regard to
its purpose, and therefore, it cancels and voids any other agreement or letter
of intent entered into among the Parties for the same purpose. The Parties agree
to have the signed and binding English version of the Agreement timely
translated into the Spanish version, which shall be signed by the Parties,
ratified before a Notary Public and registered at the Public Registry of Mining,
in accordance with Clause Twelfth (xi), above.

                                       33
<PAGE>

NINETEENTH.    NOTICES AND NOTIFICATIONS.

All notices and communications that the Parties must give in relation to this
Agreement shall be done in writing. Such notices and communications shall bind
the Parties when personally delivered or sent by means that assure actual
receipt of notice with proof of same, and are duly addressed to the Party that
corresponds at its last address stated for purposes hereof, which until there is
a communication to the contrary should be understood as being the following:

"MINERA APOLO"

MINERA APOLO, S.A. de C.V.
Pasaje Verdi 158-1
San Luis Potosi, SLP
78280 Mexico

(Tel/Fax) (444) 815-1293

Attention: Mr. Donald F. McLeroy

"SIERRA MADRE"

SIERRA MADRE RESOURCES, S.A. de C.V.
San Francisco No. 656-601
Col. Del Valle, C.P. 03100
Mexico, D.F.

(Tel) (555) 536-2028 / 3014 (Fax) (555) 543-7307

Attention: Licenciado Victor Garcia Jimenez

 "CAN-CAL"

CAN-CAL RESOURCES LTD.
2500 Vista Mar Drive
Las Vegas, NV 89128 U.S.A.

Attention: Mr. Anthony Ciali.

(Tel) 702-243-1849 (Fax) 702-243-1869

                                       34
<PAGE>

Any notices or communications from MINERA APOLO to SIERRA MADRE shall also be
copied to CAN-CAL.

Any change in the above mentioned addresses shall be notified by one Party to
the others, when it occurs.

TWENTIETH.     APPLICABLE LAWS AND COURTS.

For every thing not expressly stipulated in this Agreement, the Parties submit
themselves to the applicable laws in the City of San Luis Potosi, State of San
Luis Potosi, Mexico especially those relating to the Mining Law and its
Regulations, the Federal Duties Law, the Commerce Code and the Federal Civil
Code, and the Parties also agree to submit to the jurisdiction of the competent
courts in the City of San Luis Potosi, State of San Luis Potosi, Mexico waiving
to the jurisdiction of any other courts to which they may be entitled by reason
of their present or future domiciles

TWENTY-FIRST.  LANGUAGE

This Agreement will be signed in Spanish and English language, but in case of
controversy or interpretation, the Spanish version will prevail over the English
version.

TWENTY-SECOND. VICES OF THE CONSENT

This Agreement has neither been negotiated nor signed under the influence or
determination of fraud, bad faith, violence, illicit actions, error, without
capacity or any another vice of the consent.

AGREEING WITH ITS CONTENT, THE PARTIES SIGN THIS AGREEMENT IN TRIPLICATE, MINERA
APOLO IN THE CITY OF SAN LUIS POTOSI, STATE OF SAN LUIS POTOSI, THE DAY___ OF
MARCH OF 2005, SIERRA MADRE IN MEXICO CITY, FEDERAL DISTRICT THE DAY ___ OF
MARCH OF 2005 AND CAN-CAL IN LAS VEGAS, NEVADA, USA, THE DAY __ OF MARCH OF
2005, WITH A SIGNED COPY PROVIDED TO EACH OF THE PARTIES.

        "MINERA APOLO":                            "SIERRA MADRE":

MINERA APOLO S.A. de C. V.               SIERRA MADRE RESOURCES, S. A. de C. V.

/s/

  /s/  Donald F. McLeroy                   /s/  Licenciado Victor Garcia Jimenez
-----------------------------            ---------------------------------------
Mr. Donald F. McLeroy                    Licenciado Victor Garcia Jimenez
President

                                       35
<PAGE>

                                                          "CAN-CAL":

                                                     CAN-CAL RESOURCES LTD.

