Document:

THIS  CONTRACT  OF  SING-FOREIGN CONTRACTUAL JOINT VENTURE made this 31st day of
January,  1994

BETWEEN:

            MENG  MOUNTAIN  DIAMOND  DEVELOPMENT  CORPORATION,
            a  company incorporated under the laws of People's
            Republic  of  China with its legal  office located
            at 047 Xincheng Road, Mengyin County, Shandong
            Province,  People's  Republic  of  China

            (hereinafter  referred  to  as  "Party  A")

                                             OF THE FIRST PART

AND

            CHINA  BEST (ASIA) LIMITED, a company incorporated
            under the laws of Hong Kong with its legal address
            located at 2203 Cameron Commercial Centre, 458-460
            Hennessy  Road,  Hong  Kong

            (hereinafter  referred  to  as  "Party  B")

                                            OF THE SECOND PART

WHEREAS:

A.   Party  A  and  Party  B  wish to form a limited liability company that will
          explore  for  and  mine  diamonds  and  other precious gems in Mengyin
          County,  Shandong  Province, and process and sell such diamonds on the
          international  market;  and

B.   Party  A  and  Party  B  wish  to record their agreements relating to their
          rights  and  obligations  in  respect of such company and between each
          other  as  shareholders  thereof.

C.   Party  A  and  Party B agree that their overriding purpose in entering into
          and  performing  this  Contract is to enable each party to enjoy, in a
          spirit  of  friendship and mutual benefit, the maximum possible profit
          from  their  respective  investments.

NOW THEREFORE in consideration of the mutual covenants herein, Party A and Party
B  hereby  agree  as  follows:

                         ARTICLE 1 - GENERAL PROVISIONS

1.1     Definitions.  The parties agree that where used in this Contract, unless
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        the  context  otherwise  requires,  the  following  terms shall have the
        meanings  set  forth  below:

     1.1.1     "Approval  Authority"  means  agencies  of foreign trade of state
                council  and/or  agencies authorized by the state council and/or
                local  government;

     1.1.2.     "Board"  means  the  board  of  directors  of  the  Company

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     1.1.3      "Business  Day"  means  Monday  through Saturday, both inclusive
                except  for  statutory  holidays  recognized  in  China;

     1.1.4      "Business  license"  means  a  license  issued by Industrial and
                Commercial  Administration department and which license shall be
                valid  to  engage  in  each  item  of  business;

     1.1.5      "Company"  means  the  limited liability company to be formed by
                the  Shareholders pursuant to Article 3 hereof and in accordance
                with  the  Contractual  Joint  Venture  Law;

     1.1.6      "Contractual  Joint  Venture  Law" means the Law of the People's
                Republic  of  China  on  Sino-Foreign Contractual Joint Venture;

     1.1.7      "Duration  of  the  Joint Venture" means a period of thirty (30)
                years  commencing  on  the  date the Business License is issued;

     1.1.8      "Feasibility  Study'  means  the  verification  document  in
                connection with the aspects of geology, resource, technology and
                economics  of  diamond  mining  and  processing relevant to this
                co-operative  project  provided  by  Party  A  and  Party  B;

     1.1.9      "General Manager" means the person engaged by the Company as its
                general  manager  pursuant  to  article  9.1;

     1.1.10     "Independent  Valuator"  means  any  one of the five (5) largest
                Chinese registered accounting firms in the world, as selected by
                Party  B  in  writing;

     1.1.11     "Investment"  means  for any Shareholder all of its right, title
                and  interest  in  and  to  the  Company  and  this  Contract;

     1.1.12     "Mengyin  County"  means  an  area of approximately. 1600 square
                kilometers  and  identified  on  schedule  B;

     1.1.13     "Mine  701"  means  China  Construction  Material  701  Mine;

     1.1.14     "Mining  Authority"  means  authority  approved  by  relevant
                government agency for mining certain mine resources described in
                the  Contract;

     1.1.15     "Exploration  License and Mining license" means a license issued
                to  the Company by the Mining Authority which shall grant to the
                Company  for  the  entire  Duration  of  the Joint Venture to do
                Mining  and  Exploration;

     1.1.16     "Exploration  Rights"  means  that  rights  to explore, mine and
                extract  diamonds  in  Mengyin  County;

     1.1.17     "Party A" means Meng Mountain Diamond Development Corporation, a
                company  incorporated  under  the  laws  of China, and being the
                Party  of  -the  First  Part  of  this  Contract.

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     1.1.18     "Party  B"  means  China  Best  (Asia)  Limited,  a  company
                incorporated  under the laws of Hong Kong and being the Party of
                the  Second  Part  of  this  Contract;

     1.1.19     "Prime  Rate"  means the prime rate of interest as determined by
                the  main branch of the Bank of Nova Scotia in Vancouver, Canada
                as  the base rate for commercial loans to its most credit-worthy
                customers,  provided that the Prime Rate prevailing on January 1
                of  any  year shall be deemed to be the Prime Rate for the first
                six  (6)  months  of that year, and the Prime Rate prevailing on
                July  1 of any year shall be deemed to be the Prime Rate for the
                second  six  (6)  months  of  that  year;

     1.1.20     "Reverification  and  Exploration  Program"  means  the
                reverification  work  described  in  relevant  section  of  the
                Feasibility  Study;

     1.1.21     "S.A.I.C."  means  the  State  Administration  of  Industry  and
                Commerce;  and

     1.1.22     "Shareholders"  means  Party  A  and  Party  B collectively, and
                "Shareholder"  means  either  one  of  them.

     1.1.23     "Parties"  means  Party  A  and  Party  B  collectively.

1.2     Interpretation.  For  purposes  of  this  Contract  except  as otherwise
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        expressly  provided:

     1.2.1      "Contract"  means  this  Contract as it may from time to time be
                supplemented,  amended  or  restated  from  time  to  time.

     1.2.2      All  references  to  designated  articles,  articles  and  other
                subdivisions  are to the designated articles, articles and other
                subdivisions  hereof.

     1.2.3      The  headings  preceding  the text, articles and articles hereof
                are  for convenience only, do not form a part hereof and are not
                intended  to  interpret,  define  or  limit the scope, extent or
                intent  hereof  or  of  any  provision  hereof.

     1.2.4      Any reference to an, entity shall include and shall be deemed to
                include  reference  to an entity that is a successor or assignee
                of  such  entity.

     1.2.5      The  two  (2)  schedules  attached  to  this Contract shall form
                integral  parts  of  this  Contract:

                Schedule  "A"  -  Expenditure  Schedule;

                Schedule  "B"  -  Mengyin  County  Map.

                         ARTICLE 2 - CONTRACTING PARTIES

2.1     Parties.  The  parties  to  this  Contract  are  as  follows:
        --------

     2.1.1      Meng  Mountain  Diamond  Development  Corporation,  a  company
                incorporated  in  the  People's  Republic  of  China

<PAGE>
                with  its  legal  address at 047 Xin Cheng Road, Mengyin County,
                Shandong  Province,  People's  Republic  of  China.

                Legal  Representative:    Name:         Peng  Chuan-Jie
                                          Position:     General  Manager
                                          Nationality:     Chinese

     2.1.2      China  Best  (Asia) Limited, a company incorporated in Hong Kong
                with  its  legal  address  at  2203  Cameron  Commercial Centre,
                458-460  Hennessy  Road,  Hong  Kong.

                Legal  Representative:    Name:         Po  Sun  Liu
                                          Position:     Chairman  and  Chief
                                                        Executive  Officer
                                          Nationality:     Canadian

2.2     REPRESENTATIONS  OF PARTY B.  Party B represents and warrants to Party A
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        as  follows:

     2.2.1     Party  B  is a duly organized company validly existing under the
               laws  of  Hong  Kong;

     2.2.2     Party  B has full corporate capacity, power and authority and all
               necessary governmental approvals (other than those referred to in
               article  7.2.1) to enter into and perform each of its obligations
               hereunder;

     2.2.3     the  execution  and  delivery of this Contract and the observance
               and performance hereof have been duly authorized by all necessary
               corporate  action  on  the  part  of  Party  B;

     2.2.4     this Contract has been duly executed and delivered by Party B and
               constitutes  legal,  valid  and  binding  obligations enforceable
               against  it  in  accordance  with  its  terms;

     2.2.5     the  execution,  delivery  and  performance  by  Party  B of this
               Contract  does  not  and  will not constitute a default under any
               material  agreement  to  which  it  is  a party, any governmental
               regulation,  approval  or  order  to  which it is subject; or any
               provision  of  its  incorporation  documents;  and

     2.2.6     no  governmental  approvals  of  any  kind  are required from any
               governmental  authority  in Hong Kong in respect of this Contract
               or  the  operations  of  the  Company  as contemplated hereunder.

2.3     Representations  of  Party A. Party A represents and warrants to Party B
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        as  follows:

     2.3.1     Party  A  is a duly organized company validly, existing under the
               laws  of  People's  Republic  of  China;

     2.3.2     Party  A has full corporate capacity, power and authority and all
               necessary governmental approvals (other than those referred to in
               article  7.2.1) to enter into and perform each of its obligations
               hereunder  (including  Party  A's  obligations to arrange for the
               Company  to  be  granted  the  Exploration  and  Mining License);

<PAGE>
     2.3.3     the  execution  and  delivery of this Contract and the observance
               and performance hereof have been duly authorized by all necessary
               corporate  action  on  the  part  of  Party  A;

     2.3.4     this Contract has been duly executed and delivered by Party A and
               constitutes  legal,  valid  and  binding  obligations enforceable
               against  it;

     2.3.5     the  execution,  delivery  and  performance  by  Party  A of this
               Contract  does  not  and  will not constitute a default under any
               material  agreement  to  which  it  is  a party, any governmental
               regulation,  approval  or  order  to  which it is subject, or any
               provision  of  its  incorporation  documents;

     2.3.6     only  government  approvals from government authorities stated in
               article  7.2.1  are  required  in respect of this contract or the
               operation  of  the  company  as  contemplated  hereunder;

     2.3.7     the Company shall be required to pay no taxes, duties, royalties,
               license  fees or other payments of any kind except only for those
               described  in  article  12.1;

     2.3.8     upon  signing  of this Contract, Party A shall deliver to Party B
               all  information  concerning  diamonds  or other precious gems in
               Mengyin  County  (other  than  Mine  701)  that  is  in Party A's
               possession  or  control,  and  such  information  is accurate and
               complete;  and

     2.3.9     neither  Party  A  nor  any  other person that has engaged in the
               exploration  for or the mining of diamonds or other precious gems
               in  any  property  in  Mengyin  County  (other than Mine 701) has
               violated  or  is violating any environmental law or regulation to
               which  such  property is subject, and Party A is not aware of any
               adverse environmental condition on or affecting such property, or
               of  the  past  or  present  activities  of  any person in respect
               thererof  which has caused or is likely to cause or contribute to
               any  adverse  environmental  condition  on  such  property.

2.4     INDEMNITY.  If  any representation or warranty given herein by any party
        ----------
        is  untrue  or  inaccurate, such party shall indemnify and hold harmless
        the  other  party  for  any  loss  or damage caused to such other party.

       ARTICLE 3 - ESTABLISHMENT OF THE CONTRACTUAL JOINT VENTURE COMPANY

3.1     CONTRACTUAL  JOINT  VENTURE.  In  accordance  with  the  Sino-Foreign
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        Contractual  Joint  Venture  Law  and  other  relevant  Chinese laws and
        regulations,  Party  A  and  Party  B  agree  that  the Company shall be
        established  as  a  contractual  joint  venture.

3.2     NAME.  The  name  of  the  Company  shall  be:
        -----

     3.2.1     in  Chinese:  [GRAPHIC  OMITTED]  and
                             ------------------

<PAGE>
     3.2.2     in  English:  Mengyin  International Diamond Development Co. Ltd.

3.3     LEGAL  ADDRESS.  The  legal address of the Company shall be 047 Xincheng
        ---------------
        Road,  Mengyin  County,  Shandong  Province,  People's Republic of China

3.4     LAWS  OF  CHINA.  All activities of the Company shall be governed by the
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        published and publicly available laws, decrees, rules and regulations of
        China.

3.5     LIMITED  LIABILITY.  The  Company  shall be a limited liability company.
        -------------------
        Each  Shareholder shall be liable to the Company only for the registered
        capital  and  shareholder's  loans  such  Shareholder  has  agreed  to
        contribute in accordance with and subject to the provisions of Article S
        hereof.  No  Shareholder shall be liable for any of the debts, losses or
        liabilities  of  the  Company  or  of  the  other  Shareholder.

3.6     LEGAL  PERSON.  The  Company  shall  be  a  legal  person  existing as a
        --------------
        separate  entity  from  the  Shareholders.

3.7     NO  PARTNERSHIP.  The  parties expressly disclaim any intent to create a
        ----------------
        partnership with respect to the administration or assets of the Company.

3.8     NO  AGENCY.  Neither  party shall have any authority, actual or implied,
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        to  act  as  agent for or to bind the other party or the Company, and is
        hereby  prohibited  from  so  doing.

                     ARTICLE 4 - BUSINESS SCOPE AND PROJECT

4.1     BUSINESS  SCONE.  The  parties  agree  that  the  business  scope of the
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        Company  shall  include  the  following:

     4.1.1      the  exclusive  right  to explore for, mine and extract diamonds
                and  other  precious  gems throughout Mengyin County except only
                for  Mine  701;

     4.1.2      the  exclusive  right  to  process  and refine diamonds or other
                precious  gems  mined  or  extracted  by  the  Company;

     4.1.3      the  exclusive  right to market and sell such diamonds and other
                precious  gems  on the international market through Party B; and

     4.1.4      all  such  complementary  activities  as  may  be  necessary  or
                desirable  for  the  Company  to  fully engage in all activities
                permitted by the Business license or the Exploration License and
                Mining  License.