                                                     /s/  Anthony F. Ciali
                                                   -----------------------------
                                                   Mr. Anthony F. Ciali
                                                   President & CEO

                                       36
<PAGE>EXHIBIT 10.3

LETTER OF INTENT FOR THE EXPLORATION AND EXPLOITATION OF THE MINING CONCESSIONS,
THE SUBJECT HEREOF, THAT IS ENTERED INTO BY THE COMPANY NAMED MINERA APOLO, S.A.
DE C.V. (HEREINAFTER REFERRED TO AS "MINERA APOLO"), REPRESENTED BY ITS
PRESIDENT AND ATTORNEY-IN-FACT, MR. DONALD F. MCLEROY; AND BY THE COMPANY NAMED
SIERRA MADRE RESOURCES, S.A. DE C.V. (HEREINAFTER REFERRED TO AS "SIERRA MADRE")
REPRESENTED BY ITS ATTORNEY, LICENCIADO VICTOR GARCIA JIMENEZ, IN ACCORDANCE
WITH THE FOLLOWING STATEMENTS AND CLAUSES:

                                   STATEMENTS

I.     MINERA APOLO DECLARES, THROUGH ITS REPRESENTATIVE, THAT:

   a)  It is a mining company duly organized and existing pursuant to the laws
       of the United Mexican States;

   b)  It has the economic and legal capacity to be bound by the terms of this
       Letter of Intent;

   c)  Its representative has the faculties necessary for the execution of this
       Letter of Intent, which have not been revoked or limited in any form
       whatsoever;

   d)  It is the sole and legitimate holder of 100% (one hundred percent) of the
       rights derived from the mining concessions reflected in Exhibit A to this
       Letter of Intent, which are located in the Municipality of Pinos, State
       of Zacatecas, Mexico, hereinafter referred to collectively as the "Mining
       Concessions";

   e)  The Mining Concessions are in force and current in compliance with all
       obligations established by the Mining Law and its Regulations and the
       Federal Fees Law (except for 4 (four) Mining Concessions - See Clause
       Second I (b), below), and as of the execution date of this Letter of
       Intent, no official communication whatsoever has been received or issued
       by the General Bureau of Mines or other authority that could affect the
       rights derived from the Mining Concessions in any form;

   f)  The Mining Concessions are free of all kinds of liens, impediments or
       claims of third parties, royalties, including but not limited to
       attachments, expropriation, temporary occupation, debt, contingencies,
       obstacles or litigation that could affect the object of this Letter of
       Intent or reduce the value of the Mining Concessions;

   g)  No type of obligation has been acquired with respect to any third party
       which prevents it from entering into this Letter of Intent, nor are there
       pending proceedings or possible proceedings that expose the Mining
       Concessions, or the validity of this Letter of Intent, to risk;

                                       37
<PAGE>

   h)  Any available information with regard to the Mining Concessions has been
       delivered or disclosed to SIERRA MADRE; and

   i)  The conditions and operations related to the Mining Concessions are in
       full compliance with the laws that govern environmental matters, and
       there are no orders or requirements in force related to environmental
       issues by which any remedy, work programs or expenses with respect to the
       Mining Concessions are sought, nor has it received any communication
       related to the foregoing, nor is it aware of there being any grounds on
       which such orders or requirements could be issued.

II.    SIERRA MADRE DECLARES, THROUGH ITS REPRESENTATIVE, THAT:

   a)  It is a mining company duly organized and existing in accordance with the
       laws of the United Mexican States;

   b)  It has the economic and legal capacity to be bound by the terms of this
       Letter of Intent; and

   c)  Its representative has the faculties necessary for the execution of this
       Letter of Intent, which have not been revoked or limited in any form
       whatsoever.

                                     CLAUSES

FIRST.    GRANTING OF AN INITIAL OPTION

   a)  Upon the signing of this Letter of Intent, MINERA APOLO shall grant
       SIERRA MADRE an exclusive Initial Option (the "Option") to, among other
       things, satisfy itself as to the legal status of the Mining Concessions,
       further review available geological and technical data pertaining to the
       Mining Concessions, to conduct any geological and technical programs it
       deems necessary and to decide if it wishes to proceed with the
       exploration and exploitation of the Mining Concessions. The term of this
       Option shall commence on the execution of this Letter of Intent and shall
       expire on the 90th day following the execution of this Letter of Intent
       (the "Option Period");

   b)  During the Option Period, MINERA APOLO and SIERRA MADRE agree to finalize
       an Exploration and Exploitation Agreement (the "Agreement") with respect
       to the Mining Concessions, as per the principal terms and conditions of
       this Letter of Intent. The Agreement must be suitable for registration
       with the Public Registry of Mining. SIERRA MADRE'S signing of the
       Agreement shall be subject to the exercise of its Option before the end
       of the Option Period. If SIERRA MADRE signs the Agreement, MINERA APOLO
       shall be legally obligated to sign the Agreement;

                                       38
<PAGE>

   c)  SIERRA MADRE shall pay MINERA APOLO US$24,000 on the execution of this
       Letter of Intent, which payment shall not be recoverable by SIERRA MADRE
       against any future Net Smelter Return ("NSR") royalty payments, as below,
       even if SIERRA MADRE exercises its Option to proceed with the exploration
       and exploitation of the Mining Concessions. The payment shall be payable
       solely in restricted shares of SIERRA MADRE'S United States parent
       company, Can-Cal Resources Ltd., a Nevada-based public company listed on
       the Over-The-Counter Bulletin Board ("OTC BB"), under the stock symbol:
       CCRE, pursuant to the United States Securities and Exchange Commission's
       Rule 144 ("restricted shares"). The number of restricted shares to be
       issued to MINERA APOLO shall be determined by dividing US$24,000 by the
       average of Can-Cal's closing share prices on the OTC BB during the 5
       (five) trading days prior to the signing of this Letter of Intent. The
       restricted shares of Can-Cal shall be delivered to the representative of
       MINERA APOLO at the company's address as noted in Clause Third, below,
       within 10 (ten) business days following the signing of this Letter of
       Intent. Under no circumstances shall MINERA APOLO be permitted to refuse
       receipt of the restricted shares;

   d)  During the Option Period, MINERA APOLO shall be prohibited from selling
       or in any way granting any right or interest in the Mining Concessions to
       a third party and shall ensure that its rights to the Mining Concessions
       are maintained in force and current, in compliance with the Mining Law
       and all of its Regulations;

   e)  During the Option period, MINERA APOLO shall grant SIERRA MADRE, free of
       charges and expenses, complete access to the Mining Concessions and to
       all data relating to the Mining Concessions in its possession, and SIERRA
       MADRE shall have the right to conduct any exploration and exploitation
       programs it deems appropriate on the Mining Concessions, at its own
       expense; and

   f)  MINERA APOLO shall not have the right to terminate the Option.

SECOND.   EXPLORATION AND EXPLOITATION AGREEMENT

I.   PRINCIPAL TERMS AND CONDITIONS OF THE AGREEMENT

In the Agreement, MINERA APOLO shall grant SIERRA MADRE an exclusive 100%
interest in the exploration and exploitation rights, as applicable, to the
Mining Concessions for the existing terms and any renewals thereof, and SIERRA
MADRE shall:

   a)  From the date of the execution of the Agreement, be responsible for
       preparing and filing the work programs due on the Mining Concessions,
       beginning with the 2005 work programs, which must be filed with the
       Public Registry of Mining during May 2006;