                 ARTICLE 5 - TOTAL INVESTMENT REGISTERED CAPITAL

5.1     INITIAL  REGISTERED CAPITAL.  The total investment amount of the Company
        ----------------------------
        is  set  at  U.S.  $11,000,000  consisting  of registered capital of the
        Company  of  U.S.  $10,000,000  and  U.S.  $1,000,000 in working capital
        provided  by banks. The U.S. $10,000,000 can be in United States Dollars
        or  in  kind  or  the equivalent amount in Renminbi in whole or part and
        shall  be  contributed  to  the  Company

<PAGE>
        by  the  Shareholders  at the times and in the forms set out in articles
        5.2  and  5.3  below.  Party  A  and  Party  B shall contribute the U.S.
        $5,000,000  respectively.

5.2.    PARTY  B'S INITIAL CAPITAL CONTRIBUTION.  Party  B may make contribution
        ----------------------------------------
        under  this  article  S  in  the  form of cash, equipment and machinery,
        technology  and  technical  services  recommended  by  the  Management
        Committee and approved by the Board. Equipment and machinery value shall
        be  verified  by  an accounting company and the State Administration for
        the  inspection  of  import  and  export  commodities.

        Party  B  shall  contribute to the Company a total of U.S. $1,000,000 in
        the  form  of United States Dollars within the first year. The remaining
        U.S.  $4,000,000  or  the equivalent amount in Renminbi in whole or part
        will  be  contributed  in  accordance  with the Expenditure Schedule and
        approved  by  the  Board  and subject to article 5.4.1. The Shareholders
        agree  that  Party  B's  obligation to contribute such initial amount is
        subject to the fulfillment of each of the following conditions precedent
        to the satisfaction of Party B (each of which is for the sole benefit of
        and  may  be  waived  by  Party  B).

     5.2.1      the  Feasibility  Study  and  this  Contract  and  Article  of
                Association  have  been  approved  in  writing  by  the Approval
                Authority;

     5.2.2      the  Business  License  has  been  issued by the S.A.I.C. to the
                Company;

     5.2.3      the Exploration and Mining License has been issued by the Mining
                Authority  to  the  Company;

     5.2.4      Party  B  has  received a written legal opinion of a Chinese law
                firm  acceptable  to  Party  B  confirming  (a) the issuance and
                sufficiency  of  the  foregoing  approvals  and licenses and the
                granting  of  the  Exploration  Rights  to  the Company, (b) the
                legality,  validity  and  bindingness  of  this Contract and the
                Exclusive  Marketing and Sales Contract, and (c) the accuracy of
                the  tax  description  in  the  Contract;

     5.2.5      the Company has signed and delivered the Exclusive Marketing and
                Sales  Agreement;

     5.2.6      the  representations  and  warranties made by Party A in article
                2.3  are  true and correct as confirmed by a certificate to that
                effect  signed  and  delivered  to  Party  B  by  the  legal
                representative  of  Party  A.

5.3     PARTY  A'S  CAPITAL  CONTRIBUTION.  Party  A may make contribution under
        ----------------------------------
        this  article  5  in  the form of cash, labour supply, land, exploration
        rights,  rights-of-way,  surface rights, water rights, electricity power
        source  and  other  rights  required to allow the Company to explore and
        mine  for  diamonds  as  required  and  recommended  by  the  Management
        Committee  and  approved  by  the  Board.  As  Party A's U.S. $1,000,000
        capital  contribution,  Party A shall, no later than sixty (60) business
        days  after  the  day  the  Business  License has been issued, cause the
        Exploration  and  Mining  License  to be issued to the Company, provided
        that:

<PAGE>
     5.3.1      Party A shall be solely responsible for and cannot charge to the
                Company  any  costs  or  payments  to:

               (a)     any  person, company, entity or governmental authority in
                       respect  of  the  issuance  of the Exploration and Mining
                       License;

               (b)     any  person, company, entity or governmental authority in
                       respect  of releasing their claims on any diamond bearing
                       ore  body;

               (c)     any  person, company, entity or governmental authority in
                       respect  of the relocation of any individuals, businesses
                       or  government  entities;

               (d)     any  person, company, entity or governmental authority in
                       respect  of existing pension fund payments or termination
                       costs of individuals currently employed who are dismissed
                       or  retired  because  of  the  signing  of  the Contract.

     5.3.2      upon  the issuance of the Exploration License and Mining License
                to  the  Company  and the payment of all amounts contemplated by
                article  5.3.1,  Party  A  shall  be  deemed  to  have  made  a
                contribution  to  the  Company's  registered  capital.

     5.3.3.     upon  payment  of  any  part of the remaining registered capital
                contribution  of  U.S. $4,000,000 in the form allowed in article
                5.2  or  the  equivalent  amount  in

                Renminbi  in whole or part by Party B under Article 5.2, Party A
                shall  be  deemed  to  have made a contribution to the Company's
                registered  capital  equal  to  the same amount of that payment.

5.4     REVERIFICATION  AND EXPLORATION PROGRAM.  The funds contributed by Party
        ----------------------------------------
        B under article 5.2 shall be used for the Reverification and Exploration
        Program.  All diamonds and other precious gems found or extracted during
        the Reverification, and Exploration Program shall belong to the Company,
        and  may  be  sold under the Exclusive Marketing and Sales Contract. The
        profits  arising from such sales shall be distributed as contemplated in
        article  12.4.

     5.4.1      if  after  the  investment of any part of the initial investment
                the  results  of Reverification and Exploration Program indicate
                the  diamond  deposits are not economically feasible to mine and
                Company's Management Committee's mining engineers recommend that
                no  further funds be expended on the property, the parties agree
                that  article  16.3  shall  apply.

5.5.    BANK  LOANS.  If  the  Company  requires  funds in addition to Party B's
        ------------
        initial  capital  contribution  under article 5.2, the parties shall use
        their  best  efforts  to  obtain  all such funds from Chinese or foreign
        banks.  The  Company  shall  grant  such security over its assets as the
        lender  may  require.

5.6     ADDITIONAL  SHAREHOLDER CONTRIBUTIONS.  If the Company requires funds in
        --------------------------------------
        addition  to the bank loans obtained under article 5.5, the Shareholders
        shall  contribute  such  funds  to  the Company subject to the following
        conditions:

<PAGE>
     5.6.1      neither  Shareholder  shall  be  required to make any additional
                contribution  under  this  article  5.6  unless both parties are
                satisfied with the results of the Reverification and Exploration
                Program  and  such  contributions  shall be used only to pay for
                such  exploration  and mining expenditures as may be recommended
                by the General Manager, and or management committee and approved
                by  the  Board  by  a  duly  passed  resolution;

     5.6.2      neither  Shareholder  shall  be  required to make any additional
                contribution  hereunder  in  excess  of the expenditure schedule
                unless  approved  by  the  Board by a duly passed resolution and
                further  consented  to  in  writing  by  both  parties;

     5.6.3      to  the  greatest  extent  permitted  under  Chinese  law,  such
                contributions  shall  be  made in the form of shareholders loan,
                and  shall be made in the form of registered capital only to the
                extent  required to comply with debt-to-equity ratios imposed by
                Chinese  law  that  may  apply  to  the  Company,  if  any;

     5.6.4      if  the  Shareholders  are  required  to  make  additional
                contributions  under  this  article  5.6, whether in the form of
                shareholders loans or registered capital, each Shareholder shall
                provide  one-half  of  such  contribution;

               ARTICLE 6 - ASSIGNMENT, ENCUMBRANCES AND TRANSFERS

6.1     ASSIGNMENT.  The  obligations or liabilities of each Shareholder in this
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        Contract  hereunder  cannot  at  any time be assigned by any Shareholder
        without  the  prior  express  written  consent of the other Shareholder.

6.2     ENCUMBRANCES  IN  FAVOUR  OF  LENDERS.  If  the Company agrees to borrow
        -------------------------------------
        funds  from  a  lender, any Shareholder giving a guarantee to the lender
        may,  if  required  by  the  lender,  mortgage or otherwise encumber its
        Investment  or any part thereof in favour of such lender as security for
        the  loan  but  only  if  such lender enters into an agreement with both
        Shareholders  (satisfactory  in  form  and  substance  to  both of them)
        agreeing  to  be  bound  by  the  provisions  of  this  Contract.

6.3     TRANSFERS.  Any  Shareholder  (in  this  article,  the  "Transferring
        ---------
        Shareholder")  that is not in breach of the terms hereof may transfer to
        a  subsidiary  of  the  Transferring  Shareholder  all  or  part  of its
        Investment.

                ARTICLE 7 - RESPONSIBILITIES OF EACH SHAREHOLDER

7.1     RESPONSIBILITIES  OF  PARTY  B.  Party  B  shall  be responsible for and
        ------------------------------
        hereby  agrees  to  perform  each  of  the following matters in a timely
        manner:

     7.1.1      assist  the Company in engaging any foreign consultants, experts
                or  agents  the  Company  may  wish  to hire to evaluate all the
                historical  geological, exploration and mining data delivered to
                it  by  Party  A;

<PAGE>
     7.1.2      provide  registered  capital  and  shareholder's  loans  to  the
                Company  subject  to  and  in  accordance  with  the  terms  and
                conditions  of  articles  5.2  and  5.6  above;

     7.1.3      entrusted  to  purchase on behalf of the Company, any equipment,
                vehicles,  and  machinery  the Company may need to purchase from
                outside  China;

     7.1.4     entrusted  to  sell  on the Company's behalf on the international
                market,  all  diamonds  and relevant products and other precious
                gems  mined  by  the  Company,  in accordance with the Exclusive
                Marketing  and  Sales  Agreement, and the parties agree that the
                Exclusive  Marketing  and Sales Agreement shall be signed by the
                Company  and  Party  B within thirty (30) days after the date of
                the  Business  License;

     7.1.5      remit  to  Party A U.S.D. 5,000 for its share of the expenses of
                the  Feasibility  Study  on the execution date of this Contract;
                and

     7.1.6      handling  any  other  matter  entrusted  by  the  Company.

7.2     RESPONSIBILITIES  OF  PARTY  A   Party  A  shall be-"responsible for and
        ------------------------------
        hereby  agrees  to perform each of the following matters at its own cost
        and  in  a  timely  manner:

     7.2.1      obtaining  all  approvals,  licenses,  permits,  export  rights,
                registrations  and  renewals  necessary  for  establishing  the
                Company  and  enabling  the  Company to engage in the activities
                contemplated  hereunder,  including  but  not limited to (i) the
                Business  License,  (ii)  the Exploration and Mining License and
                (iii)  all  access permits, rights-of-way, easements, occupation
                permits,  surface  rights  and  other  such rights in respect of
                places  in  Mengyin County as the Company may reasonably request
                and  provided  that  such  licenses:

               (a)     shall  be  renewed  on  application  by  the  Company
                       (which  application  shall  be submitted at least 3months
                       and  no  more than 6 months prior to its expiration date)
                       for a further period of thirty (30) years so long only as
                       the  Company  is  engaged  in  exploration  and/or mining
                       operations  in  Mengyin  County  during  such period; and

               (b)     shall  not be cancelable except only if the Company fails
                       for  a  period  of two (2) consecutive years to carry out
                       exploration  and/or  mining of diamonds or other precious
                       gems  in  Mengyin  County  for  any reason other than (i)
                       force  majeure (as defined in article 18) or (ii) because
                       it  has  proven  uneconomic  for  the Company to carry on
                       mining  during such period, and the Company has failed to
                       recommence  mining operations within six (6) months after
                       receiving  notice  to  do  so  from the Mining Authority;

     7.2.2      granting  to  the  Company  for the entire Duration of the Joint
                Venture,  the  following  rights, in each case free and clear of
                any  and  all  liens,  charges,  encumbrances,  reservations,
                royalties  and  taxes  of  any  kind:

<PAGE>
               (a)     the  exclusive  right  to  explore  for, mine and extract
                       diamonds  and  other  precious  gems  throughout  Mengyin
                       County  except  only  for  Mine  701;

               (b)     the  exclusive  right  to process and refine diamonds and
                       other  precious  gems  mined or extracted by the Company;

               (c)     the  exclusive right to market and sell such diamonds and
                       other  precious  gems on the international market through
                       Party B under the Exclusive Marketing and Sales Contract;
                       and

               (d)     all  access,  occupation, surface, water, power and other
                       complementary  rights  necessary  or  desirable  for  the
                       Company  to  enjoy  all  of  the  foregoing  rights;

               provided  that  such  rights:

               (e)     shall  be  renewed  automatically by Party .A on the same
                       basis  as  the  approved  licenses  per  article  7.2.1.

     7.2.3      immediately  deliver  to  Party B upon request true and complete
                copies  of  all  of the geological data including maps, reports,
                surveys,  exploration data and other historical data relating to
                the  finding  and  mining of diamonds, kimberlite, precious gems
                and  ores  bearing  precious  gems  located  in  Mengyin County;

     7.2.4      make  available  for consultation to Party B and its consultants
                all  technical  experts in geology, mining and the processing of
                diamonds  and  other  precious gems who have worked on obtaining
                the  data  referred  to  in  article  7.2.3  above;

     7.2.5      ensure  that  the  Company  may obtain at prices not higher than
                prices  normally paid by Chinese Joint Venture enterprises, each
                of  the  following:

               (a)     all  necessary utilities, including the necessary consent
                       from  the Power Supply Administration, as may be required
                       for  the  Company's  operations;  and

               (b)     office  space  in Mengyin County to enable the Company to
                       carry  out  its  work  and  business;  and

               (c)     all  necessary  labour  and  personnel  as  may be deemed
                       necessary  by  the  Company;

     7.2.6     assist the Company to deal with all local, county, provincial and
               central  government  authorities, and any other parties as may be
               necessary  to ensure that the Company shall be able to operate in
               the  manner  contemplated herein, and to ensure that all of Party
               B's  rights  hereunder  are  also  protected;  and

     7.2.7     handle  such  other  matters  as  may  be  entrusted to it by the
               Company.