                                       39
<PAGE>

   b)  Pay the past due mining taxes for the years 2002, 2003 and 2004, and the
       related accrued interest and penalties thereon as of the signing date of
       the Agreement, on the La Herradua Dorada V, VII and IX and La Pulga
       mining concessions. MINERA APOLO shall be responsible for paying the
       First Semester 2005 mining taxes on these 4 (four) concessions by the
       signing date of the Agreement. Any interest and penalty charges due on
       the late payment of the First Semester 2005 mining taxes by MINERA APOLO
       shall be the responsibility of SIERRA MADRE and shall be payable by the
       signing date of the Agreement. The total financial obligations of SIERRA
       MADRE pursuant to this Clause Second I (b) shall not exceed US$62,000.
       The signing of the Agreement shall be a condition precedent to SIERRA
       MADRE making the above payments on behalf of MINERA APOLO; and

   c)  Be solely responsible for paying the mining taxes on the Mining
       Concessions, beginning with 2005 Second Semester mining taxes, which
       payment is due by the day 31 of July of 2005;

The remaining principal terms and conditions of the Agreement shall be, as
follows:

    A.  EXPLORATION OF THE MINING CONCESSIONS.

    Following the exercise of its Option in Clause First, above, and the signing
    of the Agreement, SIERRA MADRE shall have the exclusive right to explore the
    Mining Concessions, at its discretion, until the end of the calendar year of
    2008.

    B.  EXPLORATION WORK COMMITMENTS.

                                        MINIMUM               CUMULATIVE
           CALENDAR                    ANNUAL WORK               WORK
             YEAR                      COMMITMENT             COMMITMENT
           --------                    -----------            ----------

        Signing of the Agreement
          through the end of 2005       US$ -0-               US$ - 0
           2006                         US$250,000            US$250,000
           2007                         US$500,000            US$750,000
           2008                         US$1,250,000          US$2,000,000

   a)  SIERRA MADRE may terminate the Agreement at any time by giving MINERA
       APOLO at least 30 (thirty) days advance written notice;

   b)  If SIERRA MADRE terminates the Agreement and has not expended the
       cumulative work commitment for the calendar year in which the termination
       occurs, SIERRA MADRE shall pay MINERA APOLO, in cash, the difference
       between the cumulative work commitment for the calendar year of
       termination and the cumulative actual expenditures incurred by SIERRA
       MADRE up to the effective date of the termination;

                                       40
<PAGE>

   c)  If SIERRA MADRE does not terminate the Agreement within 30 (thirty) days
       of the end of the calendar year of 2007, SIERRA MADRE shall be
       responsible for preparing a Scoping Study, reflecting the results of its
       exploration program through the end of the calendar year of 2008 or at an
       earlier date, if SIERRA MADRE terminates the Agreement during the
       calendar year of 2008. The Scoping Study, which shall be presented to
       MINERA APOLO within 3 (three) months following the end of the calendar
       year of 2008, or within 3 (three) months following any termination date
       during the calendar year of 2008, shall include a recommendation as to
       whether the results of SIERRA MADRE'S exploration activities justifies
       proceeding with the development of a mine. If SIERRA MADRE terminates the
       Agreement at any time prior to 30 (thirty) days before the end of the
       calendar year of 2007, SIERRA MADRE shall prepare and present to MINERA
       APOLO a detailed internal final report of its exploration programs,
       testing results and conclusions. The final report shall be presented to
       MINERA APOLO within 3 (three) months following the termination date; and

   d)  Any calendar year's actual expenditures in excess of that calendar year's
       minimum annual work commitment shall be carried forward and credited
       towards future calendar years' cumulative work commitments.

   C.  EXPLOITATION OF THE MINING CONCESSIONS.

   a)  If SIERRA MADRE'S Scoping Study recommends that the development of a mine
       is feasible, SIERRA MADRE shall have 2 (two) years from the date of the
       Scoping Study to complete a feasibility study, if warranted, and initiate
       commercial production at a minimum rate of 600 tonnes per day. In lieu of
       a feasibility study, SIERRA MADRE'S board of directors may elect to
       proceed with the development of the mine by way of a board resolution,
       which shall be provided to MINERA APOLO;