<PAGE>
                       ARTICLE 8 - THE BOARD OF DIRECTORS

8.1     DATE  OF  ESTABLISHMENT.  The Board shall be established on the date the
        ------------------------
        Business  License  is  issued.

8.2     REPRESENTATION.  The  Board shall comprise seven (7) directors, of which
        ---------------
        three  (3) shall be appointed by Party A and four (4) shall be appointed
        by Party B. Any director may be removed and replaced at any time and for
        any  reason  by  the  Shareholder  that  appointed  such  director.

8.3     CHAIRMAN  AND  VICE-CHAIRMAN. The Company shall have one Chairman of the
        -----------------------------
        Board  and  one  (1)  Vice-Chairman. The Chairman of. the Board shall be
        selected by Party B from amongst the Board members appointed by Party B,
        and  the Vice-Chairman shall be one of the directors selected by Party A
        from  amongst  the  Board  members  appointed  by  Party  A.

8.4     TERM OF OFFICE.  The directors, Chairman and Vice-Chairman of the Board
        ---------------
        shall hold office for terms of three (3) years, and such terms of office
        may  be  renewed  by  the  continuous  appointment  of  the  relevant
        Shareholder.

8.5     LEGAL  REPRESENTATIVE.  The  Chairman  of  the  Board shall be the legal
        ----------------------
        representative of the Company. If the Chairman is unable to exercise his
        responsibilities  for  any  reason,  he  may  temporarily  delegate such
        responsibilities to the Vice-Chairman or any other director by a written
        authorization  sent  to  such  person and copied to the Company and each
        Shareholder.

8.6     BOARD DECISIONS.  The Board shall manage the business and affairs of the
        ----------------
        Company. Board issues shall be decided by the approval of a 51% majority
        of the votes cast by the directors present at a duly constituted meeting
        of  the  Board  except  that  the  approval  of 75% of all the directors
        present at a duly constituted meeting of the Board shall be required for
        each  of  the  issues  set  out  below:

     8.6.1      any  amendment  to  the  Company's  Articles  of  Association;

     8.6.2      any increase in the registered capital of the Company other than
                an increase in the registered capital resulting from an increase
                in  the  registered  capital  resulting  from  a  requirement to
                contribute  monies  pursuant  to article 5.6. Such increases are
                hereby  approved  in  advance  by  the  Shareholders,  and  the
                Shareholders  each  agree to cause the Board to vote unanimously
                in  favour  thereof;

     8.6.3      any  merger of the Company with any other economic organization,
                or  the  creation  of another joint venture entity together with
                some  other  economic  organization;  and

     8.6.4      dissolution of the Company for any reason prior to the expiry of
                the Duration of the Joint Venture provided always, however, that
                if  unanimous  approval  of all the directors is not achieved in
                this regard at any Board meeting duly convened for such purpose,
                a  resolution  for such dissolution may be effectively passed at
                the  next  Board  meeting  duly  convened  for  such  purpose if
                approved

<PAGE>
                by  the  votes  of at least 51% of the directors present at such
                later  meeting.

8.7     MEETINGS.  Board  meetings  shall  be  held  at  least once per year and
        ---------
        whenever  any  two (2) of the seven (7) directors may request. Directors
        may  appoint  alternate  directors to represent and vote for them, or by
        written  proxy  authorize  another director to vote on his behalf. Board
        meetings  may  also  be  held  by conference telephone call whereby each
        participant  is  able  to  hear and speak to each other participant. The
        Chairman  or  other  person  convening a meeting of the Board shall give
        each  director at least ten (10) days' written notice of the time, place
        and  proposed  agenda  of  the  meeting.

8.8     QUORUM.  A  quorum  shall  be formed by any five (5) directors. For such
        -------
        purpose,  a  director shall be deemed present at a meeting or conference
        telephone  call  either  if  he  participates  in  person  or  by  the
        representation  of  a  duly  appointed  alternate  director.

8.9     DEEMED QUORUM.  If a quorum is for any reason not present within one (1)
        --------------
        hour  after  the  time  set  for  a  Board  meeting,  such meeting shall
        automatically  stand  adjourned  to  the  fifth  (5th)  business  day
        immediately  following  at  the  same  time and place, and the directors
        present  or deemed present at such meeting shall be deemed to constitute
        a  quorum  and  able  to  pass  effective  resolutions.

                           ARTICLE 9 - GENERAL MANAGER

9.1     GENERAL  MANAGER.  The Board shall delegate the day-to-day management of
        -----------------
        the  Company  to  the  General  Manager.  The  General  Manager shall be
        nominated  and  hired  by  the  Board.

9.2     DUTIES OF THE GENERAL MANAGER.  The General Manager shall be responsible
        ------------------------------
        for  the  overall  management  of the Company. The General Manager shall
        report  to  the  Board,  and  his  duties  shall  include the following:

     9.2.1      preparation  of  annual  operating and capital budgets, business
                plans  and  financial  projections  for  Board  approval;

     9.2.2      implementing  budgets  and  plans  approved  by  the  Board;

     9.2.3      maintaining  an  accounting  system  and  a system of financial,
                budgetary  and internal controls designed by any one of the five
                (5)  largest Chinese registered accounting firms selected by the
                Board;

     9.2.4      maintaining  accounting ledgers, books and records in accordance
                with  internationally  accepted  accounting  principles  and
                standards  and  regulations;

     9.2.5      payroll  administration;

     9.2.6      labour  relations  and  personnel  administration;

     9.2.7      supervising  and  administering  all  exploration,  mining,
                processing  and  marketing  operations;

<PAGE>
     9.2.8      implementing  a  system  of  security designed by experts in the
                security  field  in  respect of the Company's diamonds, precious
                gems  and  other  assets  that  is  in  accordance  with  good
                international  standards  and that is satisfactory to the Board;

     9.2.9      generally,  doing  all  things  necessary or advisable to ensure
                that  the  business  of  the  Company  and  is  carried  out  in
                accordance  with  this  Contract.

9.3      The  Vice-General  Managers  shall  be nominated by the General Manager
         and  must  be  approved  by  the  Board.

     9.3.1      The  Vice-General  Managers  shall assist the General Manager in
                carrying  out  his  duties.

                      ARTICLE 10 - PURCHASES AND CONTRACTS

10.1    PURCHASES  OUTSIDE  CHINA.  If  the  Company  needs  to  purchase  any
        --------------------------
        materials,  equipment, vehicles, machinery or other items necessary from
        outside  China,  Party  B  shall  be entrusted to do so on behalf of the
        Company.

                         ARTICLE 11 - EMPLOYMENT MATTERS

11.1    EMPLOYMENT  CONTRACTS.  All  existing employees and retired employees of
        ----------------------
        Party  A are the responsibility of Party A. All employees required to be
        engaged  by  the  Company,  including  but  not  limited  to the General
        Manager, shall be hired pursuant to employment contracts approved by the
        Board.  Such contracts will set out, amongst other things, the title and
        duties  of the employee, the remuneration payable and the terms on which
        such  engagement  may  be terminated by the Company. Such employees, the
        Company  and  the  parties hereto shall be required to keep confidential
        all  the  terms  of  the  engagement  of  such  employees.

11.2    LABOR MARKET.  The  Company shall be entitled to hire employees from the
        -------------
        labor market by placing advertisements or using other direct methods for
        recruiting employees, either from China or from abroad, as it deems fit.
        Salaries  and  benefits  payable  to  any management level employee from
        China shall be based on standards prevailing in the Chinese labor market
        for  such  kind  of  employee,  and salaries and benefits payable to any
        employee from outside of China shall be based on standards prevailing in
        the  international market for such kind of employee. Such employees, the
        Company  and  the  parties hereto shall be required to keep confidential
        all  the  terms  of  the  engagement  of  such  employees.

                      ARTICLE 12 - TAXES. FINANCE AND AUDIT

12.1    COMPANY  TAXES.  The  Company  shall  pay  taxes  in accordance with the
        --------------
        stipulations  of  published  and  publicly  available  Chinese  laws and
        regulations  using  the  maximum  deductions  and  allowable

<PAGE>
        deductions  and  preferential  treatments  allowed  in  the  laws  and
        regulations of the Income Tax Law for Foreign Investment Enterprises and
        Foreign  Companies.  The  Company  shall apply for the maximum allowable
        deductions  and  the maximum allowable credits and the maximum allowable
        preferential  treatments  allowed  in  these  same  laws and regulations
        covering  duties  and  taxes.

12.2    PERSONAL  TAXES.  Employees  of  the Company shall pay individual income
        ----------------
        tax according to the Individual Income Tax Law of the People 's Republic
        of  China.

12.3    THREE  FUNDS.  The  Company  shall make annual allocations for a reserve
        -------------
        fund,  an  expansion fund and a welfare and bonus fund for its employees
        from  its  after-tax  profits  as  the  Board  may  deem  fit.

12.4    DIVIDEND  POLICY.  Unless  the Board unanimously resolves otherwise at a
        -----------------
        duly  convened  meeting,  the  following  dividend  policy  shall  apply
        throughout  the  Duration  of  the  Joint  Venture and regardless of the
        amount  of  dividends  that  may  have  been  or  will  be  paid  to any
        Shareholder:

     12.4.1     after  the loan repayments contemplated in article 5.5 have been
                paid  to  the  lender the Company shall at least once each year,
                distribute  to  the  Shareholders  all  of the after-tax profits
                remaining  by  declaring  and  paying dividends to them in equal
                proportions;

     12.4.2     the  Company  shall  use  United  States  Dollars or Renminbi as
                decided  by  the  Board  to  distribute  dividends;

     12.4.3      if  the  United  States  Dollars  available  from the Company's
                normal  operations  (excluding  foreign  currency  exchange
                transactions) is sufficient, the Company shall pay the dividends
                of  both  Shareholders  with  such  United  States  Dollars;

     12.4.4     if the United States Dollars available from the Company's normal
                operations (excluding foreign currency exchange transactions) is
                insufficient  to  pay  the  dividends  of  both  Shareholders in
                foreign  exchange,  the  '  Company  shall use the United States
                Dollars which it does have, if any, to pay Party B's dividend on
                a  priority  basis;

12.5    FISCAL  YEAR.  The  Company's  fiscal  year shall commence on July 1 and
        -------------
        end on June 30 of each year, except for the first fiscal year which will
        commence on the day the Business License is issued and end on June 30 of
        the  same  year.

12.6    BOOKS  OF  ACCOUNT.  The  Company  shall  keep  its books of accounts in
        -------------------
        English  and  Chinese,  and  in  accordance  with  generally  accepted
        international  accounting  principles.

12.7    ACCOUNTING  CURRENCY.  The  Company  shall  use  Chinese Renminbi and/or
        ---------------------
        U.S.  dollar  as  the  base  accounting  currency.

12.8    REPORTING  TO  DIRECTORS.  The  General  Manager  and  the  management
        -------------------------
        committee shall prepare and deliver the following statements and reports
        to  each  member  of  the  Board:

<PAGE>
     12.8.1     quarterly unaudited financial statements within four (4) days of
                the  end  of  each  fiscal  quarter;

     12.8.2     annual  unaudited  financial  statements  by  no  later than the
                forty-fifth  (45th)  day  after  the  end of the previous fiscal
                year;

     12.8.3     annual  audited  financial  statements  and the auditor's report
                thereon  by  no later than the sixtieth (60th) day after the end
                of  the  previous  fiscal  year;  and

     12.8.4     daily  production  records  by  shift  including  inventory  of
                diamonds  held  for  sale  at  the  end  of  each  day.

12.9    RIGHTS  TO  INSPECT.  Each  director shall have the right to inspect and
        -------------------
        copy  the  books  of  account  of  the  Company  at  any  time.

12.10   AUDITORS.  The Company's  books  shall be audited by the China office of
        --------
        one  of the international accounting firms licensed to practice in China
        or  which  has established a joint venture in China licensed to practice
        in  China,  as  selected  by  the  Party  B  in  writing.

12.11   BANK  ACCOUNTS.  The  Company  shall  open  such bank accounts as deemed
        --------------
        necessary  by  the  board  of  directors.

                             ARTICLE 13 - INSURANCE

13.1    STANDARDS  OF  INSURANCE.  The  Company shall purchase insurance of such
        ------------------------
        kind  and  of  such value and duration as the Board considers necessary,
        having  due reference to international insurance practices in respect of
        similar  projects.

13.2    CHOICE  OF INSURER.  The  Company shall purchase such insurance from the
        ------------------
        insurance  provider which the Board considers to be the most competitive
        in  terms of coverage, dependability and cost. If the People's Insurance
        Company  of China satisfies the Board that its policies are at least as.
        favourable  to the Company as those of its competitors in respect of all
        factors  the  Board  considers  material, the Company shall purchase its
        insurance  from  that  insurer.

                   ARTICLE 14 - DURATION OF THE JOINT VENTURE

14.1    INITIAL  DURATION.  The  Project  shall  have  an  initial duration (the
        -----------------
        "Duration  of the Joint Venture") of thirty (30) years commencing on the
        day  the  Business  License  is  issued.

14.2    EXTENDED  DURATION.  The  Company  and  the  Shareholders  shall make an
        ------------------
        application  to  the Approval Authority at least six (6) months prior to
        the  expiry  date  of  the  Duration of the Joint Venture for same to be
        extended  as  follows:

     14.2.1     if  the  Company  has  been  profitable, for a further period of
                thirty  (30)  years;  or.

     14.2.2     if  any loan owed to Party B either by the Company or by Party A
                or vice versa is not completely repaid, for such further period,
                if  any,  as  Party B may consider necessary to ensure that such
                loan  is  completely  repaid.

<PAGE>
14.3    CONTINUATION  OF  CONTRACT  AND LICENSES.  If  the Duration of the Joint
        ----------------------------------------
        Venture is extended for any reason, notwithstanding any provision to the
        contrary  herein, this Contract shall continue in full force and effect,
        as  amended by such extension. Party A shall obtain such renewals of the
        Business  License,  Exploration  License  and  Mining  License and other
        rights  and  permits referred to in article 7.2.1 as may be necessary or
        desirable.

          ARTICLE 15 - DISPOSAL OF COMPANY ASSETS ON EXPIRY OF DURATION

15.1    LIQUIDATION OF ASSETS.  If  the Duration of the Joint Venture expires or
        ---------------------
        is  terminated  pursuant  to this Contract for any reason, the assets of
        the  Company shall be liquidated and the debts of the Company (including
        any  amounts  owed  to  any  Shareholder  hereunder)  shall be paid. The
        remaining  cash  of  the  Company,  if  any, shall be distributed by the
        Company  to  the  Shareholders equally in accordance with the principles
        set  forth  in  article  12.4.  Thereafter,  the  Company  shall:

     15.1.1     make  a  full  report  of  the  liquidation  to  each  of  the
                Shareholders;  and

     15.1.2     cause  the  Business  License  to  be  cancelled.

15.2    SALE  OF  ASSETS.  The  liquidation committee shall use its best efforts
        ----------------
        to  sell the non-cash assets of the Company (including the Mining Rights
        and  Sales  Rights) for the highest available price. Any Shareholder may
        purchase  all or part of those assets at a purchase price equal to their
        fair  market value, as determined by the parties by agreement (or by the
        Independent  Valuator,  if no written agreement is reached within thirty
        (30)  days). Such price may be paid by way of set-off against any amount
        that  may  be  owed  by  the Company to the purchasing Shareholder. Such
        Mining  Right shall get approval from the appropriate Government Agency.

15.3    SURVIVAL OF TERMS.  The  provisions of this Article 15 shall survive the
        -----------------
        expiry or early termination of the Duration of the Joint Venture for any
        reason.

             ARTICLE 16 - AMENDMENT AND TERMINATION OF THE CONTRACT

16.1    AMENDMENT.  This  Contract and its two (2) schedules may only be amended
        ---------
        by a written amendment agreement signed by both Party A and Party B, and
        shall  come  into effect on the day such amendment agreement is approved
        by  the  Approval  Authority.

16.2    TERM  OF  CONTRACT.  This  Contract and its two (2) schedules shall come
        ------------------
        into  effect  upon  approval  by  the Approval Authority and, subject to
        article  16.3,  shall  remain in force until the procedures set forth in
        Article  15  above  have  been  completed  following the expiry or early
        termination  of  the  Duration  of  the  Joint  Venture  pursuant.

16.3    RESCISSION OF CONTRACT.  If  for any reason the conditions precedent set
        ----------------------
        forth  in  article  S.2 and 5.4 have not all been fulfilled or waived in
        writing  by  Party  B  on  or  prior to the 180th day after the Business
        License  has  been  issued,  at Party B's option, this Contract shall be
        deemed  terminated  and  of  no  force  and effect, the Company shall be
        dissolved,  and  the

<PAGE>
        Shareholders  shall  have  no  liability  of  any kind hereunder to each
        other.

16.4    EARLY  TERMINATION.  Either  Shareholder  may  by  written notice to the
        ------------------
        Chairman and Vice-Chairmen of the Company, request the Board to consider
        and  approve  a  resolution  pursuant  to  article  8.6 to terminate the
        Duration  of  the Joint Venture prior to its expiry date only for any of
        the  following  reasons:

     16.4.1     the  other  Shareholder has caused an Event of Default to occur,
                and  has failed to cure such Event of Default within thirty (30)
                days  of  written  notice  by  the first Shareholder, or if such
                Event  of  Default  cannot be cured within thirty (30) days, the
                other  Shareholder  has  failed  to use its best efforts to cure
                such  default;  or

     16.4.2     there  has  been  a  material  change  in  the  applicable laws,
                regulations  or  policies  of  the  pertinent  governmental
                authorities  that  adversely  affect  the  interests  of  such
                Shareholder.

16.5    GOVERNMENT  APPROVAL.  If  any  Shareholder  gives  a  notice requesting
        --------------------
        early termination under article 16.4 and the Board resolves according to
        article  8.6.5 to dissolve the Company, the Shareholders shall and shall
        cause  the  Company  and  the  Board  to  make  such applications to the
        Approval Authority, and to take all such other steps as may be necessary
        to  complete  the  dissolution  of  the  Company in accordance herewith.

16.6    SURVIVAL  OF  CERTAIN  PROVISIONS  AND  OBLIGATIONS.  The  provisions of
        ---------------------------------------------------
        Article  15  and  this  article  16.6  and  all other provisions of this
        Contract  necessary  to give full force and effect thereto shall survive
        the expiration or early termination of the Duration of the Joint Venture
        for  any  reason.  Notwithstanding  the termination of this Contract, no
        Shareholder  shall  by  reason  of  such  termination be relieved of any
        obligation or liability accrued hereunder prior to such termination, all
        of  which  shall  remain  enforceable  until  fully  satisfied.

                         ARTICLE 17 - BREACH OF CONTRACT

17.1    EVENTS  OF  DEFAULT.  Each of the following events shall be deemed to be
        -------------------
        an  Event  of  Default  hereunder:

     17.1.2     if  any  Shareholder  shall  be in breach of any of its material
                obligations  hereunder  and  such  breach  shall  continue for a
                period  of thirty (30) days from the receipt of a written notice
                of  breach  from the other Shareholder, or if such breach cannot
                be cured within thirty (30) days, such Shareholder has failed to
                use  its  best  efforts  to  cure  such  breach;

     17.1.2     if  any  Shareholder  passes a resolution that it be wound up or
                liquidated  or  a meeting is convened for the purpose of passing
                any  such  resolution, or an order is made for the winding-up or
                liquidation  of  such  Shareholder;

     17.1.3     if a receiver or receiver-manager is appointed in respect to the
                whole  or  a  substantial  part  of the affairs or assets of any
                Shareholder;  and

<PAGE>
     17.1.4     if  a  Shareholder  is adjudged bankrupt or insolvent or files a
                proposal  in  bankruptcy.

17.2    REMEDIES.  If an Event of Default occurs, the Non-Defaulting Shareholder
        --------
        shall  be  entitled to exercise against the Defaulting Party any and all
        rights,  remedies and recourses permitted hereunder or at law, including
        without  limitation,  the  right to obtain an injunction or order from a
        court  of  competent  jurisdiction  setting aside the act giving rise to
        such  Event of Default. All such rights, remedies and recourses shall be
        cumulative and the exercise of one shall not prevent the exercise of any
        other  or  others.

17.3    INTEREST.  Unless  otherwise  provided herein, any sum at any time owing
        --------
        hereunder  by  any  Shareholder  to the Company or by the Company or any
        Shareholder  to  another  Shareholder  which is not paid when due shall,
        without  derogation  from  any  other  right or recourse of the creditor
        hereunder  or  at  law, bear interest from its due date until payment in
        full  at  an  interest  rate  equal  to  the  Prime  Rate.

                           ARTICLE 18 - FORCE MAJEURE

18.1    EVENT  OF  FORCE  MAJEURE.  An Event of Force Majeure includes any fire,
        -------------------------
        explosion, accident, earthquake, tidal wave, strike, picketing, lockout,
        labour  dispute,  flood,  drought,  embargo,  war, riot or insurrection,
        uprising, rebellion, or any other event whether similar or dissimilar to
        the  foregoing  which  shall  be  beyond  the  reasonable control of the
        Shareholder affected thereby and which shall delay, interrupt or prevent
        the  performance  in  whole or in part by such Shareholder of any of its
        obligations  hereunder  other  than  an  obligation  to  pay  money.

18.2    NOTICE  OF  FORCE  MAJEURE.  A Shareholder affected by an Event of Force
        --------------------------
        Majeure  shall promptly give notice thereof to the other Shareholder and
        shall  indicate in such notice, as accurately as possible, the effect of
        such  Event  of Force Majeure on its capacity to perform its obligations
        hereunder.

18.3    EFFECT  OF  AN EVENT OF FORCE MAJEURE.  Subject  to the giving of notice
        -------------------------------------
        provided  for  in  the  immediately  preceding  article:

     18.3.1     the  non-fulfillment  of  any  obligation  of  any  Shareholder
                hereunder  by  reason  of  an  Event  of Force Majeure shall not
                constitute  a  breach or an Event of Default, and shall not give
                rise  to  damages  or  to  any  other  recourse;  and

     18.3.2     any  time  period provided for the performance of any obligation
                of  any Shareholder hereunder shall be postponed or extended for
                and  by a duration equal to the period during which the Event of
                Force  Majeure  shall  continue  to  exist.

18.4    NO  TERMINATION.  An Event of Force Majeure shall not be a cause for the
        ---------------
        early  termination  of  this  Contract  or  of the Duration of the Joint
        Venture  unless  the  Event  of  Force Majeure continues for a period in
        excess of 12 months, in which case the Shareholder not directly affected
        by  such  Event  of  Force  Majeure  may  request

<PAGE>
        the  early  termination  of  the  Project  pursuant to the provisions of
        article  16.4.

                           ARTICLE 19 - APPLICABLE LAW

19.1    PUBLISHED LAWS OF CHINA.  The  formation, validity and interpretation of
        -----------------------
        this  Contract shall be governed by the published and publicly available
        laws  of  the  People's  Republic  of  China.

19.2    EFFECT  OF  FUTURE  LAWS.  The  Shareholders  agree  that if any law or
        ------------------------
        regulation  of  China  that  is  amended  or changed or a new law has an
        adverse  effect  on  any Shareholder then, if such Shareholder requests,
        the  parties  shall  forthwith  amend this Contract so that such adverse
        effect  is  eliminated  or adjusted to the greatest extent possible, and
        each  Shareholder  shall  and  shall  cause  the Company to use its best
        efforts  to  cause  such  amendment  to  be  approved  by  the  Approval
        Authority.

                       ARTICLE 20 - SETTLEMENT OF DISPUTES

20.1    OVERRIDING  PRINCIPLE.  Any  dispute  arising out of or relating to this
        ---------------------
        Contract shall be resolved exclusively by the procedures set out in this
        Article  20.  First,  there  shall  be  friendly discussions between the
        Shareholders  based  on  the  overriding principle that the Shareholders
        have  agreed  to  establish  the  Company  in  order to generate maximum
        profits  for  each  of  the  Shareholders.

20.2    BINDING  ARBITRATION.  If  the  dispute  is  not  resolved  by  friendly
        --------------------
        discussions  under the immediately preceding article any Shareholder may
        give  to  the  other  Shareholder written notice under this article 20.2
        requesting  the  dispute  to be resolved. If the dispute is not resolved
        within  forty  (40)  days after such notice, either Shareholder shall be
        entitled  to  refer the dispute for arbitration by three (3) arbitrators
        pursuant  to  the  rules  of and under the auspices of the International
        Arbitration  Institute  of  the  Stockholm Chamber of Commerce. In their
        determination,  such  arbitrators shall have due regard to international
        practice.  The award of such arbitrators shall be binding on the parties
        and  may  be  entered  in  any  court  of  competent  jurisdiction.

                           ARTICLE 21 - MISCELLANEOUS

21.1    NOTICES.  Any  and  all  notices  or  other  communications  required or
        -------
        permitted  pursuant  to  this Contract shall be in writing and shall be:

     21.1.1     personally  delivered by courier (accompanied by a fax or telex)
                thereof to the addressees at the addresses referred to below, in
                which case such notice or other communication shall conclusively
                be  deemed  to  have  been given to the addressee thereof at the
                time  of  such delivery or on the next business day if delivered
                on  a  day  that  is  not  a  business  day;  or

     21.1.2     telexed  or  telecopied to the addressee at the numbers referred
                to  below,  confirmed by delivery by courier, in which case such
                notice  or  other  communication  shall

<PAGE>
                conclusively  be  deemed  to  have  been  given to the addressee
                thereof  on the day upon which it was received if received prior
                to  3:00  p.m.  (local time) on such day or on the next business
                day  if  received after 3:00 p.m. (local time) on a business day
                or  on  the next business day if received on a day that is not a
                business  day:

                    For  Party  A:
                    --------------

                    Meng  Mountain  Diamond  Development  Corporation
                    047  Xin  Cheng  Road
                    Mengyin  County
                    Shandong  Province
                    People's  Republic  of  China

                    Attention:  Peng  Chuan-Jie
                    Telephone:  549-1-71873

                    For  Party  B:
                    --------------

                    China  Best  (Asia)  Limited
                    2203  Cameron  Commercial  Centre
                    458-460  Hennessy  Road
                    Hong  Kong

                    Attention:   Po  Sun  Liu
                    Telecopier:  852-854-2128

                Each  Shareholder  may change its address for service by written
                notice,  given  in  the  manner  provided  above,  to  the other
                Shareholder and such change shall be effective upon the date the
                notice  shall  be  deemed  to  be  received.

21.2    ENTIRE  AGREEMENT.  This  Contract  and its two (2) schedules constitute
        -----------------
        the entire agreement between the parties hereto. There are no, and shall
        not  be  any, verbal or written statements, representations, warranties,
        undertakings or agreements between the parties pertaining to the subject
        matter hereof other than as expressly provided for herein. This Contract
        supersedes  the Agreement between the parties dated December 1, 1993. If
        any  provision  hereof  conflicts  with any provision of the Articles of
        Association  of  the  Company or with anything in the Feasibility Study,
        the  provision  of  this  Contract  shall  prevail.