   b)  SIERRA MADRE shall have the right to request up to a one-year extension
       for commissioning the mine, which MINERA APOLO must grant so long as
       SIERRA MADRE has demonstrated, by its efforts and expenditures, that it
       has made a good faith effort to commission the mine. SIERRA MADRE will be
       required to pay MINERA APOLO a US$25,000 penalty payment for every month
       that the commissioning of the mine extends beyond 2 (two) years from the
       date of the Scoping Study, up to a maximum 12-month extension or a
       maximum penalty payment of US$300,000. SIERRA MADRE shall not have the
       right to recover any penalty payments from MINERA APOLO;

   c)  SIERRA MADRE shall be permitted to extend the date for commissioning the
       mine, without being required to make any penalty payments to MINERA
       APOLO, for every month of delay attributable to any unforeseen time
       delays due to Force Majeure, pursuant to Clause Second I (K), below; and

                                       41
<PAGE>

   d)  If SIERRA MADRE elects to proceed with the development of a mine on the
       Mining Concessions after the Scoping Study has been presented to MINERA
       APOLO, MINERA APOLO will be obligated to transfer title to the Mining
       Concessions to SIERRA MADRE.

   D.  ADVANCE MINIMUM ROYALTY PAYMENTS.

   SIERRA MADRE shall pay, in cash, the following Advance Minimum Royalty
   Payments to MINERA APOLO:

        Day 1 of January of 2006                                     US$20,000
        6 months thereafter                                          US$50,000
        12 months thereafter                                         US$50,000
        18 months thereafter                                         US$55,000
        24 months thereafter                                         US$55,000
        30 months thereafter                                         US$60,000
        36 months thereafter and every six
           months after 36 months                                    US$60,000

        NOTE:

        All advance minimum royalty payments shall be recoverable at the same
        rate as paid by SIERRA MADRE against any NSR Royalty payments due MINERA
        APOLO. However, MINERA APOLO shall not receive a net NSR Royalty payment
        in any year of production less than the amount called for in the above
        Advance Minimum Royalty schedule.

   E.  NSR ROYALTY.

   SIERRA MADRE shall pay MINERA APOLO, quarterly in arrears, a 3% NSR Royalty,
   in accordance with mining industry standards, from any production of
   minerals from the Mining Concessions. The NSR Royalty shall be paid to
   MINERA APOLO by not later than the 45th (forty-fifth) day following the end
   of each quarter.

   F.  TRANSFER OF RIGHTS.

   a)  SIERRA MADRE shall be entitled to lease, sell or assign its interest in
       the Agreement to a wholly owned subsidiary or to a legal entity in which
       it has more than a 50% (fifty percent) equity interest, or which has more
       than a 50% (fifty percent) equity interest in it. In any such transfer,
       the acquiring party shall agree, in advance, to be legally bound by the
       terms and conditions of the Agreement; and

                                       42
<PAGE>

   b)  Until SIERRA MADRE produces a Scoping Study, elects to proceed with the
       development of a mine and, as a result, obtains title to the Mining
       Concessions, pursuant to Clause Second I (C)(d), above, SIERRA MADRE
       shall not have the right to lease, sell or assign the total or any
       portion of its interest in the Agreement to an unaffiliated third party
       without the prior approval of MINERA APOLO, which shall not be
       unreasonably withheld. After SIERRA MADRE obtains title to the Mining
       Concessions, SIERRA MADRE shall have the absolute right to lease, sell or
       assign its interests in the Mining Concessions to any party. However, in
       either case, the acquiring party shall agree, in advance, to be legally
       bound by the terms and conditions of the Agreement. If, after having
       obtained title, SIERRA MADRE were to decide to cancel any of the Mining
       Concessions, without offering the Mining Concession(s) to a third party,
       SIERRA MADRE shall first notify, in writing, and offer the Mining
       Concession to MINERA APOLO, which shall have 30 (thirty) days from date
       of SIERRA MADRE'S notice to elect to acquire the Mining Concession(s).

   G.  TERMINATION.

   a)  MINERA APOLO shall not have the right to terminate the Agreement unless
       SIERRA MADRE is in default of any of its obligations under the Agreement.
       MINERA APOLO must provide SIERRA MADRE notice of any default, and SIERRA
       MADRE shall have 60 (sixty) days to cure the default, before MINERA
       APOLO, at its option, can demand fulfillment in a court of law or
       terminate the Agreement; and

   b)  SIERRA MADRE shall have the right to terminate the Agreement at any time
       and for any reason, by providing 30 (thirty) days advance written notice
       of termination to MINERA APOLO. Once the notice is effective, SIERRA
       MADRE shall: 1.) Forfeit all payments made to date to MINERA APOLO, 2.)
       Be relieved of making any future royalty-related payments to MINERA
       APOLO, 3.) Pay MINERA APOLO the difference, if any, between the
       cumulative work commitments for the calendar year of termination and
       SIERRA MADRE'S cumulative actual expenditures on the Mining Concessions
       as of the effective date of termination, 4.) Transfer title to the Mining
       Concessions to MINERA APOLO, assuming MINERA APOLO has transferred title
       to the Mining Concessions to SIERRA MADRE, 5.) Deliver all technical and
       accounting information and records to MINERA APOLO, free of charge, 6.)
       Pay all mining taxes due on the Mining Concessions until the end of the
       calendar year of termination, and 7.) Deliver to MINERA APOLO the
       detailed final report or, if applicable, the Scoping Study, as provided
       for in Clause Second I (B)(c), above.

                                       43
<PAGE>

   H.  AREA OF INTEREST.

   a)  MINERA APOLO shall be prohibited from acquiring, by whatever means, a new
       concession located within an area of 5 (five) kilometers from the Mining
       Concessions, without first offering the concession, in writing and in
       advance, to SIERRA MADRE. SIERRA MADRE shall have 60 (sixty) days from
       receiving MINERA APOLO'S written offer to notify MINERA APOLO if it
       wishes to acquire the concession. If SIERRA MADRE elects to acquire the
       concession, the concession shall be registered in SIERRA MADRE'S name and
       shall form part of the Mining Concessions, as defined in this Letter of
       Intent, and will be subject to conditions of the Agreement; and

   b)  If SIERRA MADRE were to acquire, by whatever means, a new concession
       located within an area of 5 (five) kilometers from the Mining
       Concessions, the concession shall form part of the Mining Concessions, as
       defined in this Letter of Intent, and will be subject to conditions of
       the Agreement.

   I.  CONFIDENTIALITY

   Each of the Parties to the Agreement shall undertake and agree:

   a)  Not to use in any way any Confidential Information of the other Party or
       the Mining Concessions without the prior approval of that other Party;

   b)  Not to disclose to any person or assist or make it possible for any
       person to observe any Confidential Information of the other Party or the
       Mining Concessions, without the prior approval of that the other Party or
       otherwise in accordance with the provisions of this Clause; and

   c)  Not to allow or assist or make it possible for any person (other than the
       Party) to observe any Confidential Information of the other Party or the
       Mining Concessions, without the prior approval of that other Party.

   Nothing in this Clause prohibits the disclosure of Confidential Information
   by any Disclosing Party:

   (i.)  To any corporation or other entity affiliated with the Disclosing
         Party;

   (ii)  If and to the extent required pursuant to any applicable legislation or
         other legal requirement or pursuant to the rules or regulations of any
         recognized stock exchange which are applicable to the Disclosing Party
         or any entity affiliated with the Disclosing Party, PROVIDED HOWEVER
         that the Disclosing Party will use its best endeavors to provide a copy
         of any such disclosure or announcement to the other Party prior to
         making or releasing the same;

                                       44
<PAGE>

   (iii) If and to the extent that it may be necessary or desirable to disclose
         the information to any government or governmental authority or agency
         in connection with applications for any government consents which are
         necessary to carry out the Agreement;