21.3    BUSINESS DAY.  Where  the time limit for the doing of anything hereunder
        ------------
        expires  or  falls  upon  a  day  that is not a business day the time so
        limited  extends to and the thing may be done on the day first following
        that  is  a  Business  Day.

21.4    TIME  OF  ESSENCE.  Time  and  each  of the terms and conditions of this
        -----------------
        Contract  shall  be of the essence of this Contract and no waiver by any
        Shareholder  of  any  default by the Shareholder of any provision herein
        shall  be  deemed  to  be  a waiver of any other provision herein nor to
        release  such  other  Shareholder  from  any  such  provision.

21.5    FURTHER  ASSURANCES  COOPERATION.  Each  of  the parties hereto shall do
        --------------------------------
        all  things and execute all documents necessary or desirable in order to
        carry  out the intents of this Contract, and shall fully co-operate with
        each  other  and the Company in all respect in good faith to ensure that
        the  Company  operates  in  the

<PAGE>
        manner  contemplated  herein and achieves the purpose set out in article
        "C".

21.6    CORRECTIVE-ACTION.  If  at  any  time  during  the Duration of the Joint
        -----------------
        Venture,  any  governmental  authority  of China enacts or law or policy
        (collectively  "Unilateral  Action"),  and if such Unilateral Action has
        the  effect  (a  "Negative  Effect")  of  preventing or constraining the
        exercise  of  any  right  or  of  materially  increasing  the  burden of
        performance  of  any obligation (including any increase in an obligation
        to  pay  a sum of money) of Party B or the Company hereunder the Company
        shall,  at  the Company's cost, take such measures ("Corrective Action")
        as  may  be  required to restore Party B or the Company (as the case may
        be)  to  the  position it would have retained had such Unilateral Action
        not  been  taken.  Such  Corrective  Action  may  take any or all of the
        following  forms:

     21.6.1     obtaining  from  the  relevant  authority, an exemption from the
                application  of the law or policy that is the direct or indirect
                subject to the Unilateral Action or the direct or indirect cause
                of  the  Negative  Effect;

     21.6.2     causing  the  enactment  of  specific  legislations  (including
                subsidiary  legislation)  eliminating  the  Negative  Effect; or

     21.6.3     any  other  action  acceptable  to  Party  B.

21.7    LAUGUAGE.  This  Contract has been written in Chinese and in English and
        --------
dully  executed  in Chinese and in English. The Parties agree that both versions
are  equal,  and  legally  binding  on both Parties. In case of discrepancy, the
meaning  and  spirit  of  the  English  version  shall  be used to interpret the
Contract.

21.8    ENUREMENT.  This  Contract  shall enure to the benefit of and be binding
        ---------
        upon  the  parties  hereto and their respective successors and permitted
        assigns.

IN WITNESS WHEREOF duly authorized officers of each of the parties have executed
this  Contract  in  Beijing  on  this  31st  day  of  January,  1994.
                    -------            ----           -------

MENG  MOUNTAIN  DIAMOND                     CHINA  BEST  (ASIA)  LIMITED
DEVELOPMENT  CORPORATION

Per:     /s/  Peng  Chuan-Jie               Per:     /s/  Po  Sun  Liu
     -------------------------------        --------------------------------
     Name:  Peng  Chuan-Jie                 Name:  Po  Sun  Liu
     Title:  General  Manager               Title:     Chairman  and
                                                       Chief  Executive  Officer

Witness:                                    Witness:

/s/  Jason  Lee                             /s/  Jiang  Yong  Pu
---------------------------------           ---------------------------------
Name:  Jason  Lee,  LLB.  LLM.              Name:  Jiang  Yong  Pu

<PAGE>
[GRAPHIC  OMITTED]                                Tel:  (01)4932306  (01)4991319
DRAGON  LAW  OFFICE                               Fax:  4932307

                             Attorny' s Attestation

                                                              February lst, 1994
Shandong Mengshan Diamond Development Company (Party A) and Hong Kong China Best
(Asia)  Company Ltd.(Party B) after friendly consultation, on January 31st, 1994
in  Hilton  Hotel,  Beijing  signed  this  contract of cooperation in which they
unanimously decided to establish a limited liability company, in Mengyin county,
Shandong, China, to explore, mine and process diamonds and other precious stones
as  well  as  to  sell  above-mentioned  products on international markets.  The
contract  also  clarifies  the  shareholders'  position for both sides and their
powers  and  duties.

Party  A's  general  manager Mr. Peng Chuan Jie, Party B's president and general
manager  Mr.  James  Poe  represent  each  party  in  signing  the  contract.

Dragon  Law  Office's  attorneys,  Li  Jing  Sheng,  esq.  Zhai  Cun  Zhu, esq.,
participated  in the project's negotiations, corrected and revised the contract.
They  state  that  the  contract  is  in  accordance  with the relevant laws and
regulations  of  the People's Republic of China, it expresses the intent of both
parties  and  is  in  accordance  with  the  relevant  laws  and  regulations.

Attested  by  The  Dragon  Law  Office,  Beijing,  China.

                                   /s/  Li  Jing  Sheng
                                   -----------------------------------------
                                   Li  Jing  Sheng,  Attorney

                                   /s/  Cun  Zhu
                                   -----------------------------------------
                                   Cun  Zhu,  Attomey

                                [GRAPHIC OMITTED]
                 Suite 1001, Bldg. B, International Huiyuan Apt.
                      Yayuncun, Beijing 100101, P.R. China

<PAGE>THIS CONTRACT OF SINO-FOREIGN CONTRACTUAL JOINT VENTURE made this 22nd day of
August, 1996

BETWEEN:

          SHANDONG  LIN  YI  GEOLOGY AND MINERAL RESOURCES DEVELOPMENT
          COMPANY,  an  enterprise  incorporated  under  the  laws  of
          People's  Republic of China with its legal office located at
          Linxi  Wu  Lu,  Linyi  City,  Shandong  Province,  People's
          Republic  of  China  (hereinafter referred to as "Party A" )

          OF THE FIRST PART

AND

          CRYSTAL  BRIGHT (ASIA) LIMITED, a company incorporated under
          the laws of Hong Kong with its legal address located at 2203
          Cameron  Commercial Center, 458-460 Hennessy Road, Hong Kong
          (hereinafter  referred  to  as  "Party  B")

                    OF THE SECOND PART

WHEREAS:

1.   Party  A  and  Party  B  wish to form a limited liability company that will
     explore  for  diamonds,  other  accompanying  minerals  in an area of 1,500
     square  kilometers  in Ping Yi, Fei Xian and Cang Shan Counties in Shandong
     Province  (hereinafter  called  the  Work  Area);

2.   Party  A  and  Party  B  wish  to record their agreements relating to their
     rights and obligations in respect of such company and between each other as
     shareholders  thereof;

3.   Party  A  and  Party B agree that their overriding purpose in entering into
     and  performing this contract is to enable each party to enjoy, in a spirit
     of  friendship  and  mutual benefit, the maximum possible profit from their
     respective  investments.

With friendly discussion Party A and Party B hereby agree as follows:

ARTICLE 1 - GENERAL PROVISIONS

1.1     Definitions  The  parties agree that where used in this Contract, unless
        -----------
        otherwise  required,  the  following  terms  shall have the meanings set
        forth  below:

     1.1.1     Approving  Authority  means agencies of foreign economy and trade
               of  the State Council and/or local government agencies authorized
               by  the  State  Council.

     1.1.2     Board  means  the  board  of  directors  of  the  company.

<PAGE>
     1.1.3     Business  Day means Monday through Friday, both inclusive, except
               for  statutory  holidays  recognized  in  China.

     1.1.4     Business  License  means  a  business  license  issued  by  State
               Administration  of  Industry  and  Commerce  (SAIC) to create the
               company,  and  to  permit  the  company  to  perform each item of
               business  set  out  in  section  4.1;

     1.1.5     Company  means  the limited liability company to be formed by the
               Shareholders  pursuant to Article 3 hereof and in accordance with
               the  Contractual  Joint  Venture  Law.

     1.1.6     Contractual  Joint  Venture  Law  means  the  law of the People's
               Republic  of  China  on  Sino-Foreign  Contractual Joint Venture;

     1.1.7     Duration  of  the  Joint Venture means a period of ten (10) years
               commencing  on  the  date  the  Business  License  is  issued.

     1.1.8     General  Manager  means  the person engaged by the Company as its
               general  manager  pursuant  to  section  9.2.

     1.1.9     Independent  Valuator  means  any  one  of  the International and
               Chinese  Joint  Venture  Accounting  Firms  licensed  to practice
               accounting in China and such Accounting Firm shall be selected by
               Party  B  in  writing.

     1.1.10    Investment  means  for  any  Shareholders all of its right, title
               and  interest  in  and  to  the  Company  and  this  Contract;

     1.1.11    The  Work  Area  means  an  area  of  approximately  1,500 square
               kilometers  in  Ping  Yi,  Fei  Xian  and  Cang  Shan counties In
               Shandong  Province.

     1.1.12    The  Relevant Agencies of Geology and Mineral Resources means the
               government  agencies  which  approve  the  Company  to survey and
               explore  the  mineral  resources  as  set forth in this Contract.

     1.1.13    Survey  and  Exploration  License  means  a license issued to the
               Company  by the Mining Authority which shall grant to the Company
               for the entire Duration of the Joint Venture to do exploration of
               diamonds  and  other  accompanying  minerals  in  the  Work Area;

     1.1.14    Party  A  means  Shandong  Lin  Yi  Geology and Mineral Resources
               Development Company, an enterprise incorporated under the laws of
               China,  and  being  the Party of the First Part of this Contract;

     1.1.15    Party  B  means  Crystal  Bright  (Asia)  Limited,  a  company
               incorporated  under  the laws of Hong Kong and being the Party of
               the  Second  Part  of  this  Contract;

     1.1.16    SAIC  means  the  State  Administration of Industry and Commerce.

<PAGE>
     1.1.17    Shareholders  mean  Party  A  and  Party  B  collectively,  and
               Shareholder  means  either  one  of  them.

     1.1.18     Parties  means  Party  A  and  Party  B  collectively.

1.2  Interpretation    For  purposes  of  this  Contract  except  as  otherwise
     --------------
     expressly  provided.

     1.2.1     Contract  means  this  Contract  as  it  may from time to time be
               supplemented,  amended  or  restated  from  time  to  time.

     1.2.2     Articles,  sections  and other subdivisions of this contract mean
               all  references  to  designated  articles,  sections  and  other
               subdivisions  are  to the designated articles, sections and other
               subdivisions  hereof.

     1.2.3     The headings preceding the text, articles and sections hereof are
               for  convenience  only,  do  not  form  a part hereof and are not
               intended  to  interpret,  define  or  limit  the scope, extent or
               intent  hereof  or  of  any  provision  hereof.

     1.2.4     Any  reference  to an entity shall include and shall be deemed to
               include reference to an entity that is a successor or assignee of
               entity.

     ARTICLE  2  -  CONTRACTING  PARTIES

2.1     Parties  The  parties  to  this  Contract  are  as  follows:
        -------

     2.1.1     Shandong  Lin  Yi  Geology  and  Mineral  Resources  Development
               Company,  an  enterprise incorporated in the People's Republic of
               China  with  its  legal  address  at  Lin  Xi  Wu Lu, Linyi City,
               Shandong  Province,  People's  Republic  of  China.

               Legal Representative's Name:   Hu Shi Jie
               Position:                      General Manager
               Nationality:                   Chinese

     2.1.2     Crystal  Bright  (  Asia) Limited, a company incorporated in Hong
               Kong  with  its  legal address at 2203 Cameron Commercial Center,
               458--460  Hennessy  Road,  Hong  Kong

               Legal Representative's Name:   Po Sun Liu
               Position:                      Chairman and Chief Executive
                                              Officer
               Nationality:                   Canadian

2.2     Representations  of Party B  Party B represents and warrants to Party A
        ---------------------------
        as  follows:

     2.2.1     Party  B  is  a duly organized company validly existing under the
               laws  of  Hong  Kong;

     2.2.2     Party  B  has  full  corporate capacity, power and authority and
               all  necessary governmental approvals ( other than those referred
               to  in  section  7.2.1)  to  enter  into

<PAGE>
               and  perform  each  of  its  obligations  hereunder;

     2.2.3     the  execution  and  delivery of this Contract and the observance
               and performance hereof have been duly authorized by all necessary
               corporate  action  on  the  part  of  Party  B;

     2.2.4     once  this  contract has been signed by Party B, it constitutes a
               legal,  valid  and  binding  obligation  to  Party  13;

     2.2.5     the  execution,  delivery  and  performance  by  Party  B of this
               Contract  does  not  and  will not constitute a default under any
               material  agreement  to  which  it  is  a party, any governmental
               regulation,  approval  or  order  to  which it is subject, or any
               provision  of  its  incorporation  documents;  and

     2.2.6     no  governmental  approvals  of  any  kind  are required from any
               relevant agencies in Hong Kong in respect of this Contract or the
               operations  of  the  Company  as  contemplated  hereunder.

2.3     Representations  of Party A  Party A represents and warrants to Party B
        ---------------------------
        as  follows.