   (iv)  To a recognized financial institution (and its professional advisers)
         or other fiduciary in connection with any loan or other financial
         accommodation sought to be arranged by the Disclosing Party for
         purposes of the Agreement;

   (v)   To professional advisers (including legal advisers) and consultants of
         the Disclosing Party whose duties in relation to the Disclosing Party
         or under the Agreement necessarily require the disclosure;

   (vi)  To employees, officers, representatives, and agents of the Disclosing
         Party whose duties in relation to the Disclosing Party or under the
         Agreement necessarily require the disclosure; or

   (vii) Pursuant to a binding order of any court of competent jurisdiction or
         other competent authority;

   The provisions of this Clause shall survive and continue to bind the Parties
   following termination of the Agreement, except that if the Agreement is
   terminated in accordance with Clause Second I (G), above, MINERA APOLO shall
   be free to disclose any Confidential Information related and limited
   directly to the Mining Concessions, but not related to SIERRA MADRE, to
   third parties for the purpose of promoting and obtaining new investors in
   the Mining Concessions.

   The undertakings and agreements contained in the Agreement shall be in
   addition to and shall in no way derogate from the obligations of the Parties
   in respect of secret and confidential information at law, in equity or under
   any statute or trade or profession custom or use.

   J.  INDEMNIFICATION

   a)    MINERA APOLO agrees to indemnify and hold SIERRA MADRE harmless from
         and against any liabilities, claims, losses, damages, costs and
         expenses of any kind (including, without limitation, the reasonable
         fees and disbursements of SIERRA MADRE'S counsel) that may be incurred
         by SIERRA MADRE relating to or arising out of any breach of the
         representations and warranties made by MINERA APOLO in the Agreement,
         which cannot be cured or, if curable, has not been cured within 60
         (sixty) calendar days following the delivery of SIERRA MADRE'S written
         notification of such default to MINERA APOLO; and

                                       45
<PAGE>

   b)    SIERRA MADRE agreeS to indemnify and hold MINERA APLOLO harmless from
         and against any liabilities, claims, losses, damages, costs and
         expenses of any kind (including, without limitation, the reasonable
         fees and disbursements of MINERA APOLO'S counsel) that may be incurred
         by MINERA APOLO relating to or arising out of any breach of the
         representations and warranties made by SIERRA MADRE in the Agreement,
         which cannot be cured or, if curable, has not been cured within 60
         (sixty) calendar days following the delivery of MINERA APOLO'S written
         notification of such default to SIERRA MADRE.

   K.  FORCE MAJEURE

   a)    The obligations of the Parties may be suspended for the time when they
         are unable to perform same due to force majeure or due to any event
         outside of their control, including but not limited to (hereafter, the
         "Event"):

   i)    Fire, explosion, earthquake, hurricane, storm, flood, drought, or other
         event of adverse environmental conditions;

   ii)   War, rebellion, act of terrorism, guerrilla acts, social disruption,
         insurrection or invasion;

   iii)  Strike, work stoppage or other analogous labor dispute, taking of
         control of installations, obstruction, agrarian intrusion, and acts or
         omissions of indigenous groups, non-governmental organizations, or
         environmental groups, or groups with similar interests;

   iv)   Acts of authorities, suit or other type of judicial determination,
         disqualification from of obtaining permits, consents, licenses,
         concessions, authorizations, and opinions;

   v)    Work accidents, failures or defects in equipment, machinery or
         installations; and

   vi)   In general, any other analogous events totally out of the will and
         control of the Parties, which prevent them from fulfilling, all or any,
         of their obligations.

   b)    The Party in the cases described in the foregoing section shall notify
         ("Notice") the Event to the other Party as soon as possible, explaining
         the origin and the nature of the Event and the time estimated for its
         duration. The affected Party shall resume performance of its
         obligations as soon as possible.

                                       46
<PAGE>

   c)    The Parties shall contribute proportionally to eliminating or reducing
         the cause or event that prevents or delays Development of the Project,
         or that in any way endangers the assets used in the Development of the
         Project or the possibility of performance of the operation.

   d)    If after six months from the date of Notice, the Event still prevails
         and insufficient efforts have been made to remedy the Event, the other
         Party shall have the right to terminate this Agreement.

THIRD.  NOTICES AND NOTIFICATIONS.

All notices and communications that the Parties must give in relation to this
Letter of Intent shall be done in writing. Such notices and communications shall
bind the Parties when personally delivered or sent by means that assure actual
receipt of notice with proof of same, and are duly addressed to the Party that
corresponds at its last address stated for purposes hereof, which until there is
a communication to the contrary should be understood as being the following:

        "MINERA APOLO"

        Minera Apolo S.A. de C.V.
        Pasaje Verdi 158-1
        San Luis Potosi, SLP
        78280 Mexico

        (Tel/Fax) (444) 815-1293

        Attention: Mr. Donald F. McLeroy

        "SIERRA MADRE"

        Sierra Madre Resources S.A. de C.V.
        San Francisco No. 656-601
        Col. Del Valle, C.P. 03100
        Mexico, D.F.

        (Tel) (555) 536-2028 / 3014 (Fax) (555) 543-7307

        Attention: Licenciado Victor Garcia Jimenez

                                       47
<PAGE>

Any notices or communications from MINERA APOLO to SIERRA MADRE shall also be
copied to

        "CAN-CAL"

        Can-Cal Resources Ltd.
        2500 Vista Mar Drive
        Las Vegas, NV USA
        89128

        (Tel) 702-243-1849 (Fax) 702-243-1869

        Attention: Mr. Anthony F. Ciali

Any change in the above mentioned addresses shall be notified by one Party to
the other, when it occurs.

FOURTH. APPLICABLE LAWS AND COURTS.

For every thing not expressly stipulated in this Letter of Intent, the Parties
submit themselves to the applicable laws in the City of San Luis Potosi, State
of San Luis Potosi, Mexico especially those relating to the Mining Law and its
Regulations, the Federal Duties Law, the Commerce Code and the Federal Civil
Code, and the Parties also agree to submit to the jurisdiction of the competent
courts in the City of San Luis Potosi, State of San Luis Potosi, Mexico waiving
to the jurisdiction of any other courts to which they may be entitled by reason
of their present or future domiciles

FIFTH.  TOTAL AGREEMENT OF THE PARTIES.

This Letter of Intent reflects the total agreement between the Parties with
regard to its purpose, and, therefore, it cancels and voids any other agreement
or letter of intent entered into between the Parties for the same purpose. The
Parties agree to have the signed and binding English version of the Letter of
Intent timely translated into the Spanish version and signed.

SIXTH.  LANGUAGE.

This Letter of Intent will be signed in Spanish and English language, but in
case of controversy or interpretation, the Spanish version will prevail over the
English version.

                                       48
<PAGE>

SEVENTH VICE OF THE CONSENT

This Letter of Intent has neither been negotiated nor signed under the influence
or determination of fraud, bad faith, violence, illicit actions, error, without
capacity or any another vice of the consent.

AGREEING WITH ITS CONTENT, THE PARTIES SIGN THIS LETTER OF INTENT IN DUPLICATE,
MINERO APOLO IN THE CITY OF SAN LUIS POTOSI, STATE OF SAN LUIS POTOSI, THE DAY
31ST OF MARCH OF 2005 AND SIERRA MADRE IN MEXICO CITY, FEDERAL DISTRICT THE DAY
31ST OF MARCH OF 2005, WITH A SIGNED COPY PROVIDED TO EACH OF THE PARTIES.

        "MINERA APOLO":                            "SIERRA MADRE":

MINERA APOLO S.A. de C. V.                SIERRA MADRE RESOURCES, S. A. de C. V.

  /s/  Dondal F. McLeroy                   /s/  Licenciado Victor Garcia Jimenez
----------------------------------       -------------------------------------
Mr. Donald F. McLeroy                    Licenciado Victor Garcia Jimenez
President

                                       49
<PAGE>

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