     2.3.1     Party A is a duly organized enterprise validly existing under the
               laws  of  People's  Republic  of  China;

     2.3.2     Party  A has full corporate capacity, power and authority and all
               necessary  governmental  approvals ( other than those referred to
               in  section  7.2.1)  to  enter  into  and  perform  each  of  its
               obligations  hereunder;

     2.3.3     the  execution  and delivery of' this Contract and the observance
               and performance hereof have been duly authorized by all necessary
               corporate  action  on  the  part  of  Party  A;

     2.3.4.    once  this  Contract has been signed by Party A, it constitutes a
               legal,  valid  and  binding  obligations  to  Part  A,

     2.3.5     the  execution  delivery  and  performance  by  Party  A  of this
               Contract  does  not  and  will not constitute a default under any
               material  agreement  to  which  it  is  a party, any governmental
               regulation;  approval  or  order  to  which it is subject, or any
               provision of  its  incorporation  document;

     2.3.6     only  government  approvals from government authorities stated in
               article  7.2.1  are  required  in respect of this contract or the
               operation  of  the  Company  as  contemplated  hereunder;

     2.3.7     the Company shall be required to pay no taxes, duties, royalties,
               license  fees or other payments of any kind except only for those
               described  in  section  12.1;

<PAGE>
     2.3.8     Party  A  shall  deliver  to   Party B all information concerning
               diamonds, other accompanying minerals in respect of the Work Area
               which  are  in  Party  A's  possession  or  control,  and  such
               information  is  accurate  and  complete;

     2.3.9     Party  A  is the owner of all the Existing Assets, free and clear
               of  all  liens,  mortgages  of  other  encumbrances  of any kind.

2.4     Indemnity  If  any  representation  or  warranty  given herein by any
        ---------
        party  is  untrue  or  inaccurate,  such  party shall indemnity and hold
        harmless  the other party for any loss damage caused to such other party

ARTICLE 3 - ESTABLISHMENT OF THE .JOINT VENTURE COMPANY

3.1     Contractual  Joint  Venture  Company
        ------------------------------------
        In  accordance  with  the Sino-Foreign Contractual Joint Venture Law and
        other  relevant  Chinese laws and regulations, Party A and Party B agree
        that  the  Company  shall  be established as a contractual joint venture

3.2     Name  The  name  of  the  Company  shall  be:
        ----

     3.2.1     in  Chinese: [GRAPHIC OMITTED] and,

     3.2.2     in  English:  Crystal Bright Diamond Development Co. Ltd., Linyi,
               Shandong

3.3     Legal Address:  The legal address of the company shall be , Linxi Wu Lu,
        -------------
        Linyi  City,  Shandong  Province,  China

3.4     Laws  of  China  All  activities of the Company shall be governed by the
        ---------------
        published and publicly available laws, decrees, rules and regulations of
        China

3.5     Limited  Liability  The  Company  shall  be a limited liability company.
        Each  Shareholder shall be liable to the Company only for the registered
        capital such Shareholder has agreed to contribute in accordance with and
        subject  to  the  provisions  of  Article  5  hereof.

3.6     Legal Person  The Company shall be a legal person existing as a separate
        entity  from  the  Shareholders.

3.7     No  Partnership.  The  parties expressly disclaim any intent to create a
        partnership with respect to the administration or assets of the Company.

3.8     No Agency  Neither party shall have any authority, actual or implied, to
        act  as  agent  for  or  to  bind the other party or the Company, and is
        hereby  prohibited  from  so  doing.

ARTICLE 4 - BUSINESS SCOPE AND PROJECT

4.1     Business Scope  The parties agree that the business scope of the Company
        shall  include  the  following:

<PAGE>
     4.1.1     to  explore  diamonds,  other  precious  gems  and  other mineral
               resources  throughout  the  work  Area;  and,

     4.1.2     all  such  complementary  activities  as  may  be  necessary  or
               desirable  for  the  Company  to  fully  engage in all activities
               permitted  by  the Business License or the Survey and Exploration
               License;  and

     4.1.3.    after  the first thirty months of exploration and appraisal, the
               Board may decide upon recommendation of its geologists if it will
               continue  exploration  or  it  will  apply  for  mining;

     4.1.4.     Party  A  cannot cooperate with any other third party to explore
               or  mine  the  diamonds,  precious gems and other minerals in the
               Work  Area.  Any  other third party wishing to explore or to mine
               the  diamonds,  precious gems and other minerals in the Work Area
               must  negotiate  with  the  Company and such agreement(s) must be
               approved  by  the  Board;

     4.1.5     After  reviewing the results of the first 12 months of survey and
               exploration work, Party B may decide upon recommendation of Party
               B's  geologists/engineers not to do any further exploration work,
               Party  B  shall  notify  Party  A  of its decision in writing and
               terminate  its  further investment. This clause is solely for the
               benefit  of  Party  B.

ARTICLE 5 - TOTAL INVESTMENT AND REGISTERED CAPITAL

5.1     The Total Investment and Registered Capital  The total investment amount
        -------------------------------------------
        of  the Company is U.S. $3,000,000 The registered capital of the Company
        is  U.S. $3,000,000. Party A shall contribute U.S. $ 1,500;000 and Party
        B  shall  contribute $ 1,500,000. The proportion of contribution between
        the  two  parties  is  50%  to  50%.

This  registered  capital mentioned above shall be contributed to the Company by
the  Shareholders  at the time and in the forms set out in articles 5.2 and 5.3.
The  investment  hereof  may  be  contributed  in  cash, equipment, technique or
service.

5.2     Part  B's Capital Contribution.  Party B may make its contribution under
        ------------------------------
        this  Article  5  in  the  form  of  cash,  or  in kind of equipment and
        machinery,  and  technical services as recommended by the engineers. The
        investment  schedule  will  be  decided  separately.

        The  Shareholders  agree  that  Party  13's obligation to contribute its
        capital  contribution  is  subject  to the fulfillment of each Party the
        following  conditions  precedent  to  the  satisfaction  of  Party  B:

     5.2.1     This  Contract and the Charter of Association of the Company have
               been  approved  in  writing  by  Approving  Authority;

     5.2.2     the  Business License has been issued by the SAIC to the Company;

<PAGE>
     5.2.3     the  Survey and Exploration License has been issued by the Mining
               Authority  to  the  Company;

     5.2.4     the  Existing Assets has been transferred to the Company free and
               clear  of  all  liens,  mortgages  and  encumbrances of any kind;

     5.2.5     Party  B  has  received  a written legal opinion of a Chinese law
               firm  acceptable  to  Party  B  confirming the following matters:
               A.   the  procedures  of  the  application  and  issuance  of the
                    foregoing  approvals  and  licenses,  and the acquire of the
                    relevant  rights  are  legal  and  valid;
               B.   the  legality,  validity  and  bindingness of this Contract;
               C.   the  completion  of  the  transfer  of  the ownership of the
                    Existing  Assets to the Company free and clear of all liens,
                    mortgages  and  encumbrances  of  any  kind by Party A, and,
               D.   the  accuracy  of  the  tax  description  in  the Contract .

     5.2.6     Party  B  has  received  all  the  exploration, geology and other
               accurate  data  of  the  Work  Area,

     5.2.7     the representations and warranties made by Party A in section 2.3
               are true and correct as confirmed by a certificate to that effect
               signed  and  delivered  to Party B by the legal representative of
               Party  A.

5.3     Party  A's  Capital  Contribution  Party  A  shall make its contribution
        ---------------------------------
        under  this  Article  5 in the form of past geological data, information
        and techniques, existing assets, as listed in Schedule A, to equal Party
        B's  contribution.

        As  Party  A's  capital contribution, Party A shall cause the Company to
        get  the  Survey  and  Exploration  License; and it is part of Party A's
        contribution  of  $1,500,000.

     5.3.1     Party  A shall be solely responsible for and cannot charge to the
               Company  any  of  the  following  costs  or  payments:
               A.   the  retirement  fee  or  replacement  fee  of  any  person,
                    company,  or  governmental  employers  who  are  retired  or
                    unemployed  because  of  the  transfer  of  the  Survey  and
                    Exploration  License,  and  existing  assets to the company;
               B.   any  person  company  entity  or  governmental  authority in
                    respect of any other outstanding liability, tax or any debts
                    whatsoever  owed  by  Party  A.

     5.3.2     Upon  the transfer of the Survey and Exploration License, and the
               transfer of the existing assets to the Company and the payment of
               all  amounts  contemplated  in 5.3.1., Party A shall be deemed to
               have  made  a  contribution  to  the Company's registered capital
               equal  to  Party  B's  capital  contribution of U.S. $ 1,500,000.

     5.3.3     Upon  the  completion  of Party B's contribution of $1,500,000 in
               the  survey  and  exploration  period, Party A shall be deemed as
               completion  of  its  contribution.

<PAGE>
5.4     Bank  Loans
        -----------
        If  the  Company  requires to get loans from the bank, the parties shall
        use  their  best  efforts to obtain loans from Chinese or foreign hanks.
        The  Company shall grant such security over its assets as the lender may
        require.

5.5.    Additional  Shareholder  Contributions
        --------------------------------------
        If  the  Company  requires  funds in addition to the bank loans obtained
        under  article  5.4,  the  Shareholders  shall  contribute such funds to
        Company  subject  to  the  following  conditions:

     5.5.1     Neither  shareholder  shall  be  required  to nuke any additional
               contribution  unless  approved by a duly passed Board resolution,
               and  agreed  in  writing  by  the  parties;

     5.5.2     to  the  greatest  extent  permitted  under  Chinese  law,  such
               additional contributions of the parties shall be made in the form
               of shareholders loan, and shall be made in the form of registered
               capital.

     5.5.3     if the Shareholders are required to make additional contributions
               under this article 5.5, whether in the form of shareholders loans
               or registered capital, each Shareholder shall provide one-half of
               such  contribution;

ARTICLE 6 - ASSIGNMENT, ENCUMBRANCES AND TRANSFERS

6.1     Assignment.  The  assets  and/or  shares  in  whole  or  in part of each
        ----------
        Shareholder  in  this  Contract hereunder can at any time be assigned by
        any  Shareholder  to  a  subsidiary  upon  written  notice  to the other
        Shareholder.

6.2     Encumbrances In Favor of Lenders.  If the Company agrees to borrow funds
        --------------------------------
        from  a  lender,  any  Shareholder  giving a guarantee to the lender, if
        required  by  the  lender,  may  use,  part  or whole of its investment.
        However  it  requires  the  consent  of  both  parties.

6.3     Transfers.  It  is  not a breach of this Contract when any Shareholder
        ----------
        transfers  all or part of its Investment at any time to a subsidiary if'
        notice is given to the other Shareholder, but approval from the original
        approving  agency  is  required.

ARTICLE 7 - RESPONSIBILITIES OF EACH SHAREHOLDER

7.1     Responsibilities of Party B  Party B shall be responsible for and hereby
        ---------------------------
        agrees  to  perform  each  of  the following matters in a timely manner:

     7.1.1     assist the Company in engaging any foreign consultants experts or
               agents  the  Company  may  wish  to  hire  to  evaluate  all  the
               historical  geological, exploration data delivered to it by Party
               A;

     7.1.2     provide registered capital and shareholder's loans to the Company
               subject  to  and  in  accordance with the terms and conditions of
               articles  5.2  and  5.5  above;

<PAGE>
     7.1.3     entrusted  to  purchase  on behalf of the Company, any equipment,
               vehicles,  and  machinery  the  Company may need to purchase from
               outside  China;

     7.1.4     handling  any  other  matter  entrusted  by  the  Company.

7.2     Responsibilities of Party A  Party A shall be responsible for and hereby
        ---------------------------
        agrees to perform each of the following matters at its own cost and in a
        timely  manner:

     7.2.1     obtaining  all  approvals,  business  license,  survey  and
               exploration,  permit,  registrations  and  renewals necessary for
               establishing  the  Company  and enabling the Company to engage in
               the  activities  hereunder,  including but not limited to (1) the
               Business  License,  (2) the Survey and Exploration Permit and (3)
               all  access  permits,  right-of-way,  occupation permits, surface
               rights  and  other  such  rights in respect of places in the Work
               Area  as  the Company may reasonably request for carrying out its
               operation.  And  provided that such licenses and permits shall be
               renewed  on  application by the Company ( which application shall
               be submitted at least 3 months and no more than 6 months prior to
               its  expiration  date)  for a further period of ten (10) years so
               long  as  the Company is engaged in exploration operations in the
               Work  Area

     7.2.2     Party  A  shall  deliver to Party B , upon Party B's request, all
               relevant  geological and historical data including maps, reports,
               and past surveys, exploration data and any other data relating to
               the  finding  of diamonds, other precious gems and other minerals
               located  in  the  Work  Area;

     7.2.3     Make  available  for consultation. to Party B and its consultants
               and  all technical experts in geology exploration of diamonds and
               other  accompanying  minerals  all  data as referred to in 7.2.2.

     7.2.4     Party  A  shall  ensure that the Company may obtain at prices not
               higher  than  prices  normally  paid  by  Chinese  Joint  Venture
               enterprises,  each  of  the  following:

               (A)  all  necessary  utilities,  including  the necessary consent
                    from the Power Supply Administration, as may he required for
                    the  Company's  operations,

               (B)  office space to enable the Company to carry out its work and
                    business;  and

               (C)  all necessary labor and personnel as may be deemed necessary
                    by  the  Company;

     7.2.5     Party  A shall assist the Company to deal with all local, county,
               provincial  and  central  government  authorities,  and any other
               parties  as  may be necessary to ensure that the Company shall be
               able  to  operate in the manner contemplate herein, and to ensure
               that  all  of  Party B's rights hereunder are also protected, and

     7.2.6     Party A shall handle such other matters as may be entrusted to it
               by  the  Company.

<PAGE>
ARTICLE 8 - THE BOARD OR DIRECTORS

8.1     Date  of  Establishment  The  Board shall be established on the date the
        -----------------------
        Business  License  is  issued.

8.2     Representation  The  Board  shall comprise seven (7) directors, of which
        --------------
        three  (3) shall be appointed by Party A and four (4) shall be appointed
        by Party B. Any director may be removed and replaced at any time and for
        any  reason  by  the  Shareholder  that  appointed  such  director.

8.3     Chairman  and  Vice-Chairman  The Company shall have one (l) Chairman of
        ----------------------------
        the  Board  and one (1) Vice-Chairman. The Chairman shall be selected by
        Party  B  from amongst the Board members appointed by Party 1:3; and the
        Vice-Chairman  shall  be  one  of the directors selected by Party A from
        amongst  the  Board  members  appointed  by  Party  A.

8.4     Terms of Office  The Chairman and Vice-Chairman and the directors of the
        ---------------
        Board  shall  hold  office for terms of four (4) years and such terms of
        office  may  be  renewed  by  the  continuous  appointment  of  relevant
        Shareholder.

8.5     Legal  Representative  The  Chairman  of  the  Board  shall be the legal
        ---------------------
        representative of the Company. If the Chairman is unable to exercise his
        responsibilities  for  any  reasons,  he  may  temporarily delegate such
        responsibilities to the Vice-Chairman or any other director by a written
        authorization  sent  to  such  person and copied to the Company and each
        Shareholder.

8.6     Quorum  A  quorum  shall  be  formed by any five (5) directors. For such
        ------
        purpose,  a  director shall be deemed present at a meeting or conference
        telephone  call  either  if  he  participates  in  person  or  by  the
        representation  of  a  duly  appointed  alternate  director.

8.7     Board  Decisions  The Board shall manage the business and affairs of the
        ----------------
        Company.  Board  issues  shall be decided by the approval by vote of any
        four  (4)  directors  present at a duly constituted meeting of the Board
        except  that the approval by vote of all the seven (7) directors present
        at a duly constituted meeting of the Board shall be required for each of
        the  issues  set  out  below.

     8.7.1     any  amendment  to  the  Company's  Articles  of  Association;

     8.7.2     any  increase in the registered capital of the Company other than
               an  increase  in  the  registered  capital  resulting  from  a
               requirement  to  contribute  funds  pursuant to article 5.5. Such
               increases are hereby approved in advance by the Shareholders, and
               the  Shareholders  each agree to cause the Board to vote in favor
               thereof;

     8.7.3     any  merger  of the Company with any other economic organization,
               or  the  creation  of  another joint venture entity together with
               some  other  economic  organization;  and

<PAGE>
     8.7.4     dissolution  of the Company for any reason prior to the expire of
               the  Duration of the Joint Venture provided always, however, that
               if  unanimous  approval  of  all the directors is not achieved in
               this  regard at any Board meeting duly convened for such purpose,
               a  resolution  for  such dissolution may be effectively passed at
               the next Board meeting duly convened for such purpose if approved
               by  the  votes of at least four (4) of the seven (7) directors at
               such  later  meeting.

8.8     Meetings  Board  meetings  shall  be  held  at  least  once per year and
        --------
        whenever  any  two  (2) of the seven (7) directors may request directors
        may  appoint  alternate  directors to represent and vote for them, or by
        written  proxy  authorize another director to vote on his behalf'. Board
        meetings  may  also  be  held  by conference telephone call whereby each
        participant  is  able  to  hear and speak to each other participant. The
        Chairman  or  other  person convening a meeting of' the Board shall give
        each  director at least ten (10) days' written notice of the time, place
        and  proposed  agenda  of  the  meeting.

8.9     Deemed  Quorum  If a quorum is for any reason not present within one (1)
        --------------
        hour  after  the  time  set  for  a  Board  meeting,  such meeting shall
        automatically  stand  adjourned  to  the  fifth  (5th)  business  day
        immediately  following  at  the  same  item and place, and the directors
        present  or deemed present at such meeting shall be deemed to constitute
        a  quorum  and  able  to  pass  effective  resolutions.

ARTICLE 9 - GENERAL MANAGER

9.1     General  Manager  The  Board shall delegate the day-to-day management of
        ----------------
        the  Company  to  the  General  Manner.  The  General  Manager  shall be
        nominated  and  hired  by  the  Board.

9.2     Duties  of  the General Manager The General Manager shall be responsible
        -------------------------------
        for  the  overall  management  of the Company. The General Manager shall
        report  to  the  Board,  and  his  duties  shall  include the following:

     9.2.1     Preparation  of  annual  operating  and capital budgets, business
               plans  and  financial  projections  for  Board  approval;

     9.2.2     implementing  budgets  and  plans  approved  by  the  Board;

     9.2.3     establishing  and maintaining an accounting system and a system
               of financial, budgetary and internal controls designed by any one
               of  the  International and Chinese Joint Venture Accounting firms
               licensed to practice accounting in China and Such Accounting Firm
               shall  be  approved  by  the  Board;

     9.2.4     maintaining  accounting  ledgers, books and records in accordance
               with internationally accepted accounting principles and standards
               and  regulations;

     9.2.5     payroll administration;

     9.2.6     labor relations and personnel administration;

<PAGE>
     9.2.7     supervising  and  administering  all  exploration  operations;

     9.2.8     implementing  a  system  of  security  designed by experts in the
               security  field  in  respect  of the Company's diamonds and other
               precious  gems  and  minerals,  and  other  assets  that  is  in
               accordance  with  good  international  standards  and  that  is
               satisfactory  to  the  Board;

     9.2.9     doing  all other things necessary of advisable to ensure that the
               business  of  the  Company  and is called in accordance with this
               Contract.

9.3     The  Vice-General Managers shall be nominated by the General Manager and
        must  be  approved  by  the  Board.

     9.3.1     The  Vice-General  Managers  shall  assist the General Manager in
               carrying  out  his  duties.

ARTICLE 10 - PURCHASES AND CONTRACTS

10.1    Purchases  Outside  China  If  the  Company  needs  to  purchase  any
        -------------------------
        materials,  equipment, vehicles, machinery or other items necessary from
        outside  China,  Party  B  shall  be entrusted to do so on behalf of the
        Company.

ARTICLE 11 - EMPLOYMENT MATTERS

11.1    Employment  Contracts  All  existing employees and retired employees of
        ---------------------
        Party  A are the responsibility of Party A. All employees required to be
        engaged  by  the  Company,  including  but  not  limited  to the General
        Manager, shall be hired pursuant to employment contracts approved by the
        Board.  Such contracts will set out, amongst other things, the title and
        duties  of the employee, the remuneration payable and the terms on which
        such  engagement  may  be terminated by the Company. Such employees, the
        Company  and  the  parties hereto shall be required to keep confidential
        all  the  terms  of  the  engagement  of  such  employees.

11.2    Labor  Market  The Company shall be entitled to hire employees from the
        -------------
        labor market by placing advertisements or using other direct methods for
        recruiting employees, either from China or from abroad, as it deems tit,
        Salaries  and  benefits  payable  to  any management level employee from
        China shall be based on standards prevailing in the Chinese labor market
        for  such  kind  of  employee,  and salaries and benefits payable to any
        employee from outside of China shall be based on standards prevailing in
        the  international  market  for  such  kind of employee. Such employees,
        confidential  all,  the  terms  of  the  engagement  of  such employees.

<PAGE>
ARTICLE 12 - TAXES, FINANCE AND AUDIT

12.1    Company  Taxes   The  Company  shall  pay  taxes in accordance with the
        --------------
        stipulations  of  published  and  publicly  available  Chinese  laws and
        regulations  using  the  maximum deductions and allowable deductions and
        preferential  treatments  allowed  in these some laws and regulations of
        the  Income  Tax  for  Foreign Investment Enterprises. The Company shall
        apply for the maximum allowable deductions and maximum allowable credits
        and maximum allowable preferential treatments allowed in these same laws
        and  regulations  covering  and  taxes.

12.2    Personal  Income  Taxes.  Employees  of the Company shall pay individual
        ------------------------
        income  tax  according  to the Individual Income Tax Law of the People's
        Republic  of  China.

12.3    Fiscal year.  The Company's fiscal year shall commence on January 1 and
        ------------
        end  on December 31 of each year, except for the first fiscal year which
        will  commence  on  the  day  the  Business License is issued and end on
        December  31  of  the  same  year.

12.4    Books  of  Account.  The  Company  shall  keep its books of accounts in
        -------------------
        English  and  Chinese,  and  in  accordance  with  generally  accepted
        international  accounting  principles.

12.5    Accounting  Currency.  The  Company  shall  use Chinese Renminbi and/or
        ---------------------
        U.S.  dollar  as  the  base  accounting  currency.

12.6    Reporting  to  Directors.  The  General  Manager  and  the  management
        -------------------------
        committee shall prepare and deliver the following statements and reports
        to  each  member  the  Board:

     12.6.1    quarterly unaudited financial statement within four (4) weeks of
               the  end  of  each  fiscal  quarter;

     12.6.2    annual  unaudited  financial  statements  by  no  later than the
               forty-fifth (45th) day after the end of the previous fiscal year;

     12.6.3    annual  audited  financial  statements  and the auditor's report
               thereon by no later than the sixtieth (60th) day after the end of
               the  previous  fiscal  year;  and

12.7    Rights  to  Inspect  Each  director shall have the right to inspect and
        -------------------
        copy  the  books  of  account  of  the  Company  at  any  time.

12.8    Auditors  The  Company's  books  shall  be  audited  by  any one of the
        --------
        International  and  Chinese  Joint  Venture Accounting Firms licensed to
        practice  accounting in China and such Accounting Firm shall be selected
        by  Party  l3  in  writing.

12.9    Bank Accounts  The Company shall open such bank accounts after approved
        -------------
        by  the  People's  Bank  of  China  in  designated  banks.

<PAGE>
ARTICLE 13 - INSURANCE

13.1    Standards  of  Insurance  The Company shall purchase insurance for this
        ------------------------
        project  as  required  by  China  Law. The Board will then decide on any
        other  kind,  value  and  duration  of insurance it considers necessary,
        having  due reference to international insurance practices in respect of
        similar  projects.

13.2    Choice  of  Insurer  The Company shall purchase such insurance from the
        -------------------
        insurance  provider which the Board considers to be the most competitive
        in  terms of coverage, dependability and cost. If the People's Insurance
        Company  of  China  satisfies  Board  that  its policies are at least as
        favorable  to  the Company as those of its competitors in respect of all
        the  Board  considers material, the Company shall purchase its insurance
        from  that  insurer.

ARTICLE 14 - DURATION OF THE JOINT VENTURE

14.1    Duration  of  Joint  Venture  The  Project  shall  have  a duration (the
        ----------------------------
        "Duration of the Joint Venture ) of ten (10) years from the day when the
        Business  License  is  issued.:

14.2    Extended  Duration  The  Company  and  the  Shareholders  shall  make an
        ------------------
        application  to  the Approval Authority at least six (6) months prior to
        the  expire  date of the Duration of the Joint Venture for the extension
        of  the  Joint  Venture  Company.

14.3    Continuation  of  Contract  and  Licenses  If  the Duration of the Joint
        -----------------------------------------
        Venture is extended for any reason, notwithstanding any provision to the
        contrary  herein,  this  Contract  shall  continue in the full force and
        effect,  as  amend by such extension. Party A shall obtain such renewals
        of  the  Business License, Survey and Exploration and Mining License and
        other  rights  and permits referred to article 7.2.1 as may be necessary
        or  desirable.

14.4    Joint  Mining
        -------------
        The  parties  shall  enjoy the priority in mining right in the Work Area
        according  to  the Laws of Mineral Resources of the People's Republic of
        China.  If  diamond  ore  bodies  are  discovered  and  those ore bodies
        demonstrate  proven  economic  value  for  mining  during  the period of
        cooperation, the Company shall apply for mining license according to the
        relevant laws and regulations. The two parties herein also agree that in
        future  joint  mining,  venture  company for this purpose will be set up
        between  the  two  parties.  Each  party shall be entitled to the profit
        according  to  their  contributions,  however,  the  proportion  of  the
        contributions on future joint mining shall be at least 50 to 50 or 60 to
        40  in  Party B's favour. In the case that Party A fails to supply funds
        to  meet the contribution requirement, Party B shall supply to Party A a
        Shareholder's  loan  under  favourable  interest  rates  which  shall be
        decided  later.  Party A agrees that if Party A makes its contribution ,
        in  part  or  wherein the form of Shareholder loans it shall not get any
        dividend  distribution  prior  to  the  payment  to  Party  B.

ARTICLE 15 - DISPOSAL OF COMPANY ASSETS ON EXPIRE OF DURATION

15.1    Litigation  of  Assets  If the Duration of the Joint Venture expires or
        ----------------------
        is  terminated

<PAGE>
        pursuant  to  this  Contract  for  any reason; the assets of the Company
        shall be liquidated and the debts of the Company ( including any amounts
        owed to any Shareholder hereunder ) shall be paid. The remaining cash of
        the  Company,  if  any,  shall  be  distributed  by  the  Company to the
        Shareholders  equally  in  accordance  with  the principles set forth in
        article  12.4.  Thereafter,  the  Company  shall.

     15.1.1    make  a  full  report  of  the  liquidation  to  each  of  the
               Shareholders;  and

     15.1.2    cause  the  Business  License  to  be  canceled

15.2    Sales  of  Assets  The liquidation committee shall use its best efforts
        -----------------
        to sell the non-cash assets of the Company ( including the Mining Rights
        and  Exclusive  Marketing  and  Sales  Rights) for the highest available
        price.  Any  Shareholder  may  purchase all or part of those assets at a
        purchase  price  equal  to their fair market value, as determined by the
        parties  by  agreement  (  or by the Independent Valuator, if no written
        agreement is reached within thirty (30) days). Such price may be paid by
        way of set-off against any amount that may be owed by the Company to the
        purchasing  Shareholder.  Such  Mining Right shall get approval from the
        appropriate  Government  Agency.

15.3    Survival of Terms  The provisions o1' this Article 15 shall survive the
        -----------------
        expire or early termination of the Duration of the Joint Venture for any
        reason.

ARTICLE 16 - AMENDMENT AND TERMINATION OF THE CONTRACT

16.1    Amendment  This  Contract  may  only  be amended by a written amendment
        ---------
        agreement signed by both Party A and Party B, and shall come into effect
        on  the  day  such  amendment  agreement  is  approved  by  the Approval
        Authority.

16.2    Terms  of  Contract  This Contract shall come into effect upon approval
        -------------------
        by  the  Approval Authority and subject to article 16.3; shall remain in
        force  until  the  procedures  set  forth  in Article 15 above have been
        completed  following  the expire or early termination of the Duration of
        the  Joint  Venture  pursuant.

16.3    Rescission  of Contract  if for any reason the conditions precedent set
        -----------------------
        forth in article 5.2 and 5.3 have not all been fulfilled by any Party on
        or  prior  to  the 180`h day after the Business License has been issued,
        this  Contract shall be deemed terminated and of no force and effect and
        the  Company  shall  be  dissolved.  The Party that has suffered damages
        resulting  for the breach of the contract can claim such damages against
        the  other  Party.

16.4    Early  Termination  Either  Shareholder  may  by  written notice to the
        ------------------
        Chairman and Vice-Chairman of the Company, request the Board to consider
        and  approve  a  resolution  pursuant  to  article  8.7 to terminate the
        Duration  of' the Joint Venture prior to its expire date only any of the
        following  reasons:

     16.4.1    the  other  Shareholder has caused an Event of Default to occur,
               and  has  failed to cure such Event of Default within thirty (30)
               days of written notice by the first Shareholder, or if such Event
               of  Default  cannot  be  cured within thirty (30) days, the other
               Shareholder  has  failed  to  use  its beast efforts to cure such
               default,  or

<PAGE>
     16.4.2    there  has  been  a  material  change  in  the  applicable laws,
               regulations or policies of the pertinent governmental authorities
               that  adversely  affect  the  interests  of such Shareholder; and

16.5    Government Approval  If any Shareholder gives a notice requesting early
        -------------------
        termination  under  article  16.4  and  the  Board resolves according to
        article  8.7.4 to dissolve the Company, the Shareholders shall cause the
        Company  and  the  Board  to  make  such  applications  to  the Approval
        Authority,  and  to  take  all  such  other steps as may be necessary to
        complete  the  dissolution  of  the  Company  in  accordance  herewith.

16.6    Survival  of  Certain  Provisions  and  Obligations.  The provisions of
        ---------------------------------------------------
        Article  15  and  this  article  16.6  and  all other provisions of this
        Contract  necessary  to give full force and effect thereto shall survive
        the expiration or early termination of the Duration of the Joint Venture
        for  any  reason.

ARTICLE 17 - BREACH OF CONTRACT

17.1    Events  of  Default  Each of the following events shall be deemed to be
        -------------------
        an  Event  of  Default  hereunder:

     17.1.1    if  any  Shareholder  shall  be in breach of any of its material
               obligations hereunder and such breach shall continue for a period
               of  thirty  (30)  days  from  the  receipt of a written notice of
               breach  from  the  other Shareholder, or if such breach cannot be
               cured within thirty (30) days, such Shareholder has failed to use
               its  best  efforts  to  cure  such  breach;

     17.1.2    if  any  Shareholder  passes a resolution that it be wound up or
               liquidated  or  a  meeting is convened for the purpose of passing
               any  such  resolution,  or an order is made for the winding-up or
               liquidation  of  such  Shareholder;

     17.1.3    if a receiver or receiver-manager is appointed in respect to the
               whole  or  a  substantial  part  of  the affairs or assets of any
               Shareholder;  and

     17.1.4    if  a  Shareholder  is adjudged bankrupt or insolvent or files a
               proposal  in  bankruptcy.

17.2    Remedies  If an Event of Default occurs, the Non-Defaulting Shareholder
        --------
        shall  be  entitled to exercise against the Defaulting Party any and all
        rights,  remedies and recourses permitted hereunder or at law, including
        without  limitation,  the  right to obtain an injunction or order from a
        court  of  competent  jurisdiction  setting aside the act giving rise to
        such  Event of Default. All such rights, remedies and recourses shall be
        cumulative and the exercise of one shall not prevent the exercise of any
        other  or  others.

17.3    Interest  Unless otherwise provided herein, any sum at any time
        --------
        owing  hereunder  by any Shareholder to the Company or by the Company or
        any Shareholder to another Shareholder which is not paid when due shall,
        without  derogation  froth any other right or its due date until payment
        in  full  at an interest rate equal to the Prime Rate set by the Bank of
        Nova  Scotia  in  Canada

<PAGE>
ARTICLE 18 - FORCE MAJEURE

18.1    Event  of  Force  Majeure  An Event of Force Majeure includes any fire,
        -------------------------
        explosion,  accident, earthquake, tidal wave, strike picketing, lockout,
        labor  dispute,  flood,  drought,  embargo,  war,  riot or insurrection,
        uprising, rebellion, or any other event whether similar or dissimilar to
        the  foregoing  which  shall  be  beyond  the  reasonable control of the
        Shareholder  affected hereby and which shall delay, interrupt of prevent
        in  whole  or  in  part  by  such  Shareholder or any of its obligations
        hereunder  other  than  an  obligation  to  pay  money.

18.2    Notice  of  Force Majeure.  A Shareholder affected by an Event of Force
        -------------------------
        Majeure  shall promptly give notice thereof to the other Shareholder and
        shall  indicate in such notice, as accurately as possible, the effect of
        such  Event  of Force majeure on its capacity to perform its obligations
        hereunder.

18.3    Effect  of  an  Event of Force Majeure  Subject to the giving of notice
        --------------------------------------
        provided  for  in  the  immediately  preceding  article:

     18.3.1    the  non-fulfillment  of  any  obligation  of  any  Shareholder
               hereunder  by  reason  of  an  Event  of  Force Majeure shall not
               constitute  a  breach  or an Event of Default, and shall not give
               rise  to  damages  or  to  any  other  recourse;  and

     18.3.2    any  time  period provided for the performance of any obligation
               of  any  Shareholder hereunder shall be postponed or extended for
               and  by a duration equal toe the period during which the Event of
               Force  Major  shall  continue  to  exist.

18.1    No  Termination An Event of Force Majeure shall not be a cause for
        the  early  termination of this Contract or of the Duration of the Joint
        Venture  unless  the  Event  of  Force Majeure continues for a period in
        excess of 12 months, in which case the Shareholder not directly affected
        by  such Event of Force Majeure may request the early termination of the
        Project  pursuant  to  the  provisions  of  article  16.4.

ARTICLE 19 - APPLICABLE LAWS

19.     Published  Laws  of China  The formation, validity and interpretation of
        -------------------------
        this  Contract  shall  be  governed  and interpretation of this Contract
        shall  be  governed  by the published and publicly available laws of the
        People's  Republic  of  China.

19.2    Effect  of  Future  Laws  The  Shareholders  agree  that  if any law or
        ------------------------
        regulation  of  China  that  is  amended of changed or a new la\v has an
        adverse  effect  on  any Shareholder then, if such Shareholder requests,
        the  parties  shall  forthwith  amend this Contract so that such adverse
        effect  is  eliminated or adjusted to shall cause the Company to use its
        best  efforts  to  cause  such  amendment to be approved by the Approval
        Authority.

<PAGE>
ARTICLE 20 - SETTLEMENT OF DISPUTES

20.1    Overriding  Principle  Any  dispute  arising out of or relating to this
        ---------------------
        Contract  shall  be  resolved  by procedures set out in this Article 20.
        First,  there  shall  be  friendly  discussions between the Shareholders
        based  on  the overriding principle that the Shareholders have a-reed to
        establish  the  Company in order to generate maximum profits for each of
        the  Shareholders.

20.2    Binding  Arbitration  If  the  dispute  is  not  resolved  by  friendly
        --------------------
        discussions  under the immediately preceding article any Shareholder may
        give  to  the  other  Shareholder written notice under this article 20.2
        requesting  the  dispute  to be resolved. If the dispute is not resolved
        within  forty  (40)  days after such notice, either Shareholder shall be
        entitled to refer the dispute for arbitration by arbitrators pursuant to
        the  rules  of  an  under  the auspices of the International Arbitration
        Institute  of the Stockholm Chamber of Commerce. In their determination,
        such  arbitrators  shall  have due regard to international practice. The
        award  of  such  arbitrators  shall be binding on the parties and may be
        entered  in  any  court  of  competent  jurisdiction.

ARTICLE 21 - MISCELLANEOUS

21      Notices  Any  and  all  notices  or  other  communications required  or
        -------
        permitted  pursuant  to  this Contract shall be in writing and shall be:

     2         delivered  by  courier,  by  a  fax or telex thereof to the
               addresses  referred  to  below in which case such notice or other
               communication  shall conclusively be deemed to have been given to
               the addressee thereof at the time of such delivery or on the next
               business day if delivered on a day that is not a business day; or

     2  1.2    telexed  or  faxed  to  the addressee at the numbers referred to
               below,  confirmed  by  delivery  by  courier,  in which case such
               notice  or  other  communication  shall conclusively be deemed to
               have been given to the addressee thereof on the day upon which it
               was received if received prior to 3:00 p.m. ( local time) on such
               day or on the next business day if received after 3:00 p.m.(local
               time)  on a business day or on the next business day it 'received
               on  a  day  that  is  not  a  business  day:

                    For Party A:
                    ------------

                    Shandong Lin Yi Geology and Mineral Resources
                    Development Company
                    Linxi Wu Lu, Linyi City
                    Shandong Province
                    People's Republic of China

                    Attention:  Hu Shi lie
                    Telephone: (0539) 8223973

<PAGE>
                    For Party B:
                    ------------

                    Crystal Bright (Asia) Limited
                    2203 Cameron Commercial Center
                    458 - 460 Fieriness), Road
                    Hong Kong

                    Attention: Po Sun Liu
                    Telephone: 852-854-2128

               Each  Shareholder  may  change its address for service by Written
               notice,  given  in  the  manner  provided  above,  to  the  other
               Shareholder and such change shall be effective: upon the date the
               notice  shall  be  deemed  to  received.

21.2    Entire  Agreement  This  Contract  constitutes  the  entire  agreement
        -----------------
        between  the  parties hereto. There are no, and shall not he any, verbal
        or  written  statements,  representations,  warranties,  undertakings or
        agreements  between  the parties pertaining to the subject matter hereof
        other  than  as  expressly  provided for herein. If any provision hereof
        conflicts  with  any  provision  of  the  Articles of Association of the
        Company or with anything in the feasibility Study, the provision of this
        Contract  shall  prevail.

21.3    Business  Day  Where the time limit for the doing of anything hereunder
        -------------
        expires  or  falls  upon  a  day  that is not a business day the time so
        limited  extends to and the thing may be done on the day first following
        that  is  a  Business  Day.

21.4    Time  of  Essence  Time  and  each  of the terms and conditions of this
        -----------------
        Contract  shall  be  the  essence  of this Contract and no waiver by any
        Shareholder  of  any  default by the Shareholder of any provision herein
        shall  be  deemed  to  be  a waiver of any other provision herein nor to
        release  such  other  Shareholder  from  any  such  provision.

21.5    Further  Assurances  Cooperation  Each  of the parties hereto shall do
        --------------------------------
        all  things and execute all documents necessary or desirable in order to
        carry  out  the intents of this Contract, and shall fully cooperate with
        each  other  and the Company in all respect in good faith to ensure that
        the  Company operates in the manner contemplated herein and achieves the
        purpose  set  out  in  the  Contract.

21.6    Corrective  Actions   If  any  time  during  the  Duration of the Joint
        -------------------
        Venture, any government authority of China enacts or law or policy , and
        if  such  actions have the effect ( a " Negative Effect" ) of preventing
        or  constraining  the  exercise of any right or of materially increasing
        the  burden  of  performance of any obligation of Party B or the Company
        hereunder the Company shall, at the Company's cost, take such measures (
        "  Corrective  Action")  as  may  be  required to restore Party B or the
        Company to the position it would have retained had such actions not been
        taken.  Such  Corrective  Action  may  taken any or all of the following
        forms:

     21.6.1    obtaining  from  the  relevant  authority  an exemption from the
               application  of  the law or policy that is the direct or indirect
               subject  to the Unilateral Action or the direct or indirect cause
               of  the  Negative  Effect;

<PAGE>
     21.6.2    causing  the  enactment of specific legislation to eliminate the
               Negative Effect; or 21.6.3 other actions acceptable to Party B. .

21.7    Language  This  Contract has been written in Chinese and in English and
        --------
        dully  executed  in  Chinese and in English. The Parties asree that both
        versions  are  equal,  and  legally  binding on both Parties. In case of
        discrepancy, the meaning and spirit of the Chinese version shall prevail
        at the same time the meaning and the spirit of the English version shall
        be  referred  to.

21.8    Enurement  This  Contract  shall enure to the benefit of and be binding
        ---------
        upon,  the  parties hereto and their respective successors and permitted
        assigns.

IN  WITNESS  WHEREOF  duly  authorized  officers  of  each  of the parties have
executed  this  Contract  in Linyi, Shandong province, China on this 22nd day of
August,  1996.

Shandong Lin Yi Geology and                    Crystal Bright (Asia) Limited
Mineral Resources Development
Company

     /s/  Zhou Denshi                         /s/  Dai Zhenfei
     -------------------------------          --------------------------------
     Name:  Zhou Denshi                       Name   Dai Zhenfei
     Title: Deputy General Manager            Title: Senior Vice President
                                                     China Operations

<PAGE>

